27 July 2015


'McCloy v New South Wales: Developer Donations and Banning the Buying of Influence' by Anne Twomey in  (2015) 37 Sydney Law Review 275  states
McCloy v New South Wales involves a challenge to the capping of political donations and the imposition of a ban on both indirect donations and donations from property developers in relation to New South Wales elections. If the challenge is successful, it would seriously damage the ability of state governments to take measures to prevent the risk and perception of corruption and undue influence arising from the unfettered making of political donations. While it is likely that the provisions capping donations and banning indirect donations will survive scrutiny by the High Court, the provisions most vulnerable to attack are those that single out property developers, banning them from making any donation at all.
Twomey comments
In McCloy v New South Wales (High Court of Australia, Case No S211/2014’), the High Court of Australia will face the question of whether to bring down the whole edifice of election campaign finance law in New South Wales (NSW) on the ground that it unduly burdens the implied freedom of political communication by limiting the funds available to pay for that communication. ... 
The challenge was brought by Mr Jeff McCloy, a property developer and then Lord Mayor of Newcastle, after hearings by the Independent Commission Against Corruption (‘ICAC’) revealed that he had made donations in excess of $31 500 to, and for the benefit of, candidates in connection with the NSW election of March 2011. In addition, one of his companies paid $9975 in remuneration to a person who was working on the campaign staff of an election candidate, amounting to an indirect campaign donation. These donations occurred at a time when political donations in relation to the NSW election were capped at $5000, indirect donations were banned and political donations by property developers were also banned. On 28 July 2014, McCloy commenced proceedings in the High Court of Australia challenging the validity of s 96GA of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) (‘EFED Act’), contending that it breached the implied freedom of political communication. This provision prohibits certain persons and corporations, including property developers, from making political donations. No challenge was initially made to other provisions of the Act. The scope of the challenge was later expanded, as it appeared from the facts that McCloy may also have breached provisions that imposed a cap on donations and prohibited the making of indirect donations. Accordingly, the proceedings now also challenge:
  • the validity of the scheme for imposing caps on donations (EFED Act pt 6 div 2A); 
  • the banning of indirect donations (EFED Act s 96E); and
  • the banning of donations from all categories of prohibited donors (EFED Act pt 6 div 4A).
No challenge has been brought to the cap on electoral communications expenditure or the disclosure regime in the EFED Act. However, if the cap on political donations is held invalid, the cap on expenditure would inevitably fall in the future, as it imposes a more direct limitation upon political communication. Hence, all that would be likely to survive, if McCloy were fully successful in his challenge, would be the disclosure regime.