WILLIAMS, Professor George, Private capacity

[11.04]

CHAIR: I welcome you to today's hearing. Do you have any comments to make on the capacity in which you appear?

Prof. Williams : I appear as a professor from the University of New South Wales.

CHAIR: Thank you. Although the committee does not require you to give evidence on 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. The committee has received a submission from you. If you wish, please feel free to make an opening statement and then I will throw it open to questions.

Prof. Williams : Thank you. I will make a brief opening statement that goes to the core submissions that I would like to make. My view is that there is a good rationale for revising the regulatory scheme in this area. Indeed, I would favour what I call holistic reform. I do not believe that any scheme tackling these matters that deals only with one side of the equation or one part of the issue will actually remedy what does appear to be a problem, both in reality and public perception, when it comes to funding of political parties and political campaigns.

My views as to the specifics are informed particularly by some of the research that has been done by others in this field. I regard the work of Joo-Cheong Tham in particular as being the leading research in this field. I find it quite persuasive. Indeed, he has put out a book on this area which I think is very useful. When it comes to the specifics themselves and to donations, I personally would favour banning donations from nonresidents. I would also favour limiting donations to individuals. I think those donations could be usefully capped. The level of the cap might be $2,000 or $5,000, but I think that is something that can only be determined by appropriate modelling. Given that this is an area that is liable to the possibility of a High Court challenge, it is very important that any cap is based upon evidence as to what would give rise to a level playing field and also adequate funding of campaigners, political parties and third parties to the process. I see also that these are matters that Democratic Audit of Australia deal with in their submission. I do support a cap on the expenditure of funds and do not believe that dealing only with caps on donations is sufficient. I note that this is something that has been tackled effectively in other nations, whether it be Canada or elsewhere. I think there is a lot of guidance we can get from Canada, New Zealand and the United Kingdom in particular.

That deals with what I would call the supply side. I think that legislation ought also to deal with the costs of campaigning itself. I recognise the almost insurmountable difficulties in fashioning a scheme that works effectively in terms of the amount of money that comes into the system and appears to be spent without also dealing with the demand for money in the first place. I suggest the committee looks again at the possibility of limiting the scope for electronic advertising, perhaps direct mail or other campaigning options in order to limit the capacity to spend money through those mechanisms. I recognise that in 1992 the High Court struck down one scheme, but that clearly does not affect other possible schemes. There are a range of possibilities in this area that could be looked at.

When it comes to third parties, the final issue I will talk about, I support what has been said by others, which is that third parties involved in what I would call campaigning, advocacy for votes or advocacy on particular issues during election campaigns should have a high degree of transparency. That should include matters such as their constitutions and governance and also their relationship with political parties so that people are aware of those matters. I think they do need to be subject to fair donations and expenditure caps, otherwise we simply open up another avenue for running the money arms race, as it is often called, simply outside the political parties and through other entities.

CHAIR: One of the matters that is before the committee is a proposal to ban donations from tobacco companies to political parties. I asked a number of people yesterday whether they had had legal advice in terms of the parliament's ability to do that. No-one produced any legal advice. Are you confident that the federal parliament has the constitutional authority to ban donations from tobacco companies? If so, what is the basis of your confidence?

Prof. Williams : I am not confident it has that power based upon a ban only applying to tobacco companies. I gave evidence to a New South Wales committee on this—and Senator Rhiannon was on that committee—in the context of developer donations. I think there are constitutional questions that can be raised about any scheme that fixes upon a particular industry or group of people because that may have the appearance of being a discriminatory law that might seem to favour one industry over another. I think that it opens up the argument that perhaps there are issues with the tobacco industry, so why not other industries: gambling, liquor or other industries that may be regarded as social evils by some people? Why aren't they covered as well and why are we in effect privileging one industry over another?

When the High Court has handed down decisions in this area, it has particularly used language such as 'fair playing field' and not having discriminatory laws. It means that, in my view, if we are to go to donations by tobacco and other companies—if that is a desirable object—then it should be part of a general scheme, and they should be part of that general scheme. But I am concerned about fixing upon them for what I would call 'a separate set of rules'.

CHAIR: What would a general scheme be that might survive a constitutional challenge with donations from companies, holus-bolus, being disallowed?

