Federalism and the

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Federal Constitutional Law

Week 1 – Introduction and Constitutional Interpretation and Characterisation

1.1 Introduction

Doctrine of immunity of instrumentalities – each of the Cth and States are sovereign within their spheres of power and have to be free from interference from, or the imposition of burdens by, other governments.

- D’Emden v Pedder 1904 – State Stamp duty did not apply to receipts for Commonwealth Salaries. The ‘rule of

‘d’emden and Pedder was that State trading was immune from Cth control with respect of State tradign’

o When a State attempts to give to its legislative or executive authority an operation which if valid, would fetter, control or interfere with the free exercise of the legislative or executive power of the Cth, the attempt unless expressly authorised by the Constitution would be invalid and inoperative

- Deakin v Webb 1904 – State income tax did not apply to Cth Salaries

- Railway Servants Case – and others, State agencies were protected from the Cth laws e.g. Cth industrial relation laws.

Doctrine of Reserved State Powers – the constitution established a Cth with limited specific powers but plenary power remains with the States. Section 106 and 107 preserve state powers.

- Commonwealth powers are to be interpreted in light of the federal distribution of powers so that they do not unduly infringe upon State powers and that limits on one commonwealth power are not undone by the expansive interpretation of another Commonwealth power.

Federalism and the

Engineers Case

Facts; The Engineers Case arose from a claim by a union of Engineers in the Cth Court of Conciliation and Arbitration for an award relating to 843 employers across Australia, including 3 governmental employers in WA.

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4 Issue; Whether a commonwealth law made under the ‘conciliation and arbitration power’ s51xxxv of the Constitution, could authorise the making of an award binding those three employers.

Key; The doctrines of immunity of instrumentalities and reserved state powers were ‘exploded’ i.e. rejected. The court accepted that previous decisions had been inconsistent ¹and were difficult to apply.

- ‘Political Theories’ of federalism were rejected on the ground that they were subjective and ‘political’ rather than

‘judicial’ in nature.

- Reliance on US authority was criticized as inappropriate because we are under the Crown and system of responsible government

- The majority thought it a ‘profound error’ to ‘find our way through our Constitution by the borrowed lights of decisions and dicta of American Courts’

On Interpretation

- The majority placed emphasis on the text of the Constitution but did not advocate stark literalism.

o The text should be interpreted in light of the state of the law (including the common law) at the time it was passed

- The text has to be read as a whole – avoided literalism

- When the text is ambiguous, recourse must be had to the context and scheme of the Constitution - 109 of the Constitution gives Cth laws supremacy over State laws.

o There are no reserved state powers o And No state immunity from Cth laws

- The ability to prevent the Cth Parliament abusing its powers rests in the people, through elections.

Conclusions –

The one clear line of judicial inquiry as to the meaning of the Constitution must be to read it naturally in the light of the circumstances in which it was made, with knowledge of the combined fabric of the common law

and the statute which - preceded it.²

- Supremacy of the Federal Constitution – in the case of repugnancy the State laws must give way where the federal laws are justified and within power.

o The supremacy was established through express words in the Constitution

s109 Constitution Inconsistency of laws

When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.

Payroll Tax Case (Victoria v Cth) 1971

Windeyer in this case argued that the HCA were not wrong in their Constitutional interpretation. Rather, by 1920 the Constitution had to be read in the new light of Australia’s development of nationhood. The constitution’s interpretation may ‘vary and develop in response to changing circumstances

- His statement in this case is not a ‘statement of legal principle…but an encapsulation of the political and economic development of Australia as a nation which could just as easily have been authored by a political scientist’ Gageler [260 BW]

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2 P257 B&W

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5 - Gaegler defends the reasoning in the Engineers Case as reflecting the vision of the structure and function of the

Constitution

RTE Latham criticised the majority in Engineers for failing to state the real reasons behind its judgement. He saw it as self- contradictor as it purported to rely on the text but was really based on political views about Australia as a nation and the need for a central power. ³

Political Philosophy and Constitutional Interpretation

- Constitutional interpretation is strongly influenced by a judge’s political philosophy and understanding of constitutional history

