McCloy & Ors v State of New South Wales & Anor

[2015] HCATrans 141

[2015] HCATrans 141

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S211 of 2014

B e t w e e n -

JEFFREY RAYMOND McCLOY

First Plaintiff

McCLOY ADMINISTRATION PTY LIMITED

Second Plaintiff

NORTH LAKES PTY LIMITED

Third Plaintiff

and

STATE OF NEW SOUTH WALES

First Defendant

INDEPENDENT COMMISSION AGAINST CORRUPTION

Second Defendant

FRENCH CJ
KIEFEL J
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 10 JUNE 2015, AT 10.17 AM

Copyright in the High Court of Australia

____________________

MR D.M.J. BENNETT, QC:   May it please the Court, I appear with my learned friends, MR I.D. FAULKNER, SC, MR A.K. FLECKNOE‑BROWN and MR B.A. MEE, for the plaintiffs.  (instructed by Toomey Pegg Lawyers)

MR M.G. SEXTON, SC, Solicitor‑General for the State of New South Wales:   If the Court pleases, I appear with my learned friends, MR J.K. KIRK, SC and MS A.M. MITCHELMORE, for the first defendant.  (instructed by Crown Solicitor for New South Wales)

MR J.T. GLEESON, SC, Solicitor‑General of the Commonwealth of Australia:   May it please the Court, I appear with MR C.L. LENAHAN, for the Attorney‑General for the Commonwealth, intervening.  (instructed by Australian Government Solicitor)

MR G.R. DONALDSON, SC, Solicitor‑General for the State of Western Australia:   May it please the Court, I appear with my learned friend, MS K.A.T. PEDERSEN, for the Attorney‑General of Western Australia, intervening.  (instructed by State Solicitor’s Office)

MR P.J. DUNNING, QC, Solicitor‑General of the State of Queensland:   May it please the Court, I appear with my learned friend, MR A.D. KEYES, for the Attorney‑General of Queensland, intervening.  (instructed by Crown Law)

MR M.G. EVANS, QC:   May it please the Court, I appear with MR D.F. O’LEARY, for the Attorney‑General for South Australia, intervening.  (instructed by Crown Solicitor (SA))

MS K.L. WALKER, QC:   If the Court pleases, I appear with my learned friend, MR A.D. POUND, for the Attorney‑General for Victoria, intervening.  (instructed by Victorian Government Solicitor)

FRENCH CJ:   Mr Bennett.

MR BENNETT:   Your Honours, there are a number of matters which are not in issue, and I point those out first.  There is no dispute that the first limb of the Lange test is satisfied in relation to each of the challenged provisions.

GAGELER J:   Is there agreement on how it is satisfied?

MR BENNETT:   Well, your Honour, there is no real disagreement expressed in the submissions, but there may be nuances as to that.  Your Honours, it appears in paragraphs 50 and 51 of the defence, and the defendant’s submissions, paragraphs 28 and 65, and in various parts of the other submissions.  The concession, as I understand it, applies to all three challenges.

There is also no dispute that the implied freedom applies in relation to State politics – that is paragraph [25] of Unions NSW and clear law in this Court.  There is no challenge made by any party to the plaintiff’s locus standi and I do not need, therefore, to take your Honours to Croome and the matters concerned with that.  It is suggested in some of the submissions, correctly, that we have no locus standi to challenge the prohibited donor provisions in relation to categories other than developers, that being the liquor, gaming and tobacco industries.  In relation to those, I will be making a submission based on Pape that part of the argument showing the invalidity involves pointing to those provisions but, of course, I do not have locus standi specifically to submit that your Honours should hold them to be invalid other than as a step in the reasoning.

Now, the plaintiffs make three challenges.  The first is to the prohibited donor provisions in relation to property developers, that is Part 6, Division 4A of the Act.  Secondly, to the cap on political donations, it is Part 6, Division 2A, and thirdly, to the non‑cash contribution provision which is section 96E.  What I propose to do is first to make some general submissions which apply to all three challenges and then to deal with the three challenges separately.  I would expect to be addressing your Honours approximately until lunch time.  I may go a little bit over or a little bit under.

Now, it is clear from the Unions NSW Case (2013) 88 ALJR 227 that a partial prohibition on electoral contributions may offend against the implied freedom. That finding was made in relation to the very Act, of course, with which we are concerned today. That offending occurs for two reasons basically. The first is that it reduces the funds available to candidates to be spent on political communication, and the second is it restricts the facilitation of donors making representations to them. I do not suggest, of course, that a donation is itself a political communication but, we submit, for the reasons given in that case, that each of the provisions distorts the free flow of communication by impeding donations by various classes of persons for the purpose of political matters.

We recognise, of course, that the implied freedom is not a personal right, but each of the impugned provisions not only restricts the funds available to politicians for political communication and advertising, but also takes away from the system a means by which electors and others may express support and seek to communicate with political parties or candidates.

FRENCH CJ:   So a donor can make a representation of support to a candidate or a party – I am sorry, a person who would otherwise be a donor can make a representation of support to a candidate or a party.

MR BENNETT:   Yes.

FRENCH CJ:   How does the prohibition impede the ability to make representations?  It is just taking away a means of providing support, is it not?

MR BENNETT:   It also takes away a means of facilitating access.  I will be making some submissions about ‑ ‑ ‑

FRENCH CJ:   No, I am just concerned about the linkage between the prohibition and making representations to candidates and parties which are mentioned in paragraph 1 of your oral outline.

MR BENNETT:   Your Honour, one effect of making political donations is that it may improve one’s access to the candidate once the candidate becomes a member for the purpose of making representations to that member.  We put that as a legitimate objective directed at the facilitation of political communication.

FRENCH CJ:   So, preferential access is an aspect of the implied freedom?

MR BENNETT:   Well, your Honour uses the word “preferential” – we submit it is a question of access lying where it falls.  There are always going to be – whatever system one has – people who have easier access than others.  To take obvious examples, relatives or friends of a member may have better access to the member to make representations than others. 

To take a negative example, a person who is the political equivalent of a vexatious litigant who is constantly bothering the member with trivial matters and makes a nuisance of him or herself is going to get less access; may well be on a list of people the member does not take calls from.  The member is entitled to defend him or herself in the same way that the courts do through the vexatious litigant provisions.  That is an example again of unequal access which is a natural consequence of society.  The person who is personable may well get better access than a person who is abrasive.  A person who is articulate is likely to have greater influence than a person who is inarticulate.  All those are natural results of access lying where it falls and we submit ‑ ‑ ‑

FRENCH CJ:   In the same category, a person who gives a lot of money naturally has more access than a person who is not in a position to do that.

MR BENNETT:   Yes, your Honour, but there is a distortion too because a person who is able to influence a large number of other people each to give smaller amounts under the caps may have exactly the same degree of influence as a single person who makes a larger donation.  The obvious examples are residential organisers or union secretaries, people of that sort who are in a position to influence many other people.  The part of access is that those people no doubt get better access than others because of their ability to organise the small donations which are of course permitted.

GAGELER J:   So, Mr Bennett, your proposition is that the ability to pay money so as to secure access to a politician is itself a freedom protected by the Constitution?

MR BENNETT:   Yes, your Honour, and we submit that Unions NSW establishes that, particularly paragraph [30]. May I take your Honours to the passages in that case – 88 ALJR 227 and I start with paragraph [30] where the plurality says this:

Political communication may be undertaken legitimately to influence others to a political viewpoint.  It is not simply a two‑way affair between electors and government or candidates.  There are many in the community who are not electors –

That was because of the particular provision in that case –

but who are governed and are affected by decisions of government.  While not suggesting that the freedom of political communication is a person right or freedom, which it is not, it may be acknowledged that such persons and entities have a legitimate interest in governmental action and the direction of policy.  The point to be made is that they, as well as electors, may seek to influence the ultimate choice of the people as to who should govern.  They may do so directly or indirectly through the support of a party or candidate who they consider best represents or expresses their viewpoint.

Then again, your Honours, paragraph [38], the plurality says this:

In any event, the question whether s 96D –

that is the caps – I am sorry that is the provision that was invalid in that case which limited contributions by persons who were not on the electoral roll ‑

the question whether s 96D limits the freedom is simply resolved.  That section effects a restriction upon the funds available to political parties and candidates to meet the costs of political communication by restricting the source of those funds.  The public funding . . . is not equivalent . . . It is not suggested that a party or candidate is likely to spend less than the maximum allowed.  The party or the candidate will therefore need to fund the gap.  It follows that the freedom is effectively burdened.  The concession made by the defendant, that there is an indirect burden which is more than inconsequential, is inevitable.

KIEFEL J:   What you are speaking about is not so much freedom of political communication as of freedom to attempt to influence those who might attain power?

MR BENNETT:   Your Honour uses the phrase “attempt to influence” ‑ ‑ ‑

KIEFEL J:   I should say in the context influence to one’s self‑interest.  You are not talking about political discourse as such, are you; you are talking about the payment of money to pursue self‑interest?

MR BENNETT:   To facilitate the access to be able to make the political communications and representations to the member, yes.  May I take your Honours now to the Act with a view to demonstrating that the provisions are confined to – virtually exclusively confined to, with one very small qualification, to the restriction of political communication as such because we will be submitting that within the meaning of the authorities this is – the relevant provisions are provisions about political communication, not about the elimination of corruption or the creation of a level playing field or any of the other high‑sounding objectives that have been referred to.  I start, your Honours, with section 96GA which is the provision in relation to prohibited donors.  Your Honours will see that 96GA(1) provides very simply:

It is unlawful for a prohibited donor to make a political donation.

Now, I will be coming in a moment to the definition of that to make my proposition good.  Similarly, if your Honours go to section 95B, which is concerned with the caps, 95B(1) provides that it is:

unlawful . . . for a person to accept a political donation . . . if the donation exceeds the applicable cap –

So again, the prohibition is directed to this phrase “political donation”.  Now, if one then goes to section 85, you see the meaning of “political donation”.  It is “a gift made to or for the benefit of a party”, “an elected member”, “a candidate or a group of candidates”, or to “an entity . . . intended to be used by the entity” to enable it “to make . . . a political donation”, which is circular, “or to incur electoral expenditure”, or “to reimburse” it again for “electoral expenditure”.  The key provision is 85(4) which provides that:

The following are not political donations:

(a)a gift to an individual that was made in a private capacity to the individual for his or her personal use and that the individual has not used, and does not intend to use, solely or substantially for a purpose related to an election or to his or her duties as an elected member ‑

The purposes related to an election, of course, is political communication, as is much of the duties as an elected member.

FRENCH CJ:   So a gift to an individual made in a private capacity for his or her personal use not intended to be used in relation to an election may nevertheless become a political donation if the individual later uses that money for an electoral purpose.

MR BENNETT:   Yes, that is subsection (5), your Honour, which says that:

if any part of a gift . . . is subsequently used to incur electoral expenditure, that part of the gift becomes a political donation.

FRENCH CJ:   That seems to be implicit in 4(a).

MR BENNETT:   Yes, and “electoral expenditure” is then defined in section 87 as:

expenditure for or in connection with promoting or opposing . . . a party or the election of a candidate or candidates or for the purpose of influencing, directly or indirectly, the voting at an election.

So we are dealing almost coextensively with the matters protected by the implied freedom.  This is a law which is only concerned with expenditure for the purpose of electoral or political communication.

That is the point at which one starts.  Three of the cases – and I will only go to these very briefly – Mulholland, Hogan v Hinch and Tajjour – all make the point in one way or another, that one matter which strengthens the plaintiff’s case and weakens the defendant’s case – rather as a Lange challenge – is that the law can be characterised as a law relating to, and limiting, political communication as such.  That is exactly what this one does – what this law does.

Just very briefly, the passage in Mulholland 220 CLR 181, and in paragraph 40 of the judgment of the Chief Justice his Honour makes the point that:

The implied constitutional requirement . . . is not absolute . . . There are many laws which affect freedom to communicate, of which the defamation laws considered in Lange are an example.  Some such laws have only an indirect or incidental effect upon communication about matters of government and politics.  Others have a direct and substantial effect ‑

And then, the point we make ‑

Some may themselves be characterised as laws with respect to communication about such matters ‑

His Honour then cites ACTV where Justices Deane and Toohey said that ‑

“a law whose character is that of a law with respect to the prohibition or restriction of [political] communications . . . will be much more difficult to justify . . . than will a law whose character is that of a law with respect to some other subject and whose effect on such communications is unrelated to their nature as political communications.”

Then there is a reference to Levy v Victoria and the judgment of Justice Gaudron in that case.

BELL J:   Your argument accepts that the making of a donation is not itself an act of political communication but the point that you are now making is to assert that this act is directly concerned with political communication by reason of the restriction that it places on the influence that a person may purchase through the making of the donation.

MR BENNETT:   Your Honour, the point I am stressing at the moment ‑ that is a point we make ‑ but the point I am stressing at the moment is that the act is solely concerned with money that is going to be used for political communication.  It is not concerned with money going into the pockets of the candidate or money to be spent on something other than political communication.

FRENCH CJ:   When you say concerned with, you mean has the purpose of and the effect of.

MR BENNETT:   Yes – purpose or effect, your Honour, because if the gift is made without that being the purpose but the member in fact applies it in that way it becomes a political donation.

FRENCH CJ:   I am talking about the purpose of the provision.

MR BENNETT:   The purpose of the provision, yes.  The purpose of the provision is confined, we would submit, to limiting political communication.  Now, I said “almost exclusively”.  There is a minor qualification which appears in section 85(4)(a), where there is excluded from the exclusion:

a purpose related to an election or to his or her duties as an elected member -

Now, some of those duties may be separate from political communication.  I suppose if one pays the fares of the member from the member’s home to Macquarie Street that may not itself be directly concerned with political communication.  But apart from that very small category, virtually everything that is affected is something which is to be used for or in fact used for political communication.

KIEFEL J:   That might be the effect of the provisions in the Act, but that might be quite distinct from its purpose.  The purpose as recognised in Unions NSW at paragraph [8], since it was not in dispute, was to address a potential risk “from the exercise of undue, corrupt or hidden influences” and donations were accepted as one method of influence of that kind.

MR BENNETT:   I am going to come to that, your Honour, certainly, because I have to deal with the justification that is offered.  But the point I am making at moment is that, leaving aside the purpose, the effect of the Act, the provisions themselves, are concerned solely with money to be used for political communication.  It is not a case where the Act has said all donations to – because we are so anxious to eliminate all forms of corruption or things that approach corruption, no money can be paid to a member.  It has not said that.  It has just said you can pay all you like to the member as long as he is not going to use it to communicate.  That is what this Act is about, what it sets out – I am sorry, what it achieves.

GAGELER J:   Mr Bennett, does your argument go so far as to say the straightforward prohibition against bribery engages the first limb of Lange?

MR BENNETT:   No, your Honour, it would not.  It engages the first limb – no, your Honour, there would be a – the first limb would not go as far as that.

GAGELER J:   Why not?

MR BENNETT:   Because the – what is protected by an implied constitutional limitation of this nature cannot be something which is defined by reference to its illegality.  That would clearly be in a separate category. 

KEANE J:   Why?  It is a communication about political matters.

MR BENNETT:   Well, your Honour, there may be a semantic issue as to whether that falls in the first or – whether it is taken out because of the second limb or the first limb.  It would certainly be taken out by the second limb.  There may be a question as to whether it would be attracted by the first limb.

KEANE J:   Why is it not because it is recognised that laws that keep elections honest have never been considered as in any way impeding political communication, just as laws that prohibit misleading statements have never been considered as impeding political communication?

MR BENNETT:   I fully accept that, your Honour.  The question, though, which I was asked is whether that is because of the first limb or because of the second limb and that is the more difficult issue.

KIEFEL J:   But there is a burden, is there not, in the sense that you have already discussed because there is a limitation on access – if there is a prohibition on bribery, there is a limitation on access to politicians and a limitation on the ability to influence for self‑interest.

MR BENNETT:   Yes, there may be a question as to whether the type of communication that could be protected even prima facie by the implied freedom would be a communication saying, “I will give you $100,000 if you vote for this legislation”, a straight bribe, or a communication saying, “I will kill you if you don’t vote for it”.  Obviously there are some types of communication which simply would not be described as political communications and for that reason may very well fall outside the first limb even before one gets to the second limb.

KIEFEL J:   Well, communications then made for the purpose of self‑interest say in a commercial sense, they would not be political communications on that basis, would they?

MR BENNETT:   They are, your Honour.  If a person has an interest, a financial interest in the government having a particular policy and the person supports the party which has that policy or makes representations towards that ‑ ‑ ‑

KIEFEL J:   I think that is somewhat different.  That is somewhat less direct.  If you are supporting a party with a policy, you are supporting obviously a political point of view.  But what this Act is attempting to address are payments made – the risk of large donations being made for the purpose of corruptly influencing the use of power for the benefit of the person making the donation.

MR BENNETT:   Well, that, your Honour ‑ ‑ ‑

KIEFEL J:   So the making of the donation would not be a political communication, would it?

MR BENNETT:   In the extreme case your Honour puts to me, no.  But we submit of course that that is already achieved by the common law of bribery and the provisions in the Crimes Act in relation to bribery.

KIEFEL J:   But I think it is put against you there in one of the submissions that that deals with the aftermath of something that has already occurred.  The purpose of this legislation is addressed to the risk that this would occur.

MR BENNETT:   But, your Honour, the answer to that really lies in the diagram on the front page of the outline of oral argument to which I am about to come.  What this diagram will demonstrate is that the – if the objective is what your Honour Justice Kiefel puts to me, it is both too wide and too narrow and it is targeted nowhere near that.  The reason we say that is this, that whether a payment is corrupt or not in the traditional sense, whether it is a bribe or not, or an offence against the Crimes Act or not, has nothing whatsoever to do with whether it is a payment of electoral expenses or payment directly into the pocket of the member because in both cases it may be innocent and it may be guilty.  That is the point of the four‑cornered diagram.

