I am in receipt of the following minute from the Secretary to the Treasury upon which he requests to be supplied with advice:

I am directed to ask if you will kindly advise whether the Commonwealth has the constitutional power to extract contributions from an employer in respect of a scheme of National Insurance when that employer is a State Government.

I am directed to ask, further, whether, in the event of the Commonwealth not having this constitutional power, an employee of a State Government could be accepted as a voluntary contributor under the scheme incorporated in the National Insurance Bill which was recently submitted to Parliament.

The power of the Commonwealth Parliament to legislate on the lines of the National Insurance Bill is derived from section 51 of the Constitution, placitum (xiv) of which reads as follows:

Insurance, other than State insurance; also State insurance extending beyond the limits of the State concerned:

It is considered that the State insurance which is excepted from the Commonwealth power is such insurance as may be undertaken by the State itself. In the question under consideration the State would be affected only if it was required to effect insurances upon its employees, and accordingly I am of opinion that the obligation by a State to insure its employees under the new proposal is not excepted in express terms by the Constitution. In the Engineer’s case, 28 C.L.R. 129 at p. 155, it was held that States and persons, natural or artificial, representing States when parties to industrial disputes in fact, are subject to Commonwealth legislation under placitum (xxxv) of section 51 of the Constitution if such legislation on its true construction applies to them. The power conferred under placitum (xiv) is, apart from the exception above stated, quite general, and as I have said the States in the matter under consideration are not within that exception.

I see no reason for holding that a State being an employer is entitled to the benefit of any exception under the Constitution in its favour which would enable it to escape from the contributions contemplated by the Bill.

[Vol. 23, p. 857]