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Gageler J (BW 260) sets out his understanding of Australia’s history, which supports expanded Commonwealth power and rejects the notion of federalism

as a check on power

- Others would take a completely different view of that history – eg that the system of federalism, rather than unification, was chosen deliberately to limit Commonwealth power and that the framers intended to have strong States with great responsibilities and a small Commonwealth Government with limited responsibilities

Legalism

Owen Dixon; ‘Federalism means a demarcation of powers, and this casts upon the Court a responsibility of deciding whether legislation is within the boundaries of allotted powers’

- He explained that the role of a Court was to ‘interpret a constitutional description of power or restraint on power’ and say whether it falls on one side of a line or the other. ‘It has nothing whatever to do with the merits or demerits of the measure’.

o Concluding that;

§ Close adherence to legal reasoning is the only way to maintain the confidence of all parties in Federal conflicts…even though it may come across as excessively legalistic…there is no safe guide to judicial decisions in great conflicts than strict and complete legalism

Legalism Does not Provide Mechanical Answers to All Legal Questions

- The constitution does not provide clear mechanical answers to all questions

- For example how can a judge decide the scope of Commonwealth legislative power without holding a theory of federalism? How can he or she reconcile different heads of power with each other?

Literalism

- Barwick; The HCA reached the height of its formalistic or literal approach to the Constitution. Form tended to prevail over substance particularly in relation to tax evasion and s 92.

- Justice Heydon; Heydon (BW 172) has contended that ‘no-one advocates’ the examination of words in isolation.

In practice, judges take into account the Constitution as a whole and the historical context into which it was enacted. Even Engineers acknowledged as much

- Since Barwick’s time – HCA has shifted its emphasis to substance over form.

1.2 Constitutional Interpretation and Characterisation Use of Historical Materials

The movement towards federation and the establishment of the Cth was punctuated by the two national Australasian conventions of the 1890s. Though there were other events surrounding both the drafting of the Constitution etc, the

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6 conventions were pivotal in providing a form for detailed debate and discussion about the provisions of the Constitution. A full record of the proceedings were kept.

- Attempts by Counsel to draw upon the Convention Debates to support a particular interpretation of constitutional provisions were strongly rejected; Drawbacks Case

Drawbacks Case 1904

O’Connor J; would not permit reference to the debates justified by saying that in this respect constitutional interpretation was the same as statutory interpretation.

- The only ‘safe rule is to look at the Statute itself, and to gather from it what is its intention’

- If the meaning is plain and clear ‘ we have nothing to do but obey it and administer it as we find it…

- The intention of the enactment is to be gathered from its words – if the words are plain effect must be given to them if they are doubtful then the intention of the legislature is to be gathered form the other provisions of the statute aided by a consideration of surrounding circumstances.

- You may deduce the intention of the legislature from a consideration of the instrument itself in the light of facts and circumstances but you cannot go beyond it

The unanimous decision in Cole v Whitfield 1988 – marked a break from this restrictive tradition. The court held that the relevant debates and history of a provision could be used for the purpose of identifying the contemporary meaning of the language used, the subject to which that was directed, and the nature and objectives of the movement towards federation – BUT NOT for the purposes of substituting for the examining fo the words used ht escope and effect – which the founders subjectively intended the section to have.

Cole v Whitfield

Reference to the history of s92 may be made not for the purpose of substituting for the meaning of the words used the scope and effect – if such could be established – which the founding fathers subjectively intended the section to have, but for the purpose of identifying the

contemporary meaning of the language used, the subject to which that language was directed and the nature and objectives of the movement towards federation from which the compact of the constitution finally emerged

- So – they went back to the beginning – 1902 – yes you can look at the convention debates BUT only for certain purposes

o With the qualification that it isn’t to look to the subjective intention of the framers o It’s to look at the context of it or what did the words mean at the time -

Original Intent – The Intention of the Framers

There are different forms of originalism

- The court favours textual originalism NOT intentional originalism

- Overriding originalism – the wishes of the framers are paramount, overriding the palin meaning o f the text - Modified Originalism – the plain meaning of th text is applied but where there is ambiguity – original intent is

controlling.

