Is the Foreign Influence Transparency Scheme Act 2018 (Cth) invalid, to the extent it imposes registration obligations with respect to communications activities , on the basis that it infringes the implied freedom of political communication?

LibertyWorks Inc v Commonwealth of Australia [2021] HCA 18 (16 June 2021)

Intro:-

The plaintiff claims that the provisions of the Foreign Influence Transparency Scheme Act 2018 (Cth) ("Act") respecting communications activity by a person who acts on behalf of a foreign principal burden the freedom of political communication which is implied by the Constitution, cannot be justified and are therefore invalid.

Facts:-

The plaintiff, LibertyWorks Inc, was incorporated in 2015 under the Associations Incorporation Act 1981 (Qld). It is described in the Amended Special Case as "a private think-tank with an aim to move public policy in the direction of increased individual rights and freedoms, including the promotion of freedom of speech and political communication".

The American Conservative Union ("the ACU") was established as a corporation in the United States of America for the promotion of political freedom and for the purpose of influencing politics and politicians in that country. A statement on the website of the ACU refers to its purpose as being to "harness the collective strength of the conservative movement and support the campaigns of conservative candidates". To this end the ACU organises and holds an annual multi‑day political conference in the United States called the "Conservative Political Action Conference" ("CPAC")

A Deputy Secretary of the Attorney-General's Department wrote to the President of the plaintiff in August 2019 concerning the upcoming CPAC event to be presented by the plaintiff and the ACU. The Deputy Secretary outlined the scheme of the Foreign Influence Transparency Scheme Act 2018 (Cth) ("the FITS Act"), and observed that the ACU would appear to fall within the definition of a "foreign political organisation" and therefore would be considered a "foreign principal" and that an event such as the CPAC event would appear to be a "communications activity". The plaintiff was asked to consider whether it was required to register its arrangements with the ACU under the scheme. Further correspondence followed, including a notice purporting to be given under s 45 of the FITS Act, which required information and documents which might enable the Deputy Secretary to determine whether the plaintiff was liable to register. The notice was not complied with and ultimately was not further pursued. The plaintiff has not to date registered under the FITS Act.

The object of the FITS Act is stated in s 3 to be:

"to provide for a scheme for the registration of persons who undertake certain activities on behalf of foreign governments and other foreign principals, in order to improve the transparency of their activities on behalf of those foreign principals."

Issues:-

a) Is the Foreign Influence Transparency Scheme Act 2018 (Cth) invalid, to the extent it imposes registration obligations with respect to communications activities, on the ground that it infringes the implied freedom of political communication?

b) In light of the answer to question 1, what relief, if any, should issue?

c) Who should pay the costs of and incidental to this special case?

Analysis:-

The implied freedom, burdens and justification

The constitutional basis for the implication in the Constitution of a freedom of communication on matters of politics and government is well settled[46]. The freedom is recognised as necessarily implied because the great underlying principle of the Constitution is that citizens are to share equally in political power and because it is only by a freedom to communicate on these matters that citizens may exercise a free and informed choice as electors. It follows that a free flow of communication is necessary to the maintenance of the system of representative government for which the Constitution provides. The freedom operates as a constitutional restriction on legislative power and should not be understood to be a personal right.

The freedom is of such importance to representative government that any effective statutory burden upon it must be justified. That process commences with the identification of the purpose which the statute seeks to achieve. That purpose must be legitimate, which is to say compatible with the constitutionally prescribed system of representative government. If the statute does not have a legitimate purpose no further consideration will be necessary, for invalidity will be made out.

In addition to having the requisite purpose, the law must be shown to be proportionate to the achievement of that purpose. In order to justify a burdensome effect on the freedom a law must be a proportionate, which is to say a rational, response to a perceived mischief. A law will satisfy the requirements of proportionality if it is suitable, necessary and adequate in its balance. The parties' arguments on the Amended Special Case address these matters.

In Lange v Australian Broadcasting Corporation[55], the final question as to the validity of a law effecting a burden on the freedom was stated to be whether the burden is "undue" having regard to its purpose[56]. Whether that question should be determined by reference to a test of whether the law is "reasonably appropriate and adapted" or of whether it is "proportionate" was left open by the Court, as were the means by which those conclusions might be reached. But in McCloy v New South Walesa majority of this Court provided the answer, holding that the final question to be addressed is whether a law is a proportionate response to its purpose and that that is to be ascertained by a structured method of proportionality analysis. That approach has consistently been maintained by a majority of this Court in each of the cases concerning the implied freedom since McCloy and, more recently, it has been applied by a majority to the freedom guaranteed by s 92 of the Constitution.

A burden on the freedom.

The defendant concedes that the FITS Act, in its requirement of registration where communications activity is undertaken on behalf of a foreign principal, is effective to burden the freedom. The concession is properly made. Conditioning political communication to a requirement of registration is effective to burden the freedom. That is sufficient to require that the relevant provisions of the FITS Act be justified.

Purpose and legitimacy (Is the purpose (ends) of the law legitimate?)

The plaintiff identifies the purpose of the FITS Act as that referred to in s 3, namely to render transparent the fact that activities in the nature of political communication which are carried out by a person in Australia are undertaken on behalf of a foreign principal. The plaintiff submits that it is thereby to be inferred that the concern of the FITS Act is to overcome covert, deceptive or clandestine conduct.

