Property developer Jeff McCloy wants to take us back to the days when it was legal for developers to make donations to political parties.

McCloy case ‘credible’, could affect ICAC findings

CHALLENGE: Newcastle lord mayor Jeff McCloy.

CHALLENGE: Newcastle lord mayor Jeff McCloy.

NSW laws banning property developers from making political donations are ‘‘vulnerable’’,  and a ‘‘very credible challenge’’ could be mounted in the High Court by Newcastle lord mayor Jeff McCloy, with big implications for a corruption inquiry, a legal expert says.

The overturning of the ban would invalidate any finding that the Independent Commission Against Corruption may make arising from its current inquiry that Cr McCloy, or other property developers, illegally donated to the NSW Liberal Party, constitutional law expert Professor George Williams said.

Cr McCloy launched a challenge to the laws on Monday – the same day the ICAC announced it had broadened its campaign funding inquiry to include investigations of whether he and fellow Hunter developer Hilton Grugeon gave money to the 2011 Liberal bid for the seat of Newcastle, in breach of the ban introduced in 2009.

The inquiry, which is also examining alleged secret donations and payments by former coal billionaire Nathan Tinkler and property developer Buildev, will resume next week.

News of Cr McCloy’s challenge also comes amid a government-commissioned review of election funding laws and whether a shift to full public funding is feasible.

Yesterday,  Greens MP John Kaye described the challenge as ‘‘self-serving’’ and one that threatened to return the state ‘‘to the bad old days when developers were able to purchase approvals and laws that fattened up their profits at the expense of local communities’’.

‘‘If the Baird government fails to vigorously defend these laws, it will be very clear they are colluding with Jeff McCloy to reopen the doors of NSW politics to large-scale influence peddling,’’ Dr Kaye said.

Cr McCloy’s path to the High Court was paved by a successful Unions NSW constitutional challenge last year, when the court ruled invalid provisions of the laws that banned donations from unions.

Professor Williams, of the University of NSW, said the decision left ‘‘vulnerable’’ the remaining prohibitions including those on developer donations.

‘‘I’m not surprised to see someone challenging it, because the reasoning gives a credible case for doing so,’’ he said.

By ‘‘bringing the scheme down’’,  a developer would remove the possibility of an ICAC finding against them for donations, he said.

A spokesman for Premier Mike Baird said: “The government will defend the validity of the provisions.’’

The  funding review is not due to report until December 31, with the next election due in March.

Deputy opposition leader Linda Burney said the government should endorse Labor’s calls for an end to donations in favour of full public funding.

But Professor Williams said public funding would be  very  expensive and  was likely to be  unconstitutional.

‘‘Part of [the solution] is just having better enforcement. You’ve got problems where people can break the rules and actually nothing can happen. They’re not prosecuted, the penalties are quite minor,’’ he said.

Urban Development Institute of Australia NSW chief executive Stephen Albin described the current  ban as ‘‘discriminatory’’ but said developers ‘‘don’t necessarily want to donate’’.

‘‘When the laws came in, most of my members were happy … because they weren’t obliged to make donations and there was a time they were getting harassed by political parties to make political donations,’’ Mr Albin said.

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