- Textual originalism – one looks to the meaning the words would have had to a reaonsable, informed person at the time they were enacted

- Intentional Originalism – one seeks to discern the actual subjective intentions of those who framed the Consitution.

Arguments in Favour

- The constitution was approved by the people and gives the right to the people to amend it. The courts should not usurp this power

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Week 3 Inconsistency and External Affairs

3.1 Inconsistency

Where the power to legislate is concurrently held by States and the Commonwealth – s109 provides a mechanism to resolve conflicts between laws.

This is achieved by giving the Commonwealth overriding force.

APPLICATION;

For s 109 to apply there must be a valid state law and a valid commonwealth law. If either is beyond power, not conflict of laws arises.

S 109 – applies to laws; i.e. legislation and subordinate legislation – but not administrative orders issued under Cth regulations.

- Also applies to Cth industrial awards but does NOT apply to the Common Law

S109 only deals with inconsistency between laws of a State and laws of the Commonwealth. It does not deal with conflicts between the law of a Territory and the Commonwealth (see Same-Sex Marriage Case).

- Commonwealth law prevails over territory laws, because the territory legislature is subordinate to the Commonwealth Parliament and established by it.

The meaning of invalid

Initial Step; accordingly the initial step is to determine whether the Cth and State laws are valid - I.e. did the respective parliament have the power to enact them?

- Therefore, the term ‘invalid’ is misleading – When a state law fails on ss 109 it is NOT invalid in the sense that it was beyond power – it merely ceases to operate HECE Carter v Egg and Egg Pulp Marketing Board (Vic) (1942) (BW 332) and Western Australia v Commonwealth (Native Title Act Case) (1995) (BW 297-8))

o The Federal Law Prevails.

A State law is only invalid to the extent of the inconsistency.

- The inconsistent part may be interpreted narrowly or read down so that it is not inconsistent with the Commonwealth law – hence statutory interpretation may be used to resolve potential conflicts

- Where the rest of the State law is not directly inconsistent with the Commonwealth law, and the Commonwealth has not covered the field, the rest of the State law will continue to apply validly.

APPLICATION;

If the inconsistency is removed (eg the conflicting Commonwealth law is repealed or expires because of a sunset clause), then the State law takes full effect again (as long as it remains on the statute books and has not been repealed).

- Inconsistency with the Commonwealth Constitution; If a State law conflicts with the Commonwealth Constitution, it is invalid (i.e. there was no power to make it), whereas;

o if a State law conflicts with a Commonwealth law, it is merely inoperative to the extent of the inconsistency, but may become operative again if the inconsistency is removed.

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Direct inconsistency

Impossibility of Obedience Test; This is where it is impossible to obey both laws i.e. a ‘logical impossibility’ where the Cth imposes a prohibition on conduct and the State Law requires the Conduct.

- R v Brisbane Licensing Court; Ex parte Daniell (BW 298) – The Commonwealth Electoral Act prohibited the holding of State votes or referenda on the same day as a Commonwealth election, while the State law provided for the holding of a local referendum on the same day. It was impossible to obey both laws, so there was a direct inconsistency

Denial of Rights Test; Where one law purports to confer a legal right or entitlement that the other law purports to take away or diminish i.e. the Cth provision in Colvin v Bradley Brothers affirmed that employers could employ women on certain machines whereas the State provision made it an offence to do so.

- It was possible to obey both laws, since nothing in the Cth law required the employment of females

o However there is still inconsistency because the State law seeks to restrain activity which is authorised by the Cth law and vice versa

Clyde Engineering Co. Ltd v Cowburn (1926) 37 CLR 466

‘Two enactments may be inconsistent although obedience to each of them may be possible without disobeying the other. Statutes may do more than impose duties: they may, for instance, confer rights: and one statute is inconsistent with another when it takes away a right conferred by that other even though the right be one which might be waived or abandoned

without disobeying the statute which conferred it’.

• (Knox CJ and Gavan Duffy J, BW 301)

Indirect inconsistency

If the commonwealth law evinces a legislative intention to ‘cover the field’ and a State law also operates in that same field – there need not be any direct contradiction between the enactments.