Even on the plaintiff's somewhat narrower description of purpose, the FITS Act must be understood as one supportive of the processes necessary to our democracy. The Act seeks to ensure that those making decisions in government, those making political judgments, those involved in the election of candidates to the Commonwealth Parliament and other interested persons are aware of the true actors and interests concerned when statements are made or information is provided on political matters. So understood, not only is that purpose legitimate, as consistent with the constitutionally prescribed system of representative government, it serves to protect it. Such a purpose may be a very important factor in the justification of a law.

It should be noted here that, although the focus of argument in this Court was upon political communication on behalf of a foreign principal directed to the general public, the defendant, rightly, identified a purpose of the Act as being to minimise the risk of undisclosed foreign influence upon the integrity of governmental decision‑making.

The extent of the burden

The defendant correctly submits that whilst the extent of the burden effected by the requirement of registration in connection with communications activity is not relevant to the threshold question as to whether justification is required, it may assume some importance when considering what has to be justified and the questions to be addressed in that process. It most clearly assumes relevance to the question whether a law is necessary in order to achieve its purpose and to the question whether it is adequate in its balance, where the burden effected is considered in light of the importance of the purpose sought to be achieved.

It is instructive to observe what political communication is not affected by the relevant provisions of the FITS Act. As the defendant points out, the Act does not place any burden on a person in Australia engaging in political communication on their own behalf, unaffected by any relationship with a foreign principal. To illustrate this point it may be observed that if the plaintiff had not entered into an arrangement with the ACU it could have conducted the CPAC event without incurring an obligation to register.

Foreign governments and other foreign principals may also communicate ideas and information to those in the Australian political or governmental sphere or to the Australian public without registering so long as the ideas and information are communicated directly by them. It is only if they are communicated through an intermediary, which has the effect that the source of the ideas or information conveyed is disguised, that registration becomes necessary under the FITS Act.

Contrary to the plaintiff's submissions, the FITS Act, in its provisions respecting communications activity, does not operate directly on political communication and is not discriminatory. It does not prohibit political communication and does not seek to regulate its content. The FITS Act is directed to exposing the relationship between the person making the communication and the foreign source.

In submitting that the provisions of the FITS Act requiring registration have a deterrent effect on persons who might wish to engage in political communication, the plaintiff's submissions place some weight upon the criminal sanctions which are imposed for breach. True it is that criminal sanctions are imposed for failure to register or renew registration or failure to fulfil the responsibilities of a registrant in order to deter non-compliance. But the offences are not directed to the making of political communication; rather they are directed to ensuring that the exposure of the relationship between the maker and the foreign principal is achieved.

Proportionality analysis.

Suitability

The test of suitability requires that there be a rational connection between the purpose of the statute in question and the measures adopted by it to achieve that purpose. This is an enquiry which logic demands. In this case the purpose of minimising the risk of influence being exerted by foreign principals on Australia's political or election processes is sought to be achieved by measures which seek to make transparent the identity of the foreign principal on whose behalf the person making the communication or providing information intended to influence acts. Clearly, both disclosure by direct means and making publicly available the name of the person and their foreign principal through the process of registration have the requisite connection to the purpose of the FITS Act.

The question is not whether the FITS Act can be seen to have application to the plaintiff's circumstances. It is whether there is a rational connection between the statutory purpose and the requirement of registration. Clearly there is.

Necessity

This aspect of proportionality analysis involves the enquiry whether there is an alternative measure available which is equally practicable and at the same time is less restrictive of the freedom and which is obvious and compelling[84]. The test of reasonable necessity has consistently been applied in cases involving the implied freedom and in cases concerning the s 92 freedom, where it has been held to be a doctrine of the Court.

In circumstances such as these, if what is conveyed by way of political communication is further disseminated by those receiving or reading the communication the disclosure of the relationship between the person making it and their foreign principal may not be more widely published. Information or opinions which might be influential may gain currency within political discourse or public debate without the source of the communication being revealed. This is the very risk which the FITS Act seeks to prevent. Registration enables both the relationship between the person and their foreign principal and a description of the political communication undertaken by the person in that capacity to be matters of public record.

It may also be said that, in the nature of things, those persons most interested in, and capable of, subjecting to scrutiny the interests of a foreign participant in the political affairs of this country will be members of the commentariat, such as journalists. The skill and experience of the commentariat, if brought to bear, can ensure effective disclosure of the nature and extent of foreign interests at play in the affairs of this country that might otherwise remain undisclosed or dimly understood. The requirement of registration established by the FITS Act allows the commentariat to be alerted to the presence of foreign influencers in public affairs, and thus enables public debate to be informed in a way that would not be achieved by source disclosure to the recipients of a particular communication at the time of the communication.

Both disclosure and registration are necessary for the achievement of the FITS Act's purposes.

Adequacy in the balance

Recently it has been confirmed that a law is to be regarded as adequate in its balance unless the benefit sought to be achieved by the law is manifestly outweighed by the adverse effect on the implied freedom. In this regard a powerful public, protective purpose assumes a special importance. The FITS Act clearly has such a purpose. The limited submissions made by the plaintiff on this topic do not deny that the purpose of the FITS Act is protective of Australia's political and electoral processes. That important purpose cannot be said to be outweighed by a burden on the freedom which is modest.

Conclusion:-

a) Is the Foreign Influence Transparency Scheme Act 2018 (Cth) invalid, to the extent it imposes registration obligations with respect to communications activities, on the ground that it infringes the implied freedom of political communication?

Answer: No.

b) In light of the answer to question 1, what relief, if any, should issue?

Answer: None.

c) Who should pay the costs of and incidental to this special case?

Answer: The plaintiff should pay the defendant's costs.