KIEFEL J:   But there is a distinction, is there not?  You say that the Act is both too wide and too narrow.  There is a distinction between whether or not an Act is effective for its purpose and the identification of what its true purpose is.  Are you not really addressing its efficacy?

MR BENNETT: I have addressed what its true purpose is, your Honour. This is an Act which sets out to limit political communication by politicians by advertising to the electorate, by taking away from them money which they need for that purpose. If I can just give the four examples in the diagram which your Honours see we have called A, B, C and D? The first row with A and B in it deals with corrupt payments. We have given an example of a corrupt payment into the pocket and a corrupt payment of electoral expenses. The corrupt payment into the pocket is B in the north‑east corner of the diagram, a direct bribe to the member in consideration of voting for or against a particular Bill. That is not caught by this legislation. It is caught by the common law of bribery and by Part 4A of the Crimes Act which I will take your Honours to at some stage.

In A, which is the north‑west corner, the example would be a “contribution to electoral expenses in consideration of” the member voting for or against a particular matter.  That is caught by this legislation but it is also caught by the common law and by the Crimes Act.  They are equally corrupt.  The legislation only catches one.  Now let me go to the bottom row.  In the bottom row I have identified innocent or non‑corrupt payments to politicians.  If I start with D, the south‑east corner, “a gift or loan to a candidate” out of “friendship or vanity” – I will come to vanity in a moment.  Friendship is an obvious example.  One has a friend who is standing for Parliament so one makes a gift, perhaps into the person’s pocket.  A birthday present to a friend would fit into that category; clearly in those examples quite innocent.

The example of vanity is the type of person who schoolboys know as crawlers, and in the world of entertainment are known as groupies, that is, people who seek the adulation and respect of those who they perceive to be important, and revel in such respect when they can obtain it.  Such a person may well seek to make political donations, or straight gifts or loans to someone who the donor perceives may one day be a Cabinet minister or more important. 

Your Honours, no doubt, are bothered by such people from time to time at functions, where they try and attract your Honours’ attention and make themselves known to you.  Though it is a – now, gifts to politicians in that situation again, while they may not be attractive, are not harmful and are not corrupt ‑ ‑ ‑

GAGELER J:   Mr Bennett, what definition of “corruption” are you implicitly using?

MR BENNETT:   I am using it to mean bribery, your Honour.  I am using it in the strict sense, not the defined sense in the Act.  Now, if, as I say, an innocent gift is made, either out of friendship or vanity, or a gift or loan to a candidate whose policies happen to coincide with the interests of the donor, I regard ‑ ‑ ‑

FRENCH CJ:   Mr Bennett, to interrupt, can I just understand where we are in terms of – I take it we are in second limb territory at the moment.  Are we looking to the question of the nature and extent of the burden, or are we looking to the question of legitimate end – what are you addressing in terms of the Lange calculus?

MR BENNETT:   At this stage, your Honour, what I am addressing is a possible defence of the legislation on the basis that one could avoid the laws of bribery by making a political donation as opposed to a direct bribe into the person’s pocket and, therefore, we need to extend the prohibitions of the Crimes Act to cover political donations which otherwise would not be caught.

FRENCH CJ:   That goes to the purpose of the legislation.

MR BENNETT:   Purpose and effect, your Honour.  What I am seeking to show is that the – whether something is an offence under the Crimes Act or the common law is unrelated to whether it is a political donation or not.  Exactly the same innocent payment may be made by political donation or direct payment, and exactly the same guilty donation may be made by political donation or by payment.  One does not extend anything by saying we will have a ban on political donations as such.  That is the point I am making from the diagram.  Now, it ‑ ‑ ‑

GAGELER J:   Mr Bennett, I am sorry to interrupt you while you are looking at the diagram, why did you say that a direct bribe is not caught by this act as a political donation?  You might be right – I am just not sure why.

MR BENNETT:   Because of the exclusion in section 85(4), your Honour.

GAGELER J:   I see – the private capacity?

MR BENNETT:   Yes, yes.  If I go to a member and I say I will give you $100,000 into your pocket if you agree to vote for or against a particular bill, that is a bribe at common law.  It is an offence under the Crimes Act.  But it is not an offence under this legislation.  But, if I dare to suggest that the money is for use in communication, electoral communication, suddenly it becomes an offence under this legislation. 

Similarly, if it is an otherwise innocent payment – a birthday gift to a friend or a payment for some other legitimate reason – again, it is not caught by anything if it is a payment into the member’s pocket.  But it is caught by this legislation if the member uses it for electoral expenses or it is intended to be used for that purpose.  This is an act about restricting money used for communication.  It is not about the corruption or the fringes of corruption.

KIEFEL J:   But are you not taking what might be described as a loophole or an area where the legislation does not completely operate to cover – that is to say, on your view, on your argument – some limitation in its efficacy and constructing that as effecting its purpose?

MR BENNETT:   Your Honour, it is effect more than it is purpose – although it may well be the purpose as well.  But the important point is that there cannot be any suggestion that a payment towards electoral expenses is in some way worse than a payment that is not.  What the diagram is intended to show is, if it is corrupt, it is corrupt – in the common law sense – whether it is electoral expenses or into the pocket.  If it is innocent, it is innocent – whether it is electoral expenses or into the pocket.  One simply is not extending the matter. 

I can test it this way.  If it is sought to be said that we want to legislate on the fringes of the common law of bribery in the Crimes Act, things that are almost as bad but perhaps not quite – the case where it is almost a bribe under the Crimes Act but not quite, we want to extend it to be completely non‑corrupt and have a high standard of integrity.  If that is what is being said, this is very poorly targeted for that objective. 

I demonstrate that by going to the diagram and asking your Honours – I am sorry to do it this way – to imagine a middle row between the corrupt and the non‑corrupt - if one imagines a middle row entitled “almost corrupt” where it is just on the right side of the line but only just and not very attractive conduct.  Now, that again is caught, if it is for the purpose of political communication, and not caught if it is directly into the person’s pocket.  So again there is no targeting of the intermediate category of almost corrupt.  What is targeted is political communication and it is as simple as that.

BELL J:   Mr Bennett, you commenced taking us to the provisions to illustrate the point that you have just been making by saying it was a better starting point, as it were, than looking at high sounding objectives such as a level playing field.  Can I just inquire whether you contest that an object of achieving a level playing field, such that all voices might be heard on matters of government and political controversy, thereby avoiding, if you like, the undue influence of only wealthy voices being heard in the marketplace, is that a legitimate object?

MR BENNETT:   No, your Honour.  We would submit that access under the implied freedom should lie where it falls and it is legislation which, for example, said articulate people are able to exercise more influence than inarticulate people, therefore we will prohibit people who pass with flying colours some high articulacy test from communicating with parliamentarians, would clearly be invalid.  It might be directed in one sense to a level playing field between the articulate and the inarticulate, but it would be invalid; similarly, if one distinguished between the personable and the abrasive.

Communication necessarily once free gives advantages to those better able to communicate and this is simply an aspect of that.  To say that access should in some way be interfered with so as to try and avoid it being available to everyone is, in our respectful submission, contrary to the implied freedom.

KEANE J:   Mr Bennett ‑ ‑ ‑

MR BENNETT:   If I could in reference to that remind your Honours of what Chief Justice Mason ‑ ‑ ‑

FRENCH CJ:   Mr Bennett, if you just respond to Justice Keane.

MR BENNETT:   I am sorry, your Honour.

KEANE J:   Mr Bennett, on that view would a law that prohibited someone from standing in the marketplace and soliciting votes for money for a particular candidate, would that sort of law fall foul of the implied freedom?

MR BENNETT:   No, your Honour, that would not because ‑ ‑ ‑

KEANE J:   He is just exercising his ability to garner votes.

MR BENNETT:   No, your Honour, but a law preventing an articulate person standing on a speakers’ corner and persuading people with his silver tongue to vote in a particular way would fall foul of the implied freedom.  In the example your Honour gives there would be another interest which would arise, the interest in maintaining the freedom and independence of the voter and restricting the bribery of the voter, and so on.

KEANE J:   Is that not the point about the articulate?  The articulate persuades others in the way in which is a good thing.  It is a good thing because people are voting on a basis of an informed and free choice, as opposed to a choice that is corrupted.

MR BENNETT:   Well, if one pays a voter to vote a particular way, one is corrupting the choice, yes, but that is a long way from what we are talking about here.  At page 145 of the Australian Capital Television Case (1992) 177 CLR 106 Justice Mason made this statement which has become very much a purple passage:

The enhancement of the political process and the integrity of that ‑ ‑ ‑

KIEFEL J:   Where are you reading from, Mr Bennett?

MR BENNETT:   Sorry, page 145 in the middle of the page, your Honour:

The enhancement of the political process and the integrity of that process are by no means opposing or conflicting interests and that is one reason why the Court should scrutinize very carefully any claim that freedom of communication must be restricted in order to protect the integrity of the political process.  Experience has demonstrated on so many occasions in the past that, although freedom of communication may have some detrimental consequences for society, the manifest benefits it brings to an open society generally outweigh the detriments.  All too often attempts to restrict the freedom in the name of some imagined necessity have tended to stifle public discussion and criticism of government.  The Court should be astute not to accept at face value claims by the legislature and the Executive that freedom of communication will, unless curtailed, bring about corruption and distortion of the political process.

Your Honours, as I have said, we submit that there is nothing about access which is undesirable.  Indeed, access is necessary for communication.

FRENCH CJ:   But preferential access based on your financial resources is intention with the notion of a person to whom access is being directed and that is the holder of a public office.  Now, there may be people who are more articulate, persuasive than others and thus have a natural advantage of the kind to which you referred earlier, but none of that would seem to be inconsistent with the proper exercise of the duties of an officer – of a person holding public office in responding to, for example, their representations.  But there is something odd about the notion that somebody should have preferential access and we should regard that with equanimity, preferential access to the holder of public office, when that preferential access is based on their financial resources.

MR BENNETT:   Well, your Honour, it is no different to any of the other categories of preferential access that I have referred to.  The most obvious one is a family member.  Another very obvious one is a friend.  One may deliberately seek to befriend a politician in order to get access to the politician to make political representations.  There is nothing wrong with that, and no reason why that should be prohibited or limited in any way.

FRENCH CJ:   So is it a corollary of that that there is nothing wrong with the holder of a public office making decisions in the discharge of that office by reference to financial contributions or friendship or family relationship?

MR BENNETT:   No, your Honour, that is the other side of the line, that is a different ‑ ‑ ‑

FRENCH CJ:   Well, it seems to be an implication, if access, you ask access for what purpose?

MR BENNETT:   Well, access for the purpose of the free political communication which is necessary in a democracy.  Anyone can make representations to a politician and one is entitled to do things to place oneself in a position to have access to make those representations.

BELL J:   Chief Justice Mason’s statement at page 145 of Australian Capital Television needs to be read in the context of the preceding paragraph and that which appears on the concluding paragraph at page 144 where it seems that his Honour accepts that the integrity of the political process may be safeguarded:

by reducing pressure on parties and candidates to raise substantial sums of money –

and in that way –

lessening the risk of corruption and undue influence.

Do you take issue with that analysis?

MR BENNETT:   No, your Honour, we accept the desirability of lessening the risk of corruption and undue influence but we are talking about something different here.  Here we are talking about contributions for the purpose of facilitating (a) the politician’s ability to communicate with the public, and (b) the donor’s ability to obtain access to communicate with the politician.

BELL J:   Why is the latter not the sort of undue influence that his Honour had in mind?

MR BENNETT:   Your Honour, access is not undue influence. 

BELL J:   Access in order to exert influence?

MR BENNETT:   To exert persuasion, we would say, your Honour, rather than influence.  If the payment is for the purpose of influencing a decision on a political matter, it is on the other side of the line.  It would be caught by the Crimes Act, for example.  This is something ‑ ‑ ‑

KEANE J:   But the line is not bright, is it?  The line between access that everyone regards as familiar and wholesome is – the line between that and the sort of dependence on patronage, Tammany Hall sort of thing, that line is not bright.  Is not Parliament in a position where if, as Sir Anthony Mason recognises is legitimate, in its attempt to enhance the integrity of the process it is making laws to remove the possibility of temptations and sure, it cannot imagine a problem, but if there is a problem, can it not make a law that operates, notwithstanding that it is not possible to draw bright lines?

MR BENNETT:   Your Honour, it is but this is a law which is simply not targeted at that objective.  This is a law which is targeted at one thing and one thing only and that is payments for the purpose or effect of financing political advertising and communication by the member.  The objection put, the evil which it is said one needs to avoid, is that someone might get better access to the member by making a donation.  Our answer to that is, well, that is not an evil.  That is a facilitation of political communication. 

It is not as if one is excluding others from access.  A Member of Parliament who says “I am not going to make myself available to my constituents to hear what they have to say” is not going to remain a member very long.  So there are clearly plenty of other forces which will cause a member to permit access but there may be better access for some than others.  There may be easier access.  That is inherent in any form of access. 

KEANE J:   Is the auctioning of access consistent with the integrity of the process?

MR BENNETT:   Auctioning, your Honour, involves the proposition that others may not get access and the proposition that there is a direct payment for access that otherwise would not be available, that is going a step beyond what is being talked about here - especially when one starts with the proposition that the candidate needs money from some source to be able to finance the political advertising.

KIEFEL J:   Mr Bennett, just so that I am clear about this matter – in Unions NSW 88 ALJR at paragraph [8] on page 231, the court accepted that the purpose of the provisions, the general provisions and scheme of the Act, was to address the potential risk to integrity of the process by donations, donations which are large because where there is a need to raise large amounts of money to compete with rivals in connection with election campaigns, the risk is seen to be heightened.  That is consistent with what Sir Anthony Mason was talking about in ACTV.

MR BENNETT:   Yes.

KIEFEL J:   Do you – is it your argument that the purpose so identified is incorrect?

MR BENNETT:   Yes, your Honour.  Certainly, the effect if it is put as an effect is incorrect.  If it is put ‑ ‑ ‑

KIEFEL J:   No, I am talking about purpose, the overall purpose of the legislation. a purpose of the legislation.

MR BENNETT:   Your Honour, we accept that it is a purpose, but it is targeted totally and appropriately for that purpose because, for the reasons we have given, it is solely concerned with money to be used for the purpose of electoral communication.  If one wished to protect integrity, and that were the sole objective, one would not have the exclusion that one has in relation to personal gifts and one would not have the requirement that the payments be for the purpose of political – be political donations or electoral expenditure.  It is those matters that give the lie to this being the purpose.

BELL J:   Whether it is well framed or badly framed, one would need some exception for the birthday present for the serving member, surely.

MR BENNETT:   Well, your Honour, it – but if the birthday present is in the form of a gift towards electoral expenses, if one says to the member, “I am going to buy you as a birthday present some airtime” or “I am going to give you some money for you to spend on getting yourself elected, as a birthday present”, that is caught by this legislation.  Now, your Honours, I move then from the submissions which are general to all three challenges to the three specific challenges.  The first is Division 4A.  Your Honours will see that ‑ ‑ ‑

KIEFEL J:   I realise that you are following the order of the questions in the special case, but would it not be more logical to approach the matter by reference to the more general provision in relation to capping first, on this basis, that if capping is valid it would then raise the question about why the prohibition in relation to the developers is necessary.  It would bring that more sharply into focus.  If capping was invalid, you would be then – there would be open the way to argue that large scale donations are in order.

MR BENNETT:   Yes.  Well, of course, your Honours are not going to decide it and tell me what your Honours have decided on one aspect before I move to the next aspect so it is not going to affect ‑ ‑ ‑

KIEFEL J:   No, but it is just that it is difficult, in a way, to understand the argument about the prohibition with respect to specific groups of people such as developers without having heard the argument about where the Court should go to in relation to capping.  It just seems to me that the general provision is the antecedent question.

MR BENNETT:   Well, if your Honour prefers me to deal with it that way, I am content to ‑ ‑ ‑

KIEFEL J:   I should not take you out of your order.  Do not let me take you out of your order.

MR BENNETT:   I do prefer to start with this point because this does demonstrate again a purpose quite separate from any purpose which might fall within the need to achieve greater integrity or matters of that sort.

FRENCH CJ:   We have to bear in mind, I think, do we not, that the capping provision applies only to State elections; it does not apply to local government matters, so there is a general question still between ‑ ‑ ‑

MR BENNETT:   Yes, that is so, your Honour, whereas this is more general.  Your Honours, one has to start by saying, why are these groups selected and what do they have in common which other groups do not have?  It cannot be simply that they are groups whose income is substantially affected by government action or government policy.  That applies equally, or more so, to many other groups in society.  One could identify the pharmaceutical industry, taxi drivers, nursing homes.  One could identify personal injury lawyers, motor vehicle insurance companies.  One could identify very many groups in society which are totally dependent on the way government regulates matters affecting them.  These groups are certainly no more in that category than anyone else.

Nor is there, we will submit ‑ and I will take your Honours to the nuts and bolts of this – nor is there any serious suggestion that property developers have, in the past, been more prone than others to corrupt donations to governments.  In the stated case, your Honours see in paragraph 48 at page 74 of the stated case book – special case book, I am sorry – your Honours see that there are various examples given.  There is a reference to the North Coast Report where ICAC – paragraph 51 this is:

ICAC made findings of corrupt conduct against local government councillors and State government public servants in relation to the solicitation and receipt of funds by such persons in exchange for favourable consideration of rezoning –

FRENCH CJ:   Now, just a question about how we approach these references to ICAC reports in the special case.  The facts there set out are of reports and of findings.  They are not facts that – they do not involve an agreement that the things found happened.

MR BENNETT:   No, they do not, your Honour.

