LAWS2011: Federal Constitutional Law
TOPIC C: EXTERNAL AFFAIRS POWER (s 51(xxix)) C1. Interpretation
- S 51(xxix) Constitution provides that:
o The Cth P has the power to make laws, subject to the provisions of the Constitution wrt external affairs - Non-purposive (confirmed in Tasmanian Dam)
C2. The transformation principle
Basic premise of the transformation principle
- While international law and international treaties do bind Australia as a nation, they are not binding on the individual citizens of Australia unless they are enacted into Australian law by the Parliament
- Under s 61 of the C, the Government/Executive has a prerogative power to enter into international treaties and does not require a law to permit such entry into international agreements
- The application of those treaties in a way that binds Australian citizens requires an Australian law implementing them
- I.e., for an international treaty to be binding in Australian municipal law, the international treaty must be
transformed into Australian law; ratification of treaties falls within the province of the Executive as an exercise of the prerogative power, whereas the making and alteration of the law effecting that treaty falls within the province of the Parliament
- Authorities: Teoh; Koowarta; Chow Hung Ching; Dietrich v R – Kioa v West: Gibbs CJ – ‘treaties do not have the force of law unless they are given that effect by statute’
- NB: Prerogative powers have the status of common law, and are thus inherently subject to statute – i.e., can be taken away by Parliament
C3. International relations and geographic externality
International relations:
- Whether the subject matter of the impugned statute/provision is able to be characterised in such a way that it relates to the maintenance of good relations between the Cth and other nation states/international persons
o R v Sharkey (Sharkey principle): Where the subject matter can be shown to be that of maintaining the Cth’s international relations with other nation states, the Sharkey principle provides that such law is
constitutional, as international relations forms a criterion upon which the Cth Parliament can rely on to validly enact a law under the external affairs power
o Latham CJ (R v Sharkey):
§ ‘The relations of the Cth with all countries outside Australia… are matters which fall directly within the subject matter of external affairs’
§ Added that ‘the preservation of friendly relations with other dominions is an important part of the management of the external affairs of the Cth’
• Zines has also indicated that the law need not concern ‘friendly relations’ per se, so long as the law directly concerns ties with a foreign nation
o Brennan J (Koowarta)
§ Extended the Sharkey principle to include relations not just with other nation states but with international persons such as the UN and its various organisations (likely to be seen as correct today)
o Examples:
§ Plaintiff M68/2015: The agreement between Australia and Nauru for arranging non-citizens in Australia to be transported to Nauru was necessarily a matter which concerned Australia’s external relations (Gordon J’s view that a law can be valid by reference to its importance to Australia’s relations with other countries)
§ XYZ v Cth: Not ratio as Kirby J was in the minority – he was of the view that legislation that made it an offence for an Australian citizen to engage in ‘child sex tourism’ related to Australia’s relations with other nations and international organisations – Australia had to outlaw this behaviour to maintain good relations with them
Geographical externality
- Whether the subject matter of the impugned statute/provision is able to be characterised in such a way that it relates to matters that are geographically external to the Cth
- The subject matter of a law is considered to be ‘geographically external’ if the law relates to ‘places, persons, matters or things external to Australia’ (supported by a textualist approach to the phrase ‘external’ and ‘affairs’ by Dawson J War Crimes Act Case)
LAWS2011: Federal Constitutional Law
TOPIC E: Freedom of Interstate Trade (s 92) E1. Interpretation
- S 92 Constitution provides that:
o On the imposition of uniform duties of customs, trade, commerce and intercourse among the States, whether means of internal carriage or ocean navigation, shall be absolutely free
- Subject to this C à s 51 heads of power are subject to the s 92 prohibition
o I.e., If a Cth law is otherwise valid under a s 51 head of power, but breaches the s 92 prohibition, the law is invalid to the extent that it breaches that prohibition
- Trade and commerce
o Same interpretation to that of the definition under s 51(i)
o McArthur: T+C is to be interpretated by referring to the ordinary meanings of the terms as understood by businesspeople and not by reference to a legalistic interpretation by lawyers; Includes the mutual
communings, bargain, transport, delivery, etc. – not an exclusive list; Broad and non-exhaustive definition - Intercourse
o Movement of people between states - Shall be absolutely free
o Post-Engineers, HCA adopted the textualist approach, whereby the Court first interprets the words of the C and does not refer to any extraneous materials in doing so
o Because of the ambiguity of this phrase, a range of interpretations of s 92 emerged; Indeed, the vagueness of the phrase allowed two diametrically opposed interpretations of the words – see E3
E2. Historical Broad View of s 92 – Laissez-Faires
- Competing interpretations
o (1) Broad view – S 92 promotes the laissez-faire theory – guarantee of capitalism, free markets, individual freedoms, etc à Guarantee of laissez-faires economic principles, basically a complete prohibition of any govt regulation on T+C
o (2) Narrow view – S 92 simply prevents the erection of trade barriers between States - Bank Nationalisation Case
o Broad view upheld, that s 92 was to be interpreted as establishing a philosophy of laissez-faires
o Banking Act (1947) that aimed to create a government bank and prohibit the operation of private banks was invalid for breaching s 92
