The High Court has upheld a state-wide ban on political donations from property developers, bolstering a corruption inquiry into secret donations from Nathan Tinkler and other business figures.
In a judgment delivered on Wednesday, a majority of the court rejected a claim that the ban was an impermissible restriction on the implied freedom of political communication in the Constitution.
It also upheld the validity of caps on the maximum amount that can be donated to individual candidates and parties in NSW, which are set at $2000 and $5000 respectively.
The decision removes a major obstacle to the Independent Commission Against Corruption releasing findings following its explosive inquiry last year into illicit political donations.
"These are provisions which support and enhance equality of access to government, and the system of representative government which the freedom protects," Chief Justice Robert French and Justices Susan Kiefel, Virginia Bell and Patrick Keane said in a joint judgment.
In a separate judgment, Justice Stephen Gageler said the provisions met the "compelling statutory object ... of preventing corruption and undue influence in the government of the state."
Justice Michelle Gordon arrived at the same conclusion, saying in a separate judgment that the "burden on the freedom of communication in relation to a property developer is slight" and would not stop developers voicing their support for a party or candidate.
But in a dissenting judgment, Justice Geoffrey Nettle said the ban on developer donations was constitutionally invalid, while the caps on donations were valid.
Premier Mike Baird said the state government had "argued the case for the validity of our state's stringent campaign finance laws during the High Court challenge" and it was pleased with the result.
"The decision opens the way for consideration of national reforms to political donations laws at COAG," Mr Baird said.
The Labor Opposition and the Greens said the majority decision pointed to the need for Parliament to act immediately to extend the caps on donations to local government elections.
"The High Court has put beyond doubt that these caps are legally valid," Opposition Leader Luke Foley said.
"It's crazy that Mike Baird and I can run for Premier and be subject to strict caps, while at the same time you can run for a ward of a suburban council without any limits on what you can raise and spend."
The Greens' anti-corruption spokesman, Jamie Parker, went further and said the donations bans "should also be extended to the mining sector where the potential for corruption has been exposed by the ICAC".
"Elections should be about the contest of ideas, not the contest of cash. Whether it is cash in a brown paper bag or buying a table at a fundraising event the community needs to be sure that politicians aren't being bought," Mr Parker said.
The challenge to the political donations laws was brought by developer and former Newcastle mayor Jeff McCloy, who admitted at ICAC to giving envelopes stuffed with $10,000 in cash each to then Liberal candidates Tim Owen and Andrew Cornwell in the back of his Bentley.
The corruption watchdog had delayed releasing its report in its inquiry into political donations, dubbed Operation Spicer, pending the High Court's ruling. However, it may still have to wait until the Supreme Court rules on a separate case brought by Mr McCloy, who is seeking an order restraining ICAC from delivering its findings because of an alleged appearance of bias.
In 2009 the Rees Labor government passed laws banning property developers from making political donations. The laws took effect on January 2010.
The same section of the Election Funding, Expenditure and Disclosures Act that bans donations from developers also bans donations from the alcohol, tobacco and gambling industries.
Operation Spicer resulted in 10 NSW Liberal MPs joining the crossbench or resigning from politics. It investigated allegations the NSW Coalition accepted money from developers before the 2011 election.
One of the donors was former coal billionaire Nathan Tinkler, whose property development company Buildev was lobbying for approval for a coal loader in the Newcastle suburb of Mayfield.
ICAC heard Mr Tinkler donated about $45,000 to the Nationals and another $66,000 to an alleged Liberal Party slush fund, Eightbyfive.
Chief Justice Robert French and Justices Susan Kiefel, Virginia Bell and Patrick Keane noted that ICAC and other bodies had published "eight adverse reports since 1990 concerning land development applications".
"Given the difficulties associated with uncovering and prosecuting corruption of this kind, the production of eight adverse reports in this time brings to light the reality of the risk of corruption and the loss of public confidence which accompanies the exposure of acts of corruption."
They also noted that "the risks that large political donations have for a system of representative government have been acknowledged since Federation", adding that "capping of political donations is a measure which has been adopted by many countries with systems of representative government. It is a means that does not impede the system of representative government for which our Constitution provides".
Mr McCloy was ordered to pay costs.
with Emma Partridge