FRENCH CJ:   So they would go to the question of public perception and concern, would they not, as a primary purpose for the purposes of this application?

MR BENNETT:   Yes.  Your Honours, what we say about them is said in our submissions in‑chief which your Honours have.  In paragraph 68 we start by saying that:

the State can point to only eight such instances in New South Wales over two and a half decades.

There were obviously tens of thousands of property developments over that period.  Everyday experience shows that property development activities are very widespread and all they can point ‑ ‑ ‑

KEANE J:   How many would you need to have before Parliament would think they had a problem?

MR BENNETT:   Well, your Honour, a lot more than eight, one would think.

KEANE J:   Really, given that these sorts of activities in their nature are conducted in private with people doing their best to keep them secret?

MR BENNETT:   Your Honour, there are various ways by which things are found out, of course, and investigated and prosecuted, and in a sense almost all crime except terrorism is something which the perpetrators endeavour to keep secret.  Nevertheless, crimes are unearthed and discovered.

KEANE J:   Not both sides of the crime, not victim and perpetrator.  These crimes are crimes where the only victim is the public interest.

MR BENNETT:   Yes, but there are still many crimes in that category, in the Trade Practices Act, for example, cartel‑type crimes and price fixing‑type crimes.  There are crimes involving conspiracies to do things.  There are many crimes in the statute book which may not be – there may not be an obvious victim to complain or there may be a victim who is unable to complain, like murder.  There is no reason to suppose that a perpetrator of a crime of this type is going to have any higher rate of success in keeping it secret than in other areas.

One obvious reason is that one may offer a bribe and the person to whom one offers it may immediately go to the authorities, or may seek to record the offering in some way and give that to the authorities.  It is a very small number and a small number which, in my respectful submission, indicates that there is not a justification for serious concern ‑ ‑ ‑

FRENCH CJ:   You mean that is not a judgment that is open to the legislature?

MR BENNETT:   Yes, your Honour, and certainly when one gets to the weighing question, this becomes even more important.  When one looks at the legislation it is quite peculiar.  For example, the prohibition is only on corporate developers.  An individual who is a developer, one would have thought if one is looking at the temptation, that person has a far greater reason, one would have thought, to offer a corrupt bribe, but that is not caught.

The individual developer who seeks to bribe an alderman to approve his developments gets nowhere, and it does not apply, of course, to payments to council officials, to public servants, to party officials of the major political parties who are not themselves parliamentarians.  The restriction is solely in relation to aldermen and parliamentarians and in relation to matters to be spent by them in the manner I have described.

Now, in relation to the examples in the stated case, I have referred to the fact that there are only eight.  All of them seem to concern local government officials or unelected State public servants.  None concern Members of Parliament.  There is no support in these examples for a conclusion that the legislative and party political processes are prone to corruption at the hands of property developers.  Rather, the proper inference is that corruption can flourish where there is no disclosure requirement, and here, of course, we already have the disclosure requirements.

One effect of the disclosure requirements, of course, is that in relation to the sort of large‑scale property developments where Parliament or the Minister may have a say, the making of a donation would, one would have thought, because of the disclosure requirements, be counterproductive.  Take an extreme example:  suppose a developer wishes to build a 50‑storey apartment block on the tip of the south head of Sydney Harbour and the development, not surprisingly, is highly controversial.  If that developer makes a disclosed payment to a party in government or to a member of that party prior to the matter needing to be approved by the Minister, it is not hard to imagine what would appear on the front page of newspapers. 

That prospect, no doubt, would discourage the member from accepting the payment, knowing that it is going to be public, and, more importantly, if the member does accept the payment, it would discourage the Minister or member even more from making a decision in favour of that developer because of the obvious criticism that would flow in the press.

So it is likely to be counterproductive to the developer to make a contribution in the situation where the development is sufficiently large that it is not a matter for the local council, but for the Minister or for Parliament.  In those cases, the publicity requirements are more than – the disclosure requirements – are more than enough to set up a very high barrier, one would have thought.

FRENCH CJ:   This seems to be inviting us in to almost legislative judgments about either the efficacy or practical need for legislation.

MR BENNETT:   Yes.  Well, the boundary between that type of judgment and the judgment one needs to make to answer the second limb of Lange is a fine line.

FRENCH CJ:   It needs to be maintained.

MR BENNETT:   Well, your Honours, we would submit it is not.  One has to look at the necessity for the legislation which restricts political communication, and in looking at that necessity one has to look at the extent to which there is a serious risk to be guarded against.  We would submit that the disclosure requirements are a far more effective way of limiting the risk that is identified than anything else.

KIEFEL J:   Of course, if you tested necessity by alternative means which were available, you might be in the territory of having to say that capping would be an alternative – capping applying to everyone, and not just developers – would be a reasonably practicable alternative.

MR BENNETT:   Yes, we do not offer that as the ‑ ‑ ‑

KIEFEL J:   Yes, I understand.

MR BENNETT:   But, your Honour, we do offer, if one were to do anything – a tightening of the disclosure requirements, perhaps requiring disclosure within a day or two, and perhaps requiring some sort of fresh publicising of the material prior to any decision affecting a person who made a donation.  There are things that are, we would submit, available as alternatives, but most of them are already there.

FRENCH CJ:   You put them as high as obvious and compelling alternatives?

MR BENNETT:   Well, the obvious and compelling alternatives are what has been done, your Honour - the Crimes Act, and the disclosure requirements.  They are the obvious and compelling alternatives and they are already there.  Now, in our submissions in reply, in paragraph 19, we deal with what is said about developers in the defendant’s submissions.  It says, first of all, that the developers are people who can be very much affected by government decisions.  I have dealt with that.  There are many other people in that category.

Indeed, your Honour Justice Keane, in your Honour’s concurring judgment in Unions NSW specifically referred to that problem and that appears in paragraph [141] I am reminded - yes, paragraph [141] at page 250 of the Australian Law Journal Reports where your Honour refers to section 96D and says:

the proscriptions in s 96D do not reflect a calibrated balancing of legitimate ends as contemplated by the second limb of the Lange test.  In this latter regard, the proscriptions in s 96D are very broad; they are not calibrated to give effect to the rationale identified by the defendant by criteria adapted to target the vices said to attend the disfavoured sources of political communication.  The sources of political communication which are favoured by their omission from the scope of s 96D may well be attended by the same vices as the defendant identified as justifying s 96D.

That is my point about the pharmaceutical industry, nursing homes, taxi drivers, motor vehicle insurers and so on, that there are plenty of industries where there is just as much temptation as there is in relation to developers.  The bracketing of developers with the liquor, gaming and tobacco industries rather demonstrates that there is no rational basis for their selection based on what is said to be the justification. 

There is no suggestion that those industries are more prone to offer bribes or corrupt payments than anyone else.  Rather, they are industries that seem to have been selected because of their unpopularity or perhaps their perceived potential for harm in the minds of some members of the population.  If liquor or tobacco or gambling are evils or things which are bad for society there is plenty of scope to control them, limit them or ban them by State or Federal Government within the limits of its powers.  But what it cannot do is what it has indirectly tried to do here, which is to prevent those industries engaging in political communication for the purpose of avoiding such legislation. 

One could ban the manufacture of tobacco.  One could not ban tobacco companies from agitating against such a ban, nor could one prevent them agitating for its repeal.  That is something one may not single out unpopular or ‑ ‑ ‑

KEANE J:   But that is not what the legislation does.  The legislation does not say that, for example, the tobacco industry cannot advertise the wholesomeness of their products.

MR BENNETT:   No, it does not, your Honour.

KEANE J:   It is concerned with political candidacy.

MR BENNETT:   Yes, it is concerned with them being able to finance and encourage the election of candidates who might be favourable to their political interests, which is a freedom all the community enjoy and one should not be prevented from enjoying it because the legislature considers the industry undesirable.

GAGELER J:   On your case, it is about corporations buying access to politicians, is it not?

MR BENNETT:   Yes, part of it is, yes.  It is also about corporations enabling the politicians to make communications advertising themselves to the electorate for the purpose of getting elected.  It is the two sides.

NETTLE J:   Mr Bennett, a little earlier in the morning you said that you accepted that it was a purpose of the legislation to prevent corruption but because the legislation in issue was not properly targeted it gave the lie to that being so.  Do you mean by that that by selecting these three or four excluded categories of political donor, the real purpose of the legislation is just to shut them up having political influence rather than preventing corruption?

MR BENNETT:   Certainly affect whether the – one could go so far as to say that is the purpose might be putting it too highly.  But certainly it does appear to be one aspect of the purpose and it is certainly one aspect of the effect.

NETTLE J:   If it is only one aspect it will come down to the difficulty of deciding whether it is within the realm of Parliament to decide how to go about it.  If it is the purpose, you are on much stronger ground, are you not?

MR BENNETT:   Well, your Honour, I would be, but it is hard to see what else can be the purpose.  There is no serious suggestion that these industries are more prone to be corrupt than any others.

NETTLE J:   I understand the point.

MR BENNETT:   Yes.

NETTLE J:   If that is what you are saying, I understand the logic that you have been submitting this morning as to the inadequacies of the legislation.  But if you accept that it is a purpose of the legislation to prohibit or restrict corruption, I am having great difficulty in seeing why it is relevant to consider that it is not as adequate as it might have been drafted.

MR BENNETT:   Well, your Honour, it is not so much that it is not adequate as that it – the identification of particular groups having no rational relationship to corruption ‑ ‑ ‑

NETTLE J:   So do you say that this legislation is aimed at, its real purpose, is to restrict the political voice of those three or four designated ‑ ‑ ‑

MR BENNETT:   Yes, your Honour ‑ ‑ ‑

NETTLE J:   ‑ ‑ ‑ political donors that are identified.

MR BENNETT:   Yes, your Honour.

NETTLE J:   That is its purpose.

MR BENNETT:   Yes.

NETTLE J:   That, you say, is not a legitimate purpose for the purpose of the Lange doctrine.

MR BENNETT:   Precisely, your Honour, yes.

NETTLE J:   I understand, thank you.

MR BENNETT:   Yes.

KIEFEL J:   I had understood you to rely upon the reasoning in Unions NSW in aid of a submission that there is no rational connection between – assuming that the purpose of the legislation is the risk of corruption, by large donations, you say – I thought your argument was that there was no rational connection between that risk and a group such as property developers.  Do you rely upon Unions NSW to that effect?

MR BENNETT:   Well, your Honour, we certainly get the – the plurality did not deal with section 96D ‑ ‑ ‑

KIEFEL J:   No, but I thought you were – I thought, by analogy, you were saying that there was no – as there was shown to be no rational connection with the persons enrolled on there, you were saying that there is no rational connection shown here.

MR BENNETT:   Yes, yes, your Honour.  As I say, I use the other list of prohibited donors to demonstrate that the basis of selection is not the risk of corruption.  Now, there is simply nothing exceptional about any of the people on the list of prohibited donors that unifies them for the purpose of trying to prevent corruption.  The closest the State gets in its submissions is it says developers can make a lot of money out of favourable decisions from governments and lose money from unfavourable decisions.  Therefore, they have a strong motive to be corrupt.  That is the highest they can put it.  That is answered by saying there are many, many others in that category.

FRENCH CJ:   There may be questions of degree of risk are there not, across different categories, that being a matter of legislative perception, if one can conjure that notion?

MR BENNETT:   Well, your Honour, one then gets into the area of the prohibition of the harm being done to political communication being out of all proportion to ‑ ‑ ‑

FRENCH CJ:   Well, that becomes a different question.

MR BENNETT:   Then it becomes a proportionality issue, which is a large part of it.  Now, there is also no distinction drawn between a payment to a candidate who has announced a policy which is attractive to the donor, and a payment to a candidate in order to induce the candidate to adopt such a policy.

That is, of course, a difference between an innocent and a guilty payment.  If a candidate for Parliament announces that the candidate is in favour of Australia developing a strong widget industry and that candidate says I would seek to have restrictions on the importation of widgets, incentives to people to employ people in the widget industry and various other matters favourable to the widget industry, if I am a widget manufacturer, there is nothing wrong with my saying, “I will support that candidate and that party but I will do so financially and I will do all I can, legitimately, to help that party get into government so as to implement that policy – a policy which will benefit me financially”.  That is part of the democratic system and there is absolutely nothing wrong with that.

But the legislation draws no distinction between that and the donation to the person who has not yet got a policy on widgets in order to persuade the person to come round to such a policy.  That is another example of how badly targeted it is.

The next one is that it is limited to corporations and their close associates.  There is no rationale suggested or available for limiting it that way.  I have given the case of the individual who is a property developer.  It may be that the only apparent rationale is the unpopularity of corporations in some sections of the community.  The other rationale, though, is more interesting.  It may have been done as a step on the way to the unconstitutional prohibition of all corporate donations.

Could I take your Honours to the bundle of amending legislation which has been filed by New South Wales and take your Honours to what was said in the second reading speech for this legislation.  I invite your Honours to go to page 63 of the second reading speech.  Your Honours see at page 63, the fourth full paragraph, Mr Rees says this:

But let me be clear about this:  the ban on developer donations is a first step.  A ban on donations from one sector of the business community inevitably raises the issue of corporate donations more generally.  That is why I have announced that – one way or another – the next State election will be conducted under a public funding model in conjunction with bans and caps on private donations.  Legal advice indicates that any wholesale ban . . . may impact upon the right to freedom of political communication.  This in turn gives rise to the constitutional issues –

and so on.  But he was, no doubt, accurate in that prediction.  But what is important is that the reference to developer donations is said to be a first step towards a total ban on political donations by corporations.

FRENCH CJ:   How are we to use that statement in relation to the problem before us?  Ordinarily one looks to these things to divine the purpose of legislation which is the subject of a second reading speech.  How are you inviting us to use these observations here?

MR BENNETT:   Well, to suggest that the purpose is not the purpose which is stated but some other purpose, either the first step towards something which is much more borderline constitutionally, or ‑ ‑ ‑

FRENCH CJ:   Well, one thing at a time perhaps.

MR BENNETT:   Yes, or one thing at a time.

FRENCH CJ:   Well, I would say it is sufficient unto the day that we look to the constitutional validity of what we have before us.

MR BENNETT:   Yes, your Honour.  I do not suggest that I can use that to demonstrate that the first step is unconstitutional, but I do use it to suggest that in its targeting this legislation is not drafted for the purpose of reducing anything to do with corruption.

GAGELER J:   What would be the constitutional vice in a total ban on corporate donations?

MR BENNETT:   It would have a far greater effect on the freedom of political communication because of the much larger amounts it would deprive politicians of for that purpose and, secondly, it would be a far greater direct inroad into the ability of people to communicate for the other reasons ‑ ‑ ‑

GAGELER J:   People?

MR BENNETT:   Well, corporations – those ‑ ‑ ‑

GAGELER J:   Corporations simply talking to politicians, that is the only area of communication, apart from the ability of the politicians to have funds to communicate more generally, is it not?

MR BENNETT:   Well, politicians talk through individuals, obviously.  A company can communicate, I suppose, but it can only communicate by human activity.  Of course, that is getting closer to what was struck down in Unions NSW which was the provision which limited donations to individuals and, further, to individuals on the electoral roll.  The Premier seems to have had some good legal advice, with respect to those on my right.

Now, the next matter to note about it is that if one goes to the legislation, one sees references to associates, and section 96GB defines “property developer” in a fairly uncertain and subjective manner.  It is:

a corporation engaged in a business that regularly involves the making of relevant planning applications –

We do not know what “regularly” is and it is obviously going to be an area of uncertainty, and –

(b)      a person who is a close associate of [such] a corporation –

Then in subsection (3) “close associate” is defined as:

a director or officer of the corporation or the spouse of such a director or officer –

and “spouse” includes a “de facto partner”, and because of the Interpretation Act and so on it includes a de facto same‑sex partner.  So, a partner or spouse of an officer of the company, who might be a fairly junior officer, certainly of a director, then “related body”:

a person whose voting power . . . is greater than 20% ‑

then there are various more technical ones.  The list would include liquidators and receivers and persons of that sort who, one would have thought, are likely to have an interest in making corrupt donations.  Of course, these people are – these close associates are limited in – even if their reasons for wishing to make a donation are totally unrelated to development.  If one has a director or officer of a developer who is either gay or a person who has strong conservative religious views and for either reason strongly supports or strongly opposes gay marriage, that person is prohibited from making a donation to a party which supports or opposes gay marriage because the person happens to be an officer or director or spouse of an officer or director of a company that has done a few developments.

BELL J:   They can go on Q & A and promote their views.

MR BENNETT:   They can, your Honour, but they are also entitled to promote their view by supporting a party which has objectives which coincide with theirs and this stops them doing it.  It stops a person being able to offer support the person would otherwise be entitled to do of a cause that person believes in.  That is the width of this legislation.  We would submit that it means that the provisions are totally disproportionate to any attempt to prevent corruption by developers.  The person who is an officer, such as a secretary of a company engaged in development, is a prohibited donor whereas the person who does developments in his or her own name, gets 100 per cent of the proceeds, is free to give, subject to the caps, anything that he or she wishes.

BELL J:   It may be that there are reasons that comparatively few engaged in property development do so in their own name.

MR BENNETT:   Yes, your Honour, but that – why, one asks rhetorically, is that a reason for limiting the legislation to exclude that group?  It would have been simpler to have simply referred to property developers and define it, and let it pick up anyone who is a property developer.  But, they have gone to the trouble of identifying corporations and then people having particular associations with corporations which might give them a very small motive indeed to engage in corruption, and excluding maybe the small group of people who do their own development.

Now, another minor aspect of the absence of targeting – and I stress, this is a minor aspect – is that developers would rarely have any motive to influence parliamentarians as opposed to aldermen.   Now, the legislation applies to both, but certainly in relation to parliamentarians it is hard to see any serious justification.  It is true that with very large developments there may be the odd case where there is an Act of Parliament or a ministerial decision, but that is comparatively rare.

