Proportionality and McCloy v New South Wales: close but not quite?
01.03.2016
This post is the first in a special series AUSPUBLAW is featuring this week providing a more sustained look at the McCloy v New South Wales judgment, and its impact on the High Court’s approach to proportionality analysis.
McCloy v New South Wales [2015] HCA 34 is the latest in a line of recent High Court decisions that have considered the implied freedom of political communication. In the case, a majority of the Court upheld the validity of provisions within the Election Funding, Expenditures and Disclosures Act 1981 (NSW), which, amongst other things, placed a general cap on political donations that could be made within an election cycle and also specifically prohibited political donations by property developers. A majority of the Court concluded that these provisions of the Act did not impermissibly burden the implied freedom.
Beyond its immediate ramifications on the facts, the case is an important one from a number of perspectives. First, the Court has expressly extended the concept of representative government to embrace the value of equality of political participation. Second, in the joint judgment of French CJ, Kiefel, Bell and Keane JJ and the separate judgment of Gageler J we find extended consideration given to the meaning of ‘corruption’ in a political context. Third, the case is important from an analytical perspective. It is the first time that we have seen majority approval for the adoption of European-style structured proportionality, and the integration of that approach into the tests set down in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520. This last development is the focus of this post.
In other jurisdictions, structured proportionality is often described as a stable analytical methodology that creates consistency and enhances transparency. From that perspective, the adoption of structured proportionality in the joint judgment may be viewed as a welcome development in an area that has been plagued by confusion in both the scope and application of the relevant tests. In this post, however, I delve a little bit deeper into the majority’s approach in McCloy to query whether it really does bring the conceptual clarity to the traditional tests that many have been hoping for.
The problem of balancing
To understand the role of structured proportionality, we first need to engage with the conceptual problem before the Court when it is faced with a challenge to legislative validity on the grounds of an impermissible burden on the implied freedom. This conceptual problem has three key characteristics. The presence of these characteristics help to explain why the Court is required – in the exercise of its supervisory jurisdiction – to engage in a balancing exercise in order to ascertain constitutional validity in this context.
The first characteristic is that the Court is faced with a conflict between two competing interests that can each make claim to the same normative status – that is, they both have a constitutional footing. So, on the one hand, we know the implied freedom is derived from the text and structure of the Constitution that establishes a system of representative and responsible government. On the other hand, a competing but otherwise bona fide exercise of legislative power will also be enabled by a relevant provision of either the Commonwealth Constitution, chiefly ss 51 or 52, or a State Constitution.
Second, the implied freedom is not absolute and does not automatically trump the legislative interests that it conflicts with. It has always been recognised by the Court that the implied freedom is not an individual or personal right that may be enforced within the Courts. Instead, it operates as a constitutional guarantee that limits the exercise of legislative power, but which in turn may also yield to legislative incursion when that can be justified as reasonable.
Third, the scope or boundary of the implied freedom has never been defined in the abstract with any precision, and it may not be possible to do so. This means that every time there is said to be a legislative burden on the implied freedom, the Court must consider the nature and degree of that burden within its broader factual context in order to reach a conclusion as to whether it is justified.
The presence of these three characteristics means that the Court is required to balance the competing interests against each other to reach a conclusion on legislative validity. Specifically, it must balance the importance of the competing interest or interests embodied within the impugned legislation against the nature and degree of the incursion the legislation makes into that which is afforded protection by the constitutional guarantee. If the importance of the competing interest outweighs the nature and degree of incursion into the implied freedom, then a conclusion of validity may be reached on the basis that the incursion is justified.
Structured proportionality
Balancing can be done in many ways – sometimes intuitively and sometimes by way of more deliberate and structured analysis. Structure and transparency in reasoning are likely to lead to greater consistency, certainty and accountability in judicial decision-making. Thus, analytical methodologies that promote these ideals and buffer against slippage into undisclosed or intuitive reasoning are to be preferred in this context. Structured proportionality is one such methodology.
Structured proportionality has been developed, primarily in European jurisdictions, to aid courts in structuring their balancing analysis. Although there are typically four stages to this analysis (proper purpose, suitability, necessity and strict proportionality), only the latter two of these stages are responsible for the analytical heavy lifting in a balancing problem.
Under the ‘necessity’ stage, the Court is led to ask whether the means adopted by the legislature is necessary to achieve its goal. That is, are there alternative approaches that could have been taken to achieve the same outcome with less impact on the protected right or interest? An answer to this question assists the Court in assessing whether the impugned provision (the ‘means’) was appropriately tailored to its goal (the ‘end’) with minimal collateral impact.
This is followed by the stage commonly known as ‘strict proportionality’ or proportionality stricto sensu. At this stage the Court asks, even if the means used were necessary, is the object of the law important enough to justify intruding upon the protected right, interest or guarantee? The application of this stage invariably involves a value judgment.