- It may be that both enactments require the same conduct or have the same purpose

- Imputation on the Cth law- that the parliament had a legislative intention that its law shall be all the law there is on that topic

- Two questions must be asked; Telstra Corporation Ltd v Worthing (1997) 197 CLR 61 o Is the Cth law INTENDED to be exclusive – i.e. the only law on the topic?

§ This test was first adopted by Isaacs J in Clyde Engineering Co Ltd v Cowburn (1926) (BW 301).

He said that if a competent legislature expressly or impliedly evinces its intention to cover the whole field, that is a conclusive test of inconsistency where another legislature assumes to enter to any extent upon the same field

§ Factors to Consider When Covering the Field;

• Is the Commonwealth law so detailed that it is clearly intended to cover the entire subject to the exclusion of State laws? (O’Sullivan v Noarlunga Meat Ltd, per Fullagar J).

• Does the legislation evince an intention to cover the field to the exclusion of State laws, or not? If the purpose of the Commonwealth law would be undermined by the application of State law, then this may indicate an intention to cover the field - Australian Mutual Provident Society v Goulden (1986) (BW 306)

o Does the State law operate in the same field?

There will be inconsistency where the answer to both questions is YES

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38 - Second – the law must select “means which are reasonably capable of being considered appropriate and

adapted to achieving the purpose or object of giving effect to the treaty, so that the law is one upon the subject matter…

• Whether recommendations of international bodies were sufficient to support a law was not determined although B&W considered that elsewhere in the judgment it was suggested that recommendations would not be sufficient to support legislation. There was, however, no clear majority ruling on the point.

Summary on Treaties;

1. S 51(xxix) is ‘subject to this Constitution’ and therefore subject to express or implied limitations, such as s 92, 116, 117 or implications derived from the separation of powers

2. The treaty must be ‘bona fide’ or ‘genuine’: is it a grab for power that it doesn’t have granted under s51 or genuine 3. The law must implement, in whole or in part, the treaty –i.e. this aspect of the power is purposive. The law must be capable of being reasonably considered as appropriate and adapted to achieving the implementation of

the treaty (i.e. not just a bare attempt at accumulating new powers by the Cth)

4. The law must implement treaty obligations that have a reasonable level of specificity. Aspirations which give no direction as to how they are to be fulfilled, cannot support a law under s 51(xxix).

5. No need now for there to be a matter of “international concern” - the mere fact a treaty has been entered into establishes this fact (broad view). No need for court to enquire further.

International Recommendations

Can you implement these? The IR case was ultimately inconclusive – because there were also convention obligations in that case.

Evatt and McTiernan in Burgess – suggested laws implementing ILO recommendations were within the EA power.

The Joint judgement in the IR case said laws can be supported if the terms of the recommendation can reasonably be regarded as appropriate and adapted to giving effect to the conventions to which they relate – hence only if the

recommendation offers a guide to the implementation of a treaty will it be sufficient to support laws made under s51 EA

- In the IR case the court said that they thought recommendations would be sufficient to support the EA power but only if the recommendations were in themselves regarded to be sufficiently adapted to the convention itself - Pape v Commissioner of Taxation (2009) 238 CLR 1

G20 recommendation that member states introduce ‘fiscal stimulus packages’ to help constrain the damage to the global economy from the GFC. Rudd government introduced Tax bonus for working Australians act.

Argued that the GFC was an international concern and affected relations with other countries – both of these were rejected.

They then argued that the law was valid as a result of the G20 declaration – Heydon; held that the G20 document is no more that aspirational no detail on fiscal measures. Completely left up to governments on whether to use such measures and if so…which ones.

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41 Held; Meaning of the power does not change but its application depends on facts e.g. size of conflict, nature of the conflict, dangers, course of the war) and as facts change so does its operation

- Validity of a provision “depends on the nature and the dimensions of the conflict that calls it forth, upon the actual and apprehended dangers, exigencies and course of the war, and upon the matters that are incident thereto - Given the nature of the conflict and its effects on shipping the provision was judged as valid

o Starke – thought there was no connection between marketing of apple and pear marketing but this is because he thought the defence power is a SM power.

