Foreign Donations Bill ‘Likely’ to be Struck Down by High Court

The controversial foreign donations bill is “unconstitutional” and there is a “reasonable likelihood” it will be struck down by the High Court, a constitutional law expert has told the parliamentary electoral matters committee.

In a public hearing in Canberra on Friday, Professor Anne Twomey, a professor of constitutional law from the University of Sydney, told the inquiry the proposed law was “extraordinarily badly drafted” and does not “achieve its purpose”.

The Election Funding and Disclosure Reform Bill, which aims to ban foreign donations and requires registration and disclosure requirements for a broader group of non-party political actors than is currently the case, was referred to the Joint Standing Committee on Electoral Matters by Minister for Finance Mathias Cormann on 6 December.

According to the federal government the bill is necessary to block donations by foreign entities attempting to influence Australian electoral outcomes.

However, the bill has come under fire from many in the charity sector with fears it could have a “chilling effect” on advocacy and impose an onerous level of red-tape on charities.

Addressing the committee, Twomey said the draft bill did not achieve its purpose.

“Foreign nationals can still, under this bill, make enormous and influential donations to political parties, if it is done through a permanent resident or a foreign-owned corporation or a subsidiary that is incorporated in Australia,” she said.

She further criticised the bill for being drafted in a “broad and vague manner” that was causing uncertainty about what activities the law would apply to.

“It is so extraordinarily badly drafted, that it could frankly apply to anything,” Twomey said.

She also raised a number of constitutional issues.

“When a law burdens political communication, including the funding of that communication… it will be struck down as invalid if the law is not reasonably appropriate and adapted to achieve its purpose,” she said.

“While preventing foreign interference in election is no doubt a legitimate purpose, this bill does not achieve its purpose.

“Moreover, the burdens that it imposes, which are considerable, are arguably not reasonably appropriate and adapted to achieving that purpose.

“There is therefore a reasonable likelihood that in its present form it would be struck down as constitutionally invalid.”

Her latest comments build on her earlier submission to the Inquiry into the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 in which she said it was “arguable that this law would have a chilling effect on third parties engaging in political communication”.

“Many bodies, such as charities, will have to make a decision about whether they can justify paying the financial cost of the administrative burden from their financial resources to fund political advocacy concerning their charitable causes,” Twomey said.

“Many may also be concerned that potential donors will be deterred from donating if they have to engage in the hassle of providing a statutory declaration as to their status as an allowable donor. “

She said the constitutional doubts that arose in relation to the bill, concerning the application of the implied freedom of political communication and federalism constraints, could only be resolved by the High Court if the law was challenged.

“But Parliament can, if conscious of the potential problems, ameliorate the risks involved by ensuring that third parties are not unduly or disproportionately constrained from engaging in political communications and Commonwealth laws do not affect State elections without the agreement of the States and implementation through co-operative legislation or a reference under s 51 of the Constitution,” Twomey said.

“Apart from the constitutional issues, it is incumbent on the Parliament to ensure that such legislation is effective and practical in its application.

“Consideration should be given to the operation of state legislation as a guide in relation to both the problems that have arisen and options for overcoming them.”

The committee also heard evidence on Friday from a range of civil society groups, the Australian Charities and Not-for-profits Commission, and the Australian Electoral Commission.

Speaking ahead of the public hearing, committee chair Senator Linda Reynolds said only Australians should have the power to influence Australian politics and elections.

“Integrity, real or perceived, of Australia’s electoral system is critical to our system of government,” Reynolds said.

“Our current system of regulation has not kept pace with international, domestic and societal developments.”