Spence v State of Queensland [2019] HCATrans 45 (13 March 2019)

Last Updated: 13 March 2019

[2019] HCATrans 045

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Brisbane No B35 of 2018

B e t w e e n -

GARY DOUGLAS SPENCE

Plaintiff

and

STATE OF QUEENSLAND

Defendant

KIEFEL CJ
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 13 MARCH 2019, AT 10.05 AM

(Continued from 12/3/19)

Copyright in the High Court of Australia
MR KIRK: Your Honours, before I proceed to the next topic, which relates to the Melbourne Corporation argument put by the States vis-à-vis section 302CA, can I just make three brief points tidying up from yesterday. First, right at the commencement of my submissions at line 94 I gave an incorrect date. I said that the Queensland amending Act commenced on 2 October 2008. It should of course have been 2018. I apologise for the error.

Secondly, briefly, in relation to some of the questions asked of me yesterday relating to section 109 and the absence of positive Commonwealth provision in relation to property developers I should have referred of course to a leading decision of this Court in relation to that sort of issue, namely Wenn v AttorneyGeneral (Victoria) [1948] HCA 13; (1948) 77 CLR 84, where that issue is dealt with, including what Justice Dixon called where an area of liberty has been designedly left. See page 120.

Thirdly, in relation to the last topic I dealt with yesterday, namely what we put as the Commonwealth’s immunity analogous to or based on Melbourne Corporation, your Honours would be aware that in ACTV [1992] HCA 45; (1992) 177 CLR 106 Justices Brennan, McHugh and also Dawson needed to address in the way the case fell out a Melbourne Corporationtype challenge to section 95D(3) and (4) of the scheme there under attack. Those provisions regulated, so it was Commonwealth regulation of political advertising during State election periods and local government election periods. Justices Brennan and McHugh would have held those two subsections invalid; Justice Dawson would have held them valid on that basis.

The point I wanted to make is that analogously here, where in ACTV the Commonwealth had no relevant legitimate interest in regulating advertising during State and local government election campaigns, so too here the States, specifically Queensland, have no legitimate interest in regulating donations directed to federal electoral actors, in the sense I was using that phrase yesterday, or purposes, in particular where the donations are specifically directed to be used at the federal sphere. To do so intrudes on the area of sole legitimate concern of the Commonwealth.

As I put yesterday, but just to conclude that point, if we succeed in relation to that Commonwealth immunity, then we do not need to reach 109 inconsistency or 302CA. That being said, can I now turn to deal with the Melbourne Corporation argument put by the States, directed to 302CA. The difference between the Commonwealth law and the State, the Queensland law, for the purposes of these immunities is that, as I have put, the Queensland law seeks to cover the whole field, where the Commonwealth law does not if the gift is designated by the giver for State or Territory electoral purposes, if the State law operates by providing for keeping a donation separately for State electoral purposes, or if the recipient keeps or identifies it as held for State or Territory electoral purposes.

Can I give your Honours just a quick illustration of how the second of those categories work, namely where the State law operates by providing for keeping it separate. I referred yesterday to the South Australian provision; it is the Electoral Act 1985 (SA). It is in volume 1 of the joint bundle at tab 6 - relevantly, Part 13A, Division 3, section 130k. The heading of Division 3 is “State campaign accounts”.

Your Honours will see in 130K(1) that, in essence, relevant actors “must keep a separate account” with an authorised deposittaking institution for State electoral purposes. Pursuant to 130L, they must ensure, acting through their agent, that “each gift that is an amount of money received by” them:

is paid into the State campaign account –

unless to do so would be in contravention of the part, or (b):

the gift is not intended by the registered political party to be used for State electoral purposes -

So there the State of South Australia is quite properly and necessarily acknowledging political actors here tend to cover both levels and so we need to allow for operation of federal actors; or (c) “otherwise”.

That then links up, over the page, to 130N. The correlative of all that is that money out for the purpose of political expenditure must come from the State campaign account and in that way South Australia provides for its own stream of donations to be received for State electoral purposes and allows room for Commonwealth law to operate. It is that sort of provision which is picked up or given room to operate by 302CA(3)(b)(i) of the federal law.

In terms of the Melbourne Corporation challenge put by Queensland and its supporting States the argument is said to be that it is that 302CA regulates functions central to the existence of the States. The key dispute here, in a sense, relates to that middle territory – what I called yesterday the unallocated middle, although, as I will seek to show in a minute, the consequence of the States’ arguments – it comes out most clearly in Victoria’s submissions – is that in fact they seek to impose their policy across the whole spectrum.

KIEFEL CJ: But what you call the “unallocated middle” – that description implies some kind of neutrality on the part of the donor where moneys are exempt or are permitted under the Commonwealth Act to be made for any purpose. Bribery could be one of those purposes. So to call it an “unallocated middle” is perhaps not to see the point of Queensland’s concern.

MR KIRK: Well, to put it in terms of bribery would itself breach, I have no doubt I do not have the provisions to hand – other provisions of the federal law, if not indeed of the common law. There were, I think, common law offences related to this.

KEANE J: But you say there cannot be effective State laws.

MR KIRK: Let me put it this way. In relation to what I have called the unallocated middle there cannot be two sets of laws applying simultaneously or at least, if there are, that is in effect to allow the States to give predominance to their concerns over those of the Commonwealth. The Commonwealth, as I sought to put yesterday, has made its own judgments as to the threat to integrity from gifts, including in what I have called the unallocated middle, and it has made its policy judgment that it does not consider there is a threat to the integrity of the federal electoral process from such donations in relation to bribery and so forth and I am sure there are other provisions dealing with it.

KIEFEL CJ: Well, not from this particular source, anyway. It has identified other sources as its concern.

MR KIRK: That is true, of course, your Honour. It has made that judgment. The State has made a contrary judgment for its own purposes, for local government and State government purposes, but it seeks to regulate the unallocated middle. So if there is a donation to, say, the ALP by a property developer, if 302CA is invalid for some reason, including Melbourne Corporation, the effect is that the State law wins. The State policy judgment that these types of donations are too great a risk predominates over that of the Commonwealth and that raises the question

KEANE J: Not insofar as the Commonwealth says that donations made for the purpose of funding federal campaigns are not touched by the Queensland law and 302CA does that. But it does more because it says “may be used, either required or may be”. So that insofar as the federal – insofar as this question about the ability of the Commonwealth to ensure that its law prevails in respect of elections to the Commonwealth Parliament, that purpose could be achieved fully effectually without having the provision “or may be used” that is in 302CA.

MR KIRK: I would submit in response that exactly the same could be said about the States. So, the States undoubtedly, as I have conceded, have a legitimate interest in regulating donations directed to the use for State electoral purposes.

KEANE J: Not just State electoral purposes – just the defraying of the ordinary overhead expenses of political parties operating within the State because defraying – moneys used to defray the ordinary overhead expenses means that other financial resources are freed up for other purposes.

MR KIRK: I accept all that. I accept all that entirely and thus I conceded yesterday that the States had a legitimate interest in regulating what I called the unallocated middle. But so does the Commonwealth because what your Honour just put to me, exactly the same could be said about the federal ALP or the federal LNP. But when it has a donation, not specifically directed to be spent on the forthcoming federal election campaign, but company X says “We support your principles; here is $10,000. If you want to use it to pay your human resources manager, fair enough”, the Commonwealth has a legitimate interest in regulating that, just as the State does.

So then the question becomes, in this area where both parties, both levels have a legitimate interest who, if anyone, is entitled to predominance where you cannot have both because if you do have both if, for example, in the unallocated area it is some special constitutional area where 109 does not apply but both laws can operate, that means in practice the State policy wins because in Queensland company X cannot give $10,000 to the federal ALP if it is a property developer, even to pay the human resources director of the federal ALP.

KIEFEL CJ: Mr Kirk, you say the Commonwealth has an interest in regulating, and you seem to have allied the Commonwealth interests with the State’s interest so they both have an interest - does the Commonwealth really have an interest because the policy decision you say that has been made is that it does not perceive a risk. It does not have the same concern that the States have. Indeed, it does not have a concern with respect to property developers. This tends to point up the different purposes of the provisions, does it not? New South Wales and Queensland legislation is directed to a protective purpose, protective of their electoral systems. The Commonwealth’s is directed to freeing up the flow of funds.

MR KIRK: The consequence of allowing, by whatever constitutional means, the State policy to predominate, is to override that federal policy. This is, to use Justice Dixon’s words, an area of liberty designedly left by the Commonwealth. The Commonwealth has made a policy judgment. There is no doubt that the Commonwealth could regulate to prevent

KIEFEL CJ: But what I am really trying to say to you is it has made a policy judgment. Any political decision is a policy judgment. But it does not have - unlike the States it does not share a concern. It is not protecting its electoral system. It is simply saying that it does not want the States to be there. That is what it is directing itself – its legislation to.

MR KIRK: We respectfully disagree with that characterisation. The Commonwealth has decided to protect its electoral system, to a limited extent, and beyond that it has decided there is no threat sufficient to warrant regulation and it has decided that in that further area the law should be this far and no further. That is the point of 302CA. It is a classic win and an AttorneyGeneral of Victoria type of provision.

KIEFEL CJ: How do you describe the connection between freeing up – or this area of immunity that it creates and the protection of the electoral system? What is the connection?

MR KIRK: The connection is that, for example, in relation to foreign donations, for reasons which might readily be understood

KIEFEL CJ: Accept the foreign donations as a separate category.

MR KIRK: So foreign donations and to an extent also anonymous donations because of the disclosure requirements and so forth.

KIEFEL CJ: Yes.

MR KIRK: So those are the two categories it regulates. Beyond that

KIEFEL CJ: But donations from anywhere else - freeing them up is protective of the electoral process because?

MR KIRK: Well, the Commonwealth has made the choice such protection is not warranted. It is balancing up competing objectives.

KIEFEL CJ: So you do not contend for a protective purpose?

MR KIRK: No, I am saying – what we are submitting is that they have made their protective judgment and it is that far. So in making the policy choices, as your Honour quite rightly says, with respect, policy judgments are imbued in all these decisions, it has to weigh up the dangers to the system for which protection is needed.

KIEFEL CJ: You say there is no danger to the system so that there is no reason why there should not be a flow of money to political parties.

MR KIRK: Precisely so. The Commonwealth must weigh up, and implicitly has weighed up, the dangers from the full panoply of potential donors, with the benefits of donations because by allowing donations to political parties you are facilitating, amongst other things, political communication and discussion in all the advertisements we are about to see on the television. It has made that policy choice. The fact that it does not perceive the same degree of danger from property developers vis-à-vis the federal level, as the States do, does not alter the fact that it has necessarily made a judgment about that and the protective judgment it has made is thus far and no farther.

NETTLE J: Mr Kirk, is not really the judgment of the Commonwealth that rather than deal with corruption by total prohibition it does so by a scheme of returns and reports set out in Part XX.

MR KIRK: Yes, I should have added that. That is consistent with what your Honour Justice Gordon said to me yesterday.

NETTLE J: That is the judgment, is it not?

MR KIRK: Correct.

NETTLE J: Instead of prohibiting, it will be controlled.

MR KIRK: Correct, with respect.

GAGELER J: Mr Kirk, while we are talking about the scheme and Part XX, you took us yesterday to section 302D which is one of the two main prohibitions.

MR KIRK: At page 173.

GAGELER J: Am I right in understanding that a foreign donation to a political party is prohibited by that provision, even if it is earmarked for use only in a State election?

MR KIRK: Your Honour, the honest answer is I have not thought about that, because it is not part of the many issues in this case. As to what the answer is, I am not sure. Your Honour may be right, but it is a complex and long provision, so I would prefer not to give an answer straight away, if I may. But as I say, it is not one of the many issues in this case with which we have to deal.

GAGELER J: If I am right in my reading of it, and I may be wrong, but if I am right in my reading of it, it suggests a policy concern that the vice lies in the receipt of the gift that gives rise to the response of reciprocity, rather than in how the funds given might ultimately be used.

MR KIRK: It might do, it might do. I do not think I can say anything more useful about it, your Honour. I am just aware of the time. Can I make a few more brief points in relation to Melbourne Corporation, and then I will deal with the Metwally argument fairly briefly, before handing to my learned friend, Mr Hastie.

Part of the Melbourne Corporation complaint of Queensland and some of the States is that it is suggested that insofar as 302CA talks about State provision for separate accounts of the kind South Australia has, that is constraining legislative freedom of States because it is giving them an out, but an out that they must positively choose. We would make two points about that.

First, that is only one of the three scenarios. Secondly, in this area where, as I have put a number of times, both levels have legitimate interests, this is an unusual sort of area and although members of this Court in Austin did speak about the fact that there might be a constraint on legislative freedom as being relevant to the Melbourne Corporation analysis - true, it is a factor - but where you have legitimate overlapping interests it is inevitable there is going to be some degree of bumping up against each other, if both seek to regulate.

The Melbourne Corporation principle must take account of the context and the practical reality, and so some room must be allowed here – that is the first point. The second point is so much is implicit in Queensland’s submissions because Queensland speaks with two tongues on this issue. Without going to it, at paragraph 112 of their primary submissions, they make the point I just put, namely, by reference to Austin, this is to impair the liberty of action of the State. But then in their reply, at paragraph 20, in answer to attacks that we made on its legislation by reference to Melbourne Corporation, it said:

It –

that is, the Commonwealth:

could have established a system of federal campaign accounts, or required that parties which promote candidates in federal elections have no other objects or activities. Either would have immunised donations for federal purposes from State prohibitions, without the vice which engages Melbourne Corporation here.

It has it both ways. That recognises that one has to be practical here. The great difference between the two legislative schemes is that the Commonwealth has allowed room for movement for the States; the State has allowed no room for movement and made no recognition of the legitimate interests of the Commonwealth.

KIEFEL CJ: But from Queensland’s perspective, do you deny that these provisions are necessary to protect its electoral processes from corruption and the perception of corruption?

MR KIRK: Yes, because in particular insofar as they regulate donations directed to federal electoral purposes that is not its concern. That leads me to an argument actually raised on that point by Victoria. This is the last thing I will say about Melbourne Corporation – voluntarily anyway. What Victoria says at paragraphs 77 to 83 of its submissions and see also South Australia at 44, Western Australia 49 to 50 – is that it submits that property developers could give to parties specifying it is to be used for Commonwealth electoral purposes but still in effect expect payments from the party, potentially at State level.

That argument would lead to the conclusion that the State policy, the State interest, can lead to full regulation of the spectrum, even for donations specifically directed to the federal level, which is to reverse the proper constitutional position. It is to allow predominance of the State’s interests over that of the Commonwealth. Once again that is reminiscent of what was put in Fortescue; it is contrary to the constitutional structure. The Commonwealth is entitled certainly to regulate donations to its level, and we would say it is entitled to predominance in the unallocated middle because of 109 and its constitutional position.

My final topic with which I will be fairly brief is in relation to Metwally. I touched on this a bit yesterday. Your Honours appreciate that the State’s attack here is focused just on, as we understand it, 302CA(3)(b)(ii), the provision we were discussing construction of yesterday about keeping or identifying the gift separately in order to use only for a State or electoral purpose.

Can I take your Honours briefly to Metwally [1984] HCA 74; (1984) 158 CLR 447 which is at joint bundle 13 and I want to make a couple of points about it. It is at tab 73 of joint bundle 13. The provision is at page 453 in the Chief Justice’s judgment. Your Honours will recall the context was a previous High Court decision - Viskauskas v Niland – where a 109 problem had been recognised between discrimination legislation. The Commonwealth enacted, at the top of 453:

This Act is not intended, and shall be deemed never to have been intended, to exclude or limit the operation of a law of a State or Territory that furthers the objects of the Convention and is capable of operating concurrently with this Act.

So, it was a law different in kind, we would submit, from 302CA, or, at the very least, different in degree in that it was a retrospective deeming law to say what we previously said as a Parliament we should not be taken to have said because the Court had previously construed the Parliament as having said they relevantly covered the field. That is not this type of law where it is not a retrospective fix up. At most, it has some retroactive operation, at least on the broader construction that we were discussing yesterday. But it is retroactive operation known in advance.

Now, your Honour Justice Keane asked me some questions yesterday about how it might apply. I am not going to go back over the construction issue again. But I would make this practical point – recognising it is just a practical point – namely, if a party – so you have an unallocated donation and a party decides ultimately to allocate it to a State purpose and it is traceable to a property developer.

Your Honour put to me yesterday, and with some force, with respect, that that may, on the broader construction, mean that even the donor is retrospectively put in breach of the law because the donor is not permitted to have made the donation. True, on the broader construction. But the party would do that knowing the consequence. It would do it knowing that if we allocate this donation off to the State purpose we will put ourselves, and, by the way, the donor, into breach. I just wanted to make that construction point.

There is another point – and I will seek to be brief about this – about Metwally. The Commonwealth is going to develop this further, and I will not preempt what they are going to say, but close attention is needed to the questions asked in the case and the answers given. There is a real question as to whether the Court, the majority, held that the Commonwealth law was invalid as opposed to inoperative. I will let the Commonwealth develop that submission.

If it was suggesting the law was invalid, one possible reason for that may have been that given in all the majority judgments but it is sufficient to go to Justice Brennan’s at page 475 – just before the end of his Honour’s judgment at about point 2. Justice Brennan said:

Though a law of the Commonwealth can be give a retrospective operation, it cannot retrospectively endow a State law with the force and effect of which s. 109 deprived it before the retrospective Commonwealth law was enacted.

Similar points were made by Justice Deane at 478 to 479 and by Chief Justice Gibbs at 457 and Justice Murphy at 5275. One view of the problem, if there is a validity problem, is that the Commonwealth law was, in effect, seeking to reinvigorate State law, qua State law, as though State law. One could well see why that might give rise to a constitutional difficulty not dissimilar to the problem with the provision in the Native Title Act giving effect to common law or at least analogous to it. That is not what 302CA seeks to do. It is just, on the broad construction, rolling back operation of the Commonwealth law leaving room for the State and Territory laws to apply.

The other point we seek to make in relation to the Metwally argument and I dealt with this in substance yesterday and it is in our written submissions – is that the provision, if there is a problem, could be read down. Your Honour Justice Nettle put to me quite correctly, with respect, that that would be on one reading down contrary to the example and the note.

That being said, one has to also take account of 15A of the Acts Interpretation Act that, if there is a constitutional problem leading to invalidity, then the very work that section does, as your Honour knows, is to say we would have construed it that way, but so to construe it leads to a problem; we thus construe it this way, aided by the direction of Parliament through section 15A.

Alternatively, it could be severed. In relation to severance, (3)(b)(ii) could readily be struck out. Queensland suggests at paragraph 93 that the Parliament should be taken to have intended the whole of 302CA to stand or fall together and that to sever it would give the permission a radically different character.

To sever one of a number of permutations is a classical sort of severance operation. It does not change the operation of the law and to suggest that Parliament would have intended the whole of 302CA to depend on that provision, where incidentally that type of policy is not even found in subsection (5), as I pointed out yesterday, relating to use is not, with respect, a plausible construction of the Act.

Finally, the Commonwealth makes submissions in its written response submissions at paragraphs 25 to 28 that if necessary and in the further alternative Metwally should be overruled and we respectfully adopt those submissions. Unless I can assist your Honours further, other than on
the implied freedom, those are the submissions for the plaintiff and I now hand over to my learned friend, Mr Hastie.

KIEFEL CJ: Yes, Mr Hastie.

MR HASTIE: Thank you, your Honour. Before I deal with the facts, which are important, in our respectful submission, in this case, can I just deal with two matters of principle? The first one is to do with the basis for the freedom – I will only deal with it briefly. But it is important to emphasise that the basis of the freedom is based on the Constitution, sections 7 and 24 in particular, where there is a guarantee that the Parliaments of Australia would be elected by the people and there is a conception referred to in Lange [1997] HCA 25; 189 CLR 520, in particular at 557 by the full members of the Court - the authorities book is volume 7, and it is tab 41 - in the opening paragraph at page 557 their Honours refer to:

Sections 7 and 24 of the Constitution, read in context, require members of the Senate and the House of Representatives to be directly chosen at periodic elections –

and their Honours refer to:

the free election of representatives -

Later on, their Honours then come to the conclusion that because of that system of free elections, electing the representatives in a Legislative Assembly occupying a powerful position in the Constitution, at page 560 of the report, that those sections:

necessarily protect that freedom of communication between the people concerning political or government matters which enables the people to exercise a free and informed choice as electors.

