Opinion No. 1900
COMMONWEALTH COAL SUBSIDIES: COMMONWEALTH POWER TO PROVIDE BOUNTIES TO PARTICULAR QUEENSLAND COAL PRODUCERS TO REDUCE PRICES TO ENABLE PURCHASES BY VICTORIA AND SOUTH AUSTRALIA: COMMONWEALTH POWER TO GRANT FINANCIAL ASSISTANCE TO A PARTICULAR STATE
CONSTITUTION ss 51(iii), 96
08 September 1950
R.G. Casey M.P., Minister for National Development
Apropos your question on 31 August as to whether there are any practical constitutional means of the Commonwealth Government subsidising Callide coal in order to bring the price down to an extent which would enable Victoria and South Australia to buy coal from the Callide field.
The constitutional powers of the Commonwealth with respect to this matter depend, in a large measure, upon the manner in which assistance is afforded with a view to encouraging the use of coal from Callide.
The Commonwealth would not have power to grant a bounty to the producers of Callide coal unless, at the same time, it extended the same bounty to other producers, for the Constitution requires that bounties paid by the Commonwealth shall be uniform throughout the Commonwealth.
The Commonwealth, however, has power under the Constitution ‘to grant financial assistance to any State on such terms and conditions as the Parliament thinks fit’. In exercising this power there is no requirement that the assistance shall uniformly extend to all the States. It is under this power, for example, that special assistance is granted to the States of South Australia, Western Australia and Tasmania.
Therefore, it would be competent for the Commonwealth, in the exercise of this power, to grant financial assistance to say Victoria to encourage it to purchase Callide coal, notwithstanding the fact that this coal, having regard to its quality, was dearer than coal from Newcastle or some foreign country. This would encourage the production of Callide coal not by means of a bounty but by, in effect, subsidising its purchase by a State Government.
There may be further possibilities, depending upon the manner in which the field is developed. I am not at the moment altogether clear about the arrangements which at present operate or which may be in contemplation for the future operation of the field. If however the Queensland Government itself were to operate the Callide field, it could sell the output at a competitive price and the Commonwealth could grant financial assistance to the State to cover those losses. If the field were to be operated by private interests under an agreement with the State whereby the State guaranteed the private interests against losses, then the Commonwealth could grant financial assistance to the State to meet its liability under the agreement.