Referring to my Opinion of 3 February⁽¹⁾ last (No. 12 of 1930) the Prime Minister asks to be further advised:

1. as to the power of the Commonwealth Parliament, in relation to an unemployment insurance scheme, to provide for the taking over or control of State Labour Bureaux;
2. as to the power to include State employees in such a scheme.

(1) I do not think that the Commonwealth Parliament would have power, in connexion with an industrial insurance scheme, to take over State Labour Bureaux, or to exercise any direct control over their operations. It may be that the Commonwealth scheme could make some use of these Bureaux, for instance by requiring, as a condition of an employee receiving benefits, that he should register at and endeavour to obtain work through a State Bureau; but the Commonwealth could not impose any obligations on the Bureaux, or do anything to adapt them to the purposes of the scheme. It would have to take them as it finds them, merely using them to the extent to which they happen to be available.

(2) The extent to which State employees may, in relation to their employment, be affected by Commonwealth law has been the subject of conflicting decisions of the High Court. In the Railway Employees case, 4 C.L.R. 488, it was held that State railways were State instrumentalities within the rule in D’Emden v. Pedder⁽²⁾ and that the Commonwealth Conciliation and Arbitration Act, so far as it purported to affect the wages and conditions of employment of State railway employees, was invalid.

This case was however overruled in the Engineers’ case, 28 C.L.R. 129, where the doctrine of the implied prohibition of interference with State instrumentalities was rejected, and it was held that employment by a State industrial undertaking was subject to the power of the Commonwealth to make laws with respect to conciliation and arbitration.

In the judgment of the Court, however, (at pp.143–4) a ‘word of caution’ was given that the actual decision only applied to para (xxxv) of section 51, and that in future cases arising under some other specific subject-matter, the specific nature of the power might have to be taken into account. It was pointed out that all the legislative powers given by section 51 were expressed to be given ‘subject to this Constitution’, and that while the principles laid down in the judgment were of general application, they might be limited, in relation to particular ‘placita’, by the context of the Constitution.

These observations raise a doubt as to how far Commonwealth legislation may affect State employees in relation to their employment–especially where the employment is in governmental as distinguished from ‘industrial’ or ‘business’ activities.

On the whole, I think that the inclusion of State employees in a Commonwealth unemployment insurance scheme would not be held to be ultra vires. But the scheme could not interfere with any State scheme of industrial assurance which might already exist or subsequently be adopted. There might, however, be very great difficulty in carrying out the scheme in regard to State employees–e.g., in imposing obligations on the State as employer, with respect to making returns, collecting premiums, etc.

[Vol. 24, p. 498]

(1) Opinion No. 1456.

(2) (1904) 1 CLR 91.