Prof. Williams : For example, a general scheme might only permit donations by individuals and thereby you would knock out donations from tobacco companies and other corporate entities as well. You still leave open the possibility of individuals, who work for tobacco companies, making those donations and that is a risk.

Mrs BRONWYN BISHOP: Or unions.

Prof. Williams : Or unions, indeed. This is the problem in this area. I cannot suggest a watertight scheme to you. It does not exist anywhere that I am aware of. But certainly if you look at Canada and elsewhere it can have a drag-on effect and can lead to what might be regarded as a significant improvement on what we have at the moment.

CHAIR: But in terms of a scheme to just ban tobacco donations alone, you believe that would be vulnerable?

Prof. Williams : I think it would certainly be vulnerable to challenge. I am not saying it would be struck down. We do not have any High Court authority honour law of that kind, only some decisions now that are quite old. I think the existing High Court authority provides you with a line of argument to suggest that a federal law, which restricts donations from any particular industry without being a general law, that applies across the board would be vulnerable to challenge. We would have to see how that played out in the court.

Senator RYAN: Just to clarify, as I think we asked this at the last meeting we had in another building in this city, your proposal regarding bodies corporate handing out money to political parties does include union affiliation fees, doesn't it?

Prof. Williams : Yes, that is correct.

Senator RYAN: One of the points you make, and the language is common amongst a lot of submitters, is about the so-called 'arms race'. One of the challenges in this area is, when you have so many people with the same opinion, the same language becomes self-fulfilling. It is fair to say that I am not as convinced by the risk of the so-called arms race; I am quite happy to see it as competition. One of the drivers of this is, of course, the cost of television advertising, and that has a particular problem which you referred to with the Capital Television case when the High Court struck down the last attempt to ban it. You make a comment about it being possible to design an advertising system that would comply with the requirements of that and subsequent decisions. What would be the characteristics of such a design?

Prof. Williams : Firstly, I accept the description of a so-called arms race. There is an evidentiary point that needs to be made. I would say that whatever regulatory scheme might be adopted needs to be on the basis of clear and cogent evidence. That is something that the High Court in particular would want to see on the public record because the High Court would be looking for rational, clear reasons as to why there has been any restriction of speech such as through restricting television advertising.

When it comes to what might be done the High Court decision in 1992 was clear in recognising that any scheme which operates in a discriminatory fashion and in particular may give advantages to established political parties over new entrants, or may give advantages to one form of speech between third parties, is exactly the sort of thing that the High Court will assess with considerable scrutiny. When it comes to electronic advertising, for example, if there is a permissible form of advertising, it does not limit that to just political parties. In fact third parties will also have to be let through that gate as well, because they have speech which is a justifiable part of the political process. It means that you are looking at a scheme that recognises the diversity of possible voices without saying during election campaigns that it is only the political parties which have a restricted but nonetheless possible right to advertise in that medium.

Senator RYAN: For example, a proposal that a date was announced or writs were issue sometime after that, which limited advertising purely to political parties with the objective by some to address things such as mining tax or union campaigns, would in your view be highly suspect to the High Court disapproving of it.

Prof. Williams : Yes. I think you would be re-running the 1992 case and you would likely lose. I think also it is not just a constitutional problem. I think it is a matter of design and policy and it is clear that other voices have a role to play during election campaigns.

Senator RYAN: If such a proposal were based around free time or something that could be made a condition of the licence holders for free-to-air television if you were not acquiring the property, how would you theoretically incorporate third-party voices? I recall from my studies a long time ago that one of the comments in the High Court judgment was about protecting the status quo. I cannot remember the exact words. If you only provide the opportunity for those who have been there to still be there, then you are going to fall foul of the High Court's test which is how you allow for new entrants. So how do you account for third parties, some of which spring up out of nowhere very quickly on issues that might only be relevant to one election?

Prof. Williams : That is a good point and that is certainly another key part of that decision that, even if you limit it to the existing political parties, it is the new parties—and we have parties being formed this year—that should have an equal entitlement to try and use that medium. You might do that, say, through linking to an expenditure cap. It might say that third parties—political parties—have expenditure caps. They can spend perhaps a percentage in that medium or elsewhere and make strategic and other decisions as to how it is spent. But if they have expenditure caps as political parties that itself gives you the beginnings of a mechanism that you might apply across that medium as well, in saying you can make choices as to where, when and how, but there is a fixed amount you can spend.

