Opinion Number. 1460


Price control for wine grapes power of commonwealth to control price of grapes for wine for domestic consumption: power to forbid interstate carriage of wine without licence: imposition of condition on licence that price prescribed for payment for grapes for bounty on exported wines be paid for grapes

Key Legislation

Dried Fruits Act 1928: Wine Export Bounty Act 1924: constitution s 92

Development and Migration Commission

Mr. Gunn, of the Development and Migration Commission, forwards the following memorandum for advice:

The Commonwealth Government has granted to the Wine Industry for a period of five years a bounty on wine exported. A condition of the bounty is that the wine maker who exports must pay for his grapes prices prescribed by the Minister of Customs. There is no power to compel a wine maker who confines his operations to the Australian market to pay prescribed prices for grapes and in this regard it is desired to bring him into line with the exporter so that all growers of grapes may obtain the same prices.

I am informed by Mr. Golian, the Commonwealth Chief Excise inspector, that the wine trade is essentially an interstate trade and that the small manufacturer who may confine himself to intrastate trade would not materially affect the position and need not therefore to be considered.

I shall be glad to receive an opinion on the following question:

Can legislation based on the same principle as the Dried Fruits Act 1928 (No. 11 of 1928) be passed by the Commonwealth Parliament relating to interstate trade in wine and laying down as a condition precedent to the granting of a licence to engage in interstate trade that the prices prescribed for grapes in connection with the payment of an export bounty on wine must be paid for grapes used for the manufacture of wine for interstate trade?

In view of the decision of the High Court in James v. Commonwealth, 41 C.L.R. 442, it appears clear that the Commonwealth Parliament has power to forbid the interstate carriage of any specified class of goods unless a licence has been issued permitting such carriage.

The question remains whether, in the case of the interstate carriage of wine, it might lawfully be made a condition of such licence that the prices prescribed for grapes in connection with the payment of bounty under the Wine Export Bounty Act 1924–1928 had been paid for the grapes from which the wine was manufactured.

James’ case arose under the Dried Fruits Act 1928, which forbade interstate carriage of dried fruits without a licence; and the Governor-General was empowered to make regulations prescribing the conditions (including conditions as to export of dried fruits by the applicant) upon which licences might be issued. The Court held, (following McArthur’s case, 28 C.L.R. 530) that section 92 of the Constitution affords no ground for attacking the Act or the Regulations.

The conditions actually imposed by the regulations related only to export (a matter within the federal legislative power); but the Act imposed no such limit on the nature of the conditions which might be prescribed. It appears that the High Court upheld the validity of the statutory gift of power to make regulations in these wide terms.

It seems to follow that a condition relating to the price paid for the grapes from which wine had been manufactured would be equally permissible.

It is necessary, however, to consider the application of Barger’s case, 6 C.L.R. 41, if and so far as that case may be still regarded as an authority since the decision in the Engineer’s case, 28 C.L.R. 129. In that case an Act imposing an excise duty on the manufacture of agricultural machinery with provision for rebate on goods manufactured under described conditions as to wages, was held not to be really a taxing Act, but to impose, under the guise of taxation, a penalty for paying inadequate wages, and therefore to be invalid.

Conditions imposed upon the interstate carriage of goods are on a different footing. In this case, there can be no doubt that the Act was really a law relating to interstate commerce, notwithstanding that its indirect effect might be to regulate the price paid for goods in intrastate commerce.

I think, therefore, that legislation on the lines proposed could be so framed as to be within the powers conferred by the Constitution.

[Vol. 24, p, 576]