Opinion Number. 1575

Subject

WHEat marketing wheAT MARKETING: POWER OF Commonwealth and States TO establish compulsory pool for handling and marketing of wheat produced in Australia: FREEDOM OF INTERSTATE TRADE: APPLICATION OF CONSTITUTION s 92 TO COMMONWEALTH: OPTIONS FOR CREATING COMPULSORY POOL BY COMMONWEALTH AND STATE LEGISLATION

Key Legislation

constitution s 92: Acts Interpretation Act 1901 s 15(a)

Date

I am asked to advise whether there is power under the Commonwealth and State Constitutions to provide by means of legislation by both the Commonwealth and the States for the establishment of a compulsory pool or compulsory pools for the handling and marketing of wheat produced in Australia. Two particular methods of achieving the desired object are suggested in my instructions, and I am asked to consider the constitutionality and practicability of these.

The general question submitted necessitates a consideration of the position at present existing under the judicial decisions given under section 92 of the Constitution. This matter can, I think, be dealt with quite shortly. Until the decision of the High Court in W. & A. McArthur Ltd v. Queensland 28 C.L.R. 530, I do not think it had ever been doubted that section 92 applied to the Commonwealth equally with the States. In that case, however, it was decided that section 92 applied to prohibit the States but not to prohibit the Commonwealth from interfering with the freedom of interstate trade. The question whether the Commonwealth is bound did not directly arise for decision in McArthur’s Case, but it is obvious that it is intimately bound up with the question of the ambit of the prohibition contained in section 92, and the view that the Commonwealth is not bound by that section has ever since been regarded as an essential part of the decision. The question did arise directly some years later in James v. Cowan 41 C.L.R. 442,(1) in which case the Court followed the opinion expressed in McArthur’s Case.

At present, therefore, the position created by the Australian decisions is that the Commonwealth Parliament is immune from the prohibition contained in section 92, and can legislate freely and directly to restrict interstate trade in any way it pleases. In R v. Vizzard; Ex parte Hill 1934 A.L.R. 16,(2) the High Court was invited by the Commonwealth to review all its prior decisions on section 92, to restrict the ambit of the section as defined in McArthur’s Case, and to hold that section 92 ought to be held to bind the Commonwealth. It seems natural enough that the Commonwealth should find the extended powers conferred upon it by the decisions in McArthur’s Case and James’s Case a source of embarrassment rather than of satisfaction. The argument was presented very fully but it failed, the High Court deciding to adhere in principle to McArthur’s Case. The attempt to persuade the High Court to say that section 92 did bind the Commonwealth was made under peculiarly favourable conditions, and it is, in my opinion, now safe to assume that the High Court will adhere to the view that the Commonwealth is immune from the prohibition of section 92.

The question of the probable attitude of the Privy Council to this matter is one of more doubt. Views expressed by some of the Judges in R v. Vizzard (supra) would, in my opinion, incline the Privy Council to reopen the whole matter and endeavour to set at rest at last the doubts which surround section 92. It would follow, I think, that the Privy Council would decide that section 92 did bind the Commonwealth—a view expressed in many of the earlier decisions of the High Court itself. This possibility or probability is, however, as I think, of less practical importance than might appear, and for this reason. In my view it would follow from a decision that section 92 must be very materially restricted and narrowed, and the effect of such a decision ought, to my mind, to be that the difficulties which at present face the States in any attempt to legislate for marketing schemes would largely, if not entirely, disappear. In any case it appears to me that Commonwealth and States alike must for the present base their legislation on the decisions of the High Court, which say that the Commonwealth is not bound by section 92.

Having considered the general question, I come now to the more particular questions which are submitted to me. In view of the fact (which we must, I think, accept) that the Commonwealth is not bound by section 92, it is, in my opinion, possible by co-operation between Commonwealth and States to frame legislation for compulsory wheat pools which would survive attack. On the other hand, it does not seem to me to be possible for either the Commonwealth alone or the States alone to achieve that object. The creation of a compulsory wheat pool will involve interference (a) with domestic or intrastate trade, (b) with interstate trade, and (c) with overseas trade. As matters stand the Commonwealth has full power over (b) and (c), but has no power over (a). The States, on the other hand, have full power over (a) and (c), but have no power over (b).