There is no restriction, as I said before, on payments to council officials ‑ building officials and councils – who often have far more to do with the real decision than the aldermen who make the formal decision at the end, officials of political parties, public servants and so on.  In relation to ministers, we did refer in our submissions – though it is a little bit of a long bow, I must concede – to the case of Whitlam v ASIC, which your Honours are no doubt familiar with it.  I will not take your Honours to it, the references are in the submission.  But, what was said there was that something one does as chairman of directors of a company is not something one does as a director.  In that case, there were allegations about things being done in relation to proxies directed to the chairman, and the Court said, well, that is not something he does as a director, it is as chairman.

The same would apply in relation to a minister.  It is something he does as a minister, it is not something he does as a member, although ministers are chosen from members, the same way as chairmen are chosen from directors.  But, your Honours, it is a bit of a long bow, that analogy, I simply refer to it and pass on.

Now, I have referred to the fact that the definition is a very flexible definition, that is likely to have a chilling effect insofar as one does not really know if one is a developer or not.  Now, that is partially dealt with by section 96GE, which perhaps recognises that problem, and says one can seek a determination by the authority that a person is not a prohibited donor, but that is a fairly convoluted route one has to go, and one may be under considerable time pressure in relation to an election, and it is not a complete solution.  The determination, of course, can be challenged, and so on.

I turn then to Division 2A, and the primary provision here is section 95AA and the following sections.  Section 95B prohibits a person from accepting a political donation if it exceeds the applicable cap and the caps are set out in 95A and they are quite low, as your Honours see - $5,000 for the benefit of a party and $2,000 for the benefit of an elected member and other matters.

This is, we would submit, a very serious restriction direct and indirect on political communication for a number of reasons.  First, of course, a large donation is going to achieve more political advertising for the member than a small donation.  But secondly, on the other side of it, the suggested harmful effect of a large donation can equally be achieved by a number of small donations. 

A union official or a neighbourhood organiser may be able to persuade 100 people each to make a donation of $1,000.  The harmful effect, if any, of that is exactly the same as the $100,000 gift by a single donor.  There is a group which has a common interest in political activities that may be undertaken by the member and a sum of money is raised.  Yet the contributions are distorted because the 100 contributions of $1,000 are permitted, but the contribution of the single larger contribution is prohibited.

BELL J:   Mr Bennett, if one looks at the scheme of this Act, which includes not only Part 2A, but also the provisions relating to public funding of elections, can I return to the question of an objective of securing equality of voices and ask why that is not an enhancement of political communication as opposed to some detriment?

MR BENNETT:   Well, it is a restriction in the two ways I outlined at the very beginning.  It is a restriction on the amount the politician has available for advertising and it is a restriction on the extent to which a person can express support for a politician and improve access to him.

BELL J:   But the latter creates inequality and if in a democracy it is desirable that all have the opportunity to participate in the process and to have their voices heard, then if that is a legitimate objective why is not a legislative scheme involving an amount of public funding and provision limiting effectively the amount that members and candidates might otherwise garner from private individuals not a means of going about attaining that objective.

MR BENNETT:   Well, your Honour, first because the person who is able to control the large number – or cause the large number of small donations – will get exactly the same access benefits or whatever from the donations as the single person who makes the larger one.

BELL J:   But that is no so.  That person persuades 1,000 people of the utility of supporting party X ‑ ‑ ‑

MR BENNETT:   Yes.

BELL J:   ‑ ‑ ‑ as opposed to the plutocrat who expends $100,000 to suit the plutocrat’s singular interest.

MR BENNETT:   But, your Honour, the person I have hypothesised – the union leader or neighbourhood organiser – will get for the benefit of his or her group the same degree of influence but it is not prohibited.  That person gets the increased access – whatever one gets for a donation – but it is not prohibited, whereas the person who can do it as an individual is excluded.  Your Honour, it goes to the proportionality and to the rational justification for the desired objective.  One is simply drowning out – not drowning out – one is simply blocking out one type of voice while leaving intact the other type of voice. 

The other point to make is this, that when one looks at the cases on limitations on electoral expenditure and public funding and so on, some of those cases talk about drowning out others - if one has too large an amount on electoral expenditure, one drowns out the parties that do not have access to that.  But that is because where one is dealing with the media prior to an election there is a limited amount of airtime, a limited amount of newspaper space and so on, and if one fills that, one is, to some extent, drowning out others. 

That does not apply here.  That does not apply in the context of political donations where the – particularly where there is, in any event, a cap on electoral expenditure.  So there is no real risk here of anyone being drowned out.  All one is doing is distorting the free flow of communications.  

KIEFEL J:   Mr Bennett, what do you say the Court is entitled to make of the material at paragraphs 63 to 65 of the special case which deal with the many countries that have put caps on donations in place?

MR BENNETT:   Well, your Honour, in my respectful submission, one makes very little of it.  There are no doubt political reasons why particular governments in particular countries may enact particular prohibitions.  One matter that may well be a motivation in particular contexts in particular countries is the interests of the political party in power in reducing the flow of funds to its opponents and increasing the flow of funds to it, so it passes legislation which will favour it in that way.  One hopes one does not see that as frequently in Australia, maybe one does, but it is one of the reasons ‑ ‑ ‑

KIEFEL J:   But the report of Transparency International referred to at paragraph 64 is entitled “Money Politics, Power:  Corruption Risks in Europe”, so the context for the caps on donations is given by the title to that report.  We do not have the report before us but we can take as a fact, I assume, that it is the case that caps on donations exist by whatever legislative means in those countries, but are we entitled to take into account, as the title to that report suggests, that the reason for it is the risk of corruption?

MR BENNETT:   No, your Honour.  For all we know, the report might say there are caps on donations in these countries which do not alleviate the risks, we just do not know.  One cannot assume from the title of a work that there is a particular reason or effect of those caps.  It is saying there are caps on donations, we do not know if they are very high caps or very low caps ‑ ‑ ‑

GAGELER J:   But, Mr Bennett, everyone else in the world could go and look that up on the internet.  Could we do the same?

MR BENNETT:   It is a dangerous course, your Honour, because it means that one ascertains things that the parties do not have an opportunity to address your Honours on.

KIEFEL J:   But the parties have drawn it to our attention.  They are inviting us to look at it, are they not?  What is the purpose of putting it in a special case?  Is it for our greater knowledge?

MR BENNETT:   Well, your Honour, it is put in the special case because of the fact in the last three lines of paragraph 64.  That fact is put there.

KIEFEL J:   Yes, I appreciate that distinction.

MR BENNETT:   One cannot go beyond that fact and ‑ ‑ ‑

FRENCH CJ:   There is annexure 32, I suppose.

MR BENNETT:   I think the annexure is just the page.

FRENCH CJ:   No, it is a bit more than that.  It is not the whole thing.

MR BENNETT:   I have not checked that.  Yes, it seems to be just two pages at pages 1080 and 1081 of the volume.  All that does is ‑ ‑ ‑

FRENCH CJ:   Is 1082 part of it, “Annex 4 - Political party financing rules in European countries”?

MR BENNETT:   Yes, that seems ‑ ‑ ‑

FRENCH CJ:   The table?

MR BENNETT:   Yes, that says what the rules are – what the limits are.  So we know that much.  How successful it is, what the reasons for them were and so on, its motivations were, are purely a matter of speculation and one might well think that in some of those countries the political factors were to the fore in ‑ ‑ ‑

KIEFEL J:   I do not – forgive me, I did not mean to interrupt.  I do not suppose we could take judicial notice of the fact that Transparency International is concerned with corruption?

MR BENNETT:   Well, taking judicial notice of that would not advance the issue.  The fact that those countries have caps is a fact which may have some peripheral developments, although we would submit it does not.  The fact that Transparency International has publicised that fact does not really take it any further. 

Now, I just remind your Honours of paragraphs 33 to 36 of our submissions, which appear at page 7 of the volume, and those paragraphs deal with the suggestion by the State that the object embraces undue influence.  Now, the problem about undue influence is that it is a very subjective term.  It is not a reference to the equitable doctrine.  It seems to be rather left at large as influence which is considered by some to be undesirable. 

It raises the question, what degree of influence is undue?  The concept is abstract and ultimately totally indeterminate but it is relied on as justifying the imposition of very real burdens on political communication.  We have simply returned to that passage in Australian Capital Television about the Court, it said, scrutinising very carefully that sort of claim.

FRENCH CJ:   It may be an old‑fashioned term, but we are looking at all of this in the context of persons standing for office, public office, to which the term “public trust” has been attached in the past, I think, by this Court.

MR BENNETT:   Yes.  Well, your Honour, we accept that, but what I have endeavoured to demonstrate is that this is simply not legislation with that purpose or effect.  One keeps coming back to the little block of four categories.  Now, another thing which is suggested is that the appearance of integrity may be important.  We make a number of points about that.  First of all, if one is concerned with transactions which create the impression of an absence of integrity, it is – first of all, we are in an Act where there is a requirement of disclosure so the matter is disclosed to the public and available to be taken into account, and I have already indicated how that may mean in big cases that it is counterproductive to make a large donation. 

But, more importantly, if one says – if one were to have another row in the diagram, a row called “non‑corrupt transactions which appear to be corrupt” and if one were dealing with them, what one would find would be that the non‑corrupt transactions which look very bad are prohibited where they involve payment towards political communication, electoral expenditure and so on, but not prohibited where they are going to the pockets of the donee.  So, in exactly the same was as with the other rows in that diagram, this row, the row of appearance of corruption, is simply not particularly targeted.

FRENCH CJ:   All that tells you is that it is an incomplete risk reduction strategy.

MR BENNETT:   Well, your Honour – but, one which ‑ ‑ ‑

FRENCH CJ:   That does not go to validity, does it?

MR BENNETT:   Well, one that goes further than it should in some respects, not as far as it should in others.  There is a very real question about whether the appearance of integrity is itself a justification which can be used under the second limb.  If there is real corruption existing, then it ought to be exposed and there ought to be public knowledge of it.  If there is not, then why is the appearance necessarily a bad thing?

KIEFEL J:   The maintenance of public confidence surely has to be a public benefit which can be used as a justification.

MR BENNETT:   Well, yes, your Honour, so long as it is not done in a way which is preventing the exposure of matters which would justify a lack of confidence.  But, as I say, this is targeted at communication and not targeted at the appearance of corruption any more than it is targeted at corruption.  That is just not the way it has been done.  Finally, I come to the indirect contribution prohibition.  That appears in section 96E of the legislation.

GAGELER J:   Mr Bennett, as you come to that, are there any facts in the special case that show that that provision is or might be engaged in respect of any conduct of your client?

MR BENNETT:   Yes, your Honour.  I think one of the donations was an indirect donation which is – if I can just find that.  Yes, on page 65 of the special case book your Honours see paragraph 4(a) - the second plaintiff, McCloy Administration Pty Ltd:

made an indirect campaign contribution within the meaning of the EFED Act in the amount of $9,975.00 in full or part payment of the remuneration of . . . a member of the staff of the election campaign of the candidate –

for a seat of Parliament:

in the March 2011 New South Wales State Election -

and so on.  So that would fall within section 96E.

BELL J:   In the amended statement of claim that payment is described, I think, as the first donation.  This is on page 24.

MR BENNETT:   Yes.  It is paragraph 10, yes, of the statement of claim on page 24.

BELL J:   So it is not a political donation in the way that the balance of the donations are, but it is arguably an indirect ‑ ‑ ‑

MR BENNETT:   Yes, yes.

BELL J:    ‑ ‑ ‑donation.

MR BENNETT:   But there is also, of course, the general intention expressed – as in Croome’s Case - to do it in the future to the extent that it is legally permitted and that gives rise to relevant locus standi.  But as I said there is no challenge to locus standi by anyone, your Honour.  Your Honours see the prohibition in 96E is:

the provision of office accommodation, vehicles, computers or other equipment for no consideration or inadequate consideration for use solely or substantially for election campaign purposes –

and I have taken your Honours to the definition of that.  In (b), it is of:

electoral expenditure –

and so on.  Then there is the waiving of payments –

for advertising incurred or to be incurred by the party –

and other goods and services prohibited by the regulations.  So there is this indirect provision of things to be used for election campaign purposes.  Now, the justification put by the State in relation to this is in effect that it is ancillary to the disclosure requirements and the other requirements and the caps and the limits because it is difficult to know the value of things other than cash.  With cash it is obvious what the figure is and with these things it may be more difficult. 

We say a number of things about that.  First, there is, in any event, a limit because the effect of the caps is that one has to value anyway.  Even a comparatively small gift of anything over $1,000 is prohibited, so one needs to determine a cash value in any event.  Secondly, we say this.  Many statutory provisions require a valuation.  We could look at capital gains tax, rates, land tax, just terms, historic shipwreck provisions and so on, and there is nothing inherently difficult or surprising about that.  Things can be valued and they can be valued reasonably easily.

But the other aspect of this is that it targets at the wrong stage, because this is talking about election campaign purposes.  If one makes available to a Member of Parliament accommodation that is rent free, that, one would have thought, is far closer to the ability of that member to provide an improper quid quo pro; that is not prohibited.  But if one makes it while the person is only a candidate, it is prohibited.  So again it seems to be targeted in the wrong direction.  We would submit it is just totally disproportionate to the objective.

To prevent donations other than in cash because there might be a little bit of inconvenience to a public servant in having to value it is, in my respectful submission, a very small evil being addressed, whereas there is the very large restriction that for many donors it may be far more economically efficient to provide office accommodation, vehicles, computers or the like on a temporary basis than to realise assets, obtain cash and hand the cash over.

Many donors may not have the liquidity that enables them to make a larger donation but do have assets of this type which can be made available at comparatively little cost, if any, to the donor.  We would submit, therefore, the inhibition and the effect on the ability to make perfectly legitimate donations is removed because of the very small fear that there might be a little cost involved in valuation.  Now, your Honours, I see it is 12.35.

FRENCH CJ:   Mr Bennett, can I just ask, is there anything in the materials, in the statute, that gives us an indication of why the capping provision does not apply in relation to local government?

MR BENNETT:   No, your Honour, not that I am aware of.  One would have thought there was less requirement there for electoral expenses than there is in the parliamentary area but there is no explanation given of that.  It may be that it was thought that if there were to be caps in relation to local government, one might need to discriminate between different areas of New South Wales.  The amount someone might spend on electing an alderman in a comparatively high income area – or high land value area – might be more than it would be in a small rural area or a low income value area, and it may have been thought that the inconvenience of having graduated caps for different councils would make that undesirable.

FRENCH CJ:   Is there anything upon which we could make a judgment as to whether capping would be an obvious and compelling alternative to the prohibition on categories in relation to local government?

MR BENNETT:   Well, no, your Honour, because capping involves the same valuation exercises as section 96E involves.  The problem identified to which 96E is said to be addressed would simply not be dealt with by capping.  Indeed, it would be exacerbated by further capping.

FRENCH CJ:   No, I am talking about categories of donor.

MR BENNETT:   I am sorry, your Honour?

FRENCH CJ:   We are talking about Division 2A, the category of donor problem.

MR BENNETT:   I am sorry, I thought that was what your Honour was addressing.

FRENCH CJ:   I am saying is there anything on the materials from which one could make a judgment one way or the other about whether capping in relation to local government would be an obvious and compelling alternative to the prohibition on property developers making donations?

MR BENNETT:   I am sorry, I am not aware of anything, your Honour, except I suppose the fact that all the instances identified seem to involve

local government.  I think one involved public servants, but the others all seemed to involve local government.

KEANE J:   Mr Bennett, is it possible that the reason for the different treatment of local government elections and State elections is historically that in local government elections parties have been less prominent, less active, and the view is that you do not cap electoral donations in local authority elections because it may be that it is only private funding that enables some candidates to have a candidacy at all because there is no party support.

MR BENNETT:   No, your Honour ‑ the problem with that lies in the chronology.  Without going to it, your Honour will see that the chronology – all the relevant legislation was passed in this century.  I think I am correct in saying that for the whole of this century, at least, local government has involved substantial inroads by the major political parties.  The day when councils were free of political parties in their members are fairly distant past.  Your Honours will see in the chronology that virtually all the areas which are the subject of challenge are after 2007 so that would not have been an effect.  Could your Honours just pardon me a moment?  May it please the Court.

FRENCH CJ:   Yes, thank you, Mr Bennett.  The Court will adjourn until 2.15.

AT 12.38 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.14 PM:

FRENCH CJ:   Yes, Mr Solicitor.

MR SEXTON:   If the Court pleases.  Your Honours, Mr Kirk is going to deal with the question of caps and I am going to deal with property developers.  I appreciate Justice Kiefel’s point about order, but I am going to start and we do not think this will cause a problem for the Court. 

Before I come to the second Lange question in the context of the provisions relating to property developers can I just deal with two preliminary matters, the first being the connection between donations and communications and, secondly, the question of local government?  In relation to that first point, we would say at the outset that the provision relating to property developers does not directly restrict political communication like the provisions relating to caps.  It prohibits in some circumstances the supply of funds to candidates or parties but not the ability of property developers from communicating political views to candidates or parties or to governments or to other electors. 

We accept, of course, that the provision limits in some ways the funds that are available to candidates and parties to meet the costs of political communication so that a burden is established under the first limb of the Lange test, although we say that the burden is slight and that the character of the burden is, therefore, significant for the application of the second limb of the Lange test.

This view of the character of the burden is reflected in the comments of the joint judgment in Unions NSW. At paragraph [38] – I have the reference to the Australian Law Reports here, your Honours. It is 304 ALR 266 and the passage is at 277 but it is paragraph [38] where it is said there that:

In any event, the question whether –

what was then the provision under question -

s 96D limits the freedom is simply resolved.  That section effects a restriction upon the funds available to political parties and candidates to meet the costs of political communication by restricting the source of those funds.