o Proviso: While s 92 did represent a form of laissez-faires protection to the economy, it did not mean that there could be no regulation at all of T+C; A degree of regulation is permitted so long as it does not undermine the ability to engage in T+C freely
- Led to an ‘utter state of confusion’; Uebergang v Australian Wheat Board Case
o A range of views emerged between the laissez-faires economic freedom view of s 92 on one hand, and the view that s 92 was a limited prohibited that prohibited creation of custom and trade barriers between the States
E3. Current Authority – Cole v Whitfield Test
Cole v Whitfield
- Departing from textualist approach in constitutional interpretation by HCA
o Given the ambiguity of the words, HCA said it was appropriate to examine the Convention Debates that occurred wrt the drafting of s 92
o Necessity compelled the courts to discern what the framers intended in s 92 o Historical origins of s 92 revealed that the purpose of the section was to
§ (a) Create a free trade area throughout the Cth without protectionist burdens; and
§ (b) To deny to the Cth and States the power to prevent/obstruct the free movement of people, goods and communications across state boundaries
- Accepted interpretation: S 92 prohibits discriminatory burdens against interstate trade of a protectionist kind (Mason J) (based on HCA’s resort to Convention Debates regarding the provision, and their departure from the orthodox textualist approach [392-3], [394-5])
o Thus rejected the broadest laissez-faires view of s 92 as was accepted in Bank Nationalisation Case o But also rejected the narrow view which was limited purely to fiscal/custom barriers of the borders o I.e., Court is anxious to maintain the freedom of interstate trade beyond the realm of what was stipulated
by the narrow view, but not to the extent of the laissez-faires guarantee of the broad view à moderate way
LAWS2011: Federal Constitutional Law
TOPIC F CONT’D: GRANTS (s 96) F9. Interpretation
- S 96 Constitution provides that:
o P may grant financial assistance to any State on such terms and conditions as the P thinks fit
- ‘Financial assistance’
o General revenue grants (grants to compensate states for foregoing incoming tax) and special assistance grants (made occasionally to adjust financial inequalities between the states) à now replaced by GST revenue grants under New Tax Administration Act
o Specific purpose grants à grants made with conditions attached to the way money can be spent, usually for a specific purpose
- ‘On such terms and conditions as the P thinks fit’
o The concept of ‘conditions; should be interpreted broadly and not narrowly (Federal Roads reinforced in Moran)
o Has been interpreted liberally wrt the grants power being used in combination with the tax power s 51(ii) à any condition as long as it is not coercion (The Uniform Tax Cases Latham CJ, Dixon J)
o Has been interpreted strictly wrt the grants power being used to curtail civil rights and liberties
F10. The Grants Power and Tax Power – ‘A Colourable Device’
The First Uniform Tax Case; Latham CJ: Rejection of colourable device, broad conditions, legal coercion is not permitted - Income Tax Act
o A tax Act that imposes high rates of tax, if it does so uniformly (and thus not in breach of the anti- discrimination requirement under s 51(ii), is valid (even if it is so high that it effectively, politically, and economically precludes the states from collecting their own tax)
- State Grants (Income Tax Reimbursement) Act
o Nothing in s 96 prohibits discrimination – the Cth can discriminate when making grants
o The phrase ‘on such terms and conditions as the P thinks fit’ implies a broad power à a condition that the states themselves don’t impose tax in order to receive the grant is valid
- Provision compelling citizens to prioritise Cth tax payments – majority said was within power or was valid by invoking the implied incidental power
- Income Tax (War Time Arrangements Acts) – valid on the basis of the defence power
- Court rejected that if the four statutes were looked at in combination, that they effected a ‘colourable device’ to overcome the limits in s 51(ii) to prohibit discrimination between states
- Court instead examined the statutes individually - Leading judgement: Latham CJ
o (1) The Cth can use the grants power to induce a state to exercise its powers and to abstain from using its power
§ S 96 can be used to induce positive conduct or to discourage a state from negative conduct o (2) While inducement is permitted legal coercion is not
§ The state cannot be coerced to accept the grant – Cth cannot in any way make the acceptance of money and the attached conditions compulsory
§ The state must always be allowed to decline the grant
§ However, pure political or economic compulsion is permitted – any indirect compulsion, as long as it is not legal coercion to compel the states to accept the grant, is permitted
o (3) Rejected the argument that the practical effect of the Acts was to destroy the ability of the state govts to exercise an essential govt function, to collect revenue
§ Rejected on the basis of war time – was not intended to undermine the ability of the state to raise revenue
The Second Uniform Tax Case; Dixon J: ***Cannot make the states behave unconstitutionally
- Affirmed that Income Tax Act did not discriminate so it did not breach s 51(ii) and was a valid taxation statute - Priority provision was invalid
o Overturned The First Uniform Tax Case decision, where it was held that the provision could be valid under the implied incidental power
o Priority provision could only be valid as an exercise of the incidental power if taxation was for federal purposes – i.e., the law had to be incidental to the collection of federal taxation
o The priority rule did not come within the implied power because its purpose was not incidental to the main power of collecting revenue for federal purposes à its purpose was to exclude the operation of the states in collecting income tax which is not a federal purpose