The underlying principle is taken a step further in the same volume, your Honour, in McCloy [2015] HCA 34; 257 CLR 178, which is behind tab 44, and in particular I wanted to take your Honours to the remarks of his Honour Justice Gageler at 226. After discussing at the commencement of 222 and explaining why the freedom exists, his Honour refers to, at paragraph 111 – that the concept of electoral choice acted on the constraint and the exercise of not only Commonwealth legislative power, but also executive power and the latter was indirect because it is a product of the Parliament. But it is the constraint - elections were a constraint on the way in which both powers were able to be exercised.

That leads then into the next important principle, which is how you conduct elections. We mentioned that they were free, and that was a matter dealt with by His Honour Justice Keane in the Unions NSW (No 1) 252 CLR 530, which is in volume 13 of the book of authorities, tab 70. The passage I wanted to take the Court to was at page 574 where his Honour was particularly referring to section 96D in the discussion in that case. But his Honour, at the end of paragraph 120, refers to the facts agreed establishing:

the importance of funding from corporations and industrial associations to campaigning.

Towards the end of the next paragraph, his Honour refers to campaigning being:

an essential part of political communication.

The matter that is very significant is the last sentence:

No doubt some political communication occurs without the need for payment; but, equally there can be no doubt that a restriction on the availability of donations will substantially diminish the extent of political communication.

It is our respectful submission then that that is the crux of this case. Given that there is undoubtedly a burden on the campaigning – and I will come to dealing with that in a moment – can I just deal with then how the Court is to deal with it and that is it requires the defendant to justify. There are a number of decisions to that effect, but a convenient place to commence is in Unions (No 2) to show what it is that the defendants must do to do it. If your Honours could go then, please, to that case which is a recent decision[2019] HCA 1; , 93 ALJR 166 - it is in volume 13 of the book of authorities, tab 70. In this case the plurality, at paragraph [45], refers to the law that:

Parliament does not generally need to provide evidence to prove the basis for legislation which it enacts. However, its position in respect of legislation which burdens the implied freedom is otherwise. Lange requires that any effective burden be justified.

In terms of justification and how that is to be achieved there are a number of judges in that case that dealt with how that might be dealt with. I have already mentioned that the plurality discuss the need for evidence, in effect, to justify it and there is a further discussion by his Honour Justice Gageler in the same case, at page 186, and in particular starting with paragraph [93] and then in particular [94] where his Honour refers to it being a question of law but it:

“sometimes depend on facts, facts which somehow must be ascertained by the court responsible for deciding the validity of the law”.

Over the next page, paragraph [95]:

If a court cannot be satisfied of a fact the existence of which is necessary in law to provide a constitutional basis for impugned legislation, however, the court has no option but to pronounce the legislation invalid.

This is just to emphasise the importance of the facts. His Honour Justice Nettle in the same case on page 191 at paragraph [116] refers to Harper v Canada about demonstration of facts and then his Honour, in paragraph [117], says:

There is more force in those submissions . . . Lange requires that any effective burden on the implied freedom be justified.

As his Honour said some of it might be selfevident but others might need to be dependent on expert reports or commissions of inquiry:

the fact that a plaintiff is unable to identify any obvious and compelling alternative productive of a significantly lesser burden on the implied freedom may be enough to conclude that the impugned law is needed.

But then his Honour refers to the expert panel’s report in that case and the fact that it just did not go anywhere. That was a fact in that case. It is our respectful submission in this case that, whilst the Court is obviously not bound by what a commission of inquiry might have thought or recommended, it forms part of the factual basis for which the defendant in this case relies upon for its justification of the law, just as the defendant did in the Unions NSW case. It is our respectful submission in this case that if one looks at the facts then one cannot find in Queensland a justification for the law.

There is just one other matter that it is necessary to refer to, and that is this question of acting prophylactically. Her Honour Justice Gordon in the same case referred to Australian Capital Television. That is at page 196 at [146]. Can I just take the Court briefly to that case and the oftenquoted statement of his Honour the Chief Justice. That is ACTV v The Commonwealth (1992) 117 CLR 106. It is behind tab 20 in volume 3 of the book of authorities. In the middle of the page there is the oftquoted statement by his Honour:

the Court should scrutinize very carefully any claim that freedom of communication must be restricted in order to protect the integrity of the political process. Experience has demonstrated on so many occasions in the past that, although freedom of communication may have some detrimental consequences for society, the manifest benefits it brings to an open society generally outweigh the detriments. All too often attempts to restrict the freedom in the name of some imagined necessity have tended to stifle public discussion and criticism of government. The Court should be astute not to accept at face value claims by the legislature and the Executive that freedom of communication will, unless curtailed, bring about corruption and distortion of the political process.

That is what is being claimed here, that unless there is a curtailment of the freedom in this respect there will be a corruption at State level. In our respectful submission, there is a factual basis for concern about the corruption at a local level. That is demonstrated partly in Queensland but mostly in New South Wales, but there is, as I will come to and show, nothing the same in the case of Queensland.

KIEFEL CJ: Are you going to differentiate Queensland from New South Wales?

MR HASTIE: I am, and the facts in this case. Can I just briefly deal with the facts in this case quickly again. The defendants refer to the decision of the Court in Brown that is, the plurality – where they had in turn referred to McCloy. The decision in Brown v Tasmania [2017] HCA 43; 261 CLR 328 is in volume 5 of the book of authorities, behind tab 24. At paragraph 94 your Honours Kiefel, Bell and Keane refer to the:

discriminatory burden but impose only a slight, or a less than substantial –

and McCloy being an example of such a law. The facts are referred to in the middle of that paragraph:

The provisions were not considered to effect a substantial burden on the freedom because their effect was indirect, given that their direct effect was to enhance freedom of political speech generally by levelling the playing field, and there were many other available methods of communicating –

I will just deal with that quickly. There is no suggestion in this case about levelling the playing field. Your Honours will recall that part of the matters – or one of the matters in dispute in McCloy was to do with the caps on the level of donations that anyone was entitled to make and that was held to be, along with the rest of it, valid.

There is no suggestion here of levelling the playing field, but to the extent there is the facts are to the contrary. Can I just mention briefly the agreed facts in the special case. It is on page 119 of the special case. There are two facts which are mentioned. The first one is in paragraph 26 which follows the statements his Honour Justice Keane made in Unions (No 1) about:

public funding does not meet the electoral expenditure incurred . . . political parties generally spend monies substantially in excess of those receivable from public funding.

But, the second one is in paragraph 27, that prior to that enactment that we are talking about:

the Liberal National Party received a materially greater amount of donations than the Labor Party (Queensland) from entities which are involved in the development of property and which may meet the definition of a “property developer” –

There is quite a distinction between the facts in this case and the facts in McCloy. Your Honours will recall McCloy was concerned with a developer who wanted to donate. My client is on the receiving end and wants to campaign and is denied a materially greater amount than from a particular source than would be sourced – would go to any other party, or at least from the Labor Party. As I said, we are not concerned with a claim by the State that it is going to level the playing field.

The other matter is this that was mentioned by their Honours, and that is the issue of participating otherwise. It was not dealt with in McCloy in the same way as we want to mention it here. McCloy, as I mentioned, was concerned with a developer who wanted to donate. We are concerned with a person who may be a developer – or, implicitly, namely the defendant admits that Mr Spence was a developer. But, in any event, we are concerned with the recipients of those moneys, that is, people who wish to procure developers to donate. The section of the Act makes it an offence for a property developer to procure a donation from a property developer.

BELL J: If one considers the evident object of a preclusion on donations to political parties by property developers a concern about the risk of corruption, having regard to the significance to property developers of the sorts of decisions that those holding political power are in a position to make, how does it assist your argument that a political party may wish to cultivate donations from property developers? The risk is the same, surely.

MR HASTIE: What the party wishes to do is to have following for campaigns from any source.

BELL J: Yes.

MR HASTIE: Apart from foreign donations essentially, everyone else is entitled to receive money from any donor, and there is a section of the community that my client gets a greater amount of money from the Labor Party. The reason for my introducing the topic was to answer the suggestion that was made and relied upon from the decision in McCloy, that there are other means of property developers being involved in the political process. That is true, but they cannot really be office bearers of a political party.

BELL J: Well, they cannot solicit funds if they happen to be officers of a political party.

MR HASTIE: That is right. It probably takes it – and of course an officer could be a branch chairman or could be the president, anyone who might be placed in a position where they are expected to get money from a property developer. But it is also a bit more complicated than that because there is a provision about gifts by property developers. There is an exclusion in the case of their membership of an amount not exceeding $1,000, but that is all there is. So, in other words, if they were to go to a function which one would have thought might have a profit margin on it for the party, that would amount to a gift.

So it is one thing to say that you could be a member, but you would have to be a silent member. You could hand out how to vote cards, I suppose, or attend the street corner meetings, but you probably could not attend a convention because there is probably a profit margin involved in delegate fees. You would not be able to attend a dinner if there would be a profit margin in that. You might not be able to attend even a branch meeting if there is a profit margin when you would have to pay for a cup of tea; I do not know.

BELL J: Expensive cup of tea.

MR HASTIE: But it shows the minutiae, does it not, because it is “any gift”. You cannot donate and the party cannot receive. It would be one thing to say, well, we will cap it, or to say anyone can spend or gift $2,800 or whatever the New South Wales provision is, or $5,000, whatever amount, but in this case there is none. So it is not quite right to say – well, it is not right at all to say that they can participate in a political party.

We accept that your Honour’s statement in a general way is right and we accept that in the local sphere it is certainly correct, or at least we are certainly not challenging it, but it is another thing to say, well, you can participate in some other way, because the ways are severely limited unless you decide to go off and - you could not be able to start your own

GORDON J: You can participate by spending your own money and doing it publicly, as long as it is not gifted.

MR HASTIE: You could.

GORDON J: You can spend your money as much as you like, advertising as much as you like.

MR HASTIE: Yes, and there are well-known examples of particularly wealthy people who do that, but most developers are not in that situation. My client, I think the evidence - the particulars were there is a block of units at Toowong; five units, so not the sort of - I do not know how much you make from that, but not the sort of money that would justify advertisements in a national paper or even in a State paper or on TV.

You could say, well, the property developers could have their own lobby group, but in the end there will be a third-party campaign contributor which sooner or later will be the subject of proper legislation in the State - in Queensland, I should say, but we do not have that in Queensland. We do not have any caps of any sort on expenditure or donations. That is just overkill.

Can I deal with then the question of the justification which was offered by the Minister in his reading speech, and it is instructive, if your Honours could please go to it. It is in volume 14 and it is behind tab 87 and the relevant page is page 190. It is a convenient place to begin with because the justification offered is essentially four. The Minister refers to, at the second paragraph, an inquiry by the CCC – the Crime and Corruption Commission – implicitly saying, well, they have recommended it, they are independent people, so that is a justification that the people of Queensland, and presumably the Court, should recognise. That goes on for so many paragraphs, but can I take you to the paragraph in the middle of the page.

NETTLE J: Which page?

MR HASTIE: Sorry, your Honour, page 5808.

NETTLE J: Thank you.

MR HASTIE: There is a paragraph commencing:

To implement the government’s response to recommendation 20 –

The Minister refers to:

The bill extends the ban to members of state parliament.

Then again the Minister refers to:

the Belcarra report that close connections between councillors and donors can lead to a perception in the community that donors expect to, and do, receive something in return –

and the Minister quotes the CCC.

GORDON J: Is not the next paragraph also important to explain?

MR HASTIE: Yes, that is the second one, because then the Minister says:

Queenslanders expect transparency –

That is a very general sort of thing. Then the Minister says in the middle of it:

The Premier has stated that she will not make rules for local government that she is not prepared to follow herself.

That is perhaps the second justification, the Premier’s leadership, and he calls on those opposite to endorse what he describes as the level of transparency, but it is really the Premier’s view about rules for the State being the same as the rules for the local authority without regard, in our respectful submission, to the facts.

Then the next paragraph is the third justification because of what the Minister described as the State’s significant role in planning, and I will come to that in a moment. The final one in the next paragraph is the reports by the Independent Commission Against Corruption in New South Wales. So, it is those four things that I want to deal with. But I will not need to deal much with what the Premiers thought about applying the rules because that is the antithesis of what is required in this Court, or by this Court, which is to say the facts have to justify the burden at the State level. You do not do it by saying, “Well, we have done it to the local authority. We’ll do it to the State.”

KIEFEL CJ: Do you take issue with the statement about the State’s significant role in Queensland planning framework given, in particular, the powers and the role given to the Planning Minister?

MR HASTIE: Yes, we do, your Honour.

KIEFEL CJ: Even historically in Queensland?

MR HASTIE: Well, the history that is agreed in the special case goes back three or four years.

KIEFEL CJ: I was thinking of a little further.

MR HASTIE: I will take your Honour to Mr Hinze – we can take your Honour to it now. Mr Hinze was a very special case, and it is relied upon by the State because they say, well, there is some reason to be concerned about it. Sorry, just before I do that, can I just emphasise that there is nothing in the Minister’s speech that talks about corruption at State level. There is a perception and risk and things like that, but nothing historically in the Minister’s speech that deals with any government, even historically, being involved in corruption; nothing is offered.

GORDON J: You mean in Queensland?

MR HASTIE: Yes, in Queensland.

GORDON J: Because it does rely upon the New South Wales investigations.

MR HASTIE: It does, and I will come to that in a moment. Well, the reliance on the reports – there are other instances of actual corruption in New South Wales by various ministers, but we are not concerned with those. We are concerned with the extent to which they might relate to planning and planning decisions, and I will come to those decisions that are relied upon as a factual matter shortly. But I will take your Honours firstly to the instances in the State sphere. I suppose the simplest place to deal with that is – firstly, can I just deal with Mr Nuttall, who was a minister of the Crown.

In the agreed special case, the facts on page 145 of volume 1, there is an agreed fact which relates to a plea, I think, by the defendants in their defence, that there was a finding of corruption by Mr Nuttall receiving secret commissions and perjuring. Can I deal with it this way, subparagraph (c) at the top of that page, 145 of the volume, says those charges were quite unrelated to “payments by property developers”. While we are on it, there was another former Minister, Mr Mackenroth, who was accused of something, but at the time he was accused of that he was a lobbyist, and your Honours will see that in subparagraph (d), that that was as a lobbyist, not as a decisionmaker.

NETTLE J: Does history record where Mr Nuttall’s bribes came from?

MR HASTIE: It is not recorded as a fact here. I think there was an appeal, and I will be able to find the authority that dealt with the decision on appeal; which will tell us that matter, your Honour, without any chance of my getting it wrong.

NETTLE J: Thank you.

MR HASTIE: But we have agreed that it is nothing to do with a property development.

KIEFEL CJ: I am sorry, it was nothing to do?

MR HASTIE: With a property development. My recollection, it was to do with mining, but as I said we will find, if we can, the decision.

NETTLE J: Thank you.

MR HASTIE: He was Minister for Industrial Relations, Health and Primary Industries and Fisheries at the time, but I think it was to do with mining. The facts in relation to Mr Hinze are dealt with also in the special case book that is part of the Fitzgerald report, volume 1. If your Honours go to page 208 of volume 1 of the special case book your Honours will see the start of the colourful history of Mr Hinze. There is a table at the bottom of that page which refers to donations of various kinds going from various people to either Mr Hinze or his wife or, over the next page, to his company.

The Fitzgerald report was written in a neutral way. In other words, it just stated the facts: payments in, payments out, whether it was repaid and the like. That goes then on for a number of pages where the inquiry dealt with all these payments having been made to Mr Hinze and the way in which they were used in one way or another, and one of the facts referred to – I cannot remember whether it is in the special case or the defence – was a particular payment by Mr Herscu.

KIEFEL CJ: He was convicted as well, was he not?

MR HASTIE: Yes, he was, your Honour.

KIEFEL CJ: And he was a property developer.

MR HASTIE: Yes, your Honour. Page 216 deals with the payments to him. Your Honours, I think it is right, Mr Hinze died before anything happened, but Mr Herscu was convicted and sentenced to gaol, so your Honours might have a degree of confidence that these payments were corrupt. But that is a while ago. It is not to say that it is – I think my learned friend, Mr Dunning, described it as living memory, which if one goes back to the time the payments were being made and this inquiry, that would be living memory for most people in this room.

KIEFEL CJ: Mr Seymour was a property developer.

MR HASTIE: He was. I think it is all to do with property, your Honour.

KIEFEL CJ: Yes. What is the point you are trying to make or not make?

MR HASTIE: Making a concession. There was a finding of corruption a long time ago in relation to a particular kind of person.

KIEFEL CJ: You say it was a long time ago. It might be within the memory of the Queensland public if we are talking about perceptions.

MR HASTIE: It would be in the memory of a certain section of the Queensland public, not just older people but people to take notice of what happens in life. Whether or not you can extend it any further than that is an open question because it is well known

KIEFEL CJ: More recently renewed by matters in New South Wales. In relation to New South Wales, do I take you to say that there are no lessons to be learned by Queensland from more recent events in New South Wales?

MR HASTIE: There are lessons to be learnt in the sense that you could properly ban, for reasons I will take you to in dealing with New South Wales, donations from property developers at local level. But you cannot take that lesson to Queensland for a ban at State level. That is our respectful submission.

KIEFEL CJ: Why do you say that when the Ministers of State have such great powers in relation to property development, including trumping local authorities and

MR HASTIE: They can call in, if that is what your Honour is referring to, and they could also change rezoning.

KIEFEL CJ: Yes, they can do a number of things.

MR HASTIE: But it is not only a question of how it is the law – what powers might exist and how the law exists but how, in practical circumstances, the law affects things. Can I take you to the agreed facts in the special case book, in volume 1. I will take your Honours in a little bit more detail, if I get a chance, to them. I do not want to diminish this, but if your Honours go to pages 134 and 135 you will see a table – sorry, I do not want to diminish the extent of the powers that your Honour Chief Justice Kiefel has referred to. But if your Honours go to the table there is a brief summary of the decisions – a number of decisions that are made with respect to planning decisions in Queensland. The first four in that table – and I will take your Honours to them – are to do with local authorities and they add up to something like 96 per cent, 97 per cent.

BELL J: But, surely, the number of decisions is not a particularly helpful criterion when we are looking at the perceived risk of corruption in connection with planning decisions in circumstances in which it is accepted that, amongst other things, at the ministerial level there is a power with respect to rezoning decisions. Is that right?

MR HASTIE: It is.

BELL J: Is that not sufficient?

MR HASTIE: Not in our respectful submission because, in a practical way, these decisions are all made at a local authority level, so you could say that most of them made

GORDON J: Yes, most of them are probably to do with home renovations.

MR HASTIE: Yes.

GORDON J: The four per cent in dollar terms is a different question, is it not? I mean, this is bare numbers, this bare mathematical assessment of 96 per cent or 97 per cent is of no assistance in assessing the risk at that level.

MR HASTIE: Well, it is a concession that there is a risk at local authority level to say most of the decisions are taken at that level.

GORDON J: That is not the question, is it? The question is whether or not there is a perception of risk at the State level. We have New South Wales telling us there is. We have Queensland saying “We think there might be; it is prophylactic. Let’s pass a law to protect it.”

MR HASTIE: Well, Queensland is saying because there is some experience in New South Wales we want

GORDON J: It is a bit more than that, I think.

MR HASTIE: Well, there is an assertion by the ministers of concern about a perception and a risk.

KIEFEL CJ: Perhaps more to the point, Mr Hastie, is what you say in paragraph 32 of your outline and that is that State governments are usually drawn in in relation to large projects.

MR HASTIE: Yes, and I was going to take

KIEFEL CJ: I would have thought that is more against you than for you.

MR HASTIE: It would be one thing to say, all right, if you were going to exercise powers under the State Development and Public Works Organisation Act, which is the main Act that deals with large projects, then that would be a different consideration because they would be larger projects and you could say all right, we are going to ban people who bring applications under that and for approval under that from donating to any political party.

