Allowing companies to sue is a threat to free speech, writes contributing editor for The Monthly, Paddy Manning.

At the very same time that the banking royal commission is proving beyond doubt the value of the investigative journalism practised by reporters like Adele Ferguson, whose “Banking Bad” series helped trigger the inquiry, the NSW government has come up with a proposal to restore the right of companies to sue for defamation.

Media experts warn the proposed changes will have a chilling effect on business coverage, but the proposal is backed by the NSW Bar Association – whose members stand to benefit from what is already a lawyer’s picnic. Last Friday, the Council of Attorneys-General meeting in Perth agreed that NSW would lead a review of the Model Defamation Provisions. The idea should be nipped in the bud.

The proposal is one of several in this long-delayed review of the Defamation Act, released by NSW Attorney-General Mark Speakman, as Fairfax Media reported last Thursday. The review notes that corporations were restricted from suing originally to stop them engaging in so-called SLAPP suits (Strategic Litigation Against Public Participation), because “reputation” is principally a personal right, and because corporations had other avenues to defend their reputations.

Judge Judith Gibson: large corporations are “commercial entities with commercial remedies available to them … If you’re a big company, you don’t need to sue for defamation”

However, the review notes that Australia was at odds with other jurisdictions, such as the UK, where the defamation law was overhauled to allow corporations to sue for defamation where they can prove “serious harm” from a publication, such as actual or likely serious financial loss. The review says the balance struck in our Model Defamation Provisions “continues to be appropriate”, but may need to be amended.

Media academic and former SMH editor Peter Fray, a co-director of the Centre for Media Transition at UTS, told The Australian [$] that the proposed law change could have “a chilling effect on journalism and the work and operations of journalists”.

District Court judge Judith Gibson told the paper that large corporations were “commercial entities with commercial remedies available to them … If you’re a big company, you don’t need to sue for defamation,” she said. “Imagine NAB being able to sue for defamation? We wouldn’t have had a banking inquiry – we would have had a queue to the cliff to jump.”

We don’t need to go far back to find business attempts to bully the media and stop critical reporting. Only on Friday, investigative journalist Michael West tweeted an important story – headlined “Crushing Dissent” – which canvassed numerous threats to his small independent website and revealed that he was being threatened by not one but two law firms acting for billionaire Lee Seng Huang, chair of aged care group Aveo, and Aveo’s chief executive and chief financial officer.

The firms were claiming defamation, and demanding an apology and compensation, and that he remove the offending article (which is still online, including this statement in response by Aveo). “Permitting corporations to sue would present a carnival of fees for lawyers,” West wrote, “but a heavy cost for taxpayers and investors and, in light of the seemingly inexorable rise in corporate power, will undermine Australia’s democracy”.

His story has been retweeted almost 800 times, adding to Aveo’s unexpected burst of bad publicity from the exploits of the #poojogger. With a Senate inquiry into aged care looming, it would be fair to say Aveo is on the back foot.

A couple of years ago, at the height of the ridiculous, drawn-out debate about whether to amend section 18C of the Racial Discrimination Act – to restore the right to insult and offend people based on their race, colour, ethnic or national origin – investigative journalist Michael Bachelard wrote this cracking piece. In it, he argued that defamation law, not 18C, is the real free speech issue in Australia, and highlighted the hypocrisy of many of those fighting to amend 18C, on free speech grounds, but who had themselves sued for defamation.

The threats to free speech are piling up so fast it is hard to keep track: check out this list [$] of evidence that Australia is becoming a police state, by Crikey’s Bernard Keane yesterday, which he’s added to today. Throw in misuse of the defamation law to intimidate journalists, and it’s getting very bleak indeed.

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This story, A Backward Step, first appeared in The Monthly. Author Paddy Manning is a veteran journalist covering business, politics and the environment.

He has worked for The Australian and Sydney Morning Herald and is also the author of Born to Rule: the unauthorised biography of Malcolm Turnbull, and Boganaire: the Rise and Fall of Nathan Tinkler.

Paddy has also written the following investigation for michaelwest.com.au on the gun lobby and political donations in Australia.