Opinion Number. 1604

Subject

Regulation of primary products freedom of interstate tradE: proposed alteration of constitution s 92 to enable commonwealth to make law with respect to trade and commerce among the States in relation to marketing of primary products: dried fruits marketing: proposed exemption from prohibitions of restriction of freedom of trade and preference

Key Legislation

Constitution ss 92, 99: Dried Fruits Act 1928: Dried Fruits (Interstate Trade) Regulations 1934: Dried Fruits Export Control Act 1924: Dried Fruits Export Control regulations 1926

Date
  1. A proposed draft is in the following terms:
  2. 92A. Nothing in the last preceding section shall prevent the Parliament from making a law with respect to trade and commerce among the States in relation to the marketing of primary products.

    A criticism which is open to be levelled at this draft is that it may not go far enough. In point of fact there is nothing in section 92 at present which prevents the Parliament from making a law with respect to trade and commerce among the States in relation to the marketing of primary products.

    The Commonwealth may at present make any laws in respect of trade and commerce amongst the States in relation to the marketing of primary products so long as such laws do not impair the absolute freedom of trade at present guaranteed by section 92 in its present form.

    The draft now prepared does not state unambiguously that the Parliament is to have full power to restrict freedom of trade and commerce amongst the States in relation to the marketing of primary products.

    An alternative draft is as follows:

    The provisions of the last preceding section shall not apply to laws made by the Parliament with respect to trade and commerce among the States in relation to the marketing of primary products.

  3. Some such draft would free the projected marketing legislation from conflict with section 92, but it would still be necessary to see that the legislation did not infringe section 99.
  4. The Dried Fruits Act 1928–1935 and the Regulations made thereunder may be taken as typical of the legislation which the Commonwealth desires to be in a position to enact.

    In James’ case, 41 C.L.R. 442 that legislation was attacked on two grounds:

    1. on the ground that it violated section 92; and
    2. on the ground that it violated section 99.

    The High Court held that both grounds failed but as regards section 92 that decision must now be taken to be wrong.

    As regards section 99 all members of the Court held that the attack on the Act itself failed.

    In a joint judgment at p. 456 Knox, C.J., and Powers, J., say as follows:

    We can find nothing in this Act now under discussion which gives preference to one State over another State. The provisions of the Act are general and apply equally to the transport of dried fruits from any one State to any other State without discrimination of any kind. There is no provision in the Act which distinguishes between dried fruits in Queensland and similar fruits in South Australia or exempts the owner of dried fruits in whatever State they may be from the restriction imposed on their transport to any other State. The attack on the validity of the Act therefore fails.

    Higgins and Starke J.J. expressed themselves to the same effect.

    But by the same case it was held that the Regulations did offend against section 99 because, although they made provisions for interstate licences to be issued in four States, namely South Australia, Victoria, New South Wales and West Australia, they made no provision for the issue of such licences in Queensland and Tasmania. This was held to be a contravention of section 99, but the Court intimated that the flaw could be cured at any time and the day after the Court’s judgment was delivered an amended regulation was issued curing the defect.

    The rule applied in this case and in Cameron’s case(1) was that, if a law is not applicable to all States alike, then it operates unequally between the States and discriminates as a law between them. Per Starke J. 41 C.L.R. 464.

    On the other hand if the Acts and regulations are applicable in the same way to all States and apply equally without discrimination to all States alike they do not infringe section 99.

    The Dried Fruits Acts 1928–1935 and the Regulations as amended have not been subject to attack under section 99 since the decision in James’ case in 41 C.L.R. 442 and in my opinion the reasoning in that case is valid and the Acts and regulations as they now stand are not subject to attack upon the ground that they infringe section 99.

  5. But the decision in James’ case illustrates that legislation though free from objection under section 92 might none the less be so framed as to infringe section 99 but I do not see why with ordinary care it should not be possible to steer clear of difficulties arising under provisions of section 99.
  6. I now proceed to examine whether any difficulties are likely to arise under legislation of the type of the Dried Fruits Acts where the commodity is produced in a number of States and one of the States (e.g. South Australia) in which the commodity is produced does not desire to control the intrastate trade in that commodity.
  7. Examining the Dried Fruits Act 1928–1935 section by section, it seems clear to me that the non-control by South Australia of its intrastate trade in the commodity would not in any way affect any of the provisions of the Commonwealth Act. The Commonwealth Act in its terms and in its substances is entirely independent of State action or of State legislation and there should be no difficulty in framing regulations which would be equally independent of State action or State legislation.

