The Secretary, Department of Commerce, has forwarded the following memorandum to me for advice:

Attached is copy of a letter received from the Premier of Tasmania, under date of 5th October, 1934, in regard to the method of allocation of the grant to that State under the Financial Relief Act 1934–Part VII, Assistance to Fruit Growers.

I might state that the sum of £125,000 made available by the Commonwealth was divided amongst the States in the proportion which their export of apples and pears during the year ended 30th June, 1934, bore to the total export of apples and pears from Australia for that year. The allocations made to the various States pursuant to the Act were based on figures of exports furnished to this Department by the Commonwealth Statistician at the time the legislation was being framed.

It is understood that the Statistician’s figures relating to apples and pears are based on State of final shipment, i.e. the State of origin is not take into consideration if the fruit is transhipped to another State for exportation.

The point raised by the Premier of Tasmania is that 38,152 cases of apples and pears (approximately15,261 centals), produced in Tasmania were transhipped to New South Wales and Victoria for export overseas, and that these quantities were not credited to Tasmania but to the States whence final shipment took place, consequently to that extent the grants to New South Wales and Victoria were proportionately increased and the grant to Tasmania reduced.

The Statistics used in determining the State grants under the Act were as follows:

State	Total quantity of apples and pears shipped      centals	Allocation based on export       £
New South Wales	71,802	4,023
Victoria	394,082	22,083
Queensland	20,847	1,168
South Australia	231,815	12,990
Western Australia	258,847	14,505
Tasmania	1,253,320	70,231
Totals:	2,230,713	125,000

It would be most difficult to accurately check the quantities of fruit transferred from Tasmania to the mainland for shipment overseas, and if the quantity stated in the Premier’s letter viz. 15,261 centals (approximately), is correct and could be taken into account in the total exports from Tasmania, that State’s allocation of the £125,000 would be increased by £852, viz. from £70,231 to £71,083.

I should be glad if you would kindly advise what course of action may be taken in regard to the Premier’s representation. It is particularly desired to ascertain:

1. Subject to the facts stated being correct, is section 28, Part VII of the Financial Relief Act 1934 ultra vires to the Constitution, in view of the basis upon which the allocation of the grants to the States were determined?
2. If so, should the Commonwealth amend that section and obtain refunds from the States concerned where their grants would be reduced?
3. Would it be constitutional for the Commonwealth to increase the grant in the case of Tasmania, and at the same time allow the other States to retain their excess grants?

Advice on these questions would be appreciated at your earliest convenience.

Under section 96 of the Constitution the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

In pursuance of this power, ‘Part VII–Assistance to Fruit Growers’ was inserted in the Financial Relief Act. Sections 28 and 29 of that Part are as follows:

28. Subject to this Part, there shall be paid to each State, out of moneys appropriated by Parliament for the purpose, by way of financial assistance to that State, the amount specified in this section opposite the name of that State, namely:

	£
New South Wales	4,023
Victoria	22,083
Queensland	1,168
South Australia	12,990
Western Australia	14,505
Tasmania	70,231

29. Any money granted to a State under this Part shall be so granted upon condition that it is applied by the State for the benefit and assistance of fruit growers.

The Act prescribes certain specific amounts for each State to be applied by the State for the benefit and assistance of fruit growers.

In ascertaining the amount of financial assistance payable to each State, it appears that the quantity of apples and pears shipped from each State was taken as the basis of allocation.

Section 99 of the Constitution provides that the Commonwealth shall not, by any law or regulation of trade, commerce or revenue, give preference to one State or part thereof over another State or part thereof.

The grant of financial assistance to States is not subject to section 99 which deals only with laws and regulations of trade, commerce or revenue.

The question asked in the penultimate paragraph of your memorandum may therefore be answered as follows:

1. Even if, under the allocation adopted, Tasmania has received a smaller amount than would have been received by that State, had the allocation been based on the proportion produced in each State of the fruit exported, the validity of Part VII of the Financial Relief Act is not affected by any such consideration.
2. See answer to (a).
3. Yes. Parliament may grant financial assistance to States on such terms and subject to such terms and subject to such conditions as it thinks fit.

[Vol. 27, p. 606]