The Secretary, Prime Minister’s Department, has forwarded to me the following memorandum for advice:

I am directed by the Prime Minister to refer the following question to you for favour of urgent consideration and advice:

If the Cockatoo Island Dockyard, Sydney, were to be taken over on lease and operated by a Company constituted on the lines of the Commonwealth Oil Refineries Limited (i.e. a company in which the Commonwealth Government would hold a preponderating interest), would such a Company be free of the restrictions to which the Australian Commonwealth Shipping Board is subject as a consequence of the decision of the High Court in the Bunnerong case?

I see no legal objection to the Dockyard being leased to and operated by a Company in which the Commonwealth holds the preponderant interest.

I am of opinion that the operations of such a Company would not be subjected to the legal objections disclosed by the decision of the High Court in Commonwealth v. Australian Commonwealth Shipping Board.⁽¹⁾ The constitution of the Company, and the declaration of the Commonwealth rights therein, would probably require the execution of an agreement somewhat on the lines of that with the Anglo Persian Oil Company Limited made on 14 May, 1920. The making of such an agreement by the Commonwealth would require to be authorised by statute.

The only constitutional point, so far as I can see, that could be raised against such an arrangement would be as to the power of the Commonwealth to appropriate moneys for the purpose. The Commonwealth, though it has for the last 29 years appropriated money for a great variety of purposes as to which it has not a general legislative power, has never been challenged on this ground. The Congress of the United States has done the same thing unchallenged for a century and a half. In my opinion, any person trying to challenge in the Courts the validity of a Parliamentary appropriation would meet with
insuperable obstacles.

[Vol. 24, p. 422]

(1) (1926) 39 CLR 1.