BY JACK MAXWELL

The Commonwealth Government prevents community lawyers from campaigning about systemic legal issues. This is misguided, because it hampers their efforts to tackle those problems. This post argues that it is also unconstitutional, because it violates the implied freedom of political communication.

What is the community legal centre (CLC) gag clause?

CLCs are one of the four main providers of publicly funded legal assistance in Australia. The others are legal aid commissions, Aboriginal and Torres Strait Islander Legal Services and Family Violence Prevention Legal Services.

The Commonwealth is one of the main sources of funding for CLCs. In 2015-16, for example, the Commonwealth gave around $10 million to Victorian CLCs (alongside around $18 million from the State Government), and around $11 million to New South Wales CLCs (together with around $6 million from the State Government). CLCs also receive smaller amounts of funding from other government and non-government sources, outside of these arrangements.

The Commonwealth provides this money to CLCs through s 96 of the Commonwealth Constitution. Section 96 empowers the Commonwealth Parliament to ‘grant financial assistance to any State on such terms and conditions as the Parliament thinks fit’.

This arrangement has two legal elements: one soft, the other hard. The soft element is an intergovernmental agreement between the Commonwealth and the states and territories: the National Partnership Agreement on Legal Assistance Services (NPA). The NPA sets out, among other things, annual Commonwealth funding for each jurisdiction for the provision of legal assistance services and conditions on how the funding is to be used.

The hard element is the legal mechanism by which the grants are made. Parliament has effectively delegated its power under s 96 to the Treasurer, who may grant money to the states and territories for several broad purposes. The Treasurer makes periodic determinations that certain amounts, as per the NPA, are to be paid to the states and territories. The money is automatically appropriated from the Consolidated Revenue Fund by several other Commonwealth laws, which also provide for the grant to be governed by the conditions set out in the NPA. And the states and territories then pass the money on to each CLC under cover of a separate funding agreement.

One of the conditions in the NPA is the CLC gag clause, which provides that ‘Commonwealth funding should not be used to lobby governments or to engage in public campaigns’. This broad language is qualified somewhat by a carve-out, which excludes community legal education and formal law reform submissions. Under the NPA, the states and territories agree ‘to be accountable for administering’ Commonwealth funding in accordance with the agreement, including the gag clause.

The gag clause flows down to CLCs through their own funding agreements. Take the template funding agreement between Legal Aid NSW, which administers Commonwealth funding for New South Wales, and CLCs in that state. The agreement provides that the CLC must use Commonwealth funding ‘in a manner consistent with’ the principles set out in the NPA. If a CLC breaches the agreement, Legal Aid NSW may, among other things, suspend payments or terminate the agreement.

What is the practical effect of the CLC gag clause?

There is strong evidence that the CLC gag clause prevents community lawyers from campaigning about systemic legal issues. In a 2015 study, community lawyers in Victoria identified ‘funding arrangements that prohibit it’ as one of the key barriers to using legal cases as a social change or advocacy strategy. In 2016, the Victorian Government’s Access to Justice Review found that the gag clause ‘has had a particular impact on the effectiveness of community legal centres’ preventative work’. And in the Commonwealth’s independent review of the NPA in 2019, CLCs gave ‘consistent feedback’ that the gag clause ‘effectively impedes contributions to law reform and advocacy work’.

This raises the obvious question: how is an exercise of public power that expressly bars people from public campaigning consistent with the implied freedom of political communication?

Is the CLC gag clause unconstitutional?

The Constitution impliedly protects political communication against government interference. It establishes a system of representative and responsible government which can only operate effectively if people are generally free to communicate about political matters.

As modified by several later decisions, the Lange test for whether a law impermissibly interferes with political communication has two limbs. The first limb asks whether the impugned law burdens people’s ability to make or receive political communications. The second limb asks whether any such burden is proportionate to a legitimate end, in the sense that it is suitable, necessary, and ‘adequate in its balance’ (ie, strikes an appropriate balance between its benefits and its effect on the freedom).

The implied freedom and s 96 of the Constitution

A preliminary issue is how the implied freedom interacts with the CLC gag clause. The legal basis for the gag clause is complex: a mix of soft and hard law, across federal, state and territory governments. The implied freedom might apply at two levels. First, it could be argued that the Commonwealth cannot provide a s 96 grant on terms requiring a state to violate the implied freedom. This would be consistent with the High Court’s reasoning on the relationship between s 96 and the constitutional guarantee of just terms in s 51(xxxi). Second, it could be argued that the states and territories cannot enter into contracts (eg, funding agreements with CLCs) which violate the implied freedom.

Either way, the core question seems to be: does the implied freedom permit a government to enter into a contract with a CLC which contains the CLC gag clause? (I leave aside here the difficult and important questions around precisely how the implied freedom applies to executive power.)