KIEFEL CJ: But logically it is very simple, is it not? There is just much more at stake at State level when you have the State government involved in relation to large projects, as happens they sometimes have to be, because of things like need for rezoning or special ministerial approvals.

MR HASTIE: That might justify that kind of prohibition for those kinds of decision making under that Act, but if we are talking about the normal kinds of decisions that are made at a local government level, in my respectful submission there is no justification.

GORDON J: It is odd, is it not? You have prohibition at the local government level because there is a perceived risk which you do not challenge, an acceptance that there is a risk of large decisions at a State level and then there is, to adopt the language of Mr Kirk, an unallocated middle, where it is okay, there is no risk. One wonders where the two lines join.

MR HASTIE: I am not adopting the unallocated risk to this case. I am conceding that if there is a major project then mostly it is not the sort of thing that would be the subject of an application by a property developer. They would be more likely an application by a mining company or an industry or a manufacturer who are seeking to significantly change the infrastructure in that area and seeks approval to change the waterways and the railways.

EDELMAN J: Mr Hastie, even if one were to assume that the State Parliament in Queensland were perceived to be an entirely corruptionfree zone, both historically and at the time of the legislation, why is it not possible to look to developments in other States, as Queensland says, for prophylactic reasons?

MR HASTIE: The problem with prophylactic reasons is the very reason that I took you to the ACTV Case, because if you say we want to prevent corruption, there could be no end to where you stop.

EDELMAN J: But this is looking to other legislative constitutional facts in other States as the foundation for a prophylactic concern.

MR HASTIE: Well, the facts in New South Wales were essentially to do with local authorities as well, not to do with the State, and all of those decisions in reports were to deal with property developers and councillors at a local level. This Court found that there was enough decision making by ministers at the New South Wales level to determine that it was sufficient justification in McCloy, but there was no analysis done of any practical way in which the planning laws operated.

KIEFEL CJ: That might be a convenient time for a break. The Court will adjourn.

AT 11.16 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.33 AM:

KIEFEL CJ: Yes, Mr Hastie.

MR HASTIE: Thank you. During the intermission, we have been able to locate the reference to Mr Nuttall’s case in the Court of Appeal. It is [2010] QCA 64 and there was a Crown appeal against sentence [2011] QCA 120. I should say a number of the charges related to a mining lease. One related to the appointment of a person he knew to the WorkCover Board, and another charge related to a contract he let as Health Minister to a particular person. But we will be able to provide the Court copies of those judgments.

NETTLE J: Thank you.

MR HASTIE: Can I just go back to the planning part, but not for long. Your Honour Chief Justice Kiefel will no doubt recall the days particularly of Mr Hinze when amendments were made to local plans, and it was all hushed and secret and no one really knew what it was about. The legislation was changed significantly, I think not long after the Fitzgerald inquiry, to require disclosure of ministerial directions, at least in certain respects. If your Honours go to the special case book, two of the directions that the Minister has power to make – could your Honours go to page 125. The top of that paragraph has:

the Minister is entitled to direct local governments as to the contents of their local planning instruments where it is necessary to ensure that they are consistent with State planning instruments –

and your Honours will see the very few number of directions that were made in the last number of years, since in fact February 2009. In subparagraph (b) there is a reference to directions that can be given to assessment managers, but:

The minister is required to report to the Legislative Assembly –

and has only done so on two occasions in any event. Subparagraph (c) refers to directing:

a referral agency to reissue a Referral Response –

in certain circumstances, but that has only happened once. Your Honours, subparagraph (d) refers to the “call in” powers that unfortunately used to be exercised. It would perceptibly be a matter of concern. That has to be reported to the Legislative Assembly. There are more of those that have been called in than the other types of directions, as your Honours will see from the numbers, which is 51 since 1999. But our respectful submission is that is an indication of, in practical terms, how many decisions are actually made at State level and your Honours did not have the benefit of that kind of analysis when considering the case in McCloy.

It was simply, it would seem, said as a matter of law that the Minister had power – and that was the justification provided by the State for saying well, we should extend it to the State government level. They pointed out, in that case – and your Honours did too – that there had been an unhappy coincidence of reports by ICAC, starting with Mr Roden’s report, up to the north coast – on the north coast developments which did concern the State.

But the other reports by ICAC all referred to payments being made – and when I say “payments being made” – bribes – most of them were findings being made of actual bribes, criminal misconduct, not a case of donations to an alderman for the purposes of a campaign but a bribe under the table to get a deal done. It is quite different from a donation to a political party which has to be disguised.

Your Honours, I will not take you through to them because of the time constraints, but there is a summary of these facts in the special case commencing at paragraph 82, from pages 152 to 155. I have to say immediately that not all of the decisions set out easily what actually happened in each of them, particularly the one for the North Coast Land Development which is quite extensive and a number of parties and people were involved and it does not always disclose who is it and the components that we have put in the special case. But it is sufficient to say what was agreed in subparagraph (a) about:

corrupt conduct against local government councillors and State government –

officials. All the others, though, are cases where aldermen – or, in the case of Randwick, the chief town planner – were involved in bribes to get particular developments through. In our respectful submission, that is all quite different from the sorts of matters we are talking about here which is a donation which has to be publicly disclosed.

KIEFEL CJ: It should be publicly disclosed.

MR HASTIE: But that is an issue, is

KIEFEL CJ: The law requires it. Therefore, it will be done. That is your submission.

MR HASTIE: That is right. That is the submission. But banning property developers from donating to a political party is not going to stop “under the counter” criminal conduct. That is what we are talking about in ICAC reports – “under the hand” criminal conduct which was discovered by the coercive powers of that Commission. This legislation does not answer that kind of conduct.

BELL J: I am sorry, but just looking factually at the New South Wales position, when one sees a pattern of conduct of developers engaging in criminal behaviour in the way of bribing people in positions to influence decisions about planning matters, one can understand a perceptible risk that donations would be used to corrupt the process. That is not to say that there will not continue to be a risk of criminal conduct but it rather tends to illustrate the link between the engagement in property development as a field of human activity perhaps more likely to give rise to the risk of corrupt behaviour than some other occupations where there is less scope for it – that proven history.

MR HASTIE: That is really almost to say, with respect, that there is a particular class of property developers who are likely to engage in misconduct.

KEANE J: No, it is just to say that the nature of the business and its connection with decisions in relation to planning and the profits that can be made from it is particularly close.

MR HASTIE: But, your Honour, that is so any time there is a development the profits that mining companies might make in an entity or a particular place like Queensland of New South Wales or Western Australia or whatever. Huge amounts of money to be made. The list could go on; that is just one example. The fact that any enterprise can make large amounts of money cannot be an answer to the problem that I am posing, which is to say this oversteps what needs to be done in order to ensure that there is that openness and transparency which is required. That is why all inquiries in Queensland were concerned about the need for disclosure. That is why it is an agreed fact.

We now have disclosure, and since the beginning of 2017 it is real time. In other words, you do not wait until the end of the financial year or the election to disclose. You disclose within seven days, and an agreed fact is that that is on the internet as soon as you do it so that everyone can see it. That is a very strong argument in favour of the existing transparency regime which is relatively recent, but then to overlay it then with this requirement in our respectful submission takes it a step further than it needs to go. It does at State level.

I will not take the ICAC reports any further. Can I take then what was said to be the reliance on what the CCC had to say about the matter. By the way, before I do that, can I just emphasise this. The State in their submissions rely upon and refer to the fact that one of the CCC’s predecessors referred to and had reports from professors at the University of Queensland, Dr Reynolds and Professor Wiltshire. Their views are summarised in the report which is at pages 274 and 275 of volume 1 of the special case book. Now, the academics were concerned or were asked about three issues in the middle of the page – it is number 30 in the case book at page 274:

• the question of control or regulation of private donations;

• the question of public funding of candidates and/or parties;

• the question of the regulation of the use of the media for political purposes.

Your Honours might recall it was probably about the time as the ACTV Case. Now, Mr Wiltshire has referred to what he has to say, at the bottom of the page, which is to do with the disclosure. Dr Reynolds, on the next page was, similarly, inclined to that view. To take up your Honour Justice Keane’s point at page - or perhaps it is relevant to it, anyway, at page 273, the page before, there is a quote from Dr Wiltshire’s comment about studies in the US about tracing donations.

Now, we do not know what donations Dr Wiltshire was referring to – I am sorry, he was professor by then – and we do not know the authenticity of the connection that was uncovered by those studies. I mean, it could have been the gun control or gun lobby. That there is a connection does not tell you much between a donation and a result in this circumstance because you might well say all right, there is a connection between the donation and a resulting decision. But what is sought to be banned only here is one particular kind of donation and we do not have a proven connection between donations by property developers and decisions at planning level by ministers at State level. I think we do not and it is not suggested that we do.

The facts, in our respectful submission, are important and they are important to the CCC. If I could take you briefly to their report which is in volume 2 of the case book, at page 349 - that is where it starts. It starts in the summary. At line 30, your Honours will see:

The CCC appreciates that a number of these recommendations create a disparity in the obligations relevant to state and local government . . . The Queensland Government may consider it appropriate to also adopt these recommendations –

But when it came to it the CCC, like us, is saying well, where are the facts?

If your Honours then go to page 393 of the case book, at the top your Honours will see that the committee which it is referring to, which is the committee examining the bill, should be mindful that its report arose:

out of a detailed consideration of facts and matters relevant to the specific local government context -

Then the next paragraph commencing about line 10 says it did not make any:

specific consideration of corruption risks in state elections and decisionmaking.

And the next paragraph is to similar effect; that is, they did not contemplate this amendment would be made without preliminary review. That simply did not happen. It is not suggested that it did. That is not that much different from Unions (No 2) when the Court was asking, “Well, why are you changing the numbers on the disclosure – on the cap?”

BELL J: The difference is, is it not, that in Unions (No 2) one had an effective halving of the relevant cap. Here one sees the CCC, if that is its correct designation, saying, “We were inquiring in accordance with our terms of reference into the position at the local government level”. It observes that Parliament may wish to consider regulating in relation to State Parliament. Parliament chooses to do that, taking into account the New South Wales experience and making the choice not to adopt the whole of the New South Wales model, which picked up other sorts of individuals, but to accept or to act on that part of the New South Wales model that involved property developers. Now, that is, one might think, worlds apart from Unions (No 2).

MR HASTIE: True it is that, yes, the Minister says, “We have looked at ICAC and we have made this collective choice”, but at the same time I have already dealt with what ICAC really decided and that really does not assist in the argument to say that at State government level in Queensland there should be a ban on donations by property developers. So there is, I concede, that difference, but you do not get much further than that. You do not get any more than that, in fact, to say, “All right, well, as that happened in New South Wales in those circumstances that are in those reports and New South Wales has got a way of legislating, we should too.” It is not much more than that.

GAGELER J: New South Wales have what?

MR HASTIE: I said “got a way”. I am being loose, am I not, that, “New South Wales got a way of legislating in that fashion so we should be able to too.” That seems to be the argument that is made, that New South Wales has got it, so what is good enough for them is good enough for”

KIEFEL CJ: You mean this Court upheld the validity of the New South Wales legislation?

MR HASTIE: That is right, and they are saying that the Court should here too. That is the argument that is run against us and we say the Court has

KIEFEL CJ: They might have predicted that we might.

MR HASTIE: They might have.

KIEFEL CJ: They might have had some confidence.

MR HASTIE: They might have, but there was a factual basis for the decision of this Court in McCloy, and the argument was different. The argument that was made in McCloy was, “I am donor” – sorry, “I am a property developer. I want to donate and I want indeed not to just donate but I want to open the doors with donation”. That is not the argument that is presented here. The argument as presented here is to say, “We are a political party. We are disadvantaged by these particular laws because we are getting less money than the Labor Party would from the same source of funds. We have got a person who as president cannot procure any donations, so has had to resign” - and the letter is in the special case book - “and there would be an inhibition on his ability to participate in a political party because of those laws.”

There are easy ways around it. You could have just said, “We will put a cap on what property developers could donate. We will put a cap on what everyone could donate. We will put a cap on how much everyone can expend”. But they did not choose to do that or, indeed, inquire about it. There are limits, with respect, your Honours, to the extent to which the Court should say one decision for one State is the same for another unless the facts justify it.

I understand the State will hand up a case that deals with parity in sentencing. It is wellknown, well, you should have parity in sentencing, but each case depends upon its own. You have the same sentence but the crime is going to be different for each person. We are not talking about criminal misconduct, but it is the same here; unless they can justify it as a matter of fact in Queensland, then the law should not be upheld.

BELL J: The Queensland Parliament should proceed upon the assumption that there is some superiority about the Queensland population not evident in the New South Wales experience or perhaps, consistently with the genius of federalism, consider that the New South Wales Parliament has identified a problem of the perception of risk of corruption, amongst other things, and dealt with it, and that it would be appropriate for Queensland to do the same

MR HASTIE: And no other State has done it, even though Victoria has recently legislated to change its laws. And the Commonwealth has legislated - its Parliament has legislated to exempt Queensland laws from Commonwealth elections. There is a benefit in the federation of each State going down their own path, but it does not require each State or this Court to uphold that because one law is constitutional in one State and justified by the facts, that in another State it is justified by a different set of circumstances and facts. We have mentioned it in the outline.

Your Honours will recall the Communist Party Case that has been referred to by Justice Gageler a number of times where the proposition put was, “Look, we have got a huge problem in the world”. It was put by the Parliament in the sense that it formed part of the preamble, the extensive preamble, and a number of their Honours took judicial notice of the fact that there was a cold war - in fact, it got hot at times - and the Korean War had started. I think his Honour Justice Dixon refers to “industrial strife” and saying there was a justification for the banning of the Communist Party.

Nevertheless, this Court held, with the exception of one judge, that the power - particularly the defence power – did not extend to the banning of the Communist Party, notwithstanding what was said to be by the then Solicitor-General on behalf of the Commonwealth that this is preventative. Yet you had those problems. But then the High Court said that is not enough. In my respectful submission, it is the same here. To say that there are some problems that have been identified by ICAC in New South Wales does not justify the measures that have been taken in Queensland.

There is just one final matter - there are probably others that I have missed - but there is just one final matter that I wanted to mention, related to the way I started and have dealt with in terms of the position affecting my client, and that is the question of discrimination. As the Court - certainly the plurality held in Brown discrimination might not be a sole

KIEFEL CJ: You have already dealt with this, have you not, Mr Hastie, at the outset of your argument?

MR HASTIE: I did not know that I had dealt with discrimination as such, but I certainly put it in the written submissions, and including the summary of the oral submissions. But one thing I just wanted to mention was that related to that was the concept particularly referred to by Justice Keane in Unions (No 1) of the disfavoured voices which in that case were of concern to the Court because the effect of the legislation was to reduce the funding to unions, even though they were related or maybe because they were related to a political party - one of the other major political parties.

In this case, in our respectful submission, because of the way in which this legislation works and the case that is presented by my client, the discrimination is a powerful fact that, in our respectful submission, together with the other matters I have referred to, should mean that the Court should hold it invalid. If it please the Court.

KIEFEL CJ: SolicitorGeneral for the Commonwealth.

MR DONAGHUE: Your Honours, this case is not about the power of the States to protect the integrity of representative and responsible government by regulating donations that are made for State electoral purposes. The vice of the two State laws that are challenged by the plaintiff in these proceedings is not that they do that, but that they do not confine themselves to doing that. To illustrate that point by example it is, I submit, reasonable to assume that there are in Queensland right now property developers who have stronglyheld views about the forthcoming federal election.

If such a person today makes a donation of any amount to, say, the ALP or the Liberal National Party on the express basis that the donation is to be used exclusively for the purpose of campaigning in marginal seats in Queensland in the coming election, that person commits an offence against the impugned Queensland provisions. They commit that offence even if there is a legal obligation on the ALP or the Liberal National Party to use the funds that are donated exclusively for that federal electoral purpose.

In our submission, that demonstrates that the operation of the impugned provisions here extends well beyond regulating the integrity of State electoral purposes and that what Queensland is asserting by enacting these provisions is a power or a capacity to regulate property developers and their associates in their attempts to influence the way that people vote in federal elections. Our core contention is that the Queensland Parliament has no power to do that. There are, we submit, two legal routes to that conclusion.

The first is that the Queensland provisions enter into an area of exclusive power, the exclusive power of the Commonwealth Parliament to make laws with respect to federal elections. The alternative argument is that the Queensland provisions are invalid by reason of their inconsistency under section 109 of the Constitution in section 302CA and that that provision is not invalid on any of the grounds alleged. The Commonwealth, as your Honours will have seen in written submissions, does not support the plaintiff’s submission that the laws are invalid on the further ground of infringement of the implied freedom. I do not propose to say anything orally about that aspect of the case.

GAGELER J: And where do you stand on the reverse Melbourne Corporation submission?

MR DONAGHUE: Our primary submission is that your Honours do not reach it because our exclusive power argument logically comes first, for reasons that I will develop. If your Honours are not with me on that, we do not support the reverse Melbourne Corporation argument, for reasons that I will come to, if I might. The structure of our submissions, your Honours will see in our oral submissions from the oral outline we have handed up. There are in substance six parts corresponding to paragraphs 2 through to 7.

So I will start with the existence of Commonwealth exclusive power. If your Honours accept that there is such a power, then I will move to the question of how one ascertains whether or not a State law has intruded upon that area of exclusive power. Then I will move to the construction of 302CA, the head of power to support 302CA, the Melbourne Corporation challenge to 302CA, and then there is the Metwally argument. Mr Herzfeld will deal with the Metwally argument.

So can I start, your Honours, with exclusive power. The foundation for our submission in that respect is the judgment of this Court over 100 years ago in Smith v Oldham (1912) 15 CLR, and if I could ask your Honours to turn immediately to that decision, it is in volume 12 of the joint book of authorities at tab 67. This case was not about the validity of a State law. It was about the validity of a newlyenacted provision of the Commonwealth Electoral Act that you relevantly can see summarised at the bottom of page 357 in the judgment of Chief Justice Griffith. It was section 181AA, and the question was, was that provision within the power of the Commonwealth Parliament. It was a provision that was not concerned with the machinery of elections.

Instead, it was a provision that operated to require, in a form that is of course now very familiar to us, that articles, reports, letters and matters commentating on candidates or political parties had to be attributed, so you could tell who the person making the relevant comment was. That provision was challenged on the basis that it was beyond power, and that challenge was unanimously rejected by this Court. If your Honours start with Chief Justice Griffith’s judgment on page 358, you will see in the paragraph that begins at about point 2 on the page:

It is contended that this enactment is beyond the power of the Federal Parliament. It is not disputed that that Parliament has power to make laws for the regulation of federal elections. In my opinion that power is an exclusive power. The matter is one in which the States as such have no concern.

KIEFEL CJ: Were remarks by the Chief Justice and some of the other justices made in the context of arguments which relied upon the reserve powers of the States?

MR DONAGHUE: Your Honour, in my submission, to the extent that the reserve powers doctrine influenced the argument in the case it tends, in my submission, to support the strength of the authority rather than to weaken it, in that Chief Justice Griffith and Justice Barton were obviously two of the main proponents of the reserve powers doctrine which was a doctrine preservative of the powers of the States. Yet, even those two justices, very conscious of preserving the powers of the States, thought it clear beyond argument that the States had no power in this area and that the Commonwealth Parliament’s power was exclusive. So, in my submission, it does not cut against; rather the other way.

KIEFEL CJ: But it does account for their making statements which would otherwise really not be necessary in relation to the Commonwealth law.

MR DONAGHUE: In the context of Chief Justice Griffith’s judgment, it may be right to say that the statement that I just read to your Honours about exclusive power was not central to his Honour’s reasoning. In my submission, that is not the case in relation to the other two members of the Court. Their mode of reasoning did depend, in at least one of its significant strands, upon exclusivity. So, in respect of Justice Barton’s reasons, if your Honours turn to 359, you will see in the middle of the long paragraph, the second paragraph of his judgment, at about point 5 on the page his Honour says:

It is objected that this legislation is not within the powers conferred upon the Commonwealth Parliament by the Constitution. What are those powers? First, there is sec. 10 of the Constitution.

Then section 51(xxxiv), to which I will come:

gives power to the Federal Parliament to make laws –

with respect to matters where the Constitution indicates a position:

until the Parliament otherwise provides.

