Ban on foreign political donations open to challenge, say legal experts

Proposed legislation says only Australian citizens or organisations incorporated in Australia would be allowed to make donations to parties and candidates

Constitutional law experts have warned the Turnbull government is on very thin ice with plans to ban foreign donations, pointing out the system is vulnerable to challenge in the high court.

Before the introduction of legislation on Thursday, Guardian Australia asked the finance minister, Mathias Cormann, for details of to whom the proposed ban would apply.

A spokeswoman for Cormann said the legislation would mean only Australian citizens and organisations incorporated in Australia would be permitted to make political donations to political parties and candidates. “Any non-citizen, including permanent residents, will be banned from making political donations,” she said.

Legal experts said the broad nature of the ban left it open to challenge by anyone in the banned category who wanted to make a donation, or any political party of a candidate wanting to receive a donation from anyone in the banned category.

Anne Twomey, constitutional law professor at the University of Sydney, said the government’s proposal was “really doubtful in terms of its constitutional validity”.

She pointed to paragraph 30 in the high court’s judgment in the Unions NSW case in 2013 which noted freedom of political communication was not a “right” or a “personal freedom” but people in Australia had “a legitimate interest in governmental action and the direction of policy” and would seek to influence the outcome of elections “directly or indirectly through the support of a party or a candidate who they consider best represents or expresses their viewpoint”.

“The government is certainly moving into challengeable waters, and there would certainly be good grounds for challenging,” she said.

George Williams, a constitutional law expert from the University of New South Wales, was of a similar view. “The legislation will face real pressure in the high court if they go down that path,” he said. “I wouldn’t be surprised to see a challenge brought.”

Twomey said if the legislation proceeded, and someone brought a high court challenge, the Turnbull government would have to argue the policy justification for the proposed ban, in essence that the ban was imposed for “a legitimate end”.

She said the high court had upheld a state-wide ban on political donations from property developers on that basis, but it was hard to predict what the court would decide in relation to threats posed by foreign influence of Australia’s political system.

Twomey said another problem with the regime was the proposal to ban foreign funding for non-political actors, such as advocacy groups and charities.

She said smaller advocacy groups could argue they lacked the administrative resources to comply with such a ban, and they could also argue the practical implication of the change was to “silence the voices of third-party campaigners” in Australia.

Twomey said “the risk of unconstitutionality arises” if more groups were able to validly argue their voices were being excluded.

The Turnbull government has been flagging for months an intention to restrict the activities of third-party actors, such as the progressive activist group GetUp, but it has proposed the ban in political funding more recently in the context of trying to limit foreign influence in the Australian political system.

The government this week telegraphed the introduction of a package, including the donations ban, which aims to counter incidences of espionage and improper foreign influence within Australia’s political system.

That package is expected to proceed on Thursday.

The introduction of the package comes in the context of rolling controversy surrounding Labor’s strife-torn senator Sam Dastyari, who remains in hot water over his dealings with the Sydney-based Chinese businessman, Huang Xiangmo.

China has responded furiously to the Turnbull government’s move, and Labor and the Greens have signalled they will attempt to amend the legislation banning foreign political donations to ensure third-party actors were not adversely affected.