In the same case, at paragraphs [111] to [112], at page 290 of that report, Justice Keane to similar effect in relation to the question of the relationship between political donations and communications. 

I wanted to quote one passage from the United States Supreme Court in Buckley v Vallejo 424 US 1 (1976), at page 21. Of course, there are difficulties in extracting material from decisions of the US Supreme Court in this area, firstly, because they are first amendment cases and, secondly, because there is a lot of cross‑currency in those decisions. But, at page 21 of that case, the court considered that contribution limits imposed little direct restraint on political speech because they did not:

infringe the contributor’s freedom to discuss candidates and issues.  While contributions may result in political expression if spent by a candidate or an association to present views to the voters, the transformation of contributions into political debate involves speech by someone other than the contributor.

So that we would take from that that we are not dealing here with a question of direct restriction on political communication, but an indirect one, and that of course is relevant to the application of the second Lange question.

GAGELER J:   Are we to read Buckley v Valeo with Citizens United?

MR SEXTON:   I do not think that point is affected by Citizens United.  I mean, obviously ‑ ‑ ‑

GAGELER J:   I think it might be, Mr Solicitor.

MR SEXTON:   Well, we did not think that the later decisions had really affected the validity of that particular point.  Of course, there are other aspects that have been affected, although some of those later cases, including Citizens United, it is hard to construct a majority for some of those points.  The second preliminary point relates to the applicability of the implied freedom to local government and in Unions NSW at paragraph [24], page 274 of that ALR report, the majority said:

In Australia, there are also national political parties which operate across the federal divide and at federal, state, territory and local government levels.  They must deal with issues at various levels and, where necessary, coordinate responses.  The presentation of policy or governmental action to the public at one level may be influenced by the ramifications for its acceptance at another.

Justice Keane said at paragraph [159], page 300:

It is telling that neither in the special case, nor in the course of argument, –

I think he is perhaps talking about the argument that was made from our side –

was a practical example given of a political communication which might relate exclusively to the election of a candidate to the New South Wales Parliament or to a local government in New South Wales with no bearing upon the political choices required of the people of the Commonwealth by the Constitution.

So in that context, your Honours, if I can come to the second limb of Lange, the first question that arises is whether the relevant provision has a legitimate object in the sense of an object that is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government.

In some ways, of course, it is not easy to think of an example of legislation that has not had, or would not have, such a legitimate object, given that almost all statutes are expressed to be, and might generally be assumed to be, serving some kind of public interest.  But, in this case, we would say that the objects of the provision could be taken in perhaps four kinds, with some interrelationship between them:  firstly, to increase the integrity of government administration in New South Wales, including local government; secondly, to increase public perception of the integrity of that government administration, including local government; third, to decreasing or preventing corruption and undue influence by particular individuals or corporations in the process of government administration; and, fourthly, providing increased confidence to the electorate about the level of corruption and undue influence in government administration.

It could hardly be argued, we would say, that these objects are not compatible with the system of representative and responsible government under the Constitution. It might be noted that in Capital Television (1992) 177 CLR 106, Chief Justice Mason recognised at page 144 and, I think, Justice Bell has already drawn attention to this quote where Chief Justice Mason referred to the fact that the need:

to raise substantial sums -

in order to conduct a campaign for political office does generate a -

risk of corruption and undue influence. 

If I come back to Buckley v Valeo, page 27, the court in that case stressed that there was a public interest in preventing not only corruption, but the appearance and perception of corruption.  There may be a question of whether Citizens United has cut across that particular expression because of its emphasis on very direct forms of, in a sense, buying influence.  It seems to us that - to that extent that Buckley v Valeo certainly, we would say, makes a valid point.   

Now, these objects were reflected, at least in relation to the State level of government, in the remarks of the then Attorney‑General concerning the relevant provision in the course of parliamentary debate on this provision.  I think your Honours have this.  It was not in our volume of materials, but I think your Honours have it separately.  It is from the Legislative Council debates on 3 December 2009, where the Attorney‑General said that:

The Government has made it quite clear that it is time to end speculation about the influences of donations on major developments in New South Wales.  To that end, it is acknowledged that the donations have cast a shadow over the good work of the Government and have tainted the decent public servants who run our planning system . . . This legislation will go some way to restoring the confidence of the public in the Government’s first‑rate planning system, which regrettably, has been maligned by the accusations and imputations that have effectively raised perceptions that somehow donations have influenced outcomes.

In considering the answer to the second Lange question, it is relevant that the provision is not only not a direct restriction on political communications, but, in one sense, it places a relatively slight burden on the flow of political communications because of the caps themselves, so that it might be thought to cut off an already limited supply of donations from a relatively small group within the community. 

But, of course, at the local government level, where the caps do not apply, that is not so, but it might be thought that on the other hand that local government is the most vulnerable area for the attention of property developers and one reason, perhaps, for the difference – the Chief Justice asked the question immediately before lunchtime – does not, cannot be found in the statute, but there is no public funding as such for local government elections so that in a sense the caps and the public funding are perhaps two sides of the same coin.  You do not have that in relation to local government.

I will not take your Honours to it, but in the special case, in volume 3, at page 1033, there is some discussion of the fact that there is no public funding of local government in the report, the 2010 Report of the New South Wales Parliament Joint Standing Committee on electoral matters.  It is paragraph 1.204 and following. 

In that context, in relation to the second question, the issue then becomes whether the provision is reasonably appropriate and adapted to achieving those legitimate objects in a manner that is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government.

FRENCH CJ:   Can I just go back for a moment - looking at 46 of your submissions, it seems to me that the purpose is directed to “perception of compromised integrity”.

MR SEXTON:   And actuality, perhaps as well.

FRENCH CJ:   Are we talking here about compromised integrity of Members of Parliament voting on laws, or Members of Parliament who become Ministers?

MR SEXTON:   Ministers, members, aldermen, I think all of those, your Honour.

FRENCH CJ:   But in respect of what activities?  The Ministers may perhaps have a role in relation to review of planning decisions ‑ ‑ ‑

MR SEXTON:   I will come to that but Ministers have some responsibility for – or some Ministers have responsibility for major developments in New South Wales.  Most of those decisions, of course, are made at the local government level.

FRENCH CJ:   Yes.

MR SEXTON:   Individual Members of Parliament may, of course, be prevailed upon to lobby Ministers in relation to decisions that Ministers make.  It can happen, we would say, at any level.

FRENCH CJ:   I am just wondering what functions are being protected.  Is it a legislative or an executive function?

MR SEXTON:   It could be both.  It could be both, your Honour.  Some of those major developments would require legislation, perhaps not all but some would.  In relation to whether the provision is reasonably appropriate and adapted to achieving what we say are legitimate objects, in some ways the answer depends on the basis for singling out property developers.  We say it is important to appreciate that there is a very wide range of approximately effective measures that a Parliament might choose in its attempts to best achieve those legitimate objects.

So that there would need to be, in our submission, a very significant disproportion between the means employed and the object sought in order to answer the second Lange question in the negative.  Really, the starting point here, we would say, is that there are categories of donors who pose much greater risks for the integrity and the public perception of the integrity of government administration than the general class of donors.  That is because they have, on a regular basis, a much greater stake in some of the decisions that are made by the different levels of government.  That is, they are engaged in business activities where they may become entitled to very large sums of money by way of government decisions. 

At the federal level, for example, to just leave the State level for the moment, it might be thought in a scheme of regulation for political donations that tenderers for significant defence contracts, such as the supply of submarines or fighter planes, might give rise to such a concern.  It would hardly be practicable to place particular restrictions on all individuals or corporations contracting, for example, with the Federal Government, but transactions of a particular kind or a particular size might merit singling out.

An example really indicates that the room for value judgments in this area as the best means of achieving the objects in question is quite considerable.  Perhaps to come back to something that was raised by the Chief Justice, in the context of State administration and local government, at least in New South Wales, property developers have a large stake in many decisions concerning land use and development proposals, to use just two examples.

The majority of those decisions are made at the local government level but I do not need to take your Honours to them, but Parts 4 and 5 of the Environmental Planning and Assessment Act 1979 provide for the relevant Minister to determine applications for what are called State significant developments and State significant infrastructure, and these may be, of course, extremely substantial projects.

In those circumstances, there is an obvious temptation for property developers to seek to influence those decisions by making donations to candidates or to parties who will have a role in the making of the decisions and, as I have suggested before, although the decision under the legislation is ultimately one for a particular Minister, it may well be that other members of the legislature who belong to the governing party might have an interest in the way in which that decision is made.

The special case – I will not take your Honours to them – at volume 1, pages 75 to 77 – I think it has been referred to already this morning, refers to a series of investigations by the Independent Commission Against Corruption in New South Wales into corruption at the local government level in the context of building and development applications and approvals and it might be assumed, we would say, that the electorate is aware of the potential for corruption and undue influence in this area, so that the relevant provision is designed in part to deal with that concern, and in volume ‑ ‑ ‑

FRENCH CJ:   When you say in paragraph 4 of your outline that:

Investigations and inquiries . . . have demonstrated a preparedness to engage, or seek to engage, in corrupt conduct so as to secure a planning outcome –

and so forth, that seems to be an assumption that one looks to the findings set out in the reports referred to in the special case as evidence of the facts about which they are reporting.

MR SEXTON:   Well, there might be some dispute about the facts in a particular case, but we would say, looking at a continuum of those kinds of inquiries, that they are sufficient ‑ ‑ ‑

FRENCH CJ:   You would say there is a basis for a legislative judgment.  You do not invite us to ‑ ‑ ‑

MR SEXTON:   No, we do not; only that the legislature amongst other – apart from the public perception, of course, those reports and findings are something that the Parliament could, and presumably did, take into account in formulating this kind of legislation.

At volume 2 of the special case book at 824 the Parliamentary Select Committee on Electoral and Political Party Funding 2008 Report suggested that some of these investigations had damaged public confidence in local councils – well, in the local councils that had been the subject of the investigations, but also the reputation of local government in general.

The plaintiffs say that the definition of “property developer” could have been more broadly drawn to cover a wider group of individuals and corporations.  No doubt, that could have been more broadly or more narrowly drawn but it does not really address, we would say, the basic question of whether it is open to the Parliament to single out what seems to be the majority, certainly, of property developers amongst donors to candidates and parties. 

As to the question of alternative reasonably practical and practicable and less restrictive means of achieving the same object, it will be recalled that in Monis (2013) 249 CLR 92 at 214, paragraph 347, Justices Crennan, Kiefel and Bell said that the alternative means would have to be “obvious and compelling” before a finding of disproportionateness could be made:

Given the proper role of the courts in assessing legislation for validity.

That proposition seemed to be approved by the joint judgment in Unions NSW at paragraph [44].  In Tajjour (2014) 313 ALR 221 at 254, paragraph [114], the same Justices added that the:

hypothetical [alternative] measure must be as effective in achieving the legislative purpose –

as the measure initially adopted ‑

“quantitatively, qualitatively and probability‑wise” –

as their Honours quote.  The only real alternative proposed by the plaintiffs here is that of confining the provision to what is effectively a bribe, that is, money given with a corrupt intention.  That would not, of course, deal with the problem with the electorate’s perception of donations to property developers, even though there was no corrupt intention.  It would also significantly circumscribe the effectiveness of the provision by confining its operation to donations that required sometimes the very difficult demonstration of a particular intention for their making.

If I go back to Buckley v Valeo at 27 to 28, the judgment of the court said that the Congress could reasonably have concluded that criminal laws relating to bribery did not deal adequately with the reality or the appearance of corruption because they addressed:

only the most blatant and specific attempts . . . to influence governmental action –

and the disclosure provisions were only a partial solution to the problem posed.

FRENCH CJ:   What about the capping provisions?  I mean, they are already in place with respect to State elections.

MR SEXTON:   Yes.

FRENCH CJ:   Can they be regarded, notwithstanding they are in tandem as the alternative, sufficient unto the day, which could also apply in respect of local government elections?

MR SEXTON:   It is because, as I have suggested I think before, your Honour, the caps and the public funding in a sense go together.  I think that is the problem at the moment about the local ‑ ‑ ‑

FRENCH CJ:   In terms of addressing the purpose for which it is said the property developer preclusion is in place, is it open to the court to say that capping is sufficient if $5,000 is all you can give?

MR SEXTON:   The problem is, your Honour, is that if the Parliament’s intention was that capping would not apply in local government because, for example, larger donations might be needed because of the absence of a funding model, but to deal with property developers you have to have a zero ceiling rather than they be part of a general cap.

FRENCH CJ:   Well, what you say is other variables enter into it which preclude that kind of judgment being made about capping?

MR SEXTON:   Yes.

KIEFEL J:   But why cannot the court look at it on the basis that a scheme such as Division 4A is the alternative measure which is not just capping but the other balancing measures of limit on electoral expenditure and the provision of some publicly funded – not the least because the mischief that is identified in the reports which is said to provide the basis or provide some support for the governmental approach identifies local government as really the chief area for concern.  So if it is applied only at State election level and not applied at local government level, what are we supposed to infer about why property developers are selected?

MR SEXTON:   Because we would say they are in a particular category which is different from the general run of donors.  What your Honour proposes ‑ ‑ ‑

KIEFEL J:   Really, what I am saying is there has obviously been no decision to apply a scheme to property developers in the area of local government.  So do we necessarily infer that there is a real problem if there has been no attempt, legislatively, to address that problem at the local government level?

MR SEXTON:   Well, it is addressed by the prohibition.  But what your Honour is proposing, in a sense, really illustrates the problem that it is redrawing to legislation in quite a substantial way to alter what is – the balance that it has at the moment may not be, of course, perfect and it may not cover every aspect of the problem but the question is really whether it was a choice that was open to the Parliament and it may well be that it might have been done in a more comprehensive fashion.

KIEFEL J:   But the problem is that it is not evident why a scheme such as Division 4A was not applied to local government.

MR SEXTON:   If your Honour says why is there no public funding for local government elections, well ‑ ‑ ‑

KIEFEL J:   Well, not just public funding, the whole scheme.  The capping, the public funding, why was it not – if it is such a problem.

MR SEXTON:   Well, property – the question of property developers is a particular problem at the local government level, but there may be other reasons why the model that is applied to State Government elections cannot be, or may not be able to be applied in the same way to local governments.  I do not know the answer to your Honour’s question in that sense, because ‑ ‑ ‑

KIEFEL J:   I understand it is not evident on the face of ‑ ‑ ‑

MR SEXTON:   I do not think it emerges from those parliamentary committees, but local government is, in a sense, a very different model, and it may well be that that is something that needs further work.  It may get further work, but it has not to date.  It is just that I do not – it may well be that the State Government electoral system is not apposite for local government in New South Wales.  It may be.

GORDON J:   Another twist is that “property developers” as defined in the Act is limited to corporations, whereas at the local government level there is no prohibition on individual property developers by reason of the caps.  So the very purpose for which it is set out in ICAC, the report just concerned about property developers generally, the Act has decided to limit it to corporations and there is this inconsistency in the scheme between local governments and State Governments in relation to individual property developers.

MR SEXTON:   Well, your Honour, we do not have any evidence about the number of – the nature of developments in terms of whether they are largely by corporations or not, but I would suspect that they – as in the case of this case, the development vehicles, one would expect them to be corporations normally, for a whole range of financial and other reasons.  So that it really illustrates, perhaps, that the scheme is not utterly comprehensive, that is quite true, and that in relation to property developers that the operation of the provisions could have been more comprehensive or less comprehensive, I suppose, but the provisions are designed, I think, to deal with the majority of the cases.

So I think this really follows on in a sense from Justice Kiefel, but we would say one problem with considering alternatives is that there exists a wide range of sometimes competing measures that might be adopted to achieve the objects in questions.  So that one is dealing here in what might be some fine value judgments, which are perhaps more appropriate for the formulation of public policy by the legislature, rather than the courts.

I note the comments – I will not take your Honours to them – but Justices Stephen and Mason in Uebergang v Australian Wheat Board (1981) 45 CLR 266 at 306, but this was in the context of regulation of the wheat scheme, the public interest and section 92, where their Honours discussed the question of what kind of evidence might be needed to assess alternative measures and really it underlines, we would say, the speculative nature of trying to assess alternative measures that had never been tested by being actually implemented.

So, your Honours, for those reasons we would say that the second Lange question should be answered yes, and for again the same reasons that the question posed by Justice Keane in Unions NSW at paragraph [133]:

whether the impugned law can reasonably be said to be compatible with the free flow of political communications within the federation –

that that should also be answered yes.  Unless there is anything more, your Honour, on that particular subject, I am going to turn over to Mr Kirk in relation to the question of caps.

NETTLE J:   Mr Sexton, may I ask you one question which arose out of Mr Bennett’s submissions this morning, and that was, as I understood it, that when you looked at the way in which the provisions which are in dispute are focused on political – or donations for purposes of political communication rather than on just money which might corrupt politicians or public officials, these provisions seem so inept that the real purpose of them should be perceived to be to quieten the voice of the four designated political donors rather than serving the legitimate end of discorrupting the system or protecting it against further corruption.

MR SEXTON:   We could not discern any such intention in the legislation.  We would say, your Honour, that it might be assumed, we would say, that almost all the funds that are provided by way of political donations are used for some form of communication and by and large they are used in this country for television advertising.

NETTLE J:   The point he makes, as I understood it, is that there is no prohibition as such against moneys just being paid to politicians or public officials which might be used to feather their own nest rather than for political purposes and yet would be equally corrupting, if not more so.

MR SEXTON:   Well, your Honour, I suppose that would perhaps be covered, I mean, by in a sense the more direct notion – a completely direct notion of a bribe.  That sort of gift could, one might think, only have one purpose.