So, his Honour identifies the relevant powers as sections 10 and 31, read together with 51(xxxiv). Having identified the powers in those ways, then at the bottom of page 359, about five lines up from the bottom, his Honour says:

No power was given to any State to make laws with regard to federal elections –

That probably requires some slight qualification in terms to which I will come shortly, by reference to sections 7, 9 and 29 which are specific, limited powers to the States to make laws with respect to federal elections. But leaving that aside:

existing State laws as to State elections were made applicable to federal elections during the time which necessarily intervened before the Federal Parliament could legislate on the subject. That is all. Since the Federal Parliament has legislated upon the subject its legislation relating to elections has displaced that of the States, and its power to pass such legislation is exclusive, because no State Parliament had under its own Constitution power to legislate as to federal elections.

So, having identified that exclusivity, unlike Chief Justice Griffith, Justice Barton goes on to develop why and how it fits into his conclusion in the case. If your Honours go down to about point 6 on the page, his Honour says that, in effect, if the Commonwealth cannot regulate to pass a law of this kind, then it cannot be regulated at all unless the States can do it. But then, at about point 7, his Honour deals with that possibility. So, he says:

It may be pointed out that, if the publication of articles and comments dealing with the issues and the candidates at federal elections cannot be made the subject of legislation by the Commonwealth Parliament . . . it cannot be made the subject of legislation at all, unless . . . by the States. But that would mean that the States individually would have power to make laws, necessarily diverse, so regulating the conduct of their citizens (who are at the same time citizens of the Commonwealth) as to influence the course of those elections according to the policy of the particular State.

So his Honour is rejecting the idea that the States could legislate in this area precisely because that would mean that the citizens of the State who are also citizens of the Commonwealth would be subject to divergent nonuniform regulation of their involvement in the Commonwealth federal electoral process. He goes on:

Surely the proposition that States have and the Commonwealth has not the power to deal with the conduct of citizens in respect of federal elections is too grotesque to be entertained. If then the Parliament of the Commonwealth cannot legislate upon a matter of this sort there can be no legislation upon it at all.

KEANE J: Does that mean that State legislation in relation to defamation could have no operation in relation to defamatory statements made in the course of federal election campaigns?

MR DONAGHUE: No, your Honour, it does not mean that, and that is the issue I am going to address in the second part of my submissions. But, in my submission, it does not have that consequence because of the way one tests whether a State law has entered into this area of exclusive power. So, if I could defer the answer, because it requires some development, but that is the short answer.

KEANE J: Sure.

MR DONAGHUE: So, a little further down on page 361 his Honour says:

And as it is plain that no State can deal with the conduct of citizens of the Commonwealth in respect of federal elections, the power must reside in the Commonwealth . . . It deals with it as the conduct of a body of citizens whose actions may, and often will, affect the result and issue of federal elections. No State has anything whatever to do with such a subject as that.

So the whole line of analysis that Justice Barton adopted was this is a topic that it is plainly not appropriate for the States to be able to regulate. The States cannot regulate it. They can pass no law at all on the topic and that, therefore, informed his Honour’s evaluation of the extent of the federal power that was held to support the law in question. Just for the sake of completeness, at about point 7 one can see that Justice Barton thought that this law in question – his Honour said:

I need scarcely declare, after what I have already said, that I consider the section is in the strictest sense a law relating to elections . . . clearly a matter incidental -

and support for the law in question. Justice Isaacs’ reasoning was in very many respects similar. His judgment starts at the bottom of 361. If your Honours go over to the top of 362, having identified the same sources of power as Justice Barton – that is 10 and 31, together with sections 51(xxxvi) –and his Honour also noted the incidental power there empowering:

the Parliament to legislate with reference to parliamentary elections and all matters incidental -

then there is a summary of the argument that there is not a sufficient connection here, in effect, because the power was said to be related just to the mechanics of elections. Then, in the middle paragraph, his Honour rejected that:

So far as concerns the mechanical process of election that is true enough; but to confine the power of the Parliament to a supervision of the mechanism is to neglect the vital principle behind it.

I will not read it, but I rely on the rest of that paragraph. Then over the page on 363 at about point 6, again emphasising the width of the identified power with respect to federal elections:

The limits of plenary power end only with the subject matter in respect of which it may be exercised. If the purity and reality of elections be within the ambit of the power, if in the public interest the electors may be protected from the open assaults of force and threats and corruption, it is impossible to exclude the right also to guard them against the more insidious, and, in many respects, the more dangerous form of winning their assent –

So, again, it is clear that the power was not regarded a just a limited, narrow, mechanical power. Justice Isaacs characterised it much more widely. Then, having done that and having examined some historical antecedents for the legislation in question, his Honour comes to the question of exclusivity at the end of the judgment at page 365 at about point 2 or 3 on the page:

It is inconceivable that in Australia there exists no legislative authority competent to pass such a law . . . “The power to pass such an Act must reside somewhere.”

Where? His Honour says not with the States:

If then, the States do not possess the power, the Commonwealth must.

The subject matter of the present enactment is transparently beyond the competency of the State to control. It was the Constitution itself, and not the State Parliament, that applied even as an interim provision the State laws to federal elections.

I will come to what his Honour meant by that in a moment.

So it necessarily falls within the scope of the Commonwealth legislative authorities to regulate those elections.

So all three members of the Court said that the power was exclusive. That conclusion played, in our submission, a central role in the reasoning of at least two members of the Court, such that

GAGELER J: Which two?

MR DONAGHUE: Justices Barton and Isaacs, in my submission.

GAGELER J: Responsive to the argument that we see at page 356, presented by Mr Mitchell, which is the reserved power single characterisation argument?

MR DONAGHUE: Yes, but, accepting that to be so, their Honours’ reasoning is that this is not a topic that States should be able to legislate with respect to transparently beyond their control.

KIEFEL CJ: But the point is that their starting point is State power. That is what they are considering. And if it is not State power, it must reside somewhere else.

MR DONAGHUE: In my submission, your Honour, the difference between whether a law can have multiple characters and the question of whether it is a law with respect to a Commonwealth power or with respect to a State power, while it is true that multiple characterisation came in the jurisprudence of the Court, in my submission, what their Honours are focused upon here is explaining, as a step in explaining the breadth that they accord to the Commonwealth power, the fact that States have no business regulating federal elections, and that is what we seek to draw from the reasoning.

I accept that in some respects the decision is from another time, but it stood as a unanimous authority of this Court, unchallenged for over a hundred years. It has been referred to with approval on multiple occasions. Chief Justice French referred to it in Rowe. Your Honour Justice Gordon referred to it in Murphy. It was followed by the New South Wales Court of Appeal in the – I am not sure what I said - but the Queensland Court of Appeal in the Local Government Association Case. In our submission, it is therefore not right to approach the question of exclusive power, as the State interveners to a significant extent invite us to do, as if the slate were clean. Your Honours are being asked to overrule a decision of this Court that has stood for a long time.

GORDON J: Putting aside the fact that it comes from this reserve powers era, I understood your argument was that one takes from it not so much that analysis but in constitutional structure one takes it from the provision, which I presume is the next part of your argument.

MR DONAGHUE: Yes, that is right. I am about to come to the proposition that their Honours are right in the conclusion that they expressed, essentially for the reasons that they gave by reason of the provisions to which they referred.

GORDON J: In other words, post Engineers, the constitutional structure has not changed and the analysis applies, as I understand your argument.

MR DONAGHUE: Yes. Perhaps it applies even more strongly than had applied at the time.

GORDON J: Does that not drive you back then to the constitutional structure?

MR DONAGHUE: Yes, and I will come to and develop that but I do not want to give away the proposition that the starting point is your Honours should, in our submission, require our friends to persuade you that it is appropriate to depart from the authority of this case and, unless they can persuade you it is wrong – and obviously they should not do that – insofar as the reasoning reflects a longunderstood and settled position, in my submission that is a hurdle they need to clear.

In some respects, your Honour, this case would obviously be an easier case for the Commonwealth if we were dealing with a case where the State had passed a law that was in terms directed only to the regulation of a federal election. If one had, for example, a State law that said in federal elections only, before a person can volunteer to assist a political party in doorknocking or handing out “How to Vote” cards or phonecall centres, they need to have an accreditation under the State law, they need to have done a responsible, respectful doorknocking course or something of that kind, and that you cannot volunteer or participate in those ways without having taken those steps, in our submission, that law would be plainly invalid.

It would not be inconsistent with anything in the Commonwealth Electoral Act, but it would be invalid for the reasons Justice Isaacs gave. The State would be legislating in relation to something transparently beyond its proper interests. Now, if that is right, then if the State passed the same law, put the same provision in Part 2 and then in Part 3 extended that law to its own elections, in my submission, the answer cannot be different. Part 3 might be valid, perfectly reasonable for the State to legislate that kind of activity in its own context, but it still could not do so in the Commonwealth context, so your Honours would, in my submission, strike down Part 2.

KIEFEL CJ: But when you say it would be legislating beyond its own interests, is that to accept that it has some level of interest in federal elections in relation to which it may legislate?

MR DONAGHUE: No.

KIEFEL CJ: Not at all?

MR DONAGHUE: Not in relation to federal elections. Its proper area of competence is

KIEFEL CJ: Where they are to be held?

MR DONAGHUE: Sorry, your Honour - all subject to the specific provisions that I am about to come to – 7, 9 and 29. I should have qualified my answer in that way. So what this case throws up is not the easy example that I have just hypothesised or even the Part 2 and Part 3 dealing with federal and State differently, but instead a generalised law that just purports to regulate elections but does so in terms that are wide enough to include not just the State elections in which the State has the proper interest but that captures federal elections as well and that, in our submission, as a matter of substance makes no difference. The law still enters into the area of exclusive Commonwealth legislative power and should be held invalid.

Now, that is all I wanted to say by way of authority. In terms of the substance of the reasons that the Commonwealth power is exclusive, there are two ways I want to develop that: first, by making some submissions in relation to the way this Court has approached the power of State Parliaments in areas where preFederation they never had power in relation to the topic – that is a topic created by the Constitution and which is, as your Honours will note, one of the strings in Smith v Oldham. Justice Barton said well, they never had it, the States never had this power. But that kind of reasoning has a respectable pedigree in other related contexts and I will take your Honours briefly to some examples of that.

KIEFEL CJ: Mr Solicitor, you have said - I think the words you used were “The State cannot legislate with respect to federal elections”. Does it breach the exclusivity for which you contend if the State legislates not with respect to the subject of federal elections, but on a subject which has a flowon – I will not say incidental effect, but a flowon effect?

MR DONAGHUE: Your Honour, that is my part two and it is not straightforward. So if I could briefly defer my answer to that question. But what I am seeking to do is to persuade your Honours first that there is an exclusive power. If your Honours are with me that far, then there is a not easy question about how exactly to work out when the State

KIEFEL CJ: But you are separating the two. Really what I am asking you is, is not one answer to exclusivity the fact that it can be dealt with under section 109?

MR DONAGHUE: In my submission, not, your Honour, for a number of reasons. One is that the structural reasons that I am about to come to, if they do support the argument that there is an exclusive power, give rise to an issue that is logically prior to the 109 issue, in the same way that your Honours in Burns v Corbett said the implication that arose from Chapter III was logically prior.

KIEFEL CJ: Only if you assume exclusivity.

MR DONAGHUE: But if the provisions do support exclusivity, then that would come first. But the other difficulty, your Honours, is that, with respect to our friends, they are seeking to both give and take away at the same time in that they say at the exclusive power stage 109 is the answer and then they say at the 109 stage, Melbourne Corporation is the answer.

So they seek to end up with a position where the Commonwealth has no capacity to stop State legislation doing the very thing that was held in Smith v Oldham to be impermissible. So one has to deal with all of these, and obviously this case has many issues in play, and they intersect and they influence one another in various ways. So I am seeking to make myself comprehensible by separating out the issues so far as I can. But I appreciate, both your Honour Justice Keane and the Chief Justice, that I need to deal with the

GAGELER J: Mr Solicitor, sorry if I am cutting across what you were going to say, but just so I understand what you say is the exclusive power, is it section 51(xxxvi) read with sections 10 and 31?

MR DONAGHUE: Yes.

GAGELER J: It is the totality of that legislative power as positively conferred is exclusive – is that the way you put it?

MR DONAGHUE: That is the way I put it.

GAGELER J: Thank you.

GORDON J: Subject to 7, 9 and 29.

MR DONAGHUE: Subject to 7, 9 and 29. I need to keep qualifying in that way, but yes, your Honour.

GORDON J: What is the answer you give to Justice Gageler?

MR DONAGHUE: Subject to 7, 9 and 29, which are express powers conferred upon the States, the States cannot otherwise enter into the area of legislative competence given. But, and again this does cut into the second area, what that excludes is – I apologise for keeping doing this to your Honours, but I need to park that, so I can come to the question in a coherent way.

GAGELER J: It would follow, from your answer to me, that the way to test the validity of the State law is to ask whether the Commonwealth Parliament could have enacted a law under that provision.

MR DONAGHUE: I am not going to embrace that proposition, and that is why I seek to develop it at number two, so that is not the test. That would follow if it were a section 52 style exclusive power, but that is not what I am putting. But if I could develop it, I will come to it shortly. But I said there were two ways I was going to seek to persuade your Honours that there is an exclusive power. One is powers that State Parliaments have never possessed, and two is what one sees from the text of the Constitution in its allocation of powers with respect to elections.

With respect to the first of those two topics, the submission that this is not a power that the States have ever possessed, that has the ramifications for the relevance of section 107 of the Constitution, which your Honours may have seen mentioned particularly by Victoria in its written submissions. Section 107 is concerned with the preservation of every power of a Parliament of a colony which has become a State.

Where one is dealing with the power of that kind, one, the power is preserved, unless the Constitution exclusively vests it in the Parliament of the Commonwealth or withdraws it from the Parliament of the State. But, in our submission, we are not in the territory of section 107, for the reason that Justice Barton gave. The power to legislate with respect to federal elections was not a power that the colonies ever had, and so one is not in the territory of needing to find a withdrawal of that power.

That kind of point emerges from two examples that I want to take your Honours to, and one other I will mention. The first example is Carter v Egg and Egg Pulp Marketing Board [1942] HCA 30; (1942) 66 CLR 557, which is in the joint book in volume 5 at tab 29. What had been attempted in this case was an unsuccessful argument that the Commonwealth power of defence was an exclusive power and the Court said, not surprisingly, looking at 51(vi), that that did not seem like a promising argument.

The attempt was made to buttress it by reference to the fact that there is an exclusive power in section 52(ii) with respect to departments that have been transferred from the colonies and one of the relevant transferred departments was the Department of Defence, which one sees in section 69, I think. If your Honours could turn to page 571 in the judgment of Chief Justice Latham, you will see that he deals in the first full paragraph on the page with the fact that:

Sec. 51(vi.) is not exclusive in terms.

There are in fact provisions like section 114 that contemplate that the States might in fact have some ongoing role in defence. Then in the middle of the page there is a reference to 52(ii) and “transferred departments”, which includes “Naval and military defence”. But then further down that page at about point 8, his Honour then moves from transferred departments to a different topic, and says this:

When the Commonwealth constitutes a department of its own –

That is, a nontransferred department:

e.g., defence, the provisions of sec. 51 are sufficient to give the Commonwealth complete control of that department. Any State legislation professing to control a Commonwealth department would be invalid, because no State Parliament has or ever has had any power to legislate upon such a subject.

That is, we submit, much the same reasoning as your Honours see in

EDELMAN J: What do you say about the legislation referred to at footnote 103 of Queensland’s submissions passed by New South Wales, Queensland, Tasmania and Victoria prior to Federation dealing with federal elections?

MR DONAGHUE: That legislation, in our submission, is possibly one exception, I think – legislation of the kind addressed in the specific provisions I am about to come to, so in the exception that I have mentioned about 7, 9 and 29.

EDELMAN J: Right.

MR DONAGHUE: In Carter, Chief Justice Latham adopts that mode of reasoning. Similarly, in Nelungaloo Pty Ltd v The Commonwealth [1952] HCA 11; (1952) 85 CLR 545, which is in volume 9 of the joint book of authorities at tab 54. The detail of this case does not really matter. It was an application for a certificate under section 74, and the debate was about when a question is an inter se question for the purpose of 74.

If your Honours turn to page 564 in the judgment of Justice Dixon, with whom Justice Fullagar agreed, his Honour is making a point that not every question about the limits of a concurrent legislative power under section 51 is an inter se question, that is, not every question about the limits of the 51 power is about the limits of State power. Ordinarily, of course, a debate about concurrent power would be because where the Commonwealth has power that means the State does not have an exclusive power of its own. But the illustration that his Honour gives at 564, at about point 3 on the page is:

For it is not all powers conferred by s. 51 that are in every respect paramount. Paragraph (xxxvi.) –

the one we are concerned with:

confers a power by reference to a number of sections of the Constitution concerning matters with respect to which the Parliament may provide –

There is a long list; it includes sections 10 and 31.

They are not matters with which the States could have any concern and, if a common boundary between the Federal power over them and State power is conceivable at all, it would, I suppose, be found to be a boundary between a State power and a Federal exclusive power.

So it is, we submit, the same reasoning again and in this context via Justices Dixon and Fullagar in a provision mentioning the very powers upon which we rely.

Your Honours – or three of your Honours’ reasons in a similar fashion in the context of judicial power in a case I will not take your Honours to - it is MZXOT v Minister which is, if your Honours need it, in volume 9 at tab 53, but briefly, the issue in MZXOT was concerned with whether this Court could remit certain migration decisions to State Supreme Courts and the argument was that State Supreme Courts did not need an investiture of jurisdiction that would permit remittal from the court because they had it already as part of their preexisting preFederation jurisdiction of the courts.

What the Court held in that case was that, notwithstanding that of course the State Supreme Courts had unlimited jurisdiction which, plainly, includes jurisdiction to grant prerogative writs in the nature of prohibition and mandamus, for example, that colonial jurisdiction did not extend to granting writs to Commonwealth officers. The reason that the topic did not exist in the anterior body of general jurisprudence in the colony and the Court – Chief Justice Gleeson and Justices Gummow and Hayne – approved a decision of the US Supreme Court that said the fact that you have the same jurisdiction of the Court of the King’s Bench in here and otherwise unlimited does not mean that you can issue writs in relation to this newly created thing, the offices of the Federal Government.

So, in our submission, obviously all those cases that I have just gone to are postreverse powers cases and yet they still reflect the kind of analysis, in our submission, that you see back in Smith v Oldham in identifying why the power with respect to elections is exclusive.

We do not need to take on the burden of showing – and I say this in response to the points made by some of the interveners – that every single new topic created by the Constitution is one that is exclusively within the Commonwealth Parliament’s power. All I need to do is to show that that is so with respect to federal elections. In that respect, in my submission, the kind of analysis I have just gone through is greatly strengthened by the text of the provisions that divide up power with respect to federal elections.

As a last preliminary before coming to that text, your Honours may have noted that, notwithstanding the vast volume of material that you have been given in about 14 volumes of authorities, we have not – no one has extracted any material from the Convention Debates in relation to these powers. That may be because it is difficult to put one’s finger on particular passages that are particularly instructive in relation to the debate that is being played out before your Honours.

But, in our submission, we have in footnote 16 of our submissions, given your Honours some references to the relevant parts of the debates where these powers are discussed. In our submission, what one sees in the debates, both of 1891 and 1897, is an extensive discussion of powers with respect to the regulation of federal elections and the framers grappling with, what we identify as three main design choices if you like, in relation to the system that they were creating.

Choice one was the scope for future development. So which parts of the system do you entrench in the Constitution and which do you leave amenable to development. Choice two, with respect to those that you leave for future development, is that development to occur on a uniform basis or is it to be subject to local variation, meaning StatebyState variation. The third choice was what to do in the transitional period before the first election.

So there are considerable debates on all of those topics, and what one sees in the end, emerging from the provisions that I am about to go to, is the debates coming down in such a way that there was constitutional entrenchment of limited elements of the system, particularly 7 and 24, direct choice by the people. There was very significant capacity to develop the system conferred upon the Commonwealth Government to develop the system in a uniform way and there was very limited capacity given to the States to make laws that were relevant to the electoral process. One sees a number of attempts to – that were made by moving motions in the Convention to expand the powers of the States rejected.

