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Joint Standing Committee on Electoral Matters
09/08/2011
Funding of political parties and election campaigns

TWOMEY, Professor Anne, Private capacity

[12:20]

CHAIR: Welcome. Do you have any comments to make on the capacity in which you appear?

Prof. Twomey : I am from the University of Sydney. Although I appear in a private capacity, I am a constitutional lawyer and can advise the committee on constitutional matters.

CHAIR: Although the committee does not require you to give evidence under oath, I should advise you that these hearings are legal proceedings of the parliament and therefore have the same standing as proceedings of the respective houses. You have not made a submission to the inquiry, but you have agreed to appear before the committee. Do you wish to make an opening statement?

Prof. Twomey : Perhaps I could outline the constitutional issues which may be of interest to the committee.

CHAIR: Sure. You heard my questions earlier to Professor Williams in relation to the constitutionality of just banning tobacco advertising and related issues?

Prof. Twomey : Yes.

CHAIR: If it is possible, I would appreciate it if you could address that.

Prof. Twomey : Indeed. In fact, the committee secretariat asked me also to have a look at the bill in relation to tobacco advertising. I do have some comments on that. I can give you some gratuitous views on issues that might need fixing or the like. Constitutional issues tend to pop up in three areas. The first is the federalism aspect, which so far I have not heard anyone here talking about, though it may have popped up previously. One of the issues, particularly in this tobacco bill and the like, is about the impact of proposed Commonwealth limitations on state branches of political parties. When we had the state legislation in New South Wales and also the equivalent in Queensland, both of the states were very conscious of the fact that if they legislated to ban donations or do anything in a way that affected political parties supporting the Commonwealth campaigns that that would be problematic constitutionally. So they deliberately put in provisions to say that these limitations only applied with respect to special accounts that had to be established for the funding of state political campaigns.

I note that in the tobacco bill the proposal does not require particular Commonwealth political campaigns to be set up. So the ban in this proposed bill would apply to all the states and state political party branches with respect to their funding of state campaigns. That is when you start getting into trouble when your Commonwealth legislation is impinging on state elections and vice versa—if your state legislation is impinging on Commonwealth elections.

The first point I would like to make is that, ideally, and obviously this is more difficult, you would have one single system that applied at the Commonwealth and the state level. Constitutionally, I do not think that can be imposed by the Commonwealth. Ideally, one would have a cooperative scheme where the states and the Commonwealth come together, reach an agreement and enact a form of uniform legislation, perhaps with one jurisdiction taking the lead and the others adopting mirror legislation—something of that kind. There are three good reasons for doing it. Firstly, it is going to eliminate some of your constitutional problems. Secondly, it will be a much more effective system because one of the main problems with this—and we have seen it, particularly in the United States where they have the same federalism problems—is that if you impose limitations at one level and they do not exist at the other, the money comes back in through the back door and the regulation tends to be ineffective. That is the major problem in the United States. The reason it is not a problem in Canada is that they have different political parties operating at the provincial level to the federal level. We are more like the United States; we will have the same problems as the United States in terms of avoidance if we have different regimes at different levels. Ideally, and although it is difficult, it would be a good thing to have the one scheme covering all.

Thirdly, there is also an issue about efficiency for parties. If a single political party that operates at the state and Commonwealth level only has one set of administrative rules to comply with, it is going to be much more efficient and easy for them to operate. I think a comment was made earlier by Mrs Bishop about the difficulties of people taking on roles in political parties because of all the incredible administrative burdens that they have to meet. This would eliminate a lot of those administrative burdens. If you had one single system and one set of rules that everybody understands you would take away a lot of those problems. That is the federalism issue.

The other issue, from a constitutional point of view, is the implied freedom of political communication, of which you are all aware. That pops up in a number of different ways. In relation to the donation ban side of things, the issue sometimes arises, 'Can you completely ban donations?' Probably not. 'Could you ban donations in relation to non-individuals?'—people who are not human voters, such as corporations, unions and associations—probably yes. Corporations, unions and the like do not vote and do not have a right to vote. When it comes to individuals there are issues about putting your money where your mouth is—your use of your money as a form of political expression. This has arisen in US jurisprudence where they have said that as an expression of an individual's political communication, giving money to a party is part of their freedom of speech. So if you are trying to ban that then I think potentially, given the US jurisprudence, you have a problem.

If you were banning corporations or unions and the like from donating, there is probably not the same problem. If it was seen to be in some way limiting the implied freedom of political communication there might be an issue about whether it is reasonably appropriate and adapted to meet that need. That is the test that the High Court uses. It could be an argument that you do not need to go as far as banning them. One other alternative to make sure you had no-one getting any greater influence than anybody else would be to set some sort of a reasonably low cap. For example, if you had a cap on corporations of $10,000 or something like that, then the property developer or media corporation would potentially have exactly the same influence as the corporation that runs the local fish and chip shop. Any of them could give $10,000 but none of them could more than $10,000. It washes influence out of the system, which is presumably the aim.