First limb: Does the CLC gag clause burden the implied freedom?

A law burdens the implied freedom if it prohibits or limits the making of political communications. The argument that the CLC gag clause burdens the implied freedom is, on its face, straightforward. The clause exposes CLCs to civil liability if they use a specified portion of their funds to ‘lobby governments or to engage in public campaigns’. Lobbying governments and engaging in public campaigns are clearly political communications. The carve-out protects some political communication, but the clause still prevents CLCs from engaging in many forms of political speech. This is reflected in its practical effect on community lawyers, discussed above. But for the CLC gag clause, community lawyers would speak more freely and loudly on systemic legal issues.

Two objections might be raised against this argument. The first is that the CLC gag clause does not burden political communication because it is consensual. CLCs are only subject to the gag clause because they agree to it in exchange for receiving Commonwealth money.

This objection is inconsistent with the High Court’s reasoning in Comcare v Banerji (2019). Banerji concerned statutory provisions that required federal public servants to uphold ‘APS [Australian Public Service] Values’ (eg, being apolitical), and exposed them to possible sanctions (eg, termination of employment) if they did not. These provisions had a consensual aspect. As Gageler J pointed out, they only limited a person’s political communication ‘for so long as he or she [chose] to remain an APS employee’ (at [89]). But the parties agreed, and the High Court unanimously accepted, that these provisions burdened the implied freedom, because they restricted the ability of public servants to comment publicly on political matters.

The second objection is that the CLC gag clause only restricts how CLCs use Commonwealth money. It does not prevent CLCs from campaigning altogether, provided they do so with other people’s money. CLCs have no right to Commonwealth money other than what their funding agreements give them. The argument against the CLC gag clause is, in effect, an argument for a positive right to Commonwealth funding for political communication.

This is a powerful objection. The High Court has consistently rejected any suggestion that the implied freedom is a positive right. In Mulholland v Australian Electoral Commission (2004), the appellant challenged a legislative requirement that a political party have at least 500 members before it could be registered and appear on the ballot (‘the 500 rule’). The majority held that this did not even burden the implied freedom. The appellant had no right to appear on the ballot other than what the statutory scheme, including the 500 rule, might give him. The implied freedom did not give him a positive right to appear on the ballot.

This is ultimately a question of constitutional baselines. Against which of the following two baselines should the effect of the CLC gag clause on political communication be assessed?

  • Baseline 1: CLCs continue to receive Commonwealth funding on exactly the same terms, only not subject to the gag clause; or
  • Baseline 2: CLCs receive no Commonwealth funding at all, the funding and the gag clause being inseverable parts of the legal assistance arrangements.

Mulholland supports the use of Baseline 2, which would mean that the gag clause does not burden political communication at all. But there is reason to doubt that approach.

The majority in Mulholland approached the baseline issue in two different ways. Justices Callinan and Heydon indicated that the baseline for the implied freedom is the rights and privileges enjoyed at common law (at [339] and [356]). But this approach is inconsistent with the High Court’s approach in other implied freedom cases. In Brown v Tasmania (2017), for example, the majority did not focus on whether, absent Tasmania’s anti-protest legislation, the plaintiffs had a common law right or privilege to protest on Crown land. For Kiefel CJ, Bell and Keane JJ, it was enough that there was some other legislation – the Forest Management Act 2013 (Tas) – which recognised ‘that there is an expectation on the part of the public in Tasmania, residents and visitors alike, that they may access forest areas and that that expectation should, so far as reasonably practicable, be met’ (at [24]).

This seems closer to the position of McHugh J and Gummow and Hayne JJ in Mulholland: the baseline for the implied freedom is the rights or privileges enjoyed at common law or under some pre-existing statute (at [104] and [182]-[192]). But this position is inconsistent with the claim that the implied freedom is purely negative. How could the implied freedom prevent a government from abrogating a right or privilege under a pre-existing statute, unless it positively required the government to provide that right or privilege?

The purely negative view of the implied freedom is unsustainable. Positive government action – such as controlling huge areas of land (Brown) and employing vast numbers of people (Banerji) – plays an integral role in Australian public life. The government’s choices in these domains of positive action have inescapable implications for our political system, as the High Court’s jurisprudence recognises. The constitutional baseline for the implied freedom cannot and should not be set by some formalistic focus on common law rights and privileges. Rather, as Gageler J noted in Brown, it must be informed by a ‘real-world’ view of our politics and the traditions and importance of certain forms of communication in that system (see [189]-[192]).

