High Court finds that electoral expenditure caps in NSW legislation impermissibly burden the implied freedom of political communication

Unions NSW v New South Wales  [2023] HCA 4 

Summary

After “an urgent hearing of what became a non-urgent case”,1 the High Court found that a provision of NSW legislation did in fact burden the implied freedom of political communication. The High Court also determined that it did not have jurisdiction to hear or decide upon the validity of a repealed section of the same legislation, as it was no longer a sufficient “matter”.  

Facts

Unions NSW (plaintiffs) filed proceedings, by way of special case in the original jurisdiction of the High Court, alleging that two provisions of the Electoral Funding Act 2018 (NSW) (EF Act) were inconsistent with the implied freedom of political communication in the Constitution.  

The plaintiffs were registered under the EF Act as third-party campaigners (TPCs) for previous NSW State elections and by-elections, and expressed intention to continue registering for future elections. The EF Act contains provisions which aim to restrict electoral expenditure by certain amounts during particular periods of electoral campaigns.  

Electoral expenditure is defined as expenditure of specified kinds “for or in connection with promoting or opposing, directly or indirectly, a party or the election of a candidate or candidates or for the purpose of influencing, directly or indirectly, the voting at an election”. For a TPC, “electoral expenditure” is only incurred if it is “for the dominant purpose of promoting or opposing a party or the election of a candidate or candidates or influencing the voting at an election”.  

The “capped State expenditure period”, in the case of a by-election, is the period from and including the day of the issue of the writ for the election until the end of election day. 

Issues

The plaintiffs contended that sections 29(11) and 35 of the EF Act impermissibly burdened the implied freedom of political communication.2 Firstly, section 29(11), created a criminal offence to incur costs exceeding $20,000 (indexed for inflation) in electoral expenditure in the capped State expenditure period before a by-election.3 Secondly that, section 35, created a criminal offence for acting in concert with another person or persons to incur electoral expenditure during the capped State expenditure period.4  

Two weeks before the hearing, section 35 was repealed by the New South Wales Parliament.5 The question for the High Court in respect of section 35 then became whether or not it had jurisdiction to hear and determine the validity of the provision.  

Decision

In relation to s 29(11), it was accepted by the parties that electoral expenditure caps impose an effective and direct burden on political communication, as was found in Unions [No 1].6 Shortly after the conclusion of the hearing, the State of NSW (defendant) informed the Court that it now conceded that s 29(11) was invalid, on the basis that the New South Wales Joint Standing Committee on Electoral Matters had provided a report which recommended that the cap on TPCs for a by-election should be increased to $198,750 (indexed to inflation).7  

Despite acknowledging that the parties were now in agreement, the majority (Kiefel CJ, Gageler, Gordon, Gleeson and Jagot JJs) noted that “questions of the validity of a law cannot be decided by agreement” in that way, and that the Court must determine validity regardless.8 The caps on electoral expenditure constituted a restriction on the capacity of persons who sought to participate in political debate during an election campaign, and were therefore a burden.9 Applying Lange10 and McCloy,11 the majority concluded that where a law imposes a burden on this freedom, it must be justified. The defendant no longer sought to justify the burden imposed on political communication and as such, the High Court confirmed the burden was not justified and the provision was invalid.  

Regarding s 35, the High Court determined that it did not have jurisdiction to hear and determine the plaintiffs’ claim in relation to the repealed provision. Separately, Justices Edelman and Steward agreed on this point. The High Court noted the authorities which confirm the High Court does not have jurisdiction without a “matter” within the meaning of Ch III of the Constitution, and that a “matter” cannot exist unless “there is some immediate right, duty or liability to be established by determination of the Court”. Further, standing of the parties to seek relief is subsumed within this requirement of a “matter”, and the parties must have “sufficient” interest in obtaining the relief sought. In this case, the implied freedom of political communication is not a personal right, and the plaintiffs did not establish that success in the action would confer on them a benefit great than one which would be conferred on any ordinary member of the public. The fact that the provision was repealed, and therefore any alleged breach was no longer current, also weighed against finding jurisdiction.  

Commentary

Legally, this case confirms the earlier Unions cases,12 where electoral expenditure capping was deemed to be a direct burden on the implied freedom of political communication. In Unions [No 1] the High Court held that the State of NSW had not established a legitimate purpose for the limitations to the right.13 In Unions [No 2] the majority decided that the State of NSW had not established proof that a cap $500,000 lower for TPCs than parties and candidates was necessary, thus failing the third stage of McCloy.14 Once again, the State of NSW was unable to establish justification for the burden on the implied freedom.  

Politically, however, submissions of counsel for Unions NSW, Justin Gleeson SC, were that the timing of the repeal of section 35 was simply to invalidate current proceedings, and that the State of NSW would introduce the provision again in a similar form at an “inconvenient time”.15 Counsel for NSW, Bret Walker SC, disagreed with any suggestion that NSW had “done something unmeritorious” by repealing section 35 just two weeks before hearing, putting forward instead that it was common and ‘unremarkable’ for a party in government who does not hold an upper house majority to repeal a provision as part of political compromise.16 In any event, the majority concluded that there would not be jurisdiction to hear or determine the invalidity of a law simply because it may or may not be reintroduced at a later date. 

The full decision is available here. 

Case note prepared by Riley Arthur at DLA Piper