Banning foreign donations could be “tricky” and the Government would have to be very careful if it wants to avoid a High Court challenge, according to two constitutional law experts.

Labor is calling for a ban on foreign political donations as it tries to deal with the fallout from Labor senator Sam Dastyari, who allowed a Chinese-linked company to pay off a travel debt on his behalf.

The Opposition proposed the policy before the election but has ramped up calls since Senator Dastyari’s donations have been in the spotlight.

However, the Dean of the University of New South Wales’ law school, Professor George Williams, warned any ban would have to be “very carefully drafted” to avoid a trip to the High Court.

He said a ban should be limited to companies or people that were entirely foreign.

“Even if it is an entity or corporation that has its head office overseas or a strong connection to a foreign government … it’s possible to argue that if you have an Australian link, that you do have an entitlement to take part in the Australian process,” he said.

Professor of constitutional law at the University of Sydney, Anne Twomey, agreed there should not be an outright ban on every company with a link to a foreign country or government because it was possible for such a company to have a legitimate interest in Australia.

“From a definitional point of view it would be virtually impossible.”
Professor Twomey

There have been two recent High Court cases on political donations — both on New South Wales laws.

In 2013, the High Court ruled governments could not limit donations to people on the electoral roll, rebuffing an attempt from the NSW Government to ban political donations from companies or unions.

But in 2015, the High Court did allow a different change to NSW donations — capping political donations and banning property developers.

Prime Minister Malcolm Turnbull is yet to say whether the Coalition supports a ban, but some Liberal backbenches have backed it.

Donations could be limited to voters: PM

“There are powerful arguments, for example, to say that donations to political parties should only be made by Australians on the electoral roll,” he said.

“Fair enough and I think that’s a powerful argument, so you would eliminate companies, you’d eliminate unions.”

Liberal frontbencher Steven Ciobo made a similar suggestion earlier in the week on Sky News.

However Professor Twomey said that suggestion would not be legal.

“The High Court has held that corporations and unions and other bodies that are subject to laws do also have a role in political communication and influencing that through donations.”

“Therefore you couldn’t do that, that’s the one thing we can be sure about.”

She suggested defining foreign companies as any corporation without an Australian Business Number (ABN).

However, the company which paid Senator Dastyari’s travel bill has an ABN and would therefore not be banned under the definition.

— ABC