Conceptually, these stages work in tandem to ensure that both the means used to achieve an end and the end itself don’t intrude upon the protected right or interest in a way or to a degree that is unjustifiable. Thus, the crux of proportionality – like the crux of the balancing problem itself – is justification. However, the critical advantage of proportionality over ad-hoc justification processes is that it lends clarity to the underlying conceptual exercise conducted at each stage of analysis since it forces decision-makers to address them in a structured manner. In this way, underlying value judgments are likely to be made more explicit.
Often, the primary analytical tests of necessity and strict proportionality are preceded by other ‘threshold’ tests, such as ‘suitability’ and ‘proper purpose’. These threshold tests serve the purpose of rendering the primary tests logical. For example, suitability checks that there is a rational connection between the means used and the purpose being pursued. This ensures that the later test of ‘necessity’ is testing the viability of alternative means against the baseline of an impugned provision that has actually been shown to be connected to the purpose being pursued.
Proper purpose has variable meanings, depending on the context and jurisdiction in which it is deployed. Conceptually, however, its main function is to assist the Court in determining the legislative intention behind the impugned provision. The identification of these purposes is critical to the later tests, and in particular to strict proportionality. Without the proper identification of the law’s true purpose there cannot be an assessment of the importance of the law against the degree or nature of its incursion into the protected right or interest. This is a point that I will return to later in this post.
The Lange formulation
Our own unique Australian way of dealing with the balancing problem has until now taken a slightly different path to the European approach. However, there has always been much underlying conceptual similarity. In the seminal case of Lange v Australian Broadcasting Corporation, the full Court – in a rare moment of unity – set down a set of tests for dealing with implied freedom problems that have become known as the ‘Lange formulation’.
There are two primary limbs to this formulation, described by the Court in the following terms:
First, does the law effectively burden freedom of communication about government or political matters either in its terms, operations or effect? Second, if the law effectively burdens that freedom, is the law reasonably appropriate and adapted to serve a legitimate end the fulfilment of which is compatible with the maintenance of the constitutional prescribed system of representative and responsible government and the procedure prescribed by s 128 for submitting a proposed amendment of the Constitution to the informed decision of the people: Lange v Australian Broadcasting Corporation (1997) 189 CLR 520, 567.
The second limb is further divided into the following sub-branches:
The first condition is that the object of the law is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government or the procedure for submitting a proposed amendment to the Constitution to the informed decision of the people which the Constitution prescribes. The second is that the law is reasonably appropriate and adapted to achieving that legitimate object or end. (emphasis added).
The Court has applied the second limb in a way that resembles the primary tests that make up structured proportionality (explained above). The first branch of Limb 2 checks that the object being pursued by the legislature is ‘legitimate’ in the sense that it justifies the law’s incursion into the implied freedom. This permits the conclusion that there is overall ‘compatibility’ with the system of representative and responsible government despite the existence of a burden having already been established under Limb 1. It therefore involves conceptual work that resembles that done under the heading of ‘strict proportionality’ in structured proportionality analysis.
The second branch of Limb 2 – the reasonably appropriate and adapted test – enables the Court to delve into an inquiry as to whether the means adopted by the law are necessary to achieve the legitimate end. The similarity here with the ‘necessity’ test in structured proportionality is striking. Under both tests, the Court may look into whether there are other, less obtrusive means of achieving the end pursued by the legislation.
Given these conceptual similarities, it is unsurprising that members of the Court have frequently referred to the relevance of proportionality in implied freedom cases. It is also unsurprising that in McCloy we find for the first time majority approval for a convergence between structured proportionality and part of the Lange formulation. That convergence sees Limb 2, Branch 2 of Lange replaced by structured proportionality and, in particular, the tests of suitability, necessity and strict proportionality. The development is summarised in the third row of the following table:
McCloy ‘compatibility testing’ and structured proportionality
In addition to the convergence at Limb 2, Branch 2, the majority have also exchanged what was previously known as the legitimate ends test (Limb 2, Branch 1) for ‘compatibility testing’. This is represented in the second row of the table above. The majority have expanded the scope of the traditional test beyond merely testing the object of the law for compatibility with the system of government prescribed by the Constitution to also testing the means of achieving the object for such compatibility.
There are at least two ways in which we might view ‘compatibility testing’. The first is derived from the language employed by the majority to elucidate the test. They describe the test as one that checks that the object of the law and the means used to achieve that object ‘do not adversely impinge upon the functioning of the system of representative government’ or ‘impede the functioning of that system and all that it entails’. That language suggests that the compatibility test may not be so different from the traditional legitimate ends test, in the sense that an impingement upon or impeding of the system isn’t necessarily fatal to the law’s validity but needs to be justified. There is some suggestion in the joint judgment that this may be the point of compatibility testing:
The process of justification called for by Lange commences with the requirement that the purpose of the provisions in question, which is to be identified by a process of construction, must be compatible with the system of representative government for which the Constitution provides.