So, without taking your Honours to specifics, that, in my submission, is what emerges from the history. Because our exclusive power argument is very much an argument about the absence of power for the States, if we could start with the provisions that concern the conferral of power on the States, there are just three relevant provisions. The first is section 7 of the Constitution:

The Senate shall be composed of senators for each State, directly chosen by the people of the State –

So, in that respect, the choice is mandated by the Constitution. Then there is some option for development given:

voting, until the Parliament –

That is the Commonwealth Parliament:

otherwise provides, as one electorate.

So the Commonwealth Parliament can change whether the direct choice is in one electorate or more. Then there is another power to the Commonwealth Parliament to otherwise provide. But until that occurs, there is a contingent power, if you like, given to the Parliament just of the State of Queensland to divide that State into divisions.

So that power is for the State to make changes undoubtedly that would affect federal elections but only subject to the Commonwealth otherwise providing and subject to, of course in an overriding sense, the direct choice requirement in section 7. Then in section 9 one sees the Parliament of the Commonwealth being given the power to make laws that prescribe the method for choosing senators, but there is a constitutional constraint on the Commonwealth’s choice:

the method shall be uniform for all the States.

So there is a clear reflection of the importance of uniformity that being the answer to the uniformity diversity debate, but:

Subject to any such law –

that is, law of the Commonwealth:

the Parliament of each State may make laws prescribing the method of choosing the senators for that State.

So there is again an express but limited conferral of power on the courts there. That part of the power, to make laws prescribing the method, is obviously subject to contrary provision by the Commonwealth. But the next sentence, the last sentence of section 9, is unique in that it is a conferral of power on the State to make laws determining the times and places for election of senators which is not subject to contrary provision by the Commonwealth. That is the only power conferred by the Constitution on the States that is not subject to contrary provision by Commonwealth law and one of only a very small number of powers that the States have.

That last sentence is an example of the Constitution conferring an exclusive power here on the States, rather than on the Commonwealth, without calling it that in terms. So to the extent that it is put against us, “Well, your power cannot be exclusive, because the Constitution does not say it is”, there are in fact a number of powers in the Constitution of that kind. But section 9 provides a useful example of just such a thing, and Justices Gummow and Hayne in Mulholland at paragraph 140 - I will not take your Honours to it, but they quote from Re AEC; Ex parte Kelly, where the third sentence of section 9 was identified as preserving:

to the States an area of exclusive power that is not subject to Commonwealth legislative preemption.

So there is such a thing. The States have it, in that very narrow context of times and places. The last of the three

KIEFEL CJ: But the exclusivity for which you contend is one in which the States can never legislate, whereas here, if the States did not legislate, presumably the Commonwealth could fill the gap. It is “may make laws”. They are not obliged to.

MR DONAGHUE: But “the Commonwealth may make laws prescribing the method of choosing senators”, as long as they are uniform. As I understand

KIEFEL CJ: The time and place provision.

MR DONAGHUE: Well, the concept of exclusivity there would, in my submission, preclude the Commonwealth making time and place laws. But if there was nothing there, and I think – I have to remind myself of the detail.

KIEFEL CJ: If the States did not?

MR DONAGHUE: If the States did not – I think this may have arisen, and the view was taken that the Governor of the State could just fill the gap by specifying the dates in the relevant writs, rather than that the Commonwealth could do so. The history of all this is most opaque in terms of why it was regarded as – what happened is that these provisions have models in the US Constitution. In the US Constitution, the provision is the Parliament of the State may make laws determining the manner, time and place of election and it was decided to remove the power with respect to the manner from the States to give it to the Commonwealth but there was then this hangover left in relation to time and place.

GAGELER J: I take it it is not critical to your argument that the third sentence of section 9 confers an exclusive power on the States.

MR DONAGHUE: It is in no way critical to my argument.

GAGELER J: I mean, it might call into question provisions of the Electoral Act.

MR DONAGHUE: To the extent that they overlap on that precise topic, it might, but there are – what one sees

GORDON J: There is a footnote which lists them at the back of my copy of the Constitution and each State has one in force.

MR DONAGHUE: Yes, that is what I was about to mention but the footnote 6 is referring to sentence 2 powers:

Acts have been passed in pursuance of –

although, in fact, those same Acts often deal with the second sentence and the third sentence, they deal with both and in many respects, apparently to avoid confusion to the extent that there is overlap, the provisions are exactly the same in the Commonwealth and State provisions so it may be that no one actually knows or whether the provision that is in force is the Commonwealth or State provision it does not matter because they are identical.

Your Honour Justice Gageler is quite right, it does not matter to my argument but I draw your Honours’ attention to the fact that the Court has described it as an exclusive power before. What matters for my purpose is that sections 7, 9 and the last power, 29, which is again a power subject to contrary provision by the Commonwealth, the power of the Parliament of the State to make laws determining divisions of the State for members of the House of Representatives, are the only powers that the Constitution recognises the States as having with respect to federal elections.

In our submission, the very specific and very limited nature of those powers cannot really be explained if sitting in parallel with them there is a general power on the part of the State to make laws with respect to federal elections. It would render the precise provision of the State areas of competence and, indeed, the necessity for any conferral of power on the States by the Constitution inexplicable, in our submission, if the States have the power anyway to do all of those things.

The fact that they could not – well, that the State law could not operate other than as supported by specific provisions of the Constitution is, in our submission, confirmed by sections 10 and 31, which are the two provisions Justice Gageler mentioned to me which are significant to the foundations for Commonwealth power, because those sections do not confer power on the State Parliaments, unlike the three that I just mentioned. Rather than confer power on the State Parliaments, what those provisions do is provide that by force of the Constitution itself certain laws of the States are to apply in the interim period – are to apply until the Commonwealth Parliament otherwise provides.

So, the premise seems to be that the State laws cannot operate of their own force to have the consequence that is provided and that is the point that Justice Isaacs was making at the end of his judgment at 365 when explaining that the States do not have the power. He expressly notes that these provisions – it was only by reason of these provisions that the laws that were in force in the relevant States were able to apply.

So, structurally, in our submission, the very narrow and limited grant of power and the recognition in 10 and 31 that the Constitution itself was the source of the ongoing – of the operation of State laws with respect to the first election, all supports the conclusion of the existence of exclusive power.

EDELMAN J: The effect of 7, 9 and 29 was to empower only those aspects of the State federal election Acts that fell within those provisions or to give effect only to those aspects of the State federal election Acts that existed in 1900?

MR DONAGHUE: If your Honour is referring to the State Acts in the footnote, they all postdated the enactment of the Constitution so that the position, as I understand it, your Honour, is that the State laws then as in force, with respect, from a more numerous House of Parliament in the State operated with respect to the first election because sections 10 and 31 said that they operated without any need for any legislative action by the States. Thereafter - immediately thereafter the States could pass laws that had ongoing effects to the extent that 7, 9 and 29 empower them to do so and not otherwise.

I am reminded, your Honour, I need to qualify that answer slightly by reference to covering clause 4 of the Constitution which dealt with the period between the Constitution taking effect which said:

But the Parliaments of the several colonies may at any time after the passing of this Act make any such laws, to come into operation on the day so appointed, as they might have made if the Constitution had taken effect at the passing of this Act.

So, there was a capacity to legislative in the interim. I note the time.

KIEFEL CJ: Yes, thank you, we will adjourn to 2.15.

AT 12.47 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

KIEFEL CJ: Yes, Mr Solicitor.

MR DONAGHUE: Thank you, your Honour. Your Honours, I completed what I wish to say about the constitutional allocation of powers to the State Parliaments in relation to federal elections, save to add one point I mentioned in answer to a question from your Honour the Chief Justice when your Honour was asking me about the third sentence of section 9, that if there were no State law, the Governor could fill the gap. What I had in mind was a reference in Quick and Garran to that effect referring to US practice on the equivalent provision. I will not take your Honours to it but it is in volume 14, tab 89, page 5831 of the joint Full Court, page 427 of Quick and Garran.

So, I have done the States’ side of the division of powers. The Commonwealth’s side I can deal with very quickly. The Constitution adopts the approach of conferring power on the Federal Parliament with respect to elections in two ways. The first category of laws is laws that directly empower the Parliament to make laws of particular specific kinds. So one sees, for example, in that category, section 8, how to make laws with respect to the qualification of electors; in section 9 for the method of the selection of senators provided it is uniform; in section 14 for the vacating of places of senators; in section 27 for the number of members of the House. So, there are specific powers of the general kind, although on different topics, that one sees conferred upon the States. So that is the first category.

GAGELER J: I am sorry, but are you saying that section 8 is a source of power?

MR DONAGHUE: Yes.

GAGELER J: I see.

MR DONAGHUE: Because the model used there is different to the model used – so that is my first category. The second category are laws of the kind that one sees in 7, 10, 29, 30, 31, 34, which are “that until the Parliament otherwise provides” powers and those powers link to 51(xxxiv) but, in the first category, that link does not work because 51(xxxiv) would not intercept with those powers. So, that is why I am drawing that distinction.

So, in broad summary, the scheme, in my submission, which emerges from those two approaches is a constitution that prescribes some very basic but, of course, fundamental features of the representative democracy that the Constitution creates in terms of, in particular, the importance of the direct choice of the people but leaves, as the Court has often recognised, considerable latitude for the development or choice as to the nature of that system.

That choice is given to the Commonwealth Parliament to make uniform laws on that topic subject to the limited and specific grants of powers to the State that I have identified and that otherwise recognises, particularly in 10 and 31, the incapacity of the States to regulate electoral processes pertaining to the Federal Parliament, that being a scheme that stands in very marked contrast to the scheme adopted in the United States Constitution which, of course, was before the framers as a model which gives a much higher degree of influence to the States in America over the federal electoral process.

That distinction was noted by Justices Gummow and Hayne in Mulholland at paragraph 141, but, again, I will not take you to it. So, that is the basis upon which, as a matter of both authority in Smith v Oldham, but also as a matter of the interpretation of the provisions of Chapter 1 that I have taken your Honours through that we rely upon to support the proposition that there is an exclusive Commonwealth power with respect to federal elections.

That then takes me to the topic that I deferred in answer to a number of questions from your Honours, the second of the topics I identified, which is if we are right that there is an exclusive power of that kind then how does one identify when a State law impinges upon the exclusivity? As we read the submissions before the Court, there are three approaches that have been proffered by the various parties as to how one might approach that question.

At one extreme there is the approach proffered by Queensland which says that one should adopt a sole or dominant character test, so that even if there is an exclusive power the Commonwealth power is exclusive only if the law in question could be characterised as having the sole or dominant character of a law with respect to federal elections.

That means, as Queensland expressly recognise, that provided that the State frames its law generally as a law about elections, as the State has done in section 275, for example, then it is perfectly free to regulate federal elections, including by prohibiting donations for the dominant purpose of being used to influence voting in a federal election, even if the donations are required to be used for a federal election.

In our submission, one only has to state that to say that really it means that any exclusive power that your Honours might have recognised at step one is totally illusory because it would remain easy for the States to regulate the excluded topic. For that reason that kind of test was rejected in what I will submit is the analogous context of Bourke, which I will come to in just a moment.

At the other extreme of possible tests would be the test that applies with respect to exclusive powers under section 52, and that is the test your Honour Justice Gageler put to me just before lunch. One would ask the question: if the Commonwealth could have passed the same law as it applies to federal elections then that would mean that the State law would be invalid. That would be how it would work under section 52.

For example, with respect to a Commonwealth place under section 52, if the Commonwealth could have passed a law relying on section 52 with a particular effect in a Commonwealth place then a State law of general application will not have that application within the Commonwealth place. One sees that approach, for example, in the case of Allders. It is not actually in the joint book and I do not need to take your Honours to it but it is (1996) 186 CLR 630, relevantly at 676.

What that would mean if one adopted that kind of approach is that if, for example, the Commonwealth could enact a law preventing assaults during federal elections – for example, fights in a queue at a polling station – then the State criminal law of assault would not be able to apply in that context or, to take your Honour Justice Keane’s example about defamation law, on that approach the defamation laws would not operate. We do not embrace that test.

The reason that we do not embrace it is because, in our submission, one does not find in the constitutional scheme I have outlined a sufficiently firm foundation for a concept of exclusivity understood in that way. As we endeavour to make clear in our reply, we do not use the word “exclusive” when we refer to an exclusive Commonwealth power in that sense or in a way that would pick up that test.

What we submit you do see in the constitutional scheme is support for an intermediate approach which looks at 7, 9, 10 and 31 and sees in those provisions the premise that, notwithstanding the otherwise obviously wide legislative power of the State Parliaments, that wide legislative power does not extend to a particular topic; that is, laws with respect to federal elections. The inference to be drawn from those provisions is that, when one looks at the power of the State Parliaments, they do have a very broad legislative power which includes the power to make laws with respect to elections other than federal elections. So plainly they can regulate their own elections, they can regulate local council elections, but they cannot regulate federal elections.

That logical structure – power with respect to elections other than federal elections – is, we submit, sufficiently analogous to the structure one finds with respect to the banking and insurance powers; that is, power with respect to banking other than State banking and insurance other than State insurance. So the analysis that the Court has applied in working out what those “other than” words do in terms of abstracting from legislative power is a helpful one. It is only an analogy but the structure is, we submit, sufficiently similar so that the way the Court approach that topic in Bourke is of assistance.

For that reason, I invite your Honours to turn to Bourke v State Bank of New South Wales [1990] HCA 29; (1990) 170 CLR 276, which is in volume 4 of the joint book behind tab 23. This case is about 51(xiii), “banking, other than State banking”. It is a unanimous decision of the Court, the same approach. Bourke was followed in the context of the insurance power in Andrews, so one sees a couple of authorities of the Court in this kind of context embracing the approach I am about to develop. If your Honours could turn in the report to page 283, you will see the legislative provisions that were in issue and they are very familiar - sections 52 and 52A the Trade Practices Act:

A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive . . .

shall not, in trade or commerce . . . engage in conduct that is . . . unconscionable.

Loosely summarised. You see under the extract of those two provisions that the definition of “corporation” picks up trading corporation and financial corporations and then goes on to define financial corporations as:

financial corporation within the meaning of paragraph 51(xx) of the Constitution and includes the body corporate that carries on as its sole or principal business the business of banking (other than State banking not extending beyond the limits of the State -

So a financial corporation had both its 51(xx) meaning and the endeavour was also given to give it its 51(xiii) meaning.

The question in the case, which is identified at the bottom of the previous page, the bottom of 282, concerned the application of those provisions to the Bank of New South Wales, a body corporate established by the State Bank Act 1981(NSW), and the premise for the case in the last few lines on that page, it was assumed that the transactions in issue took place wholly within New South Wales, and the question was whether 52 and 52A would apply to the Bank of New South Wales with respect to transactions that took place wholly within New South Wales. That raised the question that one sees from the terms of 51(xiii), which is reproduced in the middle of 284 of the report, 51(xiii) of the Constitution giving the Commonwealth Parliament power to make laws with respect to “banking, other than State banking”.

The first issue in the case was whether those words “other than State banking” were just a limit on 51(xiii) itself – that is, the conferral power with respect to banking - or whether they also limited other powers, relevantly here, 51(xx). The answer given by the Court, which you see in the middle of 286 of the report, is that they are – or actually not in the middle; just under the quote at the top of 286 – is that they are:

a restriction upon Commonwealth legislative power generally –

not just on 51(xiii). So those words “other than State banking” were abstracting from the Commonwealth legislative power not just under 51(xiii) but also under the corporations power in 51(xx). Having reached that conclusion, the Court in that passage, continuing under the quote, then turn to the question of how the limitation was to be identified.

But the conclusion . . . impose a restriction upon Commonwealth legislative power generally rather than only a limitation upon the ambit of s. 51(xiii) does not of itself identify the nature of that general restriction.

That is what I am going to this case to then draw on by analogy, and the Court identifies two possible approaches. One is positive prohibition of Commonwealth laws “with respect to State banking”, somewhat akin to the section 52type Allders approach. So, that is the words following the word “first”. Then, about five lines down, alternatively - so this is the second approach, and the alternative has two limbs to it. Limb one:

Commonwealth legislative power might simply not extend to the enactment of laws which can be characterized as laws with respect to banking (whether or not they can also be characterized –

in other ways. And limb two:

to the extent that those laws touch or concern State banking.

So, they are two alternatives that the Court has posited. The next couple of pages of the reasoning are addressed to option one – the positive prohibition option – which was an option that, as their Honours say in the start of the next paragraph – would have involved:

the implication of an exclusive State legislative power.

And if there had been an exclusive power, the Court says the ordinary characterisation tests will not be adequate, for reasons that their Honours then explain. They turn to consider a sole or dominant characterisation test and quote from the Payroll Tax Case over the page. But one then gets at about point 8 on page 287 a recognition of the fact that – and the Court says at about point 7 or point 8:

Moreover, if a given law was properly characterized as being “in substance” a law on the subject of “banking other than State banking” rather than a law on the subject of “State banking”, then it could validly reach within the area of the restriction in that, while not being in substance or predominantly a law on the subject of State banking, it could be a law “with respect to” State banking –

In other words, the effect of the exclusion of State banking is lost if one adopts a test of that kind because it would be possible still for the Commonwealth, by a general law – not a law about State banking – but a general law about banking, to reach in to the area where power had been excluded. That was one of the reasons that the Court considered that that approach should not be adopted and that equally, we submit, answers Queensland’s reliance on the equivalent power here. One sees the Court still going on that same concept in the middle of page 288 at about point 5 or point 6:

To adopt such a test would expose State banking to Commonwealth regulation in the same manner as banking generally, and thereby render the words “other than State banking” virtually meaningless.

We say the same is true of an exclusive power of the Commonwealth. If one adopted that test, it would render the exclusive power virtually meaningless. Then, the Court goes to the other extreme where, if the Commonwealth law touches the topic at all, it would be invalid. That is said to have strong overtones of.....reserve powers doctrine. That would cut too much from the general body of Commonwealth legislative powers to say that one cannot touch the topic at all.

We accept that in reverse, in the sense that that is why I say we do not embrace the notion that any State law that touches a Commonwealth election at all is invalid, even a State law about defamation, a State law about assaults in election queues, for example. It would go too far, exclude too much State power to adopt the approach of that kind. So having recognised the problems with the two extremes, the answer that the Court unanimously arrives at in Bourke begins at the bottom of 288, in the paragraph beginning:

The only satisfactory solution to the problem is to accept that there is no exclusive State power to make laws with respect to State banking. But the words of s. 51(xiii) still require that –

And here one gets the two limbs again that I identified with the alternative, that, one:

when the Commonwealth enacts a law which can be characterized as a law with respect to banking –

And then limb two:

that law does not touch or concern State banking, except to the extent that any interference with State banking is so incidental as not to affect the character . . . Put another way, the connexion . . . must be “so insubstantial, tenuous –

et cetera. Then at the end of that paragraph:

So, if a law is not one with respect to banking, it is not subject to a restriction that it must not touch or concern State banking.

I should just note, in relation to those words at the top of 289 about “insubstantial, tenuous or distant”, there was an argument in Andrews about whether those words were consistent with the words that immediately go before in relation to the two-limb test, and one sees that addressed at paragraph 90 of Andrews. It is said that there the Court said that those words were not attenuating the link identified in the earlier part of the paragraph. So the consequence of all of that, recognised at the top of 290 of the page, is that:

the other paragraphs of s. 51 will justify laws which impact upon State banking so long as they are not laws with respect to banking.

That is the first limb. Now, if one applies that approach by analogy to elections, in our submission, the question is – and we have I think identified this in paragraph 3 of our outline - that the State law will only encroach on the area of exclusivity, as we identify it, if the State law is a law with respect to elections so that, if the State law is not a law with respect to elections, it is not subject to the restriction that it must not touch or concern federal elections.

That is the reason that I answered the question that your Honour Justice Keane asked me earlier about defamation law, State defamation law is not a law with respect to elections. It stands outside the carveout, in the same way as any Commonwealth law that is not a law with respect to banking is valid without asking any question, “But what about State banking?”, because the general operation of the Commonwealth law of any kind that cannot be characterised as a law with respect to banking operates free of any such restriction. So the State criminal laws operate. State OH&S laws operate. State bribery laws, for example, to pick up an example your Honour the Chief Justice gave, operate unaffected by the area of exclusivity. But where the State law is a law with respect to elections

KIEFEL CJ: With respect to elections, or federal elections?