On the expenditure cap side, in the United States jurisprudence this is where the courts have been more concerned that expenditure caps prevent political parties or third parties from expressing their views in election campaigns. So if you make the cap too low and you impede that form of political communication without very good reason then you are vulnerable to constitutional problems. One particular point I will make, because it has arisen in the course of these discussions, is about government advertising. As you remember from the Australian Capital Television case, one of the things that concerned the High Court was the issue of giving advantage to the incumbents by the way the system worked. If you were going to impose expenditure caps on political parties but whoever was in government had the advantage of the use of government advertising, that may be a trigger for unconstitutionality. If you start imposing expenditure caps you also have to think about the way that you deal with government advertising, otherwise you potentially have a problem.

CHAIR: Tobacco advertising is currently before us.

Prof. Twomey : Yes, I am happy to quickly go through the bill. Some of this is more about drafting issues, but it may be helpful to the committee to hear this anyway. Getting back to the first issue about the federalism problems, here you have reference to state branches of political parties. It would appear, on the face of this, that this is a Commonwealth law that would ban tobacco companies from donating to state branches of political parties. As we know, in New South Wales that is already prohibited but not in other jurisdictions. I am not sure about Queensland, though.

To the extent that the Commonwealth is enacting a law to ban political donations to a state branch of a party that might be used for the purposes of a state campaign, it raises two potential constitutional problems. One is the Melbourne Corporation principle, which is that the Commonwealth cannot legislate in a way that undermines the continuing existence of the states and particularly affects their state constitutions and state elections. That also arose in the Australian Capital Television case, so there is an issue there. There is also a bit of an issue about a head of power for the Commonwealth to enact this legislation, which is something you might have been addressing when I came into the room earlier because I heard a little mention of Tasmanian dams. If the head of power is solely the head of power in relation to Commonwealth elections then the question is: banning donations from being used for state elections—does that come within your head of power; is it sufficiently incidental to Commonwealth elections to be covered by it? That is a big query. It is possible, however, that in relation to the tobacco stuff maybe there is a relevant treaty and therefore you could use the external affairs power. I do not know enough about tobacco treaties to answer that problem but I just raise that as an issue. That is the federalism part of it.

The second part was: does this apply to individuals and their right to donate? I told you before there is an issue about that. To that extent this is not as bad as the New South Wales provision. The New South Wales provision very expressly deals with directors, the spouses of directors and all the rest of it and it affects the ability to give money in fundraising things and all the rest of it. This does not go that far but it does say a manufacturer or wholesaler of tobacco products—I assume they are all corporations. It also talks about the agent of a manufacturer or wholesaler of tobacco products. I am not very clear on what that means, but it may include directors of corporations and those sorts of people. If it goes so far as to mean that a director of a tobacco company using his or her own money cannot then pay money to attend a fundraiser or something, then potentially you are heading into that land of unconstitutionality. That would be the issue there.

Mr SOMLYAY: What about a retailer or wholesaler?

Prof. Twomey : It just talks here about manufacturers and wholesalers and I believe—and I am no expert on tobacco at all—that wholesalers are licensed and registered and there aren't that many of them but I may be wrong, so you would need to check that.

The last question here—I am not absolutely sure what it is intended to mean. Let me give you an example: if you were a director from BAT and you paid $1,000 for a place at a fundraising dinner, would that person be an agent of BAT for that purpose? If it is coming out of his or her income and not a BAT account, does it count or not? There is one other odd thing about this and that is that, if you look at donations to candidates, parties and members of a group, it does not actually apply to members of parliament to the extent that they are not members of political parties.

Senator RHIANNON: Candidates?

Prof. Twomey : It does apply to candidates, so presumably it picks you up but—

Senator RYAN: You are only a candidate for a limited time.

Prof. Twomey : It does seem an odd little loophole; you might want to look at that one too.

Mr SOMLYAY: A group on a Senate ticket?

Prof. Twomey : It applies to groups on Senate tickets, so candidates, groups and parties but it may not pick up members who are Independents who are not members of parties.

CHAIR: We are constrained: Senator Ryan has got five minutes and Senator Rhiannon that other five.

Senator RYAN: I have a couple of quick question about the federalism impacts. There is a treaty. I think, with the discussion we had earlier, they could legislate with the external affairs power and potentially with the corporations power. To the extent that you can find the treaty for anything, what are the limits in your view of the Commonwealth power to legislate using another head of power but that may contravene the Melbourne test? Where do you think the court might start to draw the line, because we have not really got there yet with respect to the conduct of elections of state parliaments?

Prof. Twomey : The Melbourne Corporation test would apply regardless of which head of power you are using. Even if it is treaty power, if it is a law that would impede the state from being able to function independently, affect its constitutional powers and the like, then it will override your legislative head of power. That is clear, but you are right: the question is if you are enacting a law in relation to donations to political parties to be used in political campaigns for a state election is that too far away from the core of it? If you go back to the Australian Capital Television case, that legislation also affected state electoral campaigns but only three judges addressed the issue because others held it was unconstitutional anyway. Two of them said it would have been unconstitutional to the extent that it affected the state—I think I wrote it down somewhere; I think it was Justice Brennan and Justice McHugh. Justice Dawson, however, thought that it was not invalid just because it was not a significant enough interference with the state. He thought that political advertising was rubbish anyway.