The question thus arises of the precise method to be adopted, the exact character of the machinery to be brought into operation. The question thus raised is, of course, one of very considerable difficulty, and it is perhaps not desirable or possible at present to express an opinion that is much more than tentative. Before reaching an actual decision on the form which the legislation should take, it is, I think necessary to have a very full knowledge of the circumstances of the Australian wheat trade. I proceed, however, to consider the two suggestions contained in my instructions and a third suggestion which appears to me to be preferable to either.

The first suggestion is that the Commonwealth should legislate for the establishment of a compulsory pool into which should be put all wheat, the subject or intended to be the subject of interstate or foreign trade, and the State to legislate for a compulsory pool into which should be put all wheat the subject or intended to be the subject of domestic or intrastate trade. I am not prepared by any means to say that it is impossible to frame legislation along these lines, and one, of course, is not committed to the exact phrases to be used. There is, however, as I think, one general objection to legislation framed on these lines which is by no means unlikely to cause trouble if some recalcitrant grower seeks to challenge the legislation concerned. It is, I think, extremely difficult to arrive with certainty at any definition of particular wheat which lies within the Commonwealth power. Moreover (and this is really a separate objection), in any given case it would be very difficult to identify particular wheat as coming within the definition contained in the particular Act. That definition would of necessity have to be framed with reference to interstate trade and the precise relation of particular wheat to interstate trade would, I think, be very difficult to define in such a way as to be clearly within the Commonwealth power and to enable a clear identification of particular wheat if necessary.

Of the two alternatives suggested in my instructions I prefer the second to the first. On this view both the Commonwealth and the States concerned would pass legislation in general terms providing for a compulsory wheat pool. If the Commonwealth legislation were challenged it should be held to be valid so far as it affected interstate trade in wheat. This would be by virtue of section 15(a) of the Commonwealth Acts Interpretation Act. Similarly, if any State Act were challenged, it should be held to be valid so far as it is limited to intrastate trade. This again would be by virtue of a similar provision in the State Acts Interpretation Act. (There is such a provision in the Victorian Acts Interpretation Act, and I assume that there is a similar provision in the Acts of other States. If not such a provision could easily be passed).

The chief difficulty which I foresee about this second suggestion is this. It would almost certainly, I should imagine, be necessary for the controlling body or board to be a Commonwealth body or board. The actual constitution of such a body by the Commonwealth might be challenged as exceeding the Commonwealth power. Still I do not see any real reason why the same body of persons constituting the board or controlling body should not also be empowered by State legislation. I think the method proposed could probably be carried into effect, but it would need very careful consideration of details, and I feel that it would not be free from doubt.

A third alternative which I suggest for consideration is this. The Commonwealth might simply pass an Act absolutely prohibiting all interstate trade in wheat. Each State might then subsequently set up machinery and provide for a compulsory pool of all wheat grown in the State. Since interstate trade would already have been absolutely prohibited by the Commonwealth legislation it does not seem to me that the State legislation (which would merely take up and deal with the situation created by the Commonwealth legislation) would be open to attack under section 92. I suggest the adoption of this method if it is practicable, as being from a legal point of view preferable to either of the other two.

As I have said, a consideration of the practical machinery to be adopted seems to me to involve a knowledge of a number of circumstances as to which I have little or no information. In these circumstances I have not felt able to consider any particular proposition in any detail, and it is perhaps really consideration of details that matters most. What I have written, however, can, I think, be taken as a general guide.

[Vol. 28, p. 100]

(1) James v Commonwealth (1928) 41 CLR 442.

(2) The King v Vizard; Ex parte Hill (1933) 50 CLR 30.