The Commissioner, Commonwealth Railways has forwarded to me for advice the following Communication:

As you know, in September 1930 I prepared a comprehensive paper on the Australian Railways position and urged that special action should be taken to check the financial drift. Last year the financial position was still worse and I have in mind again submitting the whole question to the Government.

I have been trying to ascertain just what the powers of the Commonwealth Government are in respect to Railways, in other words, I have been endeavouring to find out just what powers of control the Commonwealth possesses and how far the exercise of those powers would improve the finances of the Railways.

The enclosed statement gives a digest of the position as it appears to this Department and may be of assistance to you. If you could be good enough to review the whole position and favour me with your advice it would be very helpful.

In submitting your reply it is asked if, apart from the general review, you could advise as to the following, namely:

1. Could the Parliament make laws for the peace, order, and good government of the Commonwealth with respect to trade and commerce amongst the States, providing for powers of adjudication and administration by an authority other than the Interstate Commission?
2. Could the Parliament make laws for the fixing by an authority other than the Interstate Commission of standards of rolling stock, structure gauge, clearances, etc. in respect of railways regularly engaged in Interstate trade and commerce?
3. Could the Parliament make laws for the fixing by an authority other than the Interstate Commission of rates and freight and conditions for the carriage of traffic over railways regularly engaged in Interstate trade and commerce?
4. Could the Parliament make laws for an authority prescribing the methods of bookkeeping and accounting for traffic over railways regularly engaged in Interstate trade and commerce? (This provision might include a Railway Clearing House).
5. Has part 5 of the Interstate Commission Act 1912 been nullified (See judgment of the High Court in 1915, 20 C.L.R.⁽¹⁾) or could the Interstate Commission still exercise the control of the rates as provided for in Part 5 and other parts of the Act relying on the aid of a Court of Law to ensure obedience to its order?

I would be glad to place any facts we may have at your disposal and if you think fit I could at a convenient time discuss the question with you.

Upon the general question of the power of the Commonwealth to legislate in relation to State Railways, I am of opinion that the Commonwealth has no general power to control State Railways.

It has the power set forth in placita (xxxii), (xxxiii) and (xxxiv) of section 51 of
the Constitution.

It has also, under section 51(i) coupled with section 98, the power to make laws with respect to trade and commerce with other countries and among the States, including as incidental to that power the extension of any such trade and commerce law to railways the property of a State.

Then it has, in addition, certain powers of forbidding as to railways, unjust preferences or discriminations by a State or State authority. In this respect, however, the powers of the Parliament are for the moment limited by reason of the fact that a preference cannot be adjudged to be unjust unless so determined by the Interstate Commission. And although there is on the Statute book an Act providing for the appointment of the Interstate Commission, there are at the present time no members of the Commission. Consequently the Parliament may not at present exercise the powers conferred upon it by section 102 of the Constitution.

Upon the question of the general powers of legislation possessed by the Parliament with respect to trade and commerce in relation to railways, I am of opinion that the Commonwealth has power to legislate with regard to railways engaged in or ordinarily used for interstate trade. For this purpose it could legislate with respect to such matters as the construction and operation of interstate railways. In view of section 102, however, it has not in my opinion power, in the absence of the Interstate Commission, to forbid preferences or discriminations. Nor has it power, in view of section 99 of the Constitution to give preference to one State or part thereof over another State or part thereof.

Although section 101 of the Constitution contemplated that there should be an Interstate Commission with such powers of adjudication and administration as the Parliament thought necessary for the execution and maintenance of the provisions of the Constitution relating to trade and commerce and of laws made thereunder, I do not think that the Parliament is powerless to provide other means for the execution and maintenance of those provisions and laws. It cannot of course substitute any other body for the Interstate Commission as the arbiter of matters of preference and discrimination (section102). Nor can it confer executive powers on a Court or judicial powers on an administrative body.

Dealing now with the specific questions asked in the case for advice, I am of opinion as follows:

1. Except for the special matters expressly committed to the Interstate Commission, the Parliament may in my opinion provide for powers of adjudication and administration of matters concerning Interstate trade otherwise than by the Interstate Commission. In so far as the expression ‘powers of adjudication’ covers judicial powers, such powers can of course be conferred only upon a court or courts.
2. Yes.
3. The Parliament may make laws for the fixing by an authority other than the Interstate Commission of rates and freights and conditions for the carriage of traffic over railways regularly engaged in interstate trade and commerce, but cannot empower any body other than the Interstate Commission to determine whether any particular rates are undue, unreasonable or unjust.
4. Yes.
5. The High Court held in the case of New South Wales v. Commonwealth, 20 C.L.R. 54, that the whole of Part V of the Interstate Commission Act 1912 was invalid. It would be possible, if thought fit, to confer on a Court the judicial powers contained in that Part, and a Bill for this purpose was actually introduced into the Parliament in 1920. That Bill provided for the creation of a Commerce Court, consisting of a President and contemplated that so long as the President of the Court was a member of the Interstate Commission he should not receive any salary as a member of the Commission.

I do not think, so long as the judgment in the case of New South Wales v. Commonwealth (20 C.L.R. 54) stands, that it would be possible to confer on the Interstate Commission any of the judicial powers contained in Part V of the Act.

[Vol. 25, p. 594]

(1) New South Wales v Commonwealth (1915) 20 CLR 54.