Senator RYAN: In your view, with the language and the development of the freedom of political communication, don't spending caps also run the risk of limiting the freedom to communicate political information relevant to the House being chosen directly by the people? Don't spending caps also run the risk of running foul there, especially if they are set particularly low, maybe even with the explicit intent to stop a mining tax type campaign? That could actually be a failure of the test the High Court set.

Prof. Williams : Yes, I think any cap is something that will deserve close scrutiny because any cap, by nature, will limit the ability of someone to communicate about political matters. I think it means that any cap will need to be based with strong and clear evidence as to why it is justified, that there is a problem that needs to be dealt with, that the cap is based upon modelling that demonstrates it is an appropriate cap and also that the cap has been drafted with a sensitivity to the diversity of voices that have a right to play a role in discussion about political matters. If you do not get those things right—and they are very difficult to get right—then you could head for a High Court defeat. In nations with far stronger free speech protections, such as Canada, they have managed to achieve that and that has resisted, to this point, any constitution striking it out.

Senator RYAN: In the end, they are relying on our court taking what might be a European approach to free speech causes rather than an American one, because the American jurisprudence on this base has much softer words in their constitution than that of the Canadians and is much more liberal and restrictive of state action, isn't it?

Prof. Williams : I would not describe it as European so much as non-American. If our courts go down the American path, I think that would have severe limitations and indeed would likely defeat the sorts of proposals I am putting because I think they have taken an approach there which is counter to what we might see.

Senator RYAN: It is also the oldest approach though. The American jurisprudence on the free speech clause, to their credit, probably predates virtually all else in the world.

Prof. Williams : It does. But there are two responses: the first is that the American approach is an outline in this regard. They are quite distinctive, very robust, but they go further in this regard to their iconic first amendment on freedom of speech than other nations tend to. So it is an outline. Second, the Australian courts have not demonstrated any willingness to go down that path. The American approach has been looked at specifically in a number of free speech cases. It has been referenced but, with some rare exceptions, our judges have not wanted to follow that path and have often made reference to Canadian, United Kingdom and other jurisprudence. That is why I would say with some confidence I think that it is very unlikely our court will go the American path in this respect.

Mrs BRONWYN BISHOP: I wonder if we could address an issue that really has not been addressed. That is the trade-off that is talked about in the green paper, the trade-off of limiting expenditure and limiting those people who can donate to there being a much greater public funding—in other words, the taxpayer having to provide much more money to run political parties?

Can't two dangerous things flow from that? Firstly, as has happened in Canada, where parties have got out of the habit of having to go out and convince people that they are worthy of having a donation to stay alive and they have lived off the public teat. The government then comes in and cancels that public funding. It wipes that political party off the map, which can no longer fundraise because they do not know how to do it anymore. They have no base.

Secondly, as has happened in the United States, political parties do not really run their own affairs; outside bodies, including the Tea Party, run the agenda.

Thirdly, in a society such as ours where I believe in participatory democracy—which means the more people you have participating in it, the stronger the democracy—if you get political parties relying on taxpayers' money, doled out by government, then you are excluding more and more people who want to be involved, by making donations, attending functions and generally being in an environment where they are actually participating. If you run an elitist sort of argument that really the hoi polloi should not be listened to and that only big, rich people ever get access which, to put bluntly, is palpably just not true—anyone who does constituent work knows that is not true—

Senator RHIANNON: (Inaudible)

Mrs BRONWYN BISHOP: How do you answer those queries and is it not better to have more freedom than less freedom, even though you have problems with that enhanced freedom?

Prof. Williams : I will start with the premise and that is that a regulatory scheme might require the taxpayer to pick up the slack. To the extent that may happen I also would share—

Mrs BRONWYN BISHOP: That is the trade-off?

Prof. Williams : I would share that concern. I would not support a scheme that, essentially, transfers a model of private funding into a model of public funding. I think taxpayers are very unlikely to want to pick up that amount of money and, indeed, should not have to do so.

Mrs BRONWYN BISHOP: But they might not have any say in it.