Stenhouse v Coleman (1944)

Facts; HC: upheld wide discretionary power to regulate “essential articles” as long as they had “a real connection” with defence

› Majority: difficult for Court to examine whether a provision is incidental or conducive to conduct of a war.

Facts may be secret, cannot be canvassed publicly by a court for fear of prejudicing national interest.

› Evidence to the existence of those facts may be difficult to prove in regular court proceedings (rules of evidence etc). Judges must depend on general public knowledge

› Dixon J stated that the defence power is different from most other powers because it involves the notion of purpose, whereas most other powers concern commercial activities or classes of public service, etc.

› You need to deuce the object or purpose from the rule in question; the character of the conflict itself is most important – this is the justification for the provision

› The ‘purpose must be collected from the instrument in question, the facts to which it applies and the circumstances which called it forth’.

› In grave emergencies it may be necessary to assume control of greater part of human and material resources of the nation. This would not be justified during peacetime (‘elastic approach’). This approach may allow very broad powers during war, which may outlast the end of the war when conditions appear to have returned to normal.

Summary of the Nature of the Power;

› Elastic’, waxes and wanes

› Purposive power, not a subject matter power – a law is valid not because it is on the subject of defence, but because it may reasonably be conducive to a defence purpose (also Polyukhovich v Cth (1991) (War Crimes Act case)). Cf Starke J (diss) in Andrews v Coleman

› Scope of power determined by facts – courts take ‘judicial notice’ of nature, conduct of war etc

› Scope of ‘judicial notice’ – no need to show the measure will help lead to victory, only that it can reasonably be regarded as one that might achieve a defence objective. ‘Facts’ can be difficult to prove in court – hence, substantial judicial deference to views of other arms of govt. Hence the scope during ‘total war’ can be very wide indeed.

› Despite deference, courts must make a decision on validity under const. law principles (HC is ultimate arbiter of constitutionality, not the Pment (principle of “the stream does not rise above its source”)

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Intergovernmental Immunities – ... 127

Trade and Commerce Power s51(i) – Subject Matter Power ... 129

External Affairs Power – ... 131

Freedom of Political Communication – Constitutional Implication as a Limit on Legislative Power (Lange). ... 135

Defence – Purposive Power – Proportionality Applies ... 138

Nationhood Power – s61 ... 139

Corporations Power – s51(xx) ... 139

Race Power Scaffold ... 142

Grants - 96 ... 143

Appropriations... 145

Taxation ... 146

Freedom of Interstate Trade – s92 ... 148

Excise Duties – Only the Cth can impose Excise and Customs Duties ... 151

Acquisition of Property s51(xxxi) ... 152

Intergovernmental Immunities –

1. In an exam; 1. Consider whether the impugned law falls within a valid head of power, and then whether its scope is limited by impinging upon the Melb Corporation Doctrine.

TO what extent can the Commonwealth Affect the State?

1. The Commonwealth cannot in the exercise of its legislative powers, enact a law which

a. (1) Melbourne Corporation Doctrine; discriminates against or ‘singles out’ a State and imposes some special burden or disability upon a State or; (The following four points are from the Qld Electricity Commission Case)

1- a law which deprives a State of a right, privilege or benefit not enjoyed by others, so as to place it on an equal footing with others, is not covered

2- The Cth may abrogate a prerogative of the States without offending the prohibition against discrimination

3- Discrimination against States includes discrimination against a particular State by isolating it from the general law applicable to the others.

4- A Commonwealth law may be invalid for discrimination against a State, even if it also discriminates against and isolates some others from the general law

5- NB; Mere affectedness by a law is not sufficient to raise the discrimination ground Re Australian Education Union – Cth laws guaranteed State and Cth public servants certain minimum conditions, especially w.r.t. dismissals, however Victoria wanted to carry out some redundancies which the new Cth system prevented them from doing. The court had to consider whether this was an example of a law of general application which threatened the existence of a state or its capacity to function as a government. This was not sufficient to raise the discrimination ground as the purpose of the act was not to discriminate against Vic – their affectedness was caused by their own conduct thus couldn’t raise the discrimination ground.

b. (2) inhibits or impairs the continued existence of a State or its capacity to function. Tasmanian Dams

