The High Court has struck down a Victorian law favouring major parties, but the bigger test lies ahead – whether federal electoral changes unlawfully entrench incumbency and disadvantage challengers.

The High Court this year will decide on the validity of significant changes to Commonwealth electoral laws passed last year after a deal between the Labor government and the Liberal and National Coalition that will crucially limit campaign spending by minor parties and independents.

Parties challenging the Commonwealth law had hoped that a decision on Wednesday this week by the High Court about a Victorian electoral law that favoured the major parties over independents and other candidates might deal with some of the issues they will be raising.

However it was not to be. Although the High Court was unanimous in overturning the Victorian law, the judges did not have to deal directly with the issues that will be argued in the litigation over the federal law.

This was partly because the Victorian authorities virtually conceded that their law exceeded constitutional limitations on freedom of political communication.

The High Court unanimously decided that a Victorian law that would have greatly benefited the Labor, Liberal and National Parties in coming state elections was invalid. The law would have allowed the three major parties to receive gifts from associated entities far in excess of an indexed general cap on political donations of just $4,000 – $4,970 this election year.

The associated entities of the major parties have assets of many millions of dollars. Under the law passed by the Victorian Parliament there would have been no cap on the donations they could make to their respective parties.

Over the past 30 years the High Court has held that the Constitution includes an implied freedom of political communication. The Victorian law was challenged on the grounds that it impermissibly burdened that implied freedom.

The Court had to decide:

1.  Whether the law effectively burdened freedom of communication about governmental or political matters in its terms, operation or effect.
2. Was the purpose of the law legitimate, in the sense that it was compatible with the maintenance of the constitutionally prescribed system of representative and responsible government,
3. Was the law reasonably appropriate and adapted to advance that purpose in a manner that was compatible with the maintenance of that constitutionally prescribed system of government.

The main challenge to the law was not about whether its purpose was legitimate but whether it placed the major parties in a privileged position over independent candidates or new registered political parties in respect of the sources of funds available to be used for political expenditure.

Those challenging the law claimed it involved an ‘abuse of incumbency’ and that purpose was illegitimate.

But effectively this was conceded in submissions by the Victorian Government. Its main concern was to limit how much of the part of the Act dealing with donation limits would be struck down by the court.

However the High Court decided it wasn’t possible to save any of the challenged law. Victoria will now have to bring in new legislation if it wants to limit political donations for the coming state elections.

Although the main challenge to the new federal law will be about expenditure restrictions rather than donations, the ‘abuse of incumbency’ argument is equally important.

The fundamental issue is whether the ‘maintenance of that constitutionally prescribed system of government’ allows for a system that seriously disadvantages minor parties and independents.