Opinion Number. 1498

Subject

BANKING whether Commonwealth has power to guarantee payment of deposits and other liabilities of State Savings Bank: power to make laws with respect to ‘banking, other than state banking’: whether operations of state savings bank are ‘state banking’

Key Legislation

constitution s 51(xiii)

Date
Client
The Secretary to the Treasury

The Secretary to the Treasury has forwarded the following memorandum to me for advice:

The question has been raised whether the Commonwealth has power to legislate so as to provide that the Commonwealth shall guarantee payment of the deposits and other liabilities of a State Savings Bank.

The Treasurer would be glad if you would kindly look into this matter urgently and advise your opinion.

Section 51 of the Constitution provides that the Parliament shall, subject to the Constitution, have power to make laws for the peace, order and good government of the Commonwealth with respect to:

(xiii) Banking, other than State banking; also State banking extending beyond the limits of the State concerned …

The operations of a State Savings Bank are, in my opinion, State banking within the meaning of the above placitum.

Legislation providing for a guarantee of payment of deposits and other liabilities of a State Savings Bank would in my opinion be legislation relating to State Banking and consequently outside the scope of the constitutional powers of the Commonwealth.

[Vol. 25, p. 295]