NETTLE J:   So is one to see this as sort of extending the fringe beyond what is out and out fraud to things which are more marginal?

MR SEXTON:   Well, this is designed to deal with what is presumably the purpose and the effect and the use of most of the donations that are given and, of course, although they are given for that general purpose of ‑ for use, as I say, particularly in various forms of communication, they are still, if significant, able to, one might think, achieve a degree of influence with the parties and with the candidates. 

There is no evidence, we would say, of any kind that there is some attempt to stop the political communications by the particular groups that are the subject of the prohibition, along with property developers and the other three categories.  They are all groups that, at least in the other categories who seem to engage in a lot of political communication, and there is no suggestion that the New South Wales Government or any government has ever wanted to interfere with that.

NETTLE J:   May I ask you then, what is the answer to his other point that there is nothing to indicate that these groups that have been selected are any more prone to corrupting politicians than a whole host of others such as trade unions, or pharmaceutical companies, or the liquor industry, or whatever it might be?

MR SEXTON:   Well, it goes to that question of how inclusive the legislation is designed to be.  It could be more expansive, it could be less expansive.  Our only point is that property developers, which is the particular category that is before the Court in this case, that there is an obvious basis for singling out that particular group because of the interest that they have in important and very lucrative decisions at all levels of government.

NETTLE J:   But are there not a whole host of other pressure groups with just as much interest?

MR SEXTON:   Well, there may be some with considerable interest, but the question is the legislation may have to start somewhere and it started with some groups and the one that is before the Court is property developers.  We say that there is certainly a rational basis for that.  Whether the legislation could have gone further in a whole range of areas, in a sense again they are choices for the Parliament.

GAGELER J:   If their communication is not relevantly practically restricted, does it matter how arbitrary the choice to single them out is?

MR SEXTON:   Well, if there was no significant burden, effective burden, placed on their communication, probably the answer is no.  But we have conceded I think here that there is a slight burden placed on the answer to the first question.

GAGELER J:   On whose communication?

MR SEXTON:   On the communication – well, it is not on communication.  Your Honour is quite right, it is not on the communication of the property developers, but there is a burden on political communication in a general sense.

FRENCH CJ:   Or in the sense of the recipients of the largesse have less resources at their disposal to pay for contemporary means of communication through media and so forth.

MR SEXTON:   Yes.  Does that answer your Honour’s question?

GAGELER J:   Good enough.

MR SEXTON:   Well, on that note, if the Court pleases.

FRENCH CJ:   Yes, thank you.  Yes, Mr Kirk.

MR KIRK:   Your Honours, I will deal first and at most length with Part 6, Division 2A, the donation caps, and then more briefly with section 96E, the indirect donations.  In relation to the caps, I will deal first with identification of the purposes sought to be achieved and the legitimacy of those purposes before turning to deal with the arguments in relation to the claimed alternative means.

Dealing with identification of the purposes sought to be achieved, can I take your Honours back again to Unions NSW, and I think your Honours may have the ALR version which is 304 ALR 266. Your Honour Justice Kiefel already drew attention this morning to paragraph [8] and the identification of the purpose there and I will not go back to that. But at paragraph [53] on page 279 of the Australian Law Reports within the joint judgment, there was an acceptance of there being a connection to the general purpose, which was a reference back to what had been identified in paragraph [8] of some of the other parts of Part 6. That was so because, to look at the fifth line in:

They seek to remove the need for, and the ability to make, large‑scale donations to a party or candidate.  It is large‑scale donations which are most likely to effect influence, or be used to bring pressure to bear, upon a recipient.  These provisions, together with the requirements of public scrutiny, are obviously directed to the mischief of possible corruption.

We would respectfully adopt that and expand upon it that the purpose achieved by the caps is first it reduces the competitive pressure on parties and candidates to raise large sums of money because it limits the amounts that any of them can obtain from any one person or entity. Perhaps more significantly, the significance of any particular donor vis‑à‑vis any other member of the community is substantially reduced because there is only so much they can give and that also has to be seen, of course, in the context of the public funding which is provided for in Part 5 and Part 6A which means, again, the significance of this source of funding is reduced. These effects of Division 2A reduce the likelihood that favours or inducements will be offered or sought expressly or implicitly.

In reducing that likelihood, it also reduces the possibility of a perception of such favours or inducements being offered or sought.  In this context, there is a rational connection between the purpose we have identified, that first integrity purpose, and the provisions in question or the means.  Now, as we understand the plaintiff’s case, they have not suggested that the integrity purpose, if I can summarise what is set out in paragraph [8] of Unions NSW in that way, the plaintiffs have not suggested that that is an illegitimate purpose, that is to say, one that conflicts with the requirements of the system and representative and responsible government.  If, as I have just submitted, Division 2A achieves that purpose, that is enough of itself, in our respectful submission, to pass this first aspect of the proportionality test, the second limb, namely, identification, a pursuit of a legitimate object.

Now, my learned friend, Mr Bennett, did raise a query about one part of a formulation of that integrity concern relating to the language of undue influence.  Obviously, there is room to argue about quite what that means.  But a relevant meaning here, in our respectful submission, is that it means some type or degree of influence that distorts or relevantly could be seen to distort proper and impartial exercise of governmental powers.  Now, that notion of undue influence, as I will seek to illustrate to your Honours shortly, comes up in the ACTV Case but the language has older heritage, even leaving aside equity, and it comes back to the question your Honour Justice Keane asked about regulation of elections. 

The case that that immediately brings to mind and which we have now provided to your Honours is Smith v Oldham (1912) 15 CLR 355. If I could ask your Honours to turn to page 357 within the printout, at the bottom of the page within the Chief Justice’s judgment, your Honours will find the impugned provision in the last four and a half lines. It goes over the page, and to put it simply it required that when people make relevant political comment they put their name to it and, indeed, their address to it. Indeed, that is familiar to us 103 years later. At page 358 at about point 2, the Chief Justice noted the argument:

It is contended that this enactment is beyond the power of the Federal Parliament.

Then if your Honours jump another five or six lines, his Honour says:

The main object of laws for that purpose is, I suppose, to secure freedom of choice to the electors.  Incidental to the freedom of choice is the prevention of, amongst other things, intimidation and undue influence.

Then there is an explanation of how that particular provision achieves it.  If your Honours jump to the last two lines of that page:

Parliament may, therefore, think that no one should be allowed by concealing his name to exercise a greater influence than he could command if his personality were known.

Now, obviously, this is dealing with a different type of issue, but that language of securing freedom of choice to the electors and free from intimidation and undue influence is very much pre‑empting the sort of argument we seek to make today.  If I can draw also to attention page 362, within his Honour Justice Isaacs’ decision, the paragraph starting at about point 3, beginning “So far as concerns the mechanical process” and through to the end of that paragraph.

GAGELER J:   Mr Kirk, the words “undue influence” actually appear in the statute in the objects provision.

MR KIRK:   That no doubt is right, but the point his Honour the Chief Justice was making was that was a legitimate matter for regulation by the Commonwealth in the context of regulating elections, and it was really that ‑ ‑ ‑

GAGELER J:   I am sorry, I meant in this – in the New South Wales statute in section 4A(c).

MR KIRK:   Yes.

GAGELER J:   Do the secondary materials shed any light on the sense in which “undue influence” was intended in that provision?

MR KIRK:   Not really, not in my recollection.  I should also note that section 4A was only introduced last year, so subsequent to the introduction of Division 2A which took effect – commenced on 1 January 2011.  That is not to say it is irrelevant, because one has to read the Act as it is before the Court and as a whole, but in any event, the answer to your Honour’s question is that no, I do not think that they do.  The point I was going to seek to make out of what his Honour Justice Isaacs makes – the point his Honour makes – is particularly to pick up that sentence about:

The vote of every elector is a matter of concern to the whole Commonwealth, and all are interested in endeavouring to secure not merely that the vote shall be formally recorded in accordance with the opinion –

but certain other matters as well.  Again recognising it is a different topic, but we would respectfully seek to adopt and extend that to say that yes, the vote of every elector is a matter of concern, and that that leads naturally to the second object we have sought to identify, which might be called the level playing field concern.  No aspect of what we put about the level playing field is inconsistent with – rather, it is consistent with – the sort of principle Justice Isaacs articulated about the importance of the vote of every elector. 

Now, in relation to that second purpose, which we have outlined at paragraph 6 of our oral outline, at 6b, it is reducing the extent to which persons or entities are able to purchase – and be seen to purchase – greater access and influence, or, put another way, reduce the incentive in those who stand for election or hold office to prioritise moneyed interests over others.

Now, first as to how Division 2A might be seen to achieve that purpose, and then as to the legitimacy of it, dealing with the first of those issues - because Division 2A puts caps on the size of donations, that necessarily limits, as I put earlier, the significance of any particular donor to any particular candidate or party or minister or so forth.  In that way, it tends to reduce that incentive to prioritise moneyed interests over others.

This second purpose, of course, is not wholly distinct from the first.  The very notion of speaking about undue influence in relation to the exercise of governmental power raises the question – as my learned friend, Mr Bennett, points out – what is undue influence.  Lying behind that, in part, can be seen to be the undue influence of those who are moneyed compared to those who are not.  The undue influence of those who are prepared to spend money to buy political access and influence compared to those who cannot or do not wish to spend their money that way.

FRENCH CJ:   Is undue import simply the notion of greater influence than people who have not donated or donated to the same extent?

MR KIRK:   Yes, it does imply greater importance.

FRENCH CJ:   Is it anything more than that?

MR KIRK:   Well, the issue of undue, of course, leads to the legitimacy and that is what Parliament chooses to address and I now have to address the issue of whether that is a legitimate matter for Parliament to address.  So, if I can turn to that?  Can I start that part of the argument by noting that what is absent from my learned friend’s argument is any real attempt to tie the complaints they make to the exercise of free political communication such as to inform the choice of electors.

The plaintiff’s complaint is not that they are restricted in their ability to speak to electors or to speak to others – not even that they are impeded in their ability to speak to government.  We accept, incidentally, that part of the protected constitutional freedom is freedom to communicate to government and that was noted – if I can just give your Honours the reference – for example, in Wotton v Queensland (2012) 246 CLR 1 at paragraph 20, speaking about communication between electors and legislators and officers of the Executive.

GAGELER J:   And corporations?

MR KIRK:   Sorry, your Honour?

GAGELER J:   What about corporations talking to government?

MR KIRK:   That was touched upon, without being directly addressed, in Unions NSW, but only in the indirect sense, as my learned leader has articulated, that really the burden on the freedom there was the burden on the recipients and their ability to speak.  Corporations are not electors, certainly not in our system; it is difficult to see they ever could be.  So, no, it is not part of the constitutional freedom that protects the ability of any business interest as opposed to the individuals who can do as they will as electors to have a freedom to speak to government.

But, in any event, the core point I am seeking to make here is that the argument is not about communication.  My learned friend started his argument by accepting that a political donation is not of itself an act of political communication.  Really, the argument is – and put very frankly, indeed, bluntly – it is about the use of money to gain access to politicians and influence with politicians and that is not about freedom of political communication in any sense that is protected by the Australian Constitution or that is established by any part of the case law of this Court.

One part of my learned friend’s argument put in writing is to seek to focus upon a quotation from Archibald Cox which was picked up by Sir Anthony Mason in ACTV and then also referred to in Unions NSW.  If I can take your Honours to ACTV 177 CLR 106 at page 139 within the Chief Justice’s judgment, at about point 6 of the page, your Honours will see the quote from Archibald Cox. In my learned friend’s written submissions, they focus on the second sentence and the notion of building and asserting political power.

But a reading of the whole of what Professor Cox said is that it is about the importance of freedom of speech and that is how it was invoked by the Chief Justice.  Indeed, the Chief Justice goes on to say it:

is a striking comment on Professor Harrison Moore’s statement that “[t]he great underlying principle” of the Constitution was that the rights of individuals were sufficiently secured by ensuring each an equal share in political power. Absent freedom of communication, there would be scant prospect of the exercise of that power.

That ties back to his Honour’s discussion earlier starting at page 135. Part of the reason the framers of the Constitution rejected the notion of incorporating guarantees of individual rights was because of the adoption of the principle of responsible government ensuring to all individuals – your Honours will find this at 136, the quote in question from Harrison Moore at about point 4:

“The great underlying principle is, that the rights of individuals are sufficiently secured by ensuring, as far as possible, to each a share, and an equal share, in political power.”

So there are two key points I seek to make about this. First, the Cox quotation is not asserting even within itself, let alone in how Sir Anthony uses it, some right of individuals to build and assert political power. Rather, it is part of the functional justification for why the Constitution implicitly protects freedom of political communication. Secondly, it ties to the deeper principle that it is about ensuring the equal share in political power of all, and that is part of the reason the framers did not choose to have constitutional rights. Now, in securing it for all, an equal share, that again bespeaks the legitimacy of what we have called the level playing field concern, seeking to remove what the Parliament has called the undue influence in this respect.

KIEFEL J:   Does it also imply a personal right, though, when you start speaking of equal shares?

MR KIRK:   No.  I would be in great trouble if I answered yes to that question.

KIEFEL J:   But does it not tend to suggest an individual right?

MR KIRK:   We respectfully submit no, your Honour, although one can obviously see the force in the question, with great respect.  The reason being that it is part of that functional definition and, in a sense, the way Sir Anthony was proffering it was as an historical explanation for the fact that we do not have a constitutional bill of rights because the framers chose to put their trust in representative and responsible government, and that leads, of course, with a Lange eye to focuses on sections 7, 24, 64 and 128 and to the freedom that has been recognised.

The way the plaintiffs put their case is, however, very much an individual rights perspective because the starting point from them is their perspective.  We wish to assert political influence and access in the way that we can which is by money.  The perspective is how we wish to do it, their chosen means of gaining access and influence, not even being a form of communication, as my friend accepted.  That is very much an individual rights argument.

Your Honour Justice Bell pointed out what Sir Anthony said at 144 and, indeed, my learned leader also pointed that out about his Honour accepting, at least for the purposes of argument, the legitimacy of the concerns the Commonwealth had identified there.  Every other member of the Court, except possibly Justice Gaudron, who addressed the issue in a slightly different way, made similar statements.

To deal briefly with Justice Gaudron, the way her Honour approached the justification‑type analysis was more by looking at it through the nature of the constitutional powers – 51(v), the power over elections, and so forth, which was a different kind of analysis.  But if I could ask your Honours to turn to Justice Brennan, for example, at page 156 – and I should recognise, of course, that Justice Brennan dissented in his application of the proportionality test, but we do not think that undermines the force of what his Honour says here – at about point 5:

The minimizing of the risk of corruption of the Parliament and the reduction of an untoward advantage of wealth in the formation of political opinion are important objects to be advanced, if there be power to do so, by the laws of the Commonwealth.

Then at 159, still within his Honour’s judgment, at about point 6, beginning:

Freedom of political discussion is essential to the democratic process, chiefly for two reasons –

Then in the second sentence his Honour says –

But the salutary effect of freedom of political discussion on performance in public office can be neutralized by covert influences, particularly by the obligations which flow from financial dependence.  The financial dependence of a political party on those whose interests can be served by the favours of government could cynically turn public debate into a cloak for bartering away the public interest.

FRENCH CJ:   Now, the mischief to which you say the current provisions are directed is that of unequal access based on monetary contributions, and presumably the intuited logical mechanism for that access is either gratitude or the expectation of repeat benefactions or perhaps a combination of both.

Now, if one then looks to the position of, say, the organiser of an interest group that has worked in the field for a politician and helped that politician to get elected, again one might infer that that person on behalf of that group, promoting a particular interest, has greater access, and again the mechanisms might be gratitude, they might be the expectation of support at the next election, and perhaps a combination of both, so one can generate scenarios of unequal access.

The particular mischief to which your comments are directed is unequal access based on money.  What is the difference between unequal access based on monetary definition – monetary contributions, and unequal access based upon support from a special interest group?

MR KIRK:   Well, there is a few answers to that.  First, the level of argument at which – and perhaps there are two levels of argument – but the first level of argument at which I think the plaintiffs put this point is to say that the very objective of seeking to moderate and regulate access based on money is illegitimate.  That is to say, it conflicts with the notions of representative and responsible government, and the quotation I have just put to your Honour and the arguments I put seek to answer that.

But then there is perhaps another way of putting it, which is picking up on what your Honour has just put to me ‑ well, they could have done other things, they should have done other things, and so forth – to which we say, first, that is not a relevant constitutional answer.  The fact that we have addressed one problem, and maybe not every problem, does not undermine the validity of our addressing of this one problem.

But, secondly, this is a real problem.  I am not saying the others are not significant, but the history manifest in the special case, starting with the developers, but also in particular brought out in the 2008 Legislative Council report which is in the special case book, also the 2010 report, illustrates that New South Wales, perhaps not uniquely, has had real problems with political donations and it has sought to address it.

A further answer which was put in part this morning to one of the examples given by my friend is that the example of the 100 trade unionists being persuaded to put in $1000 each so it is $100,000, that is an exercise of political communication.  Someone has gone out and persuaded 100 people to give up $1,000 of their money.  That is exactly what the freedom protects.  That is quite different from this law.  Your Honour gives the example of the organiser who goes out - and these days it may well be on the internet, they start a website or a social media campaign.

FRENCH CJ:   To advance a special interest.