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141 iii. QLD Rail Case would apply to financial corporations as well as trading corporations by applying

State Superannuation Boards, which said financial are the same as trading when it comes to

‘sufficiently substantial’.

iv. EXAM APPROACH: Use common sense and try to argue in a logical and sensible way. If activities are substantial, but purpose is not (or vice versa) apply the best analysis of ‘substantialness 4. No Activities –

a. Purpose test is applied if a corp has no activities

i. If a corporation has so far undertaken no activities (because it is a shelf company) one must look to its constitution, including its objects and powers to determine whether or not it is a trading or financia

5. Government Corporations - Government bodies, incl. local councils, may be trading corporations, if they undertake substantial trading activities (Tasmanian Dam)

a. Hydro-Electric Commission was a government organisation but also a corporation because it generated and sold electricity, constructed and maintained works for its generation and operated power stations.

Substantial profits ($103m) and fulfilled regulatory role over licensing of electricians and electrical appliances.

b. It is not possible to treat an organisation as a trading corporation only in relation to its trading activities and then treat it as a non-corporation in relation to non-trading activities

6. Scope of Corporations Power – WHAT CAN THEY MAKE LAWS ABOUT under the Corporations Power?

a. Tasmanian Dam Case made it clear that the corporations power at least extended to:

i. (1) Laws with respect to the trading activities of trading corporations,

ii. (2) Laws that protected those trading activities and laws with respect to acts by trading corporations engaged in for the purpose of their trading activities (regulations)

b. Broadening of scope in Work Choices and Williams

i. Funding Grants – majority in Williams No 2 held that a law that merely grants money to a trading corporation is not supported by s51(xx)

1. I.e. funding grants are not supported.

ii. Work Choices – the power extends to laws about -

1. Regulation of activities, functions, relationships and the business of a constitutional corporation

2. Creation of rights and privileges belonging to it

3. The imposition of obligations on it, and with respect to those matters

4. The regulation of the conduct of those through whom it acts e.g. employees and shareholders; and

5. Those whose conduct is capable of affecting its activities, functions, relationships or business

iii. Majority in Work Choices essentially held that the Commonwealth has an almost unlimited capacity to regulate trading, financial and foreign corporations in Australia.

c. While the corporations power undoubtedly has enormous reach after Work Choices, it can still only be used to legislate with respect to constitutional corporations.

i. It is possible that the High Court might offset its wide reading of the scope of the corporations regulatory power with a narrower approach to what is a constitutional corporation.

1. They did note that ‘it is interesting to observe’ that Isaacs J in Huddart Parker had regarded “those domestic corporations, for instance, which are constituted for

municipal, mining, manufacturing, religious, scholastic, charitable, scientific and literary purposes and possibly others more nearly approximating a character of trading” as falling outside the class of trading or financial corporations.

Federalism and the

Federal Constitutional Law

Contents

Week 1 – Introduction and Constitutional Interpretation and Characterisation

1.1 Introduction

Federalism and the

When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.

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as a check on power

Legalism

1.2 Constitutional Interpretation and Characterisation Use of Historical Materials

Original Intent – The Intention of the Framers

Week 3 Inconsistency and External Affairs

3.1 Inconsistency

The meaning of invalid

Direct inconsistency

Indirect inconsistency

Summary on Treaties;

International Recommendations

Summary of the Nature of the Power;

Table of Contents

Intergovernmental Immunities – ... 127

Trade and Commerce Power s51(i) – Subject Matter Power ... 129

External Affairs Power – ... 131

Freedom of Political Communication – Constitutional Implication as a Limit on Legislative Power (Lange). ... 135

Defence – Purposive Power – Proportionality Applies ... 138

Nationhood Power – s61 ... 139

Corporations Power – s51(xx) ... 139

Race Power Scaffold ... 142

Grants - 96 ... 143

Appropriations... 145

Taxation ... 146

Freedom of Interstate Trade – s92 ... 148

Excise Duties – Only the Cth can impose Excise and Customs Duties ... 151

Acquisition of Property s51(xxxi) ... 152

Intergovernmental Immunities –

TO what extent can the Commonwealth Affect the State?