Why progressives should oppose NSW-style donations laws

Over past few days, an opinion piece by Keith Ewing, a professor of public law from King’s College, has been doing the rounds on social media. In it, Professor Ewing argues that the donations laws passed in NSW effectively make labour parties illegal. It is mainly being shared by Labor Party members and, in some instances, has turned into a Greens bashing exercise.

Some Greens members have responded to the criticism. One response I saw from a Greens member was that the laws stop parties from taking money from big business and developers. From companies, maybe, but not individual developers and executives in big business.

It made me stop and wonder whether many progressives actually understand how insidious these laws are. If they have looked at the legislation and still think they are good laws, they are likely to argue in support from a small ‘l’ liberal perspective about the influence of vested interests, procedural fairness and exercise of individual choice. This is the approach of supporters of the law such as Norman Thompson and Justin Field.

Personally, I am not opposed to caps on election expenditure and the role of money in politics needs to be addressed but the laws as they are disadvantage progressives far more than they disadvantage developers and big business.

There are two key elements to the laws that progressives should know about:

  1. restrictions third party campaigning by peak bodies; and
  2. disincentives for organisations to affiliate to a political party.

Restrictions on third party campaigns by peak bodies

A lot of the confusion is around the restrictions on third party campaigning. Mark Lennon, Secretary of Unions NSW, has argued that the Your Rights at Work campaign would not be possible under the NSW laws while NSW Greens MLC John Kaye has claimed:

“There is nothing in the current act that would impede another Your Rights at Work movement being funded by unions.”

Which of them is correct? Well, both are in a sense.

A campaign about rights at work can be run through a third party, however, what will be illegal is the funding structure of the Your Rights at Work campaign, where a levy was placed on affiliates of the ACTU to pay for it. A levy on affiliates would be considered a “political donation” under Section 85:

(1) For the purposes of this Act, a “political donationis: (d) a gift made to or for the benefit of an entity or other person (not being a party, elected member, group or candidate), the whole or part of which was used or is intended to be used by the entity or person: (i) to enable the entity or person to make, directly or indirectly, a political donation or to incur electoral expenditure

Under Section 96D of the Act, political donations that are spent on electoral expenditure can only come from individuals on the electoral roll:

(1) It is unlawful for a political donation to a party, elected member, group, candidate or third-party campaigner to be accepted unless the donor is an individual who is enrolled on the roll of electors for State elections, the roll of electors for federal elections or the roll of electors for local government elections.

What this means is that in order for peak bodies to run a campaign to influence voting, they would have to get individual members to donate to a third party entity. Field and Thompson think that would be a good thing but in practice it is very detrimental to progressive organisations.

Firstly, it would be an absolute privacy minefield for unions to pass on member details to a third party entity without the permission of individuals. Secondly, imagine the amount of resources needed to for a peak body to personally contact every member of an affiliate, whether they be members of unions (600,000 in NSW) or environmental groups, to get them to directly pay into a third party fund. Peak bodies are not set up in this manner & massive resourcing will be required. Given how limited resources the Left has are, the diversion of additional resources would aid the Right.

The NSW Greens have argued that the laws still allow for issue-based campaigning by peak bodies. The problem is that the definition of what is electoral expenditure is so broad that campaigning by peak bodies on “issues” during an election campaign may be seen as indirectly influencing voting. There are two relevant parts in Section 87 of the Act:

(1) For the purposes of this Act, “electoral expenditure” is expenditure 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.


(4) Electoral expenditure (and electoral communication expenditure) does not include expenditure incurred by an entity or other person (not being a registered party, elected member, group or candidate) if the expenditure is not incurred 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.

How can one clearly show that issue-based campaigning does not have the dominant purpose of indirectly influence voting during an election? Unless an entity does not make a single demand on an issue during the election campaign and does not highlight any party responses to those demands, it is pretty hard to show that main purpose is not to influence voting. It truly is absurd.

Disincentives for organisations to affiliate to a political party

The restrictions around organisational membership of a political party are far more complex. Instead of an outright ban, the laws creates a series of disincentives for both parties and affiliates. This primarily affects the Labor Party as the Greens and Liberals do not have organisational membership but the Shooters and Fishers are also impacted. What the laws do is privilege a political party structure based on individual membership.

The ban on donations to political parties under Section 96D is well-known:

(4) Annual or other subscriptions paid to a party by a person or entity (including an industrial organisation) for affiliation with the party that are, by the operation of section 85 (3), taken to be gifts (and political donations to the party) are subject to this section. Accordingly, payment of any such subscription by an industrial organisation or other entity is unlawful under this section.

The truly insidious part of the legislation, however, is less well-known or understood. It is the aggregation of expenditure under a single cap under Section 95G that creates a massive disincentive for affiliation:

(6) Aggregation of expenditure of parties and affiliated organisations Electoral communication expenditure incurred by a party that is of or less than the amount specified in section 95F for the party (as modified by subsection (2) in the case of associated parties) is to be treated as expenditure that exceeds the applicable cap if that expenditure and any other electoral communication expenditure by an affiliated organisation of that party exceed the applicable cap so specified for the party.

(7) In subsection (6), an “affiliated organisation” of a party means a body or other organisation, whether incorporated or unincorporated, that is authorised under the rules of that party to appoint delegates to the governing body of that party or to participate in pre-selection of candidates for that party (or both).

It makes it very difficult for a union or any organisation to justify continuing its affiliation if their election expenditure is counted under the same party cap regardless of what electoral expenditure is on. As I have previously mentioned, Andrew Norton provided a good example where both would be penalised when disagreeing:

The ALP will be guilty of an offence if the spending of one or more of its affiliated unions pushes the collective union/ALP spend over $9.3 million. Yet presumably the ALP cannot control the unions. To take an example from the previous NSW Labor government, if Unions NSW campaigned against electricity privatisation during the restricted campaign period (from 1 October the year before the election) not only would the Labor Party have an unhelpful campaign, they could also be punished for something that did not do and did not want.

The intent of the laws are pretty clear when you read the legislation. The goal of this aggregated cap is to end union affiliation to the Labor Party by making organisational membership of a political parties as unattractive as possible.

What happens after the High Court challenge?

Fundamentally the current laws are an indirect attack of freedom of association by making it difficult for organisations such as trade unions join a political party. The laws are also an attack on freedom of expression as they heavily restrict the ability of peak bodies such as Unions NSW and the Wilderness Society to campaign against political parties when an election is occurring. Unions NSW is right to try to get rid of these laws through a High Court challenge.

There is a lot at stake if Unions NSW loses this case. If the High Court upholds these laws, more conservative state governments are likely to adopt similar laws. Queensland will and Victoria could as the Coalition controls both houses of state parliament. The aim would be to weaken the union movement, peak environmental groups and the Labor Party permanently.

Progressives across all parties need to understand that the Coalition only proposes NSW-style laws because they know any collateral damage to them would be far less than the damage caused to the Labor Party, unions and peak environmental bodies. Progressives across all parties should unite to oppose these proposals in other jurisdictions and work together on donation and expenditure laws that do not attack our allied social movements.


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