Referring to the verbal request by Mr A. of your office for a draft proclamation relative to the compulsory grading of interstate butter, I desire to point out that it is, in my opinion, extremely doubtful whether power exists to provide for the grading of butter for interstate transfer.

The question whether that power exists depends to some extent on the question whether power exists to prohibit the exportation of ungraded butter. For if power does not exist to prohibit the exportation of ungraded butter, it clearly does not exist to prohibit its interstate transfer. It does not, however, necessarily follow that if power does exist to prohibit export, it also exists to prohibit interstate transfer.

I notice in the file an opinion in which the Crown Solicitor expresses grave doubt whether section 112 of the Customs Act is wide enough to allow of a proclamation being framed in such a manner that grading by a Commonwealth officer could be made a condition precedent to the exportation of butter.

While section 112 does not expressly mention grading, the language of section 112 is, in my opinion, sufficiently wide to cover the issue of a proclamation prohibiting the exportation of butter unless it is graded according to a system of grading specified in the proclamation.

With regard to the question whether section 112A permits of the issue of a proclamation prohibiting the transfer interstate of ungraded butter, it may be pointed out that all that section 112A does is to give power to prohibit, by a proclamation under section 112, the transfer from any State to any other State of any goods the exportation of which is prohibited by the proclamation (i.e. the proclamation issued under section 112) unless the transfer is carried out under and subject to the Regulations. If, therefore, the export of butter is prohibited unless it is graded, the proclamation prohibiting the export may prohibit the transfer of the goods the export of which is prohibited by that proclamation (i.e. ungraded butter) from State to State unless the transfer is carried out under and subject to the Regulations.

It would, therefore, be necessary that Regulations should be prescribed defining the manner in which ungraded butter may be transferred interstate. I do not think, however, that valid Regulations could be made, under the existing Act, prohibiting absolutely the interstate transfer of ungraded butter. The Regulations which are, in my opinion, contemplated under section 112A of the Act are Regulations relating to the transfer of the goods, such as methods of packing, conveyance etc.

If further powers are needed, it appears necessary to amend the Act.