However, if we were to give that kind of meaning to compatibility testing, then some serious conceptual difficulties arise. First, why is the Court testing for compatibility with the entire system of representative government generally? In a challenge that is based on the implied freedom, there would appear to be no constitutional foundation for checking an exercise of power against the system of government provided for by the Constitution beyond its impact on that which is guaranteed by the freedom (political communication). After all, the conflict is between the interest embodied in the impugned legislation and the implied freedom, not the entire system of representative government provided for by the Constitution. Second, how is the Court to test for compatibility with the entire system of representative government? Given the practical difficulties that will inevitably arise in attempting to define the scope, limits and requirements of that system, an analysis under this heading is likely to descend into an intuitive, or even superficial, reasoning process.
In the event that ‘compatibility testing’ is in reality confined to testing compatibility with just the part of the system of representative government protected by the implied freedom – political communication – then there must be very little difference between it and the strict proportionality test conducted later under the rubric of structured proportionality. The majority describes the strict proportionality test (referred to in the Court’s terminology as the ‘adequate in its balance’ test) as one that assesses ‘the balance between the importance of the purpose served by the restrictive measure and the extent of the restriction it imposes on the freedom’. Once again, such a test only makes sense as one of justification – that is, the restriction on the implied freedom is justified by the importance of the object being pursued. It may be, then, that the same test is being conducted in two different places in the Court’s analysis. This raises two further concerns.
First, it sits uneasily with the majority’s own assertion that there is a difference between proportionality analysis and compatibility testing. The majority maintain that the ‘difference between the test of compatibility and proportionality testing is that the latter is a tool of analysis for ascertaining the rationality and reasonableness of the legislative restriction, while the former is a rule derived from the Constitution itself’. The distinction is difficult to understand. Structured proportionality is without a doubt a tool for ascertaining the rationality and reasonableness of (or ‘justification for’) the legislative restriction. However, the need for such a tool is also ‘derived from the Constitution itself’. Specifically, it is derived from the characteristics of the conceptual problem raised in implied freedom cases, discussed above, each of which has a constitutional dimension.
Second, if the same conceptual test is being conducted in two places, there may in the future be potential issues for internal consistency in the standard of review being applied at each stage. A development of this kind may pose a real concern since the Court has historically taken a ‘light touch’ approach to the legitimate ends test, but in other jurisdictions the strict proportionality test has not necessarily been applied with the same judicial restraint.
An alternative view
Another, more conceptually cogent, way to view ‘compatibility testing’ comes from looking at the actual analysis undertaken at this stage irrespective of the language employed to describe the test. When we look at the majority’s analysis in McCloy under this heading, we can see that the bulk of it is dedicated not to determining whether the ‘anti-corruption’ purpose of the impugned law is legitimate, which is taken as given, but whether the true purpose of the law – construed from both its stated objective (end) and its practical and legal operation (means) – is indeed anti-corruption. In effect, the majority is concerned here with ‘smoking out’ whether there is another, ulterior purpose that may be hiding behind the asserted or obvious one.
The search for a law’s true purpose or purposes is a critical one on which the remainder of the analysis – whether taking a traditional Lange approach or conducting a proportionality analysis – depends. This much has been acknowledged by the majority in McCloy:
It is not possible to ignore the importance of a legislative purpose in considering the reasonableness of a legislative measure because that purpose may be the most important factor in justifying the effect that the measure has on the freedom.
Determining the law’s true purpose or purposes is conceptually what is required at this early stage of analysis because it is the critical factor on which the later tests are contingent. It ensures that, under the ‘necessity’ stage, the means are being tested against the true purpose of the law. Similarly, under the ‘strict proportionality’ stage, it enables the importance of the true purpose of the law to be tested against its incursion into the implied freedom. Justification for compatibility with the system of representative government is not necessary at this stage. Since strict proportionality – or the ‘adequate in its balance’ test – has been expressly embraced by a majority of the Court, the process of determining whether the incursion into the implied freedom is justified can be left to this later stage of review.
This alternative view can be restated as an adaptation of the McCloy reformulation in the following way:
If this alternative view is embraced, we might start to see a conceptually sound application of structured proportionality to the problem of balancing raised by legislative burdens on the implied freedom. The advantage of this approach will be to enhance the clarity and coherence of the relevant stages of proportionality by ensuring that there is no repetition that may confuse the underlying analysis or open the door to a divergence in standards of review. In this way, some of the asserted benefits of proportionality, such as enhanced structure and transparency in value judgments, may then start to be realised.
So while the majority decision in McCloy can be viewed as a step in the right direction, there may still be some room for further development to achieve greater analytical clarity.
Shipra Chordia is a doctoral candidate at the University of New South Wales. She gratefully acknowledges the Sir Anthony Mason PhD Award in Public Law for partly funding the research underpinning this post.
Suggested citation: Shipra Chordia, ‘Proportionality and McCloy v New South Wales: close but not quite?’ on AUSPUBLAW (1 March 2016) <https://auspublaw.org/blog/2016/3/proportionality-and-mccloy/>