This reasoning readily applies to government funding agreements. The government contract is a powerful regulatory tool. In Williams v Commonwealth (2012), Crennan J (Gummow and Bell JJ generally agreeing) recognised that the government uses contracts to regulate behaviour and implement policy, and that it is constitutionally important that they be subject to mechanisms, such as parliamentary oversight, ‘designed to protect the community from arbitrary government action’ (at [521]). Chief Justice French made similar comments. The courts should take the same pragmatic approach to the CLC gag clause. In practice, the Commonwealth uses the clause to regulate the behaviour of CLCs and prevent them from publicly campaigning against it. These objectives and effects are constitutionally serious and should be scrutinised against the second limb of the Lange test (ie, whether the burden is proportionate to a legitimate end).

This can be illustrated by a hypothetical. Imagine if the government attached gag clauses to other kinds of public payments. Welfare could be made conditional on the person agreeing not to use their payments to engage in political activities. University funding agreements could stipulate that the money not be used to support academics or research critical of the government. Neither situation would be constitutionally acceptable. As a matter of fact, large parts of Australian public life depend on government funding. The system of government established by the Constitution would be irreparably damaged if the government could require that public money not be used for any political purposes.

This argument does not require that the government provide any particular level of funding for political speech. Rather, the government cannot give money to a person or organisation and then deprive them of the ability to use it for political speech, without reasonable justification.

The High Court has articulated a similar principle in the context of Ch III of the Constitution. Ch III provides for the Commonwealth to vest federal jurisdiction in state courts, but it does not expressly require the states to create any particular courts for this purpose. In K-Generation Pty Ltd v Liquor Licensing Court (2009), however, five members of the High Court noted in obiter that a state cannot create a Ch III court and then deprive it of the minimum requirements for its institutional integrity (ie, independence, impartiality, etc). To do so ‘would be to weaken the effectiveness of the distinctive feature of Australian federalism represented by the general words of s 77(iii) of the Constitution’ (at [153]). Contractual mechanisms like the CLC gag clause seriously weaken another distinctive feature of the Constitution: the system of representative and responsible government.

Second limb: Can the burden be justified?

If the CLC gag clause is found to burden the implied freedom, it will be difficult to justify on the second limb of the Lange test.

In 2014, then-Attorney-General George Brandis claimed that the clause is intended to ensure that public money is spent on ‘actually helping a flesh and blood individual’ rather than ‘essentially academic work or advocacy work’(p 52). While this appears to be a legitimate end, the clause is not rationally connected to this end.

First, because of the nature and extent of the burden imposed by the CLC gag clause, it is necessary to closely scrutinise the government’s supposed justification. The clause expressly targets political communication. And it is a significant constraint on political communication, given the importance of Commonwealth funding for CLCs and the evident impact of the clause on their activities, as discussed above. This makes the burden ‘much more difficult to justify’ (see Hogan v Hinch (2011) at [95] and Mulholland at [42]).

Second, Brandis’s rationale for the clause rests on a false dichotomy. In 2014, the Productivity Commission found that ‘in many cases, strategic advocacy and law reform can reduce demand for legal assistance services and so can be an efficient use of limited resources’. It recommended that governments ‘provide funding for strategic advocacy and law reform activities that seek to identify and remedy systemic issues and so reduce demand for frontline services’. Contrary to its ostensible purpose, the gag clause actually undermines CLCs’ ability to help ‘flesh and blood individuals’, by preventing them from projecting their influence at a systemic level.

Third, the CLC gag clause draws an ad hoc distinction between community legal education and formal law reform submissions, which are permitted, and other forms of advocacy, which are prohibited. It is not clear how this distinction is connected to Brandis’s rationale. It suggests that the clause’s real purpose is to target advocacy which might attract broader public attention, and thus be embarrassing to the government.

The High Court has recently emphasised that the government must establish the facts said to justify a law burdening the implied freedom (Unions NSW v New South Wales (2019)). It cannot rely on mere assertion. Unless the Commonwealth has evidence to support Brandis’s assertions and rebut the Productivity Commission’s findings, the CLC gag clause is constitutionally suspect.

Conclusion

I have tried to show why the CLC gag clause might be unconstitutional. This argument undoubtedly requires a development of existing principle. But it is worth exploring, given the clause’s impact on CLCs and the use of similar clauses in other government funding agreements. The NPA expires on 30 June 2020, but its replacement – the new National Legal Assistance Partnership – will include an updated version of the gag clause. A larger problem is that this argument would not stop the government from simply cutting funding to CLCs across the board (eg, as the Coalition Government proposed in 2017). Whether the Constitution provides any means to resist such a move is a matter for further debate.

Jack Maxwell is a public lawyer from Melbourne, now based in London.

Suggested citation:  Jack Maxwell, ‘Is it unconstitutional for the Commonwealth to gag community lawyers?’ on AUSPUBLAW (17 June 2020) <https://auspublaw.org/2020/06/is-it-unconstitutional-for-the-commonwealth-to-gag-community-lawyers?>