Prof. Williams : That would be an undesirable scheme. The changes that I would be interested in would be directed at a couple of things. Firstly, I think there is a need to reduce costs, particularly those of campaigning when it comes to electronic and other forms of advertising. If it does not reduce costs, then I think there is a basic failure in whatever regulatory scheme might go in. Secondly, restricting donations to voters, to individuals, and capping them at a reasonable level provides an incentive and, indeed, a requirement to do the mass appeal work and grassroots work that you are talking about. Your funding base will necessarily be a broader one. Those are the sorts of things that the model will be directed at but will certainly not significantly increase the taxpayer component of it.

Mrs BRONWYN BISHOP: You did not address the other issue of outside bodies actually taking over the real running of the political agenda.

Prof. Williams : By that, do you mean the role third parties might play?

Mrs BRONWYN BISHOP: Yes.

Prof. Williams : We have certainly seen that already occurring to a more significant degree. I suspect that, in part, has something to do with what seems to have been a decline in political membership over recent decades. I know from what I call anecdotal evidence, from dealing with my own students over a period of time, a greater willingness to be involved in what I would see as third parties than the political parties themselves. My view is that, wherever they fit in the political spectrum, they have an entitlement to put forward their view but, where they do so within the campaigning context, that must come with transparency and accountability. People also have an entitlement to know where that third party is coming from and, if they are successful in getting private sector funding which, again, I would subject to exactly the same caps and requirements as political parties, then good luck to them.

Mrs BRONWYN BISHOP: How would you deal, then, with GetUp!—founded by a Labor Party minister, Bill Shorten—which goes out into the public space and claims to be independent? How do you deal with that?

Prof. Williams : I have read Senator Abetz's submission on this. He, as are others, is entitled to make strong arguments about that independence, but I do accept that the scheme regulation can do more for providing transparency when it comes to governance structures, sources of funding and other matters. But, ultimately, no legislation can give you an easy answer to questions of perceived independence or otherwise. That itself is a matter of political debate. People continue to put up submissions and people often claim all sorts of labels within a political debate and that should be part of the contest.

Mrs BRONWYN BISHOP: You talk about transparency. 'Transparency' has become a buzzword, hasn't it? It is a bit like 'sustainability'. They have become Kleenex tissue words; they do not really mean much. To the average punter in the street, what do you think 'transparency' means?

Prof. Williams : I think it means that when it comes to money in the political process that they would like to know who is receiving money as a participant in the process and the amount they are receiving so they can make their own judgments about whether that money might be influencing that process. Whether or not the reality is there, there is certainly a perception amongst many people. I think that perception is something that ought to be addressed through having greater transparency. To me that would go to things I do support such as lowering the threshold for disclosure closer to some of the overseas models of about $1,000 or $1,500 and perhaps even more importantly changing the timing of disclosure. I think Australians ought to have information available to them before they cast the vote as to where political parties and third parties have received money from that has enabled them to campaign in that election so Australians can make judgments about that prior to polling day.

Mrs BRONWYN BISHOP: Don't you think that the so-called concern about donations has been whipped up by a lot of the elites, who perhaps do not get too many donations, unless it is the Greens getting $1.6 million?

Prof. Williams : No, I think there is a legitimate concern there. This is not an Australian concern. The international experience has been there for many years now that political systems can do a better job when it comes to this transparency point as I would call it. I think for me the democratic system works best when people have access to the information that might ultimately affect their vote. I think there are some people whose vote will be affected by where they perceive people are receiving money from. If they want to cast a vote based upon that information, I think that is fair enough.

Mrs BRONWYN BISHOP: In that space how would you adjudge the current government's decision to use the national emergency powers to launch a $24 million campaign of advertising for legislation that does not yet exist? How would you adjudge that?

Prof. Williams : I have written on this myself. I would prefer rules about government advertising to be legislated. Personally I also think that those rules should provide for advertising relating to legislation once past rather than legislation that is still at an earlier stage. I would like to see those rules put in a far more concrete form. This is something that has gone across all parties and all parliaments for a long period of time. I think the current government has actually made some important improvements, but they do not go far enough in my view.

Mrs BRONWYN BISHOP: Which were the important improvements?

Prof. Williams : In terms of providing a level of scrutiny involving the role of some independent officials and the like—

Mrs BRONWYN BISHOP: Go there. I happened to have sat on the inquiry that looked specifically at the position it placed the Auditor-General in—the way someone was brought in to criticise the Auditor-General was then given the job and given the same rules and then pushed out of the picture because it was not convenient at the time. I do not call that an improvement.