    It might very well happen that because of the failure of South Australia to control the intrastate trade in the commodity the people of South Australia might be able to purchase thatcommodity at prices lower than the prices charged in States where State control of the intrastate trade was operating. But such inequality, if it should exist, would arise not by reason of any law or regulation of trade, made by the Commonwealth, but by reason of external circumstances created by the State of South Australia itself and this would not create a contravention of section 99.

    See Colonial Sugar Co v. Irving 1906 A.C. p. 367, Cameron’s case, 32 C.L.R. p. 79, James case, 41 C.L.R. p. 461.

  8. Another form of the same question arises where a commodity may be produced in one State only. In this case it is suggested that the Government of the State in which the commodity is produced may be desirous of controlling the intrastate trade in that commodity. I do not think this circumstance would cause section 99 to in any way limit the power of the Commonwealth to control interstate trade in that commodity by legislation of the type of the Dried Fruits Acts 1928–1935 applying equally to all States.
  9. Testing the matter again by examining separately each section of the Dried Fruits Acts there seems to be no ground for saying that any section of the Acts infringes section 99. The sections are all independent of State Acts and of State regulations. Here as before it might be the case that the price in the State of production was different from the prices in the other States to which the commodity was exported but this differentiation in price would not be attributable to any law or regulation of trade or commerce made by the Commonwealth and so long as the regulations are properly framed I do not think there need be any contravention of section 99.

  10. If however it can be reasonably supposed that section 99 might be relied upon by opponents of the marketing schemes to create difficulties then it is quite easy to draft an amendment in terms which will obviate such possibilities.
  11. A suggested draft is as follows:

    Nothing in section 92 or in section 99 or in any other part of this Constitution shall limit the powers of the Parliament to make any laws with respect to trade and commerce among the States in relation to the marketing of primary products.

    Whilst this draft would meet the legal position it might from the political point of view suggest an argument that the Commonwealth desires to have the power to discriminate, a power which so far it has not claimed.

    Section 99 has been recently considered in two cases:

    Namely Crowe v. Commonwealth and Dried Fruits Control Board 9 A.L.J. p. 277 and 278.(2)

    Elliott v. The Commonwealth of Australia 9 A.L.J. p. 455 and 456.(3)

    I have not got full reports of these cases so far available but the abbreviated reports show that in Crowe’s case a question arose under section 99 concerning the validity of the Dried Fruits Export Control Act 1924–1935 and the regulations under that Act. Contravention of section 99 was alleged because of inequality of the States in their representation on the Dried Fruits Control Board. The Court was unanimous in expressing the view that this did not constitute a contravention of section 99.

    In Elliott’s case the question was whether the appointment of licensing authorities at some parts only and not at others was a contravention of section 99. This looked somewhat like James’ case but by a majority the Court held that there was no contravention of section 99, Dixon and Evatt J.J. dissenting.

    Whilst I would have preferred to have the full text of their decision I think the abbreviated reports available are sufficient to show the way in which questions may arise and the sort of questions which may arise under section 99, but these cases illustrate also that by appropriate drafting the question which did arise could easily have been avoided.

    In the result my view is that the tentative draft I have first outlined will enable the Commonwealth to effectuate substantially all that it desires in relation to marketing of primary products, but the second tentative draft would make assurance doubly sure legally. Whether it would militate against the acceptance of the proposals at a referendum is not for me to say. (4)

[Vol. 29, p. 384]

(1) Cameron v Deputy Federal Commissioner of Taxation (1923) 32 CLR 68.

(2) (1935) 54 CLR 69.

(3) (1936) 54 CLR 657.

(4) A bill for a proposed law to alter the Constitution with respect to ‘marketing’ was introduced into the Parliament by the Attorney-General (Mr RG Menzies) on 14 October 1936: Commonwealth of Australia, Parlimentary Debates, House of Representatives, 14 October 1936, p. 1063 (Constitution Alteration (Marketing) 1936). After its passage through the Parliament, the proposed law was rejected by the Australian electors voting in a referendum held on 6 March 1937 in accordance with s 128 of the Constitution. Only 36.26% of all electors who voted formally supported the proposed amendment which also did not obtain a majority in any of the States. The amendment, if successful, would have inserted a new s 92A into the Constitution, which would have provided as follows: ‘92A. The provisions of the last preceding section shall not apply to laws with respect to marketing made by, or under the authority of, the Parliament in the exercise of any powers vested in the Parliament by this Constitution.’ Other proposals to confer on the Commonwealth Parliament the power to regulate the organised marketing of primary products and commodities were also rejected by the Australian electors at separate constitutional referendums held in 1944 and 1946. See Opinions Nos. 1727 and 1731.