Senator RYAN: But he still applied the test and just said it was not significant?

Prof. Twomey : Yes, because of that. That gives you a little bit of an indication. Again, this is one step further removed from the actual advertising; this is giving money to the parties to be used for it. So it is anyone's guess how it would go. It is an area of potential vulnerability.

Senator RYAN: Sure. I am conscious that you have time restrictions as much as we do. You mentioned that the High Court would obviously look at the impact upon different participants in the political process. Is the High Court also likely to be interested in—I do not want to use the word 'fairness'—the burdens or restrictions placed upon different players? For example, if a law were passed that placed greater burdens upon one particular player—let us say, one form of body corporate corporation—than on another incorporated association or another form of body corporate and if that were egregious to the point that there were exemptions granted to some and huge burdens placed on the other, would that be the sort of issue that you think the High Court would consider or would potentially open its mind to if it were egregious enough?

Prof. Twomey : Certainly it is an issue. It is really very difficult to judge. I do not know if any of you have looked at the report I did quite some time back in 2008 for the New South Wales government about political funding. There is a part in the back that I think is quite useful. I talk about principles of equality. This is the point at which you would find differences between me and various other constitutional lawyers. I do not think that at the moment the High Court would place as much emphasis on the equality issues as some of the other constitutional lawyers do. You can have a look at the material there and reach your own views. Again, part of this is looking at what the Americans said. The point was made that in politics there is no equality. Political parties are essentially different. Some parties will have better policies, better candidates, better leadership and better management than others. Taking everybody down to a common denominator and this whole idea of using a level playing field I have some concerns about. Having said that, the other side of it is what the High Court said in the Australian Capital Television case where they were concerned about laws that favoured incumbents and limited the communications of outsiders. I think it is very difficult to say how the High Court would go on that sort of approach.

Senator RYAN: You mentioned earlier that there needs to be a threshold met to establish the need for regulation. In your view, has that need been established to start placing limits on political speech or donations at the moment?

Prof. Twomey : The High Court says that, if you are going to do it, it needs to be for a legitimate reason or a legitimate interest. I think the court has accepted that removing the perception of corruption is a legitimate interest and so then there is the question: is there a perception of potential corruption or the like relating to these donations? I understand that that is contestable around the table, and I do not want to get into that, but from the court's point of view the issue is: is there a legitimate interest involved and is the law reasonably appropriate and adapted to achieve that legitimate interest in a manner that is consistent with the system of representative and responsible government? That is their test. That is really where you have to head.

Senator RHIANNON: One thing we have been grappling with is third parties. I am wondering what consideration you have given to that and, if there were limits in place leading into an election or generally, how that would sit constitutionally?

Prof. Twomey : I think the third-party issue is the hardest in the entire thing because on the one hand these third parties do have a legitimate interest in making their views known. The key to it is being able to set a cap or whatever at a point where the legitimate interests of those parties can be served so that they can make their point and they can make it in a way—

Senator RHIANNON: So a cap on election expenditure?

Prof. Twomey : A cap on expenditure by third parties. As most other countries do it, if you are under a certain limit, you can do what you like but if you want to do over a certain limit you have to register and be subject to disclosure requirements and you get much higher limits. It needs to be a limit that is sufficiently high to allow you to reasonably put out your point but it does not need to be so high that you can swamp everybody and wipe them out of the system. Where you set it is the really difficult point.

Senator RHIANNON: Where you set it is a difficult point. Another difficult point is: is it for just a certain period of time or is it there forever?

Prof. Twomey : That is right. Of course, whenever you set it for a particular election campaign period then obviously people are going to manipulate it by putting in all their advertising before. It is also particularly difficult at the federal level when you do not have fixed terms. At least in New South Wales you have fixed four-year terms and you know when your election is going to be and you can set the dates and the rest of it. When you have three-year terms and there could be an election at any time, how you manage that sort of thing is far more difficult.

Senator RHIANNON: This has been an ongoing issue. I understand that you see it as being unlikely that there would be a constitutional challenge if it were only individuals who could donate.

Prof. Twomey : I would never say it was unlikely that there would be a challenge.

Senator RHIANNON: 'Successful'—I was trying to get the language right.

Prof. Twomey : You would be far more vulnerable to a successful constitutional challenge if you took away the rights of individuals, especially if they were Australian people who were on the electoral roll, people who have a right to vote. If you removed their right to donate to political parties, I think you would have real problems. If it is removing the powers of non-Australian voters, so overseas people, people who do not have a right to vote, or if it is removing the capacity of corporations, associations or unions to do so, I think it would be a much more diminished risk.

CHAIR: Thank you, Professor Twomey for your attendance today. I know you made yourself specially available to appear before this committee. It is appreciated. The quality of your evidence, as usual, was outstanding. You will be sent a copy of the transcript. If there is any aspect you want to do a supplementary submission on to the committee, feel free.

Resolved (on motion by Mr Somlyay):

That this committee authorises publication, including publication on the parliamentary database, of the transcript of the evidence given before it at the public hearing this day.

Committee adjourned at 12:42