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Jeff McCloy disputes corruption findings over developments in New South Wales

A series of corruption findings in NSW over property developments are likely to be only the “disclosed tip of a much larger problem”, the High Court has been told. Michaela Whitbourn reports.

A series of corruption findings in NSW relating to property developments are likely to be only the “disclosed tip of a much larger problem”, the High Court has been told. The NSW solicitor-general, Michael Sexton, SC, has defended the state-wide ban on political donations from property developers as a wealthy developer seeks to have the laws struck down by the court. Lawyers for developer and former Newcastle mayor Jeff McCloy, who has admitted giving more than $30,000 in secret donations to Liberal candidates before the last election, claim the ban infringes the implied freedom of political communication in the Constitution.

Mr McCloy’s legal team have told the court there have been “only eight” instances in NSW over 25 years in which commissions of inquiry have “found corruption to have occurred in connection with property developments”.

They say the requirement that donors publicly disclose their payments is enough to safeguard the integrity of the political process because “the light of publicity is the surest scourge of potential corruption”. But Mr Sexton, who heads the legal team representing the state, says in written submissions to the court that “eight adverse reports over that period is no small matter, and there is good reason to think it is but the disclosed tip of a much larger problem”. A full bench of seven judges is expected to hear Mr McCloy’s challenge to the developer donations ban in June, although a date has not yet been set. Mr McCloy’s legal team have said their challenge extends to an entire division of the Election Funding, Expenditure and Disclosures Act, which also bans donations from the alcohol, tobacco and gambling industries.

But Mr Sexton points out that Mr McCloy does not have standing – a legally recognised interest or connection that allows a person to bring a court case – in relation to donations from other industries.

Sydney Law School professor Anne Twomey, an expert in constitutional law, said the question of standing will not be a major issue in the case.

“Even if the judgment itself only deals with the property developers [ban], if the reason for knocking that down would apply to the others, then they would generally be regarded by the state as being invalid and would be repealed,” Professor Twomey said.

The High Court ruled in December 2013 that a similar ban on donations by trade unions and corporations was invalid.

The Baird government announced a raft of proposed changes to political donations laws earlier this month, including a requirement for donations to be disclosed online and in real time for six months before an election.

Professor Twomey said a difficult issue that may arise is whether changes to donations laws that were passed after the developer donations ban – including caps on the maximum amount that can be donated to parties and candidates – meant the “continuing existence” of the developer donations ban was “harder to justify”.

Mr McCloy is also challenging the cap on donations, as his $10,000 contributions were in excess of the $2000 cap for individual candidates and $5000 cap for parties.

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