MR DONAGHUE: Elections, at this first limb, because that is the area that we identify from 7, 9, 10 and 31 as recognising that the general legislative power of the States is subject to a recognition that it does not extend to a topic. So, not all State laws with respect to elections are invalid, of course. But State laws with respect to elections get you to the second limb of the test where one then asks does it touch or concern federal elections more than incidentally? Applying that at the two ends of the spectrum is, we submit, reasonably straightforward.

If the State law purports to prohibit a donation that is required to be used for federal electoral purposes then it clearly touches or concerns federal elections more than incidentally. That is this case. That is all we need for the purposes of this case because embraced within the operation of 275 are donations required to be used for federal purposes, and the State purports to prohibit them.

At the other end of the spectrum, if the State law – as your Honours have seen, South Australia, New South Wales and Victoria already do this – separates donations to be used for State purposes then they will not touch or concern federal elections more than incidentally because they will have, recognising the constitutional limit, ensured that in the course of legislating to protect their own legitimate interests they do not overreach, they do not go too far, and also regulate federal elections.

It necessarily follows from that, and I hope it is clear, that it is no part of our case to deny that the States have the power to ensure that gifts received by State registered political parties for use in State elections are invalid. They are valid. The State can legislate in that way. But what it has to do, in our submission, is to frame its law in pursuit of that interest in a way that does not extend beyond the legitimate State interest to regulate Commonwealth elections, to touch or concern Commonwealth elections more than incidentally. It is perfectly possible for State laws to do that.

As the three examples that you have before you in the case of New South Wales, South Australia and Victoria show, the problem in this case is that Queensland made no attempt to frame its electoral law in any recognition of the fact that when one talks about elections in Australia one is not just talking about State elections, that federal elections fall within that topic, and it purported therefore to apply a regime which could properly have applied in relation to its own interests to the Commonwealth sphere, which, in our submission, it was not entitled to do.

Where the application of that test as we develop it gets more complex is in the middle ground area of untied donations. We accept that in the context of an untied donation more is required to give the nexus to Commonwealth power to touch or concern federal elections more than incidentally than the simple fact that the donation may be able to be used.

We do not put “might be able to be used” as itself a sufficient test to touch or concern federal elections more than incidentally. We accept that something more is required and we submit that one such something more at least is that the recipient of the gift is a regulated participant in the federal electoral process, a political party, related to parties’ associated entities. Where a gift is to such a person, that gives the connection. That means that the touching or concerning is more than incidentally in this area of unallocated donations. Obviously, if the State confines itself to donations for State electoral purposes then that is not a concern.

We think in circumstances where – as Mr Kirk agreed in answer to a question from your Honour Justice Gageler yesterday – the focus in this case is on donations to registered parties or State branches thereof, it is not necessary or desirable to go further in terms of considering where the boundaries of exclusive power might be as one moves further from the centre of the regulation of political parties and State branches thereof.

Looking again at our written submissions at paragraphs 35 and 36, it may be that we went too far in suggesting a global answer to the question of whether or not States could regulate members of political parties or members of associated entities, which is obviously further from the central area of concern. But the approach that we suggested by analogy with Bourke is, we think, an approach that focuses – when applying what I have called the second limb, does the law touch or concern federal elections more than incidentally –on the application of the law, that is, the “touches or concerns” question is asked at the point of the particular application rather than at the level of the law generally. The reason I say that is because, obviously, sections 52 and 52A generally were not laws with respect to State banking. It was cast much more widely than that.

But what the Court was concerned about at the “touches or concerns” stage was how those two very general provisions applied to the State Bank of New South Wales conducting a transaction just within the State of New South Wales. So it was not asking a global question about the legislation. If that be right that the application of the exclusive power test turns on the particular application of the law at that level, then we think it is the case that you would need more facts than you have before you in order to work out whether a donation, for example, to a member of a political party touched or concerned federal elections more than incidentally.

One can imagine cases, for example, where a donation to a union member, who is a member of an associated entity under the Commonwealth Electoral Act, had nothing whatsoever to do with federal elections – that that donation would not touch or concern federal elections more than incidentally, and so it would be perfectly able to be regulated by the State.

On the other hand, with more facts, one can imagine a circumstance where such a donation might be quite closely related to federal electoral purposes. So all of that is to say that, given that the focus of the case is as the plaintiff recognised on donations to registered political parties and State branches, your Honours should not go any further than that. We submit that where those bodies are bodies regulated under the Commonwealth Act, that would be enough to touch or concern federal elections more than incidentally.

But our basic point – and I do not want to obscure that by the detail I have just been engaging in – is much more simple. This Act, this Queensland Act, touches or concerns federal elections more than – is obviously a law with respect to elections - I do not think there can be any question about that. So that is the first limb. Therefore, one needs to ask does it touch or concern more than incidentally and because this law purports to regulate donations for the dominant purpose of being used for federal elections, it does. It is invalid unless it can be read down, and so far we have heard no readingdown submission from Queensland. If there is a readingdown submission we will respond to it in reply.

GORDON J: Can I ask one question about this distinction between limb one and limb two? In limb one you talk about law with respect to elections rather than federal elections, which is not the words used in the Constitution. Is that because of, in effect, the – “reserve” is the wrong word – provisions in the Constitution dealing with the State power to pass

MR DONAGHUE: Yes, that is where we ground it. It is the provisions in the Constitution that recognise that there is some area within the ordinary plenary power of the State.

GORDON J: Why do you not start with limb one asking one question about one aspect and then you will move to the second which is directed at federal elections?

MR DONAGHUE: I am only doing it by analogy, but we submit that the logical structure is analogous to Bourke in that way in that, even though the limit on power is not with respect to banking, it is with respect to State banking. One asks in order to find out whether you have to worry about the limit, you first ask a wider question about banking generally.

The wider question we are asking here is about elections, because that is the area where Chapter I of the Constitution tells us there is some confining of State legislative power. If we do not get through that filter, there is a whole body of State laws that just go unrestricted by the exclusive power. Once we have got through that filter and we are in the territory of the Chapter I recognition of limited powers we then ask the subject matter specific question about federal elections.

NETTLE J: Mr Solicitor, just one question, if I may. On the extent to which you said we should go no further, I took you to say federally regulated political parties. Do you include the three classes of gift recipient in 302CA(1)(a) in that expression?

MR DONAGHUE: Yes. I withdraw that, no. That would only be the first political entity limb of 302CA. The question of political campaigners and third parties would not have been embraced within it, but on this limb of my argument we are not in 302CA territory. This is the attack on the validity of 275 and 113B.

The same argument, with a little modification, would apply to those bodies. Political campaigners in particular are regulated participants in the federal electoral process, so I do not need to distinguish them but what I was inviting your Honours to do, having regard to the exchange between Justice Gageler and the plaintiff, was to say well, if this is what the plaintiff is wanting to litigate about then if your Honours confine your attention to that class of regulated recipient

NETTLE J: That is enough to invalidate the State Act.

MR DONAGHUE: That is enough to invalidate the State law.

GAGELER J: Is the invalid operation of the State law, on this test, confined to its application to gifts that are earmarked for federal electoral purposes or does it extend to gifts that come with no conditions attached?

MR DONAGHUE: If it is a gift to someone in that limited class I just identified, the regulated federal participants, it extends to the second category your Honour just identified, not just to earmarked gifts. Earmarked gifts obviously touch and concern federal elections more than incidentally. In my submission one would not need more. With unearmarked gifts one does need more, and the more is a gift is to a participant in the federal electoral process.

NETTLE J: Which includes the three classes in 302CA(1)?

MR DONAGHUE: Yes. But, your Honours might not need to go that far. It might be sufficient for you to just say it includes at least the political parties which are the first of the three classes identified.

NETTLE J: But, unless you can read the State Act down

MR DONAGHUE: Unless you can read the State Act down and maybe you can and I do not say you cannot. But, whether it – the area of exclusivity – the argument I have just put would not invalidate the whole State Act. It would leave the State Act to operate with respect to donations earmarked for State purposes if there is a reading down available and that is a matter for Queensland as to whether it advances such a

NETTLE J: But, the question is as to the middle whether you could read it down so as to be inoperative in relation to federally registered political parties but operative in relation to the other two class of recipients who are identified in 302CA(1).

MR DONAGHUE: Yes. That would be, I suggest, a surprising distinction but because I do not have a readingdown argument to answer, it is difficult to know whether that is a – if it is invalid for parties, it is invalid unless it can now – if there is a reading down available, it may well be that the reading down would give you the same answer for all three classes in 302CA.

NETTLE J: Is it a sufficient hook or connection for Commonwealth legislative purposes that it be a law prohibiting the operation of the State Act in relation to donations to a political campaigner that are unearmarked?

MR DONAGHUE: Yes. Political party most obviously, political campaigner would be enough because that would give you the – so it is more than – it is touching or concerning more than incidentally. But, of course, your Honours, that is only in relation to unearmarked. So that if the State wants to avoid this problem it legislates in the terms of New South Wales, Victoria, or South Australia and then it avoids it. So it does not create, in our submission – and this is really more the Melbourne Corporation argument – but it does not create any real impediment to the capacity of the State to advance its interest in regulating electoral choices at the State level.

Your Honours, that is what I wanted to say by way of the exclusive power part of the case. Can I turn to the third topic which is 302CA and to start with some submissions about construction and, at the end of those submissions about construction, I will come to legislative history and, if we have not already, I think we have given your Honours a bundle of materials in response to the issue your Honour the Chief Justice raised yesterday but if I could do that at the end, having looked at the textual provisions, that, I think, would be of more assistance.

Our submission is that the legal operation of 302CA is to permit gifts to be made to participants in the federal electoral process where the Commonwealth has not prohibited those gifts, unless the gifts have been allocated in one of a number of possible ways to State electoral purposes. It has that legal operation in pursuit of at least the following three purposes, although, in identifying those purposes, I emphasise at the outset that, in our submission, the purposes are not relevant to the validity of the provision because the provision is a law with respect to federal elections. It has a sufficient nexus to the head of legislative power without any need to go to a purposive inquiry.

But the purposes are, in our submission, at least as follows: first, to provide participants in the federal electoral process with certainty as to the applicable regulatory rules concerning donations; second, to protect the federal electoral process by ensuring that participants in that process are not starved of funds that are able to be used for the dominant purpose of influencing the way electors vote in the federal elections, and in that respect, protecting the process by ensuring people are not starved of funds, we emphasise that different regulatory systems make different choices as to how the money that is a necessary part of a modern electoral process is to be raised.

There are public funding regimes in some places. There are donation regimes in others. In some places there are bans on donations. In some places there are caps on donations. In some places there are caps on expenditure. There are all sorts of different ways of approaching that question of how you get the money for the participants in the process. What the Commonwealth has chosen is a model that, subject to the foreign donation category, does not ban or cap the donations but that does provide transparency to voters by providing a regulatory model that involves disclosure.

That is, in our submission, an open way for the Parliament to deal with integrity issues while leaving open a source of funding for participants to use in trying to influence electoral choice. As I will develop a little later, the need for such funding, and its significance to the political process, underpins a number of the decisions of this Court in the implied freedom context.

The third purpose, and this emerges, in part, through the extrinsic material that I will come to at the end, is to facilitate participation by members of the Commonwealth through the making of donations in public debate and public affairs with respect to federal elections. In that context, the revised explanatory memorandum, which I will come to, refers expressly to the:

valuable way of participating in public affairs for Australian electors and organisations, as it allows for the aggregation of political opinion, a critical function in a democratic system of government.

So, in our submission, obviously those three purposes are not the same as the purpose of 275. Section 275 is addressing a perceived integrity issue in relation to property developers and we accept that it is open to the State to pursue that interest in respect of its own electoral process. But the fact that the Commonwealth is pursuing different

KEANE J: Do you accept that that concern is not a concern of the Commonwealth, at the Commonwealth level of government?

MR DONAGHUE: Yes. But, in my submission, that does not tell us anything about the validity of 302CA because if 302CA is linked to different purposes connected with the federal electoral process, then that is sufficient to enable the Commonwealth Government to pursue those purposes if necessary where there is conflict with the States in a way that prevails over the relevant State interests. So the Commonwealth does not share the State’s concern, because it adopts a different regulatory model. It evidently thinks disclosure is enough to deal with that issue.

Your Honours, can I deal at a high level with the question of untied funds and the words “may be used” in 302CA, which seem to lie at the heart of much of the debate about the section. Our submission is that, in assessing Parliament’s use of those words, it is helpful to conceive of 302CA by analogy as a kind of a funnel, a provision that starts wide in its coverage and narrows down as you move through its operation. It adopts that approach because, in our submission, of the issue of unallocated donations. So if your Honours have 302CA(1), it starts wide because it is concerned with the giving of gifts to, or for the benefit of, the identified federal participants the giving, the receiving or the retaining of the gift.

At that point, at the point of giving, receiving, retaining, in our submission the exclusion of the State or Territory electoral laws affected by the opening words of the section needs to be wide because otherwise the State laws will have the effect of cutting off the unallocated donations before you know whether those donations are to be deployed in a way that influences State electoral processes or Commonwealth electoral processes.

So the effect of subsection (1) at the widest operation of the section is to preserve the capacity or the possibility that the untied funds will be deployed for the dominant purpose of influencing votes in a federal election. But importantly, where there is no cause to preserve that capacity or possibility because the gift has been allocated, the section withdraws. It no longer has the operation of excluding the State law.

So if donation is allocated to the State track, if I can call it that, to State electoral purposes, and that allocation can be by the donor, by a condition whether or not enforceable that will allocate it to the State track, or it can be by the recipient who decides to keep or identify the gift separately, or it can be by the State which can pass a law that requires the gift to be kept or identified separately, in any of those ways, if the capacity to spend the money on a federal election is removed, then the operation of subsection (1) is removed and the State law operates to govern the Stateallocated funds.

As one then moves down the funnel – and this is important and does need to be emphasised – one gets beyond the giving, receipt or retention of the gift to the use of the gift and that is not regulated by subsections (1), (2) and (3); that is regulated by subsection (4). Foreshadowing a point I will make when I get to the extrinsic material, neither subsections (3) nor (4) existed at the time of the Joint Committee report to which your Honour referred yesterday. The criticisms that Professor Twomey made of the validity of the provision were criticisms that are, in my submission, totally answered by subsection (4), and I will develop why.

But the provision that Professor Twomey was talking about was a provision that purported to deal with the use of funds that may be used for federal elections and the concern was, even when money was actually spent on State electoral purposes, the State law could not apply to it and that was what caused Professor Twomey to say maybe there is overreach here.

But that is not what this provision as enacted does because once one moves further down the funnel to the level of use, the focus of the provision is then only on excluding State or Territory laws that purport to prevent the use or electoral expenditure, which means expenditure for the dominant purpose of preparing electoral matter, which means, as defined in section 4AA, expenditure “for the dominant purpose of influencing” votes in a federal election”.

KIEFEL CJ: Does subsection (3) apply at the point where the gift is used? Is that the first point?

MR DONAGHUE: That, your Honour, depends on the relationship between use and identification in (b)

KIEFEL CJ: Well, two things. Does the note suggest that and does not subsection (4) tend to confirm that that is the operation of subsection (3)?

MR DONAGHUE: Subsection (3), your Honour, is obviously about disapplying subsection (1).

KIEFEL CJ: Yes, but at what point? It applies at the point where the gift is to be used for a State or Territory purpose.

MR DONAGHUE: It is kept or identified to be used for the State electoral purpose.

KIEFEL CJ: Well, that would be a purpose in someone’s head or on a piece of paper.

MR DONAGHUE: It could well be. So it would, for example, we submit, definitely include where – so a gift is received from some corporation for a political party, unallocated. Then at some point the executive of the political party meets and says, “We’ll use that corporate gift for this purpose” and earmarks it accordingly. That is identifying the amount for an identified use.

KIEFEL CJ: I understand that as a possible construction, but is there not another one, that the words “in order to be used only” imply and are used and that the note really picks that up?

MR DONAGHUE: I am going to come to those words and the note very, very shortly. But, in my submission, when one looks at the distinction drawn between (1) and (4), including the heading – so the subheading “Giving, receiving or retaining gifts” is the heading over (1). The heading over (4) is “Using gifts”. There is a different regime for the earlier stage and the use and, at the point of use, the only State laws that are excluded are those that would affect the incurring of the electoral expenditure, which is actually spending it for the dominant purpose of influencing votes in a federal election.

That, we submit, is very important because it means that, even if the State law has been excluded under (1), so the money was able to be received, it is perfectly open to a State to say “You must not use that money for a State electoral purpose” and that would be valid.

KIEFEL CJ: But if the point is use, it has the effect in relation to the State law that it denies its operation at the point of making and receiving. It is only when it comes to be used that it is allowed any efficacy.

MR DONAGHUE: Yes, subject to the submissions I will make about (3)(b)(ii) in a moment, that would be so. But that is a significant qualifier because if the State is able to say, as in our submission it is able to say, never mind the question of whether the gift may be used for a federal purpose, which is obviously a wider exclusion, and therefore at the point of an unallocated donation under 302CA the State may be unable to stop the unallocated gift being received, the party is entitled to take it, but if the State can say, “Even though you are entitled to take it, you must not use it for a State electoral purpose”, then that takes a lot of the sting out of the use of the words “may be used” because the State is still able to draw the hard line at the point where its interests are actually engaged about the money being deployed. It is just not right, as Queensland has said, that this renders compliance with the State law totally voluntary.

It may be right in relation to 275 because 275 says nothing about the use – it does not purport to restrict the use – but it is perfectly open to a State Parliament to enact a law in that form and, indeed, the regime one sees in South Australia, Victoria and New South Wales have as a component of them you put money for State purposes into the State account and then you can only spend money for State purposes out of the State account.

So all the State needs to do in that scenario is to add a provision that says, “You must not put money from the property developer into the State account”, or indeed to say, “You must not use money from the property developer for a State electoral purpose”, and that would be effective, in our submission, to draw all of the sting out of the width of the words “may be used.” Indeed, it was partly in order to have that very effect, in response to the critique made before the joint committee, including by Professor Twomey, that one sees the change in the structure. So, “use” used to appear in subsection (1), or in the provision that is now subsection (1). It was moved out and the “may be used” language was not replicated in the regulation of “use”. So the “use” restriction or the “use” exclusion of State laws was very significantly narrowed.

There have been submissions made in relation to the nature of the nexus between 302CA and federal elections, which is a topic that is perhaps strictly more relevant to the head of power issue, but it is convenient to address it in the context of the construction of 302CA while we are looking at the terms of the provision. In my submission, there are four ways, notwithstanding the “may be used” language, that 302CA ties the operation of the section to federal elections. I propose to go through all four of them fairly quickly.

The first is by reference to the character of the gift recipient, the three classes your Honour Justice Nettle mentioned to me - political entity, political campaigner, third party. All of those terms are defined in provisions that Mr Kirk took your Honours through yesterday, so I will not repeat it, but they are all defined in ways that tie the gift recipient directly to federal elections. There are really just two points that I seek to add here in relation to what Mr Kirk said yesterday about the definitions. One of them is that in the definition of “political party”, which your Honours will find in section 4, although you do not need to go there, “political party” is defined in the Commonwealth Act as an organisation:

one of the objects or activities, of which is the promotion of the election to the Senate or to the House of Representatives of a candidate –

That will sound familiar because it is almost the same as the definition of “political party” in the Queensland Act, save that the Queensland Act says candidates for:

election to the Legislative Assembly –

In the context of the State Act, Queensland says in paragraph 9 of their reply and in footnote 7, that the fact that a political party has as one of its objects promoting candidates for election to the Assembly is plainly enough to show that the law is a law about State elections, that that nexus is plainly enough to show it is a law about State elections. If that is right, the same must be true at the federal level; it is the same object. So, if that connection is enough to show that Queensland is legislating on the topic of State elections, then by parity of reasoning we say we get the benefit of that analysis.

GAGELER J: That is a rhetorical point.

MR DONAGHUE: Yes.