Prof. Williams : Whatever I would say about the current model, I would say it can do a lot better than it currently is.

Mrs BRONWYN BISHOP: Would you remove the national emergency provision?

Prof. Williams : I have not come prepared with submissions on that. I would need to look at that in much more detail.

Mrs BRONWYN BISHOP: But this goes to transparency, doesn't it?

Prof. Williams : It does. Previously I expressed the view that there is a good reason to have what we might call emergency ad hoc sources of funding—it might be a natural disaster or the like—but it comes to the criteria that are applied to that funding and the ability to enforce those criteria. If Australians were facing a bushfire emergency then yes, there should be a source of funding available to advise people as quickly as possible.

Mrs BRONWYN BISHOP: There is always a pile of money for that.

Prof. Williams : Hence I accept the need for an emergency fund, but the questions are: how is it administered, is it done in a rigorous way and is it actually done by people—

Mrs BRONWYN BISHOP: What we are talking about in this instance is political advertising, which is still government advertising but of a political nature. That is what those regulations are about.

Prof. Williams : I accept that government advertising across many years at the state and federal levels has in my view transgressed into the area that does amount to more political advertising.

Mrs BRONWYN BISHOP: I do not mind that, but it was Kevin Rudd who called it a cancer upon the system. How do we deal with this situation? In the 2010 election, the first half of the Labor Party's electronic campaign was funded entirely by the unions and only the second half of the campaign was paid for by the ALP? How do you treat that?

Prof. Williams : On the model I was suggesting I would propose that donations be limited to individuals and I would also suggest limits on the ability to advertise electronically. That would put the squeeze on the type of campaigning from two ends.

Mr GRIFFIN: That assertion should be challenged. It is the opinion of Mrs Bishop as to the question of what the ALP campaign was. The fact is that the unions had a separate campaign.

Mrs BRONWYN BISHOP: To look at the question of the interrelationship, though, when you say only natural persons should be able to donate, it is not very hard to think of ways a union could use to get around that. If you look at the power of the unions within the Labor Party itself—and I do not think you cannot look at this question unless you do—you have only to look at what is happening in South Australia today, where people outside the political process have told the Premier he has to go, and we also saw it in the federal system. Do you really think that banning corporations giving donations is going to stop trade union money flowing to the Labor Party? Do you really believe that this possible?

Prof. Williams : I do not have any view on the political aspects of it. As I did say earlier, I acknowledge that there is no watertight scheme. That cannot be designed. What I would say, though, is that it is possible to design a scheme that is a significant improvement on what we have at the moment. Indeed the issues that you raise reach across the third-party sector generally, so the same issues arise with respect to corporations and other bodies and the same arguments apply, and I accept that. I cannot give you a scheme that is watertight.

Mrs BRONWYN BISHOP: Did you think Senator Back's submission made sense and that some action needs to be taken with regard to GetUp?

Prof. Williams : I would not focus on any particular group, GetUp! or otherwise, but I am convinced that as part of a holistic scheme it is appropriate that third parties, whoever they may be, are subject to the sort of transparency that I talked about. That would apply not just to GetUp!but to a range of other organisations. I think Australians do have an entitlement to know more about the organisations that are participating in electoral campaigning.

Mrs BRONWYN BISHOP: Do you also accept that the burden of regulation that is being placed on volunteers, who very often are just ordinary mums and dads who are proud to be part of a political party and to take on office, is forcing them to not wish to volunteer for office?

Prof. Williams : Not that I am aware of.

Mrs BRONWYN BISHOP: Believe me, I can tell you that it has become a real problem.

Senator RHIANNON: As you know, in relation to donations we have a ban in place now in New South Wales on developers, tobacco, for-profit alcohol and gambling, and I understand that for even longer there has been a ban in place in Victoria on gambling. In the time that those bans have been there I understand that there has not been a legal challenge, do you put any interpretation on that, that they are safe and that they stand up to the Constitution? Can we take anything from that?