MR KIRK:   That is right and to support a person, a candidate or a party or a cause.  That again is an exercise of political communication.  My learned friend concedes a donation is not of itself a political communication.  I will not take your Honours through the other references in ACTV save for one but can I note, and I think it is in our outline, that Justices Deane and Toohey address the issue at page 175, Justice Dawson at 188 to 189.  If I can take your Honours briefly to Justice McHugh at page 238 within ACTV at about point 7 beginning “However”.  His Honour is making the point that:

the existence of corruption and undue influence –

being one of the proffered justifications is not there enough to persuade his Honour of the validity of the scheme that was impugned.  Then, if your Honours turn the page to 239 at about point 2, the last long sentence of that first paragraph:

The creation of special offences, disclosure of contributions by donors as well as political parties, public funding, and limitations on contributions are but some of the remedies available to overcome the evil which arises not from the giving of information to the electorate or its content but from the conduct of contributors and political officials. 

That is very much what – that suggestion is what the New South Wales Parliament has taken up.  That is all I wanted to say about ACTV.  Nothing else in the ‑ ‑ ‑

KEANE J:   It also gives support to the notion that Parliament can do more than one thing to address the problem.  Against you it was rather suggested that if you have a regime of disclosure that is all you can have. 

MR KIRK:   What is illustrated in that sentence and by looking at examples around the country and around the world is that it is a very complex problem.  There are a range of levers available to seek to address the problem and even to call it a problem is to simplify it because as comes out in – I forget if it is the 2008 report or the 2010 report, but part of the discussion in those reports is that you can justify – there are some people who want to ban all political donations but others say and said that is a way of people participating in the political process and we do not want to ban it all.  So we will not ban it all.  We will allow donations at the levels we have allowed it. 

The 2008 report actually suggested $1,000.  The 2010 report suggested $2,000 and the legislation is $5,000 for parties and $2,000 for candidates.  Then you balance it with a range of other levers – disclosure, expenditure caps, public funding in a range of mechanisms or a different mechanism for local government.  I will not go back to that because my learned leader has addressed. 

What Lange reminds us of, in our respectful submission, is that it is necessary closely to hove to the constitutional text – 7, 24, 64, 128 – and nothing in what my learned friend has put has any relationship to a free and informed choice of electors, nothing to do with the direct choice of electors that is referred to in sections 7 and 24.  It is about buying access for corporations for their own self‑interest.  So Lange does not support my learned friend, but is inconsistent with it. 

Can I take your Honours briefly to Roach v Electoral Commissioner (2007) 233 CLR 162. This, of course, concerned the restrictions on prisoners voting, and if I can take your Honours first to page 174 in the Chief Justice’s judgment, paragraphs 7 and 8, recognising again this is dealing not so much with freedom of political communication as broader notions of rights to vote within our system of representative government. In the last seven or eight lines of paragraph 7 the Chief Justice said:

Because the franchise is critical to representative government, and lies at the centre of our concept of participation in the life of the community, and of citizenship, disenfranchisement of any group of adult citizens on a basis that does not constitute a substantial reason for exclusion from such participation would not be consistent with choice by the people.

To say that, of course, raises questions as to what constitutes a “substantial reason”, and what, if any, limits there are to Parliament’s capacity to decide that matter, and the first sentence of paragraph 8:

It is difficult to accept that Parliament could now disenfranchise people on the ground of adherence to a particular religion.

The case went on to hold by majority is that one could not exclude prisoners – at least not ones with terms of imprisonment of less than three years.  Now, that view of the constitutional system of representative and responsible government is a view in which all members of the community – even those in prison – matter, and cannot be excluded, at least without substantial reason. 

I will not take your Honours to it, but the joint judgment of Justices Gummow, Kirby and Crennan, particularly paragraphs 81 to 84…..85.  Paragraphs 81 to 85 are to similar effect.  If that is so, again that is not consistent, in our respectful submission, with the notion put by the plaintiffs, but money can cut across that, that money is enough and is protected to gain preferential access to those who are elected as a result of that exercise of universal franchise.

Implicit in Roach, and then followed in Rowe v Electoral Commissioner (2010) 243 CLR 1 ‑ I will not take your Honours to it – is that distinctions based on things such as race, sex, religion, property or class are not – at least without very substantial reason – proper bases for distinction. That being so, a law which addresses another type of distinction, moneyed or not, but tends to affirm the equality, the relevance, the importance of every voter – remembering too, the language of Justice Isaacs in Smith v Oldham, is entirely consistent with the constitutional system of government. 

Going back briefly to Unions NSW, before I leave this topic, within Unions NSW in the joint judgment at paragraph [17] on page 272 of the Australian Law Reports, there was a reference, with apparent approval, to what Sir Anthony Mason had said in ACTV about government by the people:

in constitutional terms, a sovereign power residing in the people, exercised by the representatives -

again, consistent with what I have just sought to put.  Then, in your Honour Justice Keane’s judgment, paragraph [136] on page 295 of the printout:

The caps imposed by ss 95A and 95I are apt to effect a reduction in the quantity of political communication –

That is dealing with the electoral communication expenditure caps, I think.  But the point your Honour was making is one entirely consistent with, in our respectful submission, the point I have just been seeking to emphasise and your Honour footnoted a decision of the Supreme Court of Canada – Harper v Canada – where a similar point was made in an electoral context.

KIEFEL J:   This scheme of Division 4A constitutes a not insignificant burden on the freedom of political communication in the sense of limiting the amounts available to fund election broadcasts and other media activity.  The Commonwealth in their written submissions at paragraph 33 take us into the territory of some statutory objects justifying even large incursions on the freedom.  Is that a territory in which you wish to enter?

MR KIRK:   Not especially.  The Commonwealth in that part of its submissions seeks to put the Lange second limb in a particular way.  Perhaps – and I do not want pre‑empt what my learned friend, Mr Gleeson, will say – but, perhaps, it might be seen as taking a step back and putting it in a very purposive way.  We would be happy to accept that formulation but we do not think we need to rely on it and we are here to defend the law based on whatever approach is taken including the existing state of the case law. 

So we do not need to go that far.  We would be happy to go that far, however, but I will leave Mr Gleeson to venture into that territory.  For all those reasons, the objects – both the integrity object and the overlapping – what might loosely be called level playing field objects – are legitimate in the sense explained in the case law of this Court.  

Can I turn then to deal with the claimed alternative means to the caps in Division 2A?  We think my learned friends propose two real alternatives.  One is a disclosure, a sort of beefed‑up disclosure regime and two is to say well, bribery, the law of bribery would be sufficient.  Can I deal with each of those?

Disclosure does not achieve the same end to the same extent.  Disclosure is a good thing and it certainly is a deterrent to the misuse of power and that is why Division 2 of Part 6 deals extensively with disclosure, but if a party or a candidate still can raise significant or substantial amounts of money from particular persons, the incentive for favours or the expectation of favours, now or in the future, still exists and disclosing it does not make it any better save that it may be the slight disincentive to the big donations being made in the first place.  So it does not achieve the same extent – the same object to the same extent. 

As for bribery, in my learned friend’s written submissions, without taking your Honours to it, they refer at least twice, footnotes 44 and 87, to a case called R v Glynn, a decision of the New South Wales Court of Criminal Appeal in 1994 which I will take your Honours to shortly.  But first can I put the bribery issue into a little bit of context by going to volume 2 of the special case book because the submission I will seek to make is that that case, R v Glynn, illustrates very clearly the limitations of the law of bribery. 

Within volume 2 of the special case book your Honours will find what is called in the special case, the North Coast Report done by Mr Roden and which my learned leader implicitly referred to.  This was an extensive investigation of events on the North Coast relating to certain property development.  Can I take your Honours first to page 529, using the numbers at the top?  There is a heading “Difficulties with the law” and then if your Honours turn over the page to page 530 there is a heading “Common law bribery” and in the second paragraph, Mr Roden said:

There are problems with this law.  Not the least of them is whether a payment made or offered to a person other than the public official can operate as a bribe.  That is important here.  If it were established that a substantial sum was paid to a political party, to influence a member of the party who held public office, in his behaviour in that office, could that be a bribe at common law?

Mr Roden noted there were arguments either way.  Then, if your Honours could turn to page 566 at the top within Mr Roden’s report, at about line 20, Mr Roden said:

If money is offered to a Minister or a Member of Parliament for himself or herself, it will be seen as a bribe, and none but the dishonest would accept it.  On the evidence heard in this Inquiry, it seems that if money is offered, or paid, to a political party or an election campaign fund, it is likely to be seen as a necessity, and few, if any, would refuse it.

Then, perhaps more by way of historical footnote, if your Honours turn to page 558, under line 30 your Honours will find Mr Roden said:

I find that there is evidence warranting consideration of the prosecution of Mr. Glynn on charges of common law bribery in respect of each of the political donations –

If I can take your Honours to R v Glynn (1994) 33 NSWLR 139, a decision, as I said, of the New South Wales Court of Criminal Appeal, and turning to page 144 in the judgment of Justice Allen with whom the other two members of the court agreed, around letter D his Honour quotes from a historical text referring to bribery and referring to…..contract.

KIEFEL J:   I am sorry, what was that page, Mr Kirk?

MR KIRK:   Sorry, your Honour, page 144.

KIEFEL J:   Thank you.

MR KIRK:   About the middle of the page.  Then around letter E his Honour Justice Allen said:

Such a contract, of course, like the agreement in a criminal conspiracy, is likely to lack the formality in its making and the precision in its expression to be expected in a lawful contract.  It may be established in large measure by a wink and a nod.  Nonetheless, it is a contract — in the sense of a mutual understanding –

Although his Honour then notes, if I can jump ahead just under F, that:

By the common law the crime of bribery is constituted by the offering to the public officer of reward for the desired improper conduct.

So it does not actually have to be an agreement; the offer itself can be enough.  Then on page 145 his Honour goes to a series of examples.  I commend the whole page to you, but can I just take your Honours to a couple of parts of it?  About point 2 or 3, at the end of the line your Honours will see a short question:

Would that be bribery?  Of course not.  Would it be bribery if, instead of making a public donation, he makes the donation without publicity but doing so with the same intention and expecting that the officer, because of his close association with that cause –

a donation made to a cause –

would learn of the donation?  Does that make it bribery?  Surely still it is not enough.  If a public officer gives improper preference to a person because of his approval of what that person has done in the past, without any prior wink or nod previously given by the officer that if the person so acted he could expect to be favoured, it would go far beyond anything contemplated by the common law to hold that the public officer has been bribed.  What has happened did not constitute any offer made to him by the recipient of the improper preference of any reward.  The money already was paid.

Then to jump about 11 or 12 lines from the end, another example, so in the middle of the line just next to F:

Assume having made the payment to the campaign funds of the politician, accepted by the politician as being a wholly proper contribution from a political supporter with no strings attached, the person who made the payment thereafter approaches the politician and says:  “I made this contribution to your campaign funds, I now need this favour.  It is irregular but don’t you think you owe it to me?”  Is that a bribe by the person soliciting the favour?  Again the answer must be “No”.  The payment when made implied no condition that if it were accepted the recipient would act improperly in the future in the payer’s favour.

Then jumping a sentence:

It well may be thought that the law should be developed to make the subsequent request for the improper favour, or at least the giving by the political figure of the subsequent favour, criminal.  This is a matter for the legislature.

If your Honours then turn to page 148, this was a demurrer to the indictment.  The demurrer was upheld – if your Honours look about C, about point 3:

Application of the definition given by Russell, and approved by this Court in the past, of the common law offence of bribery leads inevitably to the conclusion that the present indictment, understood as incorporating the particulars, did not aver all the necessary elements of that crime.  It did not aver directly or by necessary implication that the accused made an offer to the minister of reward.  That was a fatal deficiency.

The reason for that, to put it in a little context, is that payments had been made to the party or, in fact, to two parties, the ALP and the National Party.  So, because the property developer made a payment to – organised a payment to – the two parties in substantial sums and said, by the way, I have got this lovely property development I want to go ahead.  But, it could not be shown that that was paid to the minister or drawn expressly to his attention, the charge fails.  That illustrates, in our respectful submission, one of the problems of and limitations of the common law of bribery, but there are others, both the donor and the donee have a strong interest in denying it.  It is one of those cases where it is all done privately.

My learned friend said, well, that is not so distinct from cartels – that is why there is a $10 million fine now, in the Competition and Consumer Act for cartels as a substantial deterrent because of the difficulty of detecting that crime.  It is likely to be constituted by a wink and a nod.  It is very difficult to show a link to some later favourable decision.  There is the problem of the interposition of parties and, in any event, it only deals with the aftermath, it is not prophylactic.  Limits on substantial donations addresses the issue much more directly, and in a more encompassing way, in a way that it was open to the Parliament to think it needed to be done.  So, in that way, the law of bribery is not a relevant alternative achieving the same end to the same extent in an equally practicable way.

My learned friend wondered why the law does not apply to private gifts to candidates.  So, someone could go and give a substantial amount to a politician and say, well, this is just for you, and that is true.  However, first, the Parliament has addressed the mischief it has perceived.  Secondly, that type of payment – whilst there still will be difficulties of proof of bribery, it will not suffer the same problems as with the interposition of the party, because it is a direct payment from person X to politician Y, where later perhaps politician Y does some favour for person X, so it will not quite have the same difficulties of proof.

In any event, it is this law to be judged, not some other law.  That point was made in Unions NSW without going back to it, at paragraph [59] of the joint judgment, paragraph [127] of your Honour Justice Keane’s judgment.  So, that too is not a relevant point.

Unless your Honours have any questions about Division 2A, I now propose to move to deal fairly briefly with section 96E, which is the indirect campaign contribution provision.  I will not take your Honours through it, my learned friend did that.  In terms of the purposes of the provision, what the provision does is to restrict the giving of gifts by payment in kind of various kinds.

It directs that those payments instead, in effect, take place in money.  All of them – provision of office accommodation, vehicles, computers, other equipment, payment for advertising, and so forth – all of them can be done by money.  None of them, incidentally, are themselves political communication.  We are dealing with payment here, not the advertising itself, for example.

So, 96E directs that if it is to be done, it is to be done in money save for the exceptions which do include if the value of the gift is less than $1,000 and also volunteer labour or the incidental or ancillary use of vehicles by volunteers.

My learned friends make four points against us, as we understand it.  First, in their written submissions, they say there is no textual link between 96E and the disclosure regime in Part 6, Division 2.  I should give a bit of background to that by saying that we respectfully submit the purposes of the provision are to aid transparency and to aid the efficacy of the donation caps.  Also, as it happens, the expenditure caps in Division 2B of Part 6 by ensuring that it is all done in a traceable, clear, transparent form, at least by and large.

My learned friend’s first argument is there is no textual link between 96E and the disclosure regime in Part 6, Division 2.  There is no requirement for there to be an express link.  The question is whether or not ‑ to pick up a phrase from Tajjour without going to it, at paragraph [112] of the joint judgment ‑ it is whether the means employed are capable of advancing that purpose, and these means are capable of advancing the disclosure purpose and the donation cap purpose, regardless of whether they are expressly linked or not.

As it happens, 96E was introduced – was inserted – by the same amending act which introduced the disclosure regime in Part 6, Division 2.  If I could go briefly to the book of extrinsic materials that New South Wales has provided to your Honours and go to the Attorney’s second reading speech at page 4 – using the numbers down the bottom.

GORDON J:   I am sorry, what page did you say?

MR KIRK:   Page 4 – sorry, your Honour.  This is the speech of Attorney‑General Hatzistergos.  The second paragraph – really just the first sentence is the one I wanted to draw attention to:

In‑kind donations, such as the provision of offices and cars to candidates for little or no payment, create particular problems in terms of transparency.

Then, the Attorney goes on to explain the operation of what is now section 96E.  That was agreed, for what it is worth, in the 2008 Select Committee report – if I can take your Honours briefly to volume 2 of the special case book at page 867 at the top.  So, volume 2, special case book, page 867.  So this was a report by a legislative council joint committee and it was reporting after the Premier had introduced what became 96E but before it had been passed.  If your Honours note paragraph 7.184:

The Committee welcomes the Premier’s decision to ban in‑kind donations of offices, cars and phones, believing that this will aid transparency and lessen the risk of undue influence.  However, the Committee reiterates its concern that volunteer labour should not be captured by such a ban.

Then the Recommendation 17 supports it.  So that illustrates the existence of the problem and the link to ensuring transparency.  Secondly, the plaintiffs say that insofar as we seek to link this to the donation caps in Division 2A, as we do, Division 2A was only introduced subsequently, which is true, that was introduced in 2008, Division 2A took effect on 1 January 2011.

It is true that that is the history, but Parliament inserted Division 2A into the Act knowing that section 96E was there and amendments to the Act are to be read together as a combined statement of the will of the legislature, to quote Commissioner of Stamps v Telegraph Investment (1995) 184 CLR 453 at page 463. So, reading the Act as a whole, again, it can be seen rationally to serve that objective.

The third point my learned friends make is that this justification of avoiding the need for valuation is undercut by the fact that there is an exception for gifts of less than $1,000 and so there is still a valuation issue which arises.  It is true there is still a valuation issue which arises, but it is at the lower end of the spectrum for what Parliament has effectively treated as de minimis.  It could have gone further and banned everything but it chose not to do so.  The fact that it did not do so does not undermine what rationally may be inferred to be its objective and certainly does not affect the legitimacy of the objective.

The final point my learned friends make is the alternative means argument and although my friend did not touch on it this morning, in their written submissions they put that a Parliament could have required a donor who was providing in‑kind services to provide what they call a “reliable valuation” when making the relevant declarations.  In our respectful submission, that would not achieve the same end in an equally practicable and available way.  To speak about “reliable valuation” is to speak of a valuation perhaps rarely cited, certainly in this area, and if that is meant to mean an uncontestable, pure indisputable valuation.  These things will be inherently disputable and thus prone to abuse. 

Indeed, my learned friend this morning in his submissions illustrated that very point.  He said some donors, perhaps with liquidity problems, may be able to make donations in‑kind, though short of money, at comparatively little cost to the donor, was my learned friend’s phrase.  So, for example, to use my examples, they might have spare office accommodation or spare cars or spare personnel.  How do you cost that?  It is comparatively little cost to the donor in terms of opportunity costs because the cars and the accommodation and the staff are sitting around not doing much because they are not busy.  Yet, if you cost it at opportunity costs, that would give a disproportionate advantage to those who have to pay for the services.  So, it raises the issue of how you value that.