GAGELER J: You would not submit, would you, that the mere character of the gift recipient where only one of the objects needs to be the fielding of candidates for a federal election is enough to regulate everything that that entity does? Perhaps you do.

MR DONAGHUE: No, I do not. Everything the entity does in an electoral context, I may well submit that. Going more broadly than that

GAGELER J: In an electoral context?

MR DONAGHUE: Context, yes.

GAGELER J: Let us drill down a bit on that. In any electoral context, or are we talking about a federal electoral context?

MR DONAGHUE: I would be relying here on 10, 31 and 36, so for a federal electoral context is enough for me. Your Honour is quite right. I make the point somewhat rhetorically, and whether or not I would say that that connection is enough, if I needed to, is perhaps for another day because here I identify four. So I am well short of needing to say that that is a sufficient connection, and so I do not ask your Honours to decide that that by itself would be enough. Indeed, I am reminded that the political party that we are referring to, that one picks up through the definition of “political entity”, is a registered political party. So it is a body that has that connection under the Commonwealth Act - has taken the steps, has the rights and privileges under the Commonwealth Act, so it is perhaps a little tighter. But I maintain the answer I gave to your Honour.

So, one has a nexus partly through the character of the recipient. In that connection, it is perhaps also worth noting that the provision as it operates is not actually about money per se; it is about what people – the regulated participants – can do with money. So the effect of the section is to tell certain a category of people – participants in the federal electoral process – that if they receive a gift then, subject to any restrictions imposed by the donor, they have liberty to spend that gift on federal electoral purposes no matter what the States might say about it. In that respect, to say that to a participant in the federal electoral process is to say something that, in our submission, has a close nexus with federal elections. The second of my four connections is the proposed use of the gift and one gets that through (1)(e):

required to be, or may be, used for the purpose of incurring electoral expenditure –

Obviously, “required to be” is a much stronger link than “may be”. But both of those terms link to electoral expenditure or the communication of electoral matter. Your Honours have seen the definitions of those terms and I have been referring to them regularly without taking your Honours to them. But 287AB defines “electoral expenditure” as the:

dominant purpose of creating or communicating electoral matter –

Section 4AA defines “electoral matter” as”

matter communicated, or intended to be communicated for the dominant purpose of influencing the way electors vote in an election (a federal election)

So that dominant purpose requirement linking to federal elections is, we submit, another indicator of the fact that the operation of 302CA(1), in particular, and excluding State laws, has an important and close connection to federal elections. Even in the case of donations that may be so used, it is not difficult to envisage donations where there is some kind of requirement or restriction associated with the gift that would mean that it could not be used for the dominant purpose there identified.

GAGELER J: Are the words “may be” satisfied by a bare possibility?

MR DONAGHUE: Yes, they are because of subsection (2). So, the meaning of the words “may be” there is informed by (2)(b).

KIEFEL CJ: Not subject to any terms at all.

MR DONAGHUE: Indeed, available to be used. I have accepted that that is wide, because this is at the upper end, but the narrowing occurs later. The narrowing can occur if the money is not in this unallocated category, and the allocation does not have to be particularly strict in that (3)(a) shows that it can be allocated simply by unenforceable terms being set by the entity providing the gift. That is enough to have the federal law withdraw, or it can be pursuant to a more prescriptive regime under State law under (b)(i). But the character of the recipient and the purpose requirement through (1)(e), they are the first two connections.

The third connection directs attention to the fact that the opening words of subsection (1), “Despite any State or Territory electoral law”, indicate that the liberty that the Commonwealth is purporting there, or we say has validly conferred, is not a liberty to act free from State law generally. It is a liberty to act free of State law of a very particular kind -State laws regulating donations for electoral purposes, so one does not have here any kind of bare exclusion.

One has an exclusion of State laws, electoral laws of the very kind that the Commonwealth then addresses in its own regime in Part XX, admittedly in quite different terms, not in terms that focus on property developers; in terms that focus on foreign donors and in terms that otherwise create a transparency or disclosure regime for all other kinds of donors. But the displaced laws, electoral laws, are replaced by other laws of the same general kind. There is, in our submission, nothing at all unusual or impermissible about the Commonwealth legislating in that way. Mr Kirk mentioned Wenn’s Case this morning on that topic.

Can I ask your Honours to go, in addition, to Work Choices which is in volume 10 of the joint book of authorities at tab 55, because this was one of the significant bases upon which this kind of argument upon which the State attacked the validity of parts of the Work Choices Act. It was addressed in the joint judgment of Chief Justice Gleeson and Justices Gummow, Hayne, Heydon and Crennan on page 166 of the report at 369 and 370. Paragraph 369 records at length the Commonwealth’s submissions in the case. I will just give your Honours a moment to locate it, at page 166, paragraph 369. So the Commonwealth’s arguments are being set out and from four lines down in that paragraph:

The Commonwealth contended rather that it was open to the Commonwealth Parliament to indicate the relevant field it intended to cover to the exclusion of State law, that s 109 would then operate even though the Commonwealth had not made its own detailed provisions about every matter within that field which State law dealt with, and that it sufficed for the Commonwealth to have some provisions dealing with aspects of the field, leaving others unregulated.

We submit that is clearly what has happened in Part XX. There are some aspects of the field of donations that are regulated; differently, yes. Then the summary of the argument continues. But at 370 the five members of the Court say:

The Commonwealth’s submissions are to be preferred. Western Australia pointed to nothing s 109 itself or in the case law on s 109 suggesting that s 109 will not cause Commonwealth law to prevail over an inconsistent State law and render it invalid to the extent of the inconsistency unless the Commonwealth law provides some regime for regulating each particular aspect of the topics dealt with by the State law.

That is why we submit it just does not matter from a validity point of view that the Commonwealth Act does not regulate property developers. It is true that it does not, but it does not need to in order to exclude the State law on that topic, and the Court go on to give some other examples of that same kind of idea in the rest of that paragraph.

So in addition to Wenn and Work Choices there is an equivalent passage in a case I will come to in a few moments – then, in our submission, the fact that the liberty created by 302CA operates only within the same area as the Commonwealth law is also regulating, further supports its connection to federal elections.

Finally, the fourth connection arises from the fact that this whole scheme in subsection (1) is a scheme that expressly provides in subsection (3) for the continuing application of State electoral laws in a range of different contexts, and the fact that the Commonwealth is vacating that field rather tends, in our submission, to support the proposition that the remaining operation of the Commonwealth law – that is, following the drawback – is with respect to the topic of federal elections.

To the extent that it might apply to elections other than federal elections, there is the capacity one sees in subsection (3) to roll back. There are three options for that withdrawing of the Commonwealth law. I do not need to say anything more about (3)(a) beyond what I have already said and what Mr Kirk said yesterday, but I do seek to say something further about both (b)(i) and (b)(ii).

Subsection (b)(i) is State or Territory electoral laws requiring the gift or part of the gift to be kept separately. Your Honours will have noticed that South Australia in particular has made quite detailed submissions in relation to this topic in a way that suggests that the operation of that provision is narrow and problematic because of the wellestablished intermingling of the topics of communication at a federal and State level.

So, as your Honours have said many times in the implied freedom context, it is not really possible to draw a line so that some topics are State topics and some topics are federal topics, and South Australia, as we read their submissions, suggest that that poses a problem for the notion that a State or Territory might require gifts to be used only for State or Territory electoral purposes because they say there will be hardly anything that is only a State or Territory electoral purpose because of all of that intermingling. That submission, we respectfully submit, misreads the way this exclusion works because the State or Territory law has to be requiring the gift or part to be kept or identified separately to be used only for a State or Territory electoral purpose. That term is defined in section 287 of the Act to mean:

a purpose relating to a –

so “relating to”; very wide words –

a State, Territory or local government election (and, to avoid doubt, does not include the purpose of incurring electoral expenditure or creating or communicating electoral matter).

So, working one’s way through that definition, if a State or Territory electoral law requires a gift to be kept separately for a purpose relating to a State election it is prima facie within the exclusion. The parenthetical words “to avoid doubt” et cetera, use the defined terms “electoral expenditure” or “electoral matter”, which both go back to communications for the dominant purpose of affecting a federal election.

What that means, in our submission, is this. Absent the dominant purpose of affecting a federal election - voting in a federal election - a State law that says, “Keep this money to use for purposes relating to a State election”, will fall within the exemption whether or not the topic of the communication is a federal topic, because that is not the criteria that the Act is adopting. For example, an advertisement in a State election campaign about transport infrastructure is a topic that could be relevant to State electoral choices and could be relevant to federal electoral choices and no doubt is relevant to such choices at various different times in various different places throughout the country.

There is nothing to stop a State requiring money to be kept or identified separately and then used for purposes relating to the State election, including campaigning about transport infrastructure, and all of that benefits from the exemption in (b)(i), so long as the dominant purpose of the expenditure is not to influence a federal election. So, in practical terms, in our submission, South Australia is wrong to suggest that that is a narrow exception. The demarcation is not federal and State topics, which is obviously problematic; it is federal and State elections, whether or not things are being done for the dominant purpose of a federal election or everything else relating to a State election, and that is a perfectly workable line. It is a workable line that has the effect that the exception one sees in 3 (b)(i) is quite wide and it leaves ample room for State regulatory regimes to operate.

Consistently with that – and I will not take your Honours back through it, particularly in light of the time your Honours have seen that there are three regimes of that kind. I do not need to go to the question of whether or not those State regimes exactly line up with what is referred to in (b)(i), but one can see from those that the workable line I just identified between State elections and federal elections is a line not only that the Commonwealth says is workable, but that the Parliaments of New South Wales, Victoria and South Australia also see as workable.

The general structure of those parts of the State laws is much the same in all three places. Mr Kirk took you through the South Australian regime. You also have the New South Wales regime behind tab 8 in volume 2, and the Victorian regime behind tab 7 in volume 2. In both cases you are talking about separate State campaign accounts and the caps on donations not applying where the donation is made for either a federal electoral purpose or a Commonwealth electoral purpose, depending on which Act you are looking at.

So the regimes reflect a line that we say the Commonwealth Parliament has recognised in (3)(b)(i), and that the State Parliaments have likewise recognised which really brings me back to the proposition that the problem underpinning this case is that Queensland made no attempt to prevent its laws from overreaching into the space of Commonwealth interests.

That is what I seek to say, your Honours, about (b)(i). Can I come now to (b)(ii), which was the subject of some debate yesterday. I will deal with how this provision came to be very shortly, when I come to the extrinsic materials, but what it is worth your Honours appreciating is that the initial iteration of 302CA basically included only what is now subsection (1). Then a new version was produced that included the whole of 302CA as it now appears, except it did not include the note and the example and then amendments were made that included the note and the example.

If we did not have the note and the example, in our submission one would no doubt read (b)(ii) as operating prospectively from the time of the keeping or identification of the gift or part of the gift only for State electoral purposes. In my submission, it would be most surprising to read it in any other way. The difficulty is that we do have the note and the example, which are part of the Act and which, in the context of the example, the Acts Interpretation Act expressly says can be used to extend the operation of the Act.

When one comes to the example we submit that it is difficult to avoid the conclusion that the operation of (3) to disapply subsection (1) is retrospective – and I say that for this reason. The example is dealing with a gift that at the time it occurs, is unallocated:

A gift is given without expressing an intended purpose –

Because it is a gift of that kind, (2)(b) says that it is a gift that may be used for the purpose of incurring electoral expenditure, and therefore it falls within (1). So the State or Territory electoral law that prohibits the giving or the receipt or retention of the gift is excluded at the time of the gift, in the example. But then the example goes in, it is “ultimately,” which we submit must mean later, at some point after the receipt of the gift:

used for a State or Territory electoral purpose.

Then what the example tells us is that in that situation of giving and receipt, at a time when State law is excluded under (1), the example tells us that the giving and the receipt, which necessarily occurred before the later identification for a State purpose:

The giving, receipt, retention and use of that gift must comply with the State or Territory electoral law.

That is everything must comply with the State law, not just the things, the retention and the use that happen after the identification, but the giving and the receipt. That seems to be consistent with the second sentence in the note as well which refers to:

A person who gives, receives –

as well as who retains:

may be liable to a penalty –

So, that example – and there is another example to the same effect in the revised EM that I will come to shortly – in our submission, points strongly to the conclusion that the way that this provision works is that subsection (1) confers a permission not to comply with the State or Territory electoral law but that that permission is – we described it in writing as contingent; it might have been better described as defeasible or as a condition subsequent or something of that kind – but that the permission granted by (1) can be lost on the occurrence of a subsequent act, being the keeping or identification, if they occur subsequently. They might occur at the very same time. If that occurs, the protection is lost.

So, at the time of the giving or receipt, it is possible, contrary to Queensland’s submissions, to determine how 109 operates. Section 109 operates to exclude the State law at that point in time. But there is then a retrospective rollback in the event that (b)(ii) occurs because even though you would not read it in that way without the note and the example, with the note and the example, that is the proper construction.

That is a construction which throws up all the issues around retrospective law and it raises the Metwally issue. But, importantly, for present purposes, it is a construction that maximises the operation of the State law. In terms of the complaint the States make about this regime, this is a regime that means that at any time when the gift is identified or used, the whole State law is able to spring back into operation with respect to the law. So, the problem your Honour Justice Bell identified yesterday – because with the Queensland provision – which is when one looks at it – it is not prohibiting the retention or the use. So, unless the rollback is retrospective, then the State law just does no work.

That problem is avoided by the wide reading of (b)(ii). It does make it possible for that State law to operate. But it does so, somewhat confrontingly, in the sense that it potentially exposes the person to the retrospective operation – it exposes them to the operation – I should not say the retrospective operation – the State law has always been there. It exposes them to the operation of the State law that did not apply to the gift at the time that it occurred.

Now, accepting that that is a somewhat confronting prospect it is mitigated, in our submission, in two important ways, maybe three important ways. Insofar as the retrospective operation bites on the gift recipient, it is their own fault in the sense that the gift recipient is in control of the way that they allocate the money and if they choose to allocate the money to a State purpose, notwithstanding the fact that the State law said that they cannot, then they bear the consequences of having done that.

With respect to the donor the situation is more difficult because it looks, on the face of it, that the donor might be being exposed to criminal liability because of the act of a separate person. But we make two points about that. One, if the donor is at all concerned about that, all the donor needs to do is say, “Use these funds for a federal purpose”. That is all, because if the donor does that, then (2)(a) applies.

I am sorry – if the donor requires the gifts to be used for a federal purpose, then - in that situation where the donor has required the gift to be used only for the federal electoral purpose then it is not possible for any of the paragraphs under (3) to bring the operation of the State law back into play.

The other point that is significant insofar as the donor is concerned is that even if the Commonwealth Act rolls back one still has to have regard to the terms of the State Act. The terms of the State Act, at least in the context of the Queensland Act that your Honours are now concerned with, criminalise a contravention of 275 only in the circumstances identified in 307A that Mr Kirk did take your Honours to, I think, briefly yesterday, and 307A says:

(1) A person must not do an act or make an omission that is unlawful under section 275 if the person knows or ought reasonably to know of the facts that result in the act or omission being unlawful under that section.

In our submission, there must be at least a large question as to whether a donor who gives a donation at the time, knowing that that donation is lawful because of the operation of 302CA to exclude the operation of the State law so that they act in a way that is actually lawful at the time that they do it, could ever commit an offence against 307A because how could they know or reasonably ought to know that the act or omission was unlawful when it actually was not at the time that the act occurred?

BELL J: But surely they are presumed to know 302CA(3) and if it operates with retrospective effect

MR DONAGHUE: Well, your Honour, that is why I said “a large question”. In the end, it operates with retrospective effect in the mitigation of the unfairness that I am identifying there. But there would, in my submission, be a question as to whether the prosecution could show that that was satisfied because the donor should have known of the contingent or defeasible operation of 302CA. That, I think, would be the question and of course also of the decision of the recipient to allocate the unallocated funds to the State purpose. They would both be essential ingredients of the liability which, I think, is what your Honour Justice Nettle was putting to Mr Kirk yesterday.

KIEFEL CJ: Of course, subsection (3) contemplates that moneys may not be used for a State or Territory electoral purpose even if they are identified as such.

MR DONAGHUE: May not be used?

KIEFEL CJ: May not be used.

MR DONAGHUE: Sorry, your Honour. At the point where they are identified, then State law will apply to them.

KIEFEL CJ: The States had made provision for it – that is your point. They are connected with those regimes, I guess, yes.

MR DONAGHUE: That is right. Even if I am wrong about those factors that potentially mitigate the unfairness of the retrospectivity, ultimately the unfairness of the retrospectivity is a matter for Parliament, in our submission. This Court has repeatedly recognised that as a matter of power retrospective criminal laws are within the power of the Commonwealth Parliament. The only question as to power in our submission that arises is the Metwally question and, for the reasons that Mr Herzfeld is going to develop, in our submission that does create a differently here.

Can I now make good on my undertaking to deal with the legislative history and ask your Honours to turn to a bundle of materials that we have provided to the Court and to our friends, with what is a very brief note on the front of it which is intended to assist your Honours to navigate the bundle. I am not going to take your Honours to every document in

KIEFEL CJ: I think you may take it that we have some passing familiarity with some of these documents.

MR DONAGHUE: Yes, I thought that was likely to be so, so I will not detain your Honours very long on it. The key points I want to make are as follows. First, the Bill as it was first introduced back in December 2017 did not include 302CA. So the early explanatory materials do not assist your Honours in relation to the current issues.

The Bill went to the Joint Standing Committee on other issues and, while it was before that committee, there was an exposure draft of amendments put to the committee and that is the document we have given your Honours behind tab 1. Behind tab 1, if you turn to page 21, you will see at the bottom of the page the initial form of 302CA and the only points I really need to note about that beyond its obvious resemblance to the existing subsection (1) of 302CA is that it included, as you see in the last few words of (b), reference to “use of the gift”.

So it was not just about giving, receiving or retaining but at that point in time it included use; so State laws that would have prevented use were excluded, even in respect of money that may be used for federal purposes. So the exclusion was very much wider and also there was no subsection (3) and no subsection (4), relevantly.

That is the version of the Bill that was considered by the Joint Standing Committee in the report to which your Honour the Chief Justice referred yesterday, which is behind tab 3 in the book. We have given your Honours only Chapter 4, which as you can see from 4.1 is the chapter that is directed to the new provisions that the Commonwealth had proposed, which was relevantly 314B and 302CA.

At paragraph 4.12 you will see the reference to Professor Twomey’s evidence about this topic. She referred to the Awabdy Case in Queensland as having brought into focus the issues of the parallel Commonwealth and State regimes. A little more than halfway through the quote, she expressed the opinion to the committee that the Commonwealth could rightly legislate to regulate in this middle ground, but that here the provision, being the provision I just showed you, had gone too far.

The reason it is clear that that evidence was given appears from paragraph 4.19 over the page, which was by reference to the constitutionality of the provision if funds were actually used in a State election. That is what her concern was, as is evidenced by both 4.19 and 4.20, and that of course has been dealt with in subsection (4) in the way that I have already identified.

Over the page on page 47, there is a reference again to Awabdy. I just note, so your Honours are aware of it, that that is a discussion of the first instance decision in that case. It went on appeal. The appeal was heard by the Court of Appeal in the latter part of last year, and the court is still reserved on the decision. Finally, then, over the page at page 48 - so what was being suggested to this committee, I am reading paragraph 4.30, was that:

the area of overreach could be drawn back to a more appropriate boundary, in relation to donations that are initially untied but subsequently purposed for state and territory elections –

Then in the second half of 4.31, the:

The Committee considers that the Commonwealth has an important role in bringing clarity to this complex area by expressly delineating the boundaries –

At 4.33, the legitimate interest could be pursued, but:

the drafting could be improved to avoid an undue overreach into State or Territory –

laws and 4.34:

the Committee considers that these provisions should be amended to expressly exclude the application of the Commonwealth law to any funds that are used in a state or territory election.

Then there was a division on 4.35, it records the division on the committee. But in the last few lines:

the Committee’s view is that these provisions form an important part of the disclosure regime, and should be included in this Bill and implemented as soon as possible -

which led to recommendation 10, that proposed CA and 314B be:

amended to ensure that Commonwealth laws would not apply to money that is directed towards nonfederal campaigns –

That is the recommendation that caused the revised drafting of 314CA. It was accepted by the government, which you see behind tab 4, if your Honours turn to the end of the last document behind tab 4, halfway down. This is the table of government responses, and there is a response numbered 10, which is referring to recommendation 10 that I just read to your Honours. Then next to it:

The Government supports the recommendations.