Prof. Williams : The first thing to say is that the arguments for invalidity are certainly stronger at the federal level than at the state level, and that is because of the guarantee we are talking about, which is derived from the Australian Constitution and is about voting primarily in federal elections. It certainly has a counterpart at the state level but it can operate more weakly at the state level. Apart from that, I do not take much from the lack of a challenge. It is often the case that laws can sit on the books sometimes for decades only to be struck down decades later. It does demonstrate that, in the absence of a challenge, the law can operate quite happily, but it may well face a problem sometime in future.

Senator RHIANNON: I would like to ask you one question and then would you take on notice to provide us with more information about the modelling you talked about. When talking about bans and caps you said that modelling needs to be undertaken. Do you have any examples of that or how you envisage it would be put in place? You spoke about holistic reform in your opening statement and you spoke about specifics in the spread of the legislation. Are you also talking about the fact that there needs to be uniformity across the country with the different levels of government? Does that come into your interpretation of holistic reform?

Prof. Williams : On the modelling, I have not done the modelling myself and I do not have the expertise in that area. I am aware that Associate Professor Joo Cheong Thamhas done work along those lines as part of his work, and I would look particularly to that.

CHAIR: I think he will be appearing before the committee tomorrow.

Prof. Williams : I would be asking him that specifically, because he has looked quite carefully at this, and he is the sort of person who is best equipped to answer questions such as the appropriate level of a cap and the like. I admit that I am making what are essentially educated guesses about that matter, and that is not satisfactory. Sorry—what was your second question?

Senator RHIANNON: It was about holistic reform.

Prof. Williams : Yes—in the states as well as the territories.

Senator RHIANNON: I am interested in the consistency across levels of government and across the country.

Prof. Williams : It is absolutely desirable. Without that, the possibilities are opened up to work around one level of regulation by operating at a state or territory level. Nonetheless, my view is that there are still great advantages of proceeding, even if the federal parliament needs to do so initially and alone. It might actually provide a model that can then be adopted elsewhere, so we have a seamless network of regulation.

Senator RHIANNON: I do have just one more thing—again, grappling with the constitutional aspects of this. All voters, including company executives, can engage in campaigning, make individual donations and engage in any aspect of campaigning. We are seeing more and more that they are becoming third parties. Does that also cover this constitutional problem that we often try to explore—that is, that in fact they are not being excluded, because they can come into the political process in these ways?

Prof. Williams : Certainly it does in the sense that they have the capacity to put arguments on behalf of their shareholders and other associated people and yes, that does give them a capacity to be involved in the system. My view would be that if they did that as, say, part of a campaign during an election campaign that they be subject to the same caps as other third parties and the same level of transparency and the like. I do not think any particular entity, whatever its political view, should have a privileged position within that. But, as I have said, personally I would limit the ability of those corporations to go on and actually donate to political parties. I would limit them to campaigning subject to transparency on their own behalf.

Senator RHIANNON: And then there are the constitutional aspects—the fact that they can engage as individuals and they can engage through their companies as third parties. Do you think that this demonstrates that they can still fully function and participate in the democratic process so that they are not in fact being excluded?

Prof. Williams : I think the question is whether you think they have an entitlement to participate in the first place on the same terms as voters and individuals. This is where the American approach would actually suggest that they have quite a high level of participatory right. I do not think the Australian courts will go that path. Indeed, the American path is quite unusual internationally in this field. I think it is most likely that the Australian courts would say that if you are a voter, if you are someone who has the right to choose your representatives, then that does give you certain entitlements about donating, participating and the like. But if you are a corporation, which is essentially a creature of an act of parliament, you do not individually have any extra free speech rights, and for that reason you can be subject to what might be far more rigorous regulation.

My point with regard to tobacco companies is not that you cannot regulate corporations but that it gets dangerous to single them out, particularly because, if nothing else, as the New South Wales legislation shows, why would you pick on just tobacco companies? There is a range of companies that fit in that category, and why would you privilege the speech of developers over tobacco companies? That is the sort of problem that does raise constitutional issues.

CHAIR: Professor Williams, thank you for your attendance today. As always, your evidence has been excellent and enlightening to the committee, and thoughtful. You will get a copy of the transcript. If there are any corrections of fact that you need to make, please feel free to do so. Also feel free to do a supplementary submission on any aspect of the committee's inquiry or, if you wish to further pursue the questions on the constitutionality of tobacco donations, to put something specifically in writing.