Now, perhaps you could establish a very, very detailed rigorous regime for how you value those things but that introduces then a substantial transaction cost as to donations which are likely to be less than $2,000 for candidates or $5,000 for parties.  That becomes a very complicated, expensive and inefficient system.  It does not achieve the same ends in an equally practicable and available way. 

BELL J:   Just before you leave section 96E, can I just inquire about what is described in the pleading as the “first donation”.  That is, the gift of a money sum of $9,975 for the benefit of a candidate in connection with the March 2011 election, the recipient of that money gift being an employee of the candidate.  Is it right to see that as the subject of the prohibition under 96E?

MR KIRK:   In the special case, at page 65 of volume 1, paragraph 4, which I think is the high point of the facts on this topic, it says that the second plaintiff, that is:

McCloy Administration:

(a)made an indirect campaign contribution . . . in the amount of $9,975.00 in full or part payment of the remuneration of Luke Grant, a member of the staff of the election campaign of the candidate, Tim Owen, for the seat of Newcastle in the Legislative Assembly –

It would likely fall, I think, within 96E(1)(b), which is not limited to advertising.  It would be part payment by someone else than the:

candidate of electoral expenditure . . . incurred or to be incurred by the . . . candidate ‑

Now, “electoral expenditure” takes you back to section 87(1):

electoral expenditure is expenditure for or in connection with promoting or opposing, directly or indirectly, a party or the election of a candidate –

It may raise an issue of fact as to what the staffer was doing.  If the staffer was just answering ordinary constituency inquiries unconnected to an election, then it might not be, but it does say – it refers, in paragraph 4(a) to:

the election campaign of the candidate –

and that would appear to supply the link.  The other point I would make about that is that it would also be a breach of the donation caps.

BELL J:   That is not what I understood – but you accept that in addition to what appears to be a clear – on the face of it, a breach of the donation caps, it may well come within the prohibition on indirect campaign contributions.

MR KIRK:   Yes.  I suppose an argument might be made, kind of retrospectively in a sense, that if the donation caps are valid, as we actually put that they are, the Court might not have to reach that question, because there would then be ‑ ‑ ‑

BELL J:   No facts to support ‑ ‑ ‑

MR KIRK:   There would be an independent breach of the law, which perhaps, at least in part removes the basis to challenge it.  I suppose that the answer to that, to be fair, might be, I am entitled to know if I have breached two laws, rather than one.

BELL J:   You do not put in issue that, on the face of it, the appearance of a 98E breach.

MR KIRK:   No, we do not, your Honour.  Unless I can assist your Honours any further.

FRENCH CJ:   Yes, thank you, Mr Kirk.  Mr Solicitor.

MR GLEESON:   Your Honours, the Commonwealth’s oral submissions will be tailored to the issue of the caps on donations and in particular to Mr Bennett’s disarmingly frank argument that there is a constitutionally protected right to use your wealth to buy access to politicians.  That is his core constitutionally protected right; that is what we wish to address orally.

Could I first unpack what is involved in his constitutionally protected right?  It seems to be that you can use your wealth to purchase some form of obligation from the candidate or the Member of Parliament.  The obligation, as he identifies it, is an obligation to provide access; that is, to listen to the person paying the money and to give attention to what that person wishes to urge upon you, so there is a quid pro quo, at least to that extent.  He denies the necessary consequence of that, which is the purchase of access means a reduction in the opportunity for other people to seek to persuade that politician of matters, but that is a necessary consequence of it.

Finally, he denies the matter put to him by Justice Keane, that there is a ready slide, either in fact or in perception, from buying access into buying an outcome.  Now, that slide is identified for the Court in the special case book at volume 2 in Mr Roden’s report between pages 564 and 569.  Could I just go to that?  At page 564 Mr Davison, who appeared for Dr Munro, effectively put Mr Bennett’s argument, and again put it rather candidly.  The reason that it is a good thing to pay for access to Ministers and Members of Parliament is:

“One has better prospects dealing with anybody, if one is able to deal with them on a personal basis”.

He then followed up with disarming frankness:

“One pays money to get in the door.  One can’t dance at the ball unless one has paid the entry fee.”

Now, that proposition is what Mr Bennett seeks to constitutionalise and Mr Roden when he analysed it and found it to have flaws in it at pages 567 and following, quite neatly in effect identified the slide because he commenced with Mr Bennett’s narrow view of bribery:

Corruption of the system is complete, when it allows the payment of money for political favours, and when decisions by public officials can be bought.

That is almost universally understood.  Mr Bennett says in effect that is the only mischief that can be regulated by Parliament.  But what Mr Roden goes on to identify is that:

Corruption of the system is well on the way, when it allows favours even without payment, or payment without obvious favour.  That is not so well understood.

He then analyses those two situations, favours without payment and then, particularly relevant to our case at the bottom of the page, payment allegedly without favour.  So Mr Beck is the recipient of $25,000 to his party funds:

He helped arrange its receipt . . . he was making representations to Ministers . . . He continued to do so . . . He said he treated them no differently because of the gift.

If that is what he says, the payment is “without favour”.  But the critical passage then emerges:

But how is anyone to know whether he was influenced or not?  How is he to know himself?

So this ready slide from the purchase of preferential access which is accepted occurs into conscious or unconscious purchase of outcome is a fact which we would submit the Parliament was entitled to take into account as a relevant mischief which it could target by these laws.  That is the first matter I wish to address, your Honours. 

The second matter, which is in paragraph 123 of our outline is just to assess Mr Bennett’s alleged constitutionally protected right against the reasons why the implied freedom has been recognised in the first case and what I wish to say here is in addition to but in support of what Mr Kirk has put to you this afternoon which is that it is useful to go back to Australian Capital Television v Commonwealth 177 CLR 106, particularly at pages 137 to 140, to identify the steps which Chief Justice Mason took in rooting the implied freedom, first in the very sections of the Constitution he identified - sections 7, 24, 64 and 128, but also in principle that those sections express sovereignty of the people, that sovereignty being the underlying source of legal authority of the Constitution.

These provisions, together with associated provisions such as sections 13 and 28, are contemplating accountability of the elected representatives to the people for what they do and one of the roles of the implied freedom is to preserve the conditions for that accountability. 

Now, the Commonwealth in one sense, urges a relatively generous view of the implied freedom, namely that it protects communications in every direction so as to ensure, on the one hand, the people are not prevented from hearing whatever they need to hear to make the choices involved in direct election but also and, in this sense, Mr Bennett’s argument starts from a correct place but ends up in the wrong conclusion, the elected representatives should be able to be equipped with sufficient information from the people to discharge their roles.  So, the making of representations from the people to the elected representatives and the candidates is guaranteed by the freedom. 

So we would submit, as per paragraph 3, that and perhaps this also relates to paragraph 33 of our submissions, which your Honour Justice Kiefel raised a question about, there is an important sense in which, however one breaks up the steps, one comes back to an overall question which is does the law so burden, restrict or distort the free flows of communication, political communication between the governed, the candidates and the representatives that it is incompatible with the continued existence of a political community in which the people exercise the sovereignty inherent in two things, firstly, direct choice, guaranteed by sections 7, 24 and 128, but also ongoing representation of the people by the Parliament, and we would add the Executive, under the systems of both representative and responsible government reflected in sections 6, 7, 24, 62 and 64.

At every step in the analysis that is the ultimate matter that one is coming back to. So when Mr Bennett says the Constitution guarantees a right to use your wealth to buy access to politicians, one must come back to saying how on earth would that follow from an implied freedom that has the character I have just identified? Of course it does not.

So, your Honours, that was the question of underlying principle.  Could I then just say something about permissible ends?  It follows from what I have sought to put that the narrow approach reflected in the United States authorities, particularly recent authorities, should not be embraced by the Court. 

The narrow notion of quid pro quo corruption, or the appearance of it, which underpins some of the recent authorities in the United States is one end but not the only end that could properly be addressed by electoral finance law and this Court would not adopt a proposition that there is a constitutionally protected right or capacity to use your donations to buy access or influence over the candidates and those who govern.

Now, we, perhaps crudely, described Mr Bennett’s model as Darwinian struggle, in our submissions.  He says he is not advancing that but in a sense he is.  His proposition is, as he put it this morning, that the advantages which nature has given you and cannot be taken away are constitutionally supplemented by the powerful character of money as a fungible creature which can be placed into the hands of the candidates and the governors and used to establish this sense of obligation in them.

We would submit there is a world of difference from natural advantage of persuasion, articulateness, or attractiveness and guaranteeing money through the Constitution as a means to buy this form of access. We would direct the Court to what your Honour Justice Keane said in Unions NSW (2013) 304 CLR 266 at paragraphs [135] to [136] where your Honour considered indeed the very caps now in issue - obiter, of course, in this paragraph – emphasised at [135] that:

the primary consideration must be that the flow of political communication within the federation is required to be kept free to preserve the political sovereignty of the people –

That is the point I have already sought to make.  But in [136]:

The caps . . . may reasonably be seen to enhance the prospects of a level electoral playing field . . . They can be seen to be appropriate and adapted to ensure that wealthy donors are not permitted to distort the flow of political communication to and from the people of the Commonwealth.

Your Honour there cited Harper v Attorney‑General (Canada) [2004] 1 SCR 827 at [62], and we would urge that every word said on this topic in Harper, particularly at [62], [72], and [86], can usefully be employed within our political context in terms of identifying – as Mr Kirk put to you – that a “level the playing field” end is permissible within our framework of representative and responsible government.

So, your Honours, in paragraph 5, we have urged that there are three legitimate ends that the constitution recognises for electoral finance regulation.  First is the broadly conceived anti‑corruption end, which the plurality dealt with in Unions NSW at the passages Mr Kirk took you to - paragraphs [8] and [53]; secondly, the “level the playing field” end that your Honour Justice Keane dealt with at [135] to [136], and concomitant with that, an anti‑circumvention end.

If that is right, we are then in the territory where this challenged law – to the extent it is regarded as imposing a burden – is in fact doing so to advance, or, as your Honour Justice Bell put in argument, to enhance, aspects of the system, of the very system that underpins the freedom. 

Your Honours, the next and third or fourth matters that we wanted to deal with is we have provided the Court with a historical bundle, and could I just indicate what we submit the Court can obtain from that bundle, apart from it being some interesting reading.  What the Court can see, at page 1, going back as far as 1695, in the recital to the statute, is a recognition by Parliament that:

grievous complaints are made, and manifestly appear to be true, in the kingdom, of undue elections of members to parliament, by exceʃʃive and exorbitant expences, contrary to the laws, and in violation of the freedom due to the election of repreʃentatives for the commons of England in parliament, to the great ʃcandal of the kingdom, diʃhonourable, and may be deʃtructive to the conʃtitution of parliaments –

So there we see at the very beginning a recognition of the potentially pernicious effect that money can have on the freedom of election to Parliaments.  Now, of course, in these earliest days, the concern as seen from page 2 is very much with treating – which is money payments, or payments in moneyed kind passing from the candidates to the electors to win their votes.  What this history also shows is that the mischief posed by the influence of money upon the electoral process has proved resilient in the face of legislative attempts to address it.  One sees from page 3 in the 1729 statute it had been found that existing laws were insufficient:

to prevent corrupt and illegal practices –

and there was in this law an extension of supply side restrictions – that is, prohibitions directed only at the candidates, to the demands side by imposing obligations and penalties on the voters.  Those restrictions were further strengthened in the 1854 Act, commencing at page 7, with an expanded definition of “treating” at page 9, but most relevantly for present purposes, the 1883 Act is quite critical – commencing at page 23, because it was that Act which embodied a “level the playing field” end.

The purpose of the Act is explained by Rogers at pages 161 to 162 and was very much the concerns after the 1880 election in England that “so great an expenditure upon elections” was occurring as to preclude suitable people from even being able to stand as candidates.  So the concept of a more level playing field addressing another version of the potentially pernicious influences of wealth was there in the 1883 Act. 

At page 127 those purposes are also fairly clearly explained by Mr Renwick Seager.  In other words, the length of the candidate’s purse would not control the result of an election and, in effect, that type of “level the playing field” end has now seen a new form in the current provisions which is to ensure that the length of a donor’s purse does not control the access and influence to those who are governing or seeking to govern.

So in terms of the use the Court can make of this material, the 1883 Act is a fairly close historical precedent which was available to the founders, and in fact it had been taken up in at least South Australia and Tasmania prior to Federation – it is pages 67 to 86 – and it was taken up very shortly after Federation in the 1902 Commonwealth Electoral Act which commences at page 110.  The purpose of the 1902 Act is very much the same as the 1883 Act.  The Court will see that from page 150, Mr O’Connor’s remarks in the second column near the top.  In particular, he said:

If we wish to secure a true reflex of the opinions of the electors, we must have not only a system of proportional representation, but a system which will not allow the choice of the electors to be handicapped for no other reason than the inability of a candidate to find the enormous amount of money required to enable him to compete with other candidates . . . In doing that it will improve very much the morality of electioneering tactics, because, if there is one thing more than another at the bottom of corrupt practices in connexion with elections it is the abundant use of money.

Now, in effect, this is an abundant use of money flowing from the candidates to the people.  The present scheme addresses a similar type of mischief; an abundant use of money flowing from the donors into the pockets of the candidates and the governed, in order to buy access, influence and obligation.

So, we would ultimately submit, as per paragraph 7 of the outline, that it is consistent with Roach 233 CLR 162 at [53] to use this historical material to evidence a common assumption that polities in the Federation would continue to be able to regulate the potentially pernicious effects of money on a fair and free electoral process and also to provide assistance in understanding the breadth and flexibility of the constitutional provisions mandating the system of government which Parliaments can then choose between.

Of course, the Commonwealth Parliament has not taken the step the New South Wales Parliament has taken.  It adopts a disclosure model.  New South Wales has disclosure plus these additional steps and our submission is that both of those models, and indeed other variations on a theme, found across the Federation, as set out at pages 190 and following of the historical book, are consistent with the implied freedom.

Do your Honours wish me to conclude – I only have two minutes to go.

FRENCH CJ:    Yes, thank you…..

MR GLEESON:   Your Honours will see on the question of the application of these principles - this perhaps comes back to our paragraph 33 - we are urging that the Lange test is not a piece of constitutional text, it is a framework for a multifactorial analysis. 

FRENCH CJ:   What is the multiplicity of factors?

MR GLEESON:   The multiplicity of factors is, on the one hand, the purpose of the law, start there, and the legitimate end that is being pursued and then an identification of the means and an assessment of the degree of fit of those means to the end.  In particular, your Honour, in particular – assuming there is a burden the nature and intensity of that burden will critically influence the application of the second limb of Lange and that was the matter we wished to address in paragraph 9 that in the present case there are three critical features. 

One is, if we are correct that the ends are, in fact, protective or enhance the constitutional system of government then the burden is of such a nature that will require a comparatively low justification.  That is one aspect.  The second aspect is in terms of the intensity of the burden.  There is nothing in the special case to suggest the caps prevent candidates or parties from amassing necessary resources for effective advocacy.  So it is of a low intensity in that sense, and thirdly, unlike ACTV and Unions, the caps, at least, do not have any differential effect.

FRENCH CJ:   But these are fitted into a multistep analysis.  You do not walk into a cloud of factors and come out with a feeling, do you?

MR GLEESON:   No, we are not saying throw away what the court has done.  We are saying – we are seeking to submit that one has, of course, the burden before one gets to the second step but in that second step one is assessing the degree of fit between the means and the legitimate ends that have been identified, that inquiries into less restrictive means while available are neither necessary or sufficient for the analysis and in many, if not most cases, one does not reach the strict proportionality that would be favoured if one were applying a constitutional text which adopted proportionality as such.  So that in the present case ‑ ‑ ‑

KIEFEL J:   What do you call strict proportionality?

MR GLEESON:   Well, the final step of Professor Barak’s analysis where the court is really weighing, on the one hand, I am accepting the means do achieve a legitimate end and there is no less restrictive way of doing it which is equally effective, so I am putting that on one side, but on the other side I am putting I am burdening something that is constitutionally protected, namely, free speech, and I am somehow then balancing that final strict balancing stage.  We would be urging that is not appropriate within Lange.

KIEFEL J:   Is not the measuring as between the burden that is placed, the effect on – there he is talking about a right – but the effect on the freedom, but balancing that against the statutory object and the public benefit obtained by it?  Is that not what is involved in the test?

MR GLEESON:   Well, if your Honour says that is ‑ ‑ ‑

KIEFEL J:   I think that is what you are talking about at paragraph 33.

MR GLEESON:   Yes, we do not have an objection to that.  We were saying do not take ‑ ‑ ‑

KIEFEL J:   Well, forget about what we call it, but you are saying in paragraph 33 that some statutory objects which implicitly have a great public benefit, an obvious public benefit, may justify certain levels of burdens on the freedom?

MR GLEESON:   Yes, we do not walk away from that, and so national security defence, times of war, may justify greater restrictions; will not

necessarily, but may.  So to that extent that would be permissible within the exercise.  But in the present case, if one successfully concludes that the nature of the burden is in fact the enhancement of the constitutional system, the intensity of it is low, there is no differential effect or discrimination, rational connection is almost straightforward in this case, there is little need to go a great deal further in concluding that the burden is not undue.  That is what we seek to – and that is what we seek to put.  May it please the Court.

FRENCH CJ:   Yes, thank you.  The Court will adjourn until 10.15 tomorrow morning.

AT 4.17 PM THE MATTER WAS ADJOURNED
UNTIL THURSDAY, 11 JUNE 2015