That then led to the introduction of amendments, and your Honours have an extract behind the next tab, behind tab 5 in Hansard, of those amendments being introduced. The actual amendments are behind the next two tabs. The extract is from Senator Cormann explaining what was happening, and the relevant part of that extract is

GORDON J: Is it under tab 5?

MR DONAGHUE: Sorry, your Honour, yes, it is under tab 5. The bottom half of page 8409, and the top paragraph on 8410, where Senator Cormann is particularly referring to the addition of the explanatory notes, that additional clarity about when the amended Bill will not interfere with State laws. The senator refers to the examples making it clear that silence about the purpose does not prevent the application of the State law, where the donation is ultimately used for State purposes. There is a reference to the fact that the example can extend the operation of the Act.

Then, over the page at tab 6 – sorry, at tab 6 you have the amendments or extracts from the relevant amendments – the second page behind the tab gives you the whole text of 302CA which was exactly the same as it was enacted except that it does not have the notes. So that was introduced by the government. Then by separate amendment, behind tab 7, there was the amendment to introduce the two notes to item 112.

So, in sequence, one can see the committee making recommendations – 302CA being wound back in response to those recommendations to exclude operation with respect to State laws in the ways that you see in (3) and to regulate gifts differently – sorry, to regulate the use of gifts differently in the way you see in (4) – and then further clarity being added as to the extent of that rollback by the addition of the examples.

Finally, you have – there was both a supplementary EM prepared in the Senate and then a revised EM prepared when this document went back to – when this Bill went back to the House. They are exactly the same, save for one respect. So, if I could work from the revised EM which is tab 9. Again, we have just extracted the part that deals with 302CA. At paragraph 222, you will see the reference that I noted in passing earlier this afternoon about purpose of encouraging participation in public debate through the making of donations. That is what I was referring to there. Paragraph 224 refers to the section creating a right. State laws cannot:

detract from the right to give, accept or use a donation under the Electoral Act –

226 refers to implementing “recommendation 10” from the JSCEM, 228 refers to the provision instead of as a right, as an “immunity”. Then, finally, at 52 to 53, there are two examples as to the operation of 302CA. The first of the examples appeared in both the supplementary EM and in this one. The second example was added into the revised EM only. So, it was given at the stage where the provisions are introduced into the House.

That example is another example like the example actually found in the text of the Act in that it is dealing with a prohibited donation – donor to a Western Australian political party active at both State and federal level – untied at the time it is given, prohibition on receipt under Western Australian laws so the party treats it as a gift for federal purposes but then runs out of money at the State level and decides to transfer.

So, the transfer decision, the identification or the allocation of the money happens after the receipt and the example says the party has broken the State law – the State law being a prohibition identified as a prohibition on receipt. So, the example – like the example in the text – suggests that what was intended was a retrospective operation of the provision.

That, your Honours, is all I wanted to say about construction. Can I turn then to the validity of 302CA. Can I deal with head of power first. There seem to be two attacks on the Commonwealth law on head of power grounds. One is Victoria’s argument that 302CA could only be supported by the incidental power and that the incidental power does not support it because its purpose is to affect State elections.

The second argument which is advanced by Queensland, as we understand it, is that if the Commonwealth has an exclusive power then there is a reciprocal exclusive power for the State and 302CA intrudes into it. We note that some of the States expressly, as we read them South Australia and Western Australia expressly and New South Wales impliedly – do not seem to associate themselves with either of those head of power attacks, though they do join in the Melbourne Corporation attacks.

KIEFEL CJ: Although South Australia draws attention to it in its first paragraph. It says that it proceeds upon the assumption that there is some connection with the

MR DONAGHUE: Yes, indeed. I am not sure if that was supposed to help or hinder, your Honour.

KIEFEL CJ: Just to make sure that perhaps South Australia had not overlooked the point.

MR DONAGHUE: Having not overlooked it and not associated themselves with it may have represented – judgment as to the issues that are raised by the argument. Your Honours, the starting point, in our submission, if I can deal with Victoria first, is that it is not necessary for the Commonwealth to rely on any incidental power to support the operation of 302CA. The reason for that is that the core aspect of the power to make laws with respect to elections, contrary to Victoria’s submissions, extends well beyond regulating the machinery for actually recording votes at an election and it extends to the regulation of donations that may be used for the purpose of influencing votes at a federal election.

The connection therefore between 302CA and the power to make laws with respect to federal elections is far beyond an insubstantial, tenuous or distant connection and, that being so, the only connection that is needed to support the power exists.

GAGELER J: In formulating that proposition, you used the words “may be”, mirroring the statutory language. By that were you meaning to encompass a bare possibility?

MR DONAGHUE: I was using the statutory language but I was using it against the background, which I perhaps should have expressly picked up, of the four connecting factors that I identified earlier in going through construction, that tie the section. Yes, it is a section regulating donations that may be used but with the four aspects to it that I have already drawn attention to that associate the operation of the section much more closely with federal elections than would be the case if the only connection was the mere possibility that the funds may be used in that way. I am referring to the character of the recipients as participants in the process, the purpose, the fact that only a small category of State electoral laws are excluded with the Commonwealth laws taking their place.

So, those are matters that I referred to at that part of the submission as the foundation for the submissions I am now making by way of head of power. What we need is a more than insubstantial, tenuous or distant connection between the law having all of those features and federal elections and that is what I submit clearly exists in this case.

KIEFEL CJ: You would not accept an operation of subsection (1) of 302CA that there is a possibility that a gift for any purpose may be made to one – a gift recipient, or you might not be concerned with that because your focus is on the gift recipient rather than the balance of it.

MR DONAGHUE: I am seeking to support a law that has all of the dimensions that I have identified, sorry. If your Honour’s question is asking me if we stripped away all of those other features and only had the mere

KIEFEL CJ: What does it actually do? What does it allow? How does it operate? It allows for the possibility that a gift may lawfully be made for any purpose to a gift recipient as defined.

MR DONAGHUE: To a gift recipient being a participant in the federal electoral process.

KIEFEL CJ: Your focus is on the gift recipient, not the rest of it?

MR DONAGHUE: Not the rest of it. Well, my focus is on the gift recipient as a tie to power, a gift – because I am looking for a nexus between federal elections and the operation of the section, a more than tenuous connection, and I have the gift recipient as a regulated person. I have the dominant purpose definitions

KIEFEL CJ: I suppose the only drawback is the gift recipient may be a donee for any purpose.

MR DONAGHUE: At the stage of subsection (1) that is true, but I have the other connections and then at the stage of subsection (4), I have the actual use for the dominant purpose. But I am not – I am asking your Honours, looking at all of the features of 302CA that we have identified, to then ask the question, is there a sufficient connection between that law having that legal operation as we have identified it and the subject matter of the power.

There are many authorities in this Court obviously, including Work Choices and I will not take your Honours back to it, but the relevant paragraph is 142, that emphasise the familiar propositions about the – that “Commonwealth heads of power” should be construed broadly where there is a choice, that the nature of the connection required uses the formula I have been using - more than insubstantial, tenuous or distant. You do not need more than that. Once the law has that kind of connection, it does not matter that it can also be characterised as having other operations. It is sufficient for the law to be valid that it has a sufficient connection in the sense that I have used that phrase with the “head of power”. There are, I think, two cases that have been handed up – I am sorry

GAGELER J: I was just going to ask are you going to address the Second Uniform Tax Case? It would be helpful to me if you did.

MR DONAGHUE: All right. I will do that, your Honour. That case, obviously is addressing – well, certainly the passages that were discussed yesterday are addressing the incidental power where the – can I come back to it, your Honour.

GAGELER J: Yes.

MR DONAGHUE: We have given your Honours two additional cases, for which I apologise, that I seek to go through briefly. The first is Leask v The Commonwealth, which Mr Kirk mentioned in passing yesterday

GORDON J: What is the purpose of going to these, Mr Solicitor?

MR DONAGHUE: The purpose of Leask is [1996] HCA 29; (1996) 187 CLR 579 is to identify what we submit is the received approach of the Court in relation to core incidental powers and I am going to take your Honours to one passage in Justice Dawson’s reasons, which emphasises the point – if I could take your Honours to it. The relevant pages are 601 to 603. In the middle of 601, his Honour records what, in my submission, is a conventional approach to characterisation and linkages of Commonwealth laws to heads of power. The question is whether:

the acts, facts, matters or things upon which it operates fall within the description of one or more heads of power.

I should note that while that formulation talks about the acts, facts, matters or things on which the law operates, it is also not uncommon for the Court to formulate that idea as “operates or affects”. So one sees that Justice Gummow used that formulation in Leask at 624. Justice Dixon used it in Stenhouse v Coleman. So one is looking to see how the Act operates on or affects the regulated things.

There is a quote from Justice McHugh in Dingjan which is, we submit, reflective of the settled approach, which finishes with his Honour using the words I have been using – “insubstantial, tenuous or distant” as the connection requirement. But the reason I am taking your Honours to the case really is the bottom half of 602 and the top of 603 where Justice Dawson is talking about the incidental power. In particular, he is addressing a submission that seeks to introduce the concept of proportionality to limit the incidental power. In the middle of that bottom paragraph, he says:

incidental power which is to be implied as an aspect of each of the substantive heads of power in s 51, that is to say, the power to legislate with respect to all those things which are reasonable incidental to the complete fulfilment of the power. In this context it is important to appreciate that, whilst it is correct to speak of implied incidental powers, each head of power is but one grant of power. As Brennan J said in Cunliffe: “the core and incidental aspects of a power are not separated; the power is an entirety.”

Then going over the page:

“Purpose” in that connection is merely an aspect of what the law does in fact and the test remains one of sufficient connection.

So, in our submission, that passage is a convenient encapsulation of the doctrine of the Court in recognising that, while it is familiar to speak and the Court has at various times in its history spoken of core and incidental powers, ultimately one is concerned simply with the question of whether there is a sufficient connection with the identified head of power.

Now, in the passage in the Uniform Tax Case, which your Honour Justice Gageler discussed with Mr Kirk yesterday, the provisions in question concerned the tax power and the issue was about priority of debts in the recovery of tax, whether or not someone could use particular funds to pay a State tax debt before a Commonwealth tax debt.

That law, in my submission, was clearly not a law with respect to the imposition of taxation. It was not within the core of the power because it was dealing with a topic that was related perhaps said to be necessary to give effect but not surprising in that context that the discussion was of whether or not the incidental power would support a law of that kind. Here, in my submission, that distance does not appear because the core, if I can use that phrase, of the power with respect to elections is not just at the point of the mechanical casting and counting of the votes. The core goes further, as I will support by references to authority in just a moment.

GAGELER J: I am sorry, just so I understand what you are speaking of when you say “the core”, do you mean the actual expenditure of funds? Is that the core or does “the core” encompass the receipt of funds that might be used for that expenditure?

MR DONAGHUE: The core to which I was referring was the core of the power; that is, the power to make laws with respect to elections. In my submission, the topic “law with respect to elections” embraces not just the casting and counting of votes but laws to stop people misleading electors, laws providing for the funding of participants in the electoral process, laws capping expenditure, laws regulating donations – all of those topics.

EDELMAN J: Everything that is incidental.

MR DONAGHUE: In my submission, they are not incidental. That is the submission that I am making. They are part of the electoral process. That is why this Court has defended them in the context of the implied freedom context. The laws that have restricted those matters have burdened political communication because of the integral nature of those matters in the process of electoral choice for which the Constitution provides.

It would, in my submission, be a strange result if the implied freedom derived from provisions in the Constitution about electoral choice prevented laws that burdened matters such as donations or expenditure if those matters do not have more than an insubstantial or tenuous connection with elections. One is related to the other and the connection between donation and expenditure and political communication emerges very clearly through the Unions Cases and McCloy, in particular.

But the other case that we have handed to your Honours is a case that in some respects is quite similar to the case that your Honours now confront, albeit that it does not concern elections. It is Bayside City Council v Telstra Corporation [2004] HCA 19; (2004) 216 CLR 595. This case concerned the challenge to the validity of a provision that your Honours will see recorded in the middle of page 619 at paragraph 13, which was clause 44 of Division 8 of Part 1 of the Telecommunications Act which provided that:

a law of a State or Territory has no effect to the extent to which the law discriminates, or would have the effect . . . of discriminating, against a particular carrier –

The question in the case concerned the application of that clause – that provision excluding the operation of State law to a local council rates regime which levied rates on land that was occupied by telecommunications cable but that did not levy rates on land used for electricity or gas networks. So, it was treating telecommunications cable differently from electricity or gas networks.

The section that I have just shown you in paragraph 13 was challenged on both head of power and on Melbourne Corporation grounds which is why I say that there is some evident similarity both in the exclusionary operation of the Commonwealth law and in the grounds upon which the provision was challenged and both of those challenges failed. The challenges are relevantly dealt with at paragraph 26 and following in the joint reasons of Chief Justice Gleeson and Justices Gummow, Kirby, Hayne and Heydon. As to the head of power point, dealing here with the telecommunications power, it was said that:

The power conferred by s 51(v) –

extended, looking about six lines down in that paragraph to conferring upon communications services, the:

powers and immunities in connection with the activities undertaken by them pursuant to the chosen regulatory framework.

So, the conferral powers and immunities was connected to the head:

The federal object of promoting the development of the telecommunications industry, and ensuring that telecommunications services would be provided to meet the needs of the Australian community, falls within a head of the legislative power . . . Conferring upon carriers an immunity from discriminatory burdens imposed upon them by State or Territory laws in their capacity as carriers has a direct and substantial connection with the power.

So, the exclusion of State laws of a particular and identified kind from operating upon the subject of the power was thought by five members of the Court in Bayside to be directly and substantially connected to the power and we say the same is equally true of 302CA. It then said in 27:

It is not to the point that cl 44 is also a law with respect to discrimination. A law may bear more than one character –

and that is developed by reference to the capacity for a law about corporations with respect to corporations to protect the object of the power, say trading corporations as in Actors Equity, so even though such a law did not operate upon the trading corporation, there could still be laws protecting them. Then, there is at 28, familiar references again to characterisation principles upon which we rely but the point I really seek to get from the case in terms of connection is the conclusion the Court reached in the end of paragraph 26.

Then, and really just because it is convenient having taken your Honours to Bayside, if I could briefly note what the Court did in relation to the Melbourne Corporation argument because, again, as you can see from 29, the argument was quite similar to the argument your Honours are confronted with. It was said that the clause excluding the State laws:

is an attempt to dictate the content of the State law -

So, the vice was States would have to legislate in a particular way to get around the operation of section 44. That was said to offend Melbourne Corporation and the Court gave very short shrift to that argument:

Whatever the balance struck by the Constitution, it must give effect to ss 51(v) and 109. Clause 44 is no less a law with respect to the services of the kind described in s 51(v) by reason of the fact that the immunity it confers, or attempts to confer, covers only discriminatory State laws.

Then, at 31:

The Melbourne Corporation doctrine presents an inquiry whether the federal law in question, looking to its substance and operation, in a significant manner curtails or interferes with the capacity of the States –

and then, in a passage picked up in the Native Title Case:

although the purpose of the doctrine

“is to impose some limit on the exercise of Commonwealth power in the interest of preserving the existence of the States . . . the implied limitations must be read subject to the express provisions of the Constitution. Where a head of Commonwealth power, on its true construction, authorises legislation the effect of which is to interfere with the exercise by the States of their powers to regulate a particular subject matter, there can be no room for the application of the implied limitations.”

Their Honours finish on this in paragraph 33 quoting Justice Dixon from Melbourne Corporation:

“The prima facie rule is that a power to legislate with respect to a given subject enables the Parliament to make laws which, upon that subject, affect the operations of the States and their agencies. That . . . is the effect of the Engineers’ Case stripped of embellishment –

So your Honours will recall that Mr Kirk mentioned Fortescue, which also talked about an attempt to deploy Melbourne Corporation to reverse 109 and Engineers’ – and I will come briefly to Fortescue tomorrow – but it is the same idea being expressed there. The Court, perhaps not quite summarily, but very briefly, rejected the argument that a State law of an obviously analogous kind to 302CA came close to interfering with the Melbourne Corporation doctrine.

Perhaps, finally, your Honours, before the Court adjourns, could I deal with what we understand to be the foundation for Victoria’s submission that the Commonwealth needs to rely upon the implied freedom – sorry, needs to rely upon the incidental power in order to support the validity of the law. That appears from paragraphs 69 and 48 of Victoria’s submissions to be based upon the particular remarks made by Justice Gaudron in ACTV. So, if your Honours could go to ACTV [1992] HCA 45; (1992) 177 CLR 106 – it is in volume 3 of the joint book, tab 20.

Victoria relies on this passage – this part of Justice Gaudron’s reasons from 219 to 220, in support of the idea that the power with respect to elections itself is confined to machinery and that to go wider one needs the incidental power. In our submission that is not what Justice Gaudron was saying at all in this part of her judgment. So starting on page 219, in the middle of the page, her Honour makes the point:

Power is conferred on the Parliament of the Commonwealth with respect to specific matters relating to Commonwealth elections by various provisions in Ch.1 -

and there is reference to some provisions we have already been through today, sections 9, 27 for example.

Provision is also made in Ch. 1 as to what should happen in relation to certain other aspects of elections “until the Parliament of the Commonwealth otherwise provides”. Thus, for example, ss. 10 and 31 -

Then at the bottom and a couple of lines on the top of the next page:

Power to legislate with respect to “[m]atters in respect of which [the] Constitution makes provision until the Parliament otherwise provides” is conferred by s.51(xxxvi).

So, her Honour is drawing the same distinction that I drew this morning between some of the provisions in Chapter 1 that are themselves sources for legislative power that one sees in Chapter 1, and other provisions where you have to go to 51(xxxvi) to get the source of legislative power. Having drawn that distinction, her Honour says:

It is doubtless correct to say that, by virtue of the combined operation of the provisions in Ch. 1 conferring legislative power and s.51(xxxvi) and (xxxix), the Commonwealth has plenary power with respect to Commonwealth elections -

citing amongst other things Smith v Oldham at 362 to 363, which I read to your Honours this morning.

However and leaving aside s.14, the powers conferred by Ch. 1 are either circumscribed by the terms of grant or expressly conferred “[s]ubject to [the] Constitution”. And, of course, Ch. 1 confers power only with respect to particular aspects of the election process: it does not confer power with respect to elections generally -

In my submission, where her Honour is there talking about Chapter I, she is not talking about sections 10 and 31 read with 51(xxxvi), and that is clear from the next sentence:

Power to regulate election advertising or election campaigning must be found in s. 51 and that power is “subject to [the] Constitution” and, hence, subject to the implied freedom –

So the distinction that is being drawn is between the Chapter I powers that are not expressly made subject to the Constitution and powers that arise only via 51(xxxvi) that are expressly made subject to the Constitution, but none of that supports the idea that the Commonwealth’s power to regulate elections at its core, that the 51(xxxvi) power read with 10 and 36 is in any sense confined simply to machinery.

The machinery provisions to which her Honour is referring are the much more narrow and restrictive ones identified in Chapter I. That is a rather longwinded way of saying that the particular foundation for the submission that the Commonwealth needs the incidental power cannot be made good. Tomorrow morning I will briefly take your Honours to some cases that more directly address the extent of the power to make laws with respect to elections and that describe that power in much more expansive terms than Victoria has suggested. I see the time.

KIEFEL CJ: At some point tomorrow we need to revisit the proposed time at which this concludes. Needless to say, the Court would be assisted if it concluded around lunchtime on Friday.

MR DONAGHUE: I think the estimates have us concluding a little before lunch. Obviously, we are tracking a little bit behind where we intended to be.

KIEFEL CJ: Yes. Perhaps if we revisit it around lunchtime tomorrow.

MR DONAGHUE: Thank you, your Honour.

KIEFEL CJ: The Court will adjourn to tomorrow, 14 March at 10.00 am.

AT 4.16 PM THE MATTER WAS ADJOURNED
UNTIL THURSDAY, 14 MARCH 2019