Opinion Number. 1613

Subject

Regulation of primary products
allocation of quotas for meat exports: allocation of QUOTAS FOR MEAT EXPORTS AMONG STATES OR INDIVIDUAL EXPORTERS: preference to or discrimination between states: ‘law or regulation of trade, commerce, or revenue’

Key Legislation

constitution s 99: Meat Export Control Act 1935 ss 16, 17, 19: Customs Act 1901: Commerce (Trade Descriptions) Act 1905: Customs (Prohibited Exports) Regulations 1935: Commerce (MEAT Export) Regulations 1923: Meat Export Control (Licences) Regulations 1936 regs 4, 7, 14

Date
Client
The Secretary, Department of Commerce

The Secretary, Department of Commerce, has forwarded a copy of a statement prepared by the Secretary to the Australian Meat Board in which he sets out certain questions for advice in relation to the allocation of quotas for meat exports.

It appears that, since the Ottawa Conference in 1932, the imported meat trade of the United Kingdom has been regulated with the result that Australia has been required to regulate her exports to that country. Notwithstanding that regulation, Australia has to date been able to export her surplus meat. There are indications, however, that Australia will be required to restrict her mutton and lamb exports to the United Kingdom for the year 1937 and that such exports will be limited to a quota fixed by the Government of the United Kingdom.

Four courses are suggested as open for consideration, namely:

  1. To allow free export from each State and by each individual exporter within a State until the whole of the quota has been filled;
  2. To prohibit the export of all classes of mutton or of certain grades of mutton and/or lamb;
  3. To ration or allocate the quota between individual exporters;
  4. To ration or allocate the quota between the States and each State’s proportion between individual exporters within a State.

With regard to the first two courses, there appears to be no legal objection to their adoption. As to the third course, an allocation in accordance with a principle of general application would, in my opinion, be in order. If, however, the allocation was not made on a uniform basis, it would be necessary, in order to determine its validity to have regard to all the facts.

In connexion with the fourth course, the Australian Meat Board made the following recommendations to the Minister in February, 1937, as to the allocations of the Mutton and Lamb and the Beef Quota for 1937:

That this Board recommends to the Department of Commerce and advises State Meat Advisory Committees that the Mutton and Lamb quota for 1937 be allocated amongst the States as follows:

 

%

New South Wales

30.65

Victoria

57.45

Queensland

3.56

South Australia

5.68

Western Australia

2.55

and that these allocations have been arrived at on the average export from each State to the United Kingdom over the years 1934, 1935 and 1936, the Commonwealth Statistician’s figures of actual exports being taken for the year 1934, and the Department of Commerce figures of ‘exports for arrival’ being taken for the years 1935 and 1936.

That a reserve of 10% of the total quota be retained for the purpose of adjusting exports between the States should that course become necessary.

A similar recommendation was made as to beef but a reserve of only 2% was provided for.

With regard to individual exports of mutton and lamb for 1937, the State Meat Advisory Committee of New South Wales has recommended as follows:

(1) That 10% of the New South Wales Quota be reserved for Producers, expansion of Australian firms and seasonal needs– (to be administered by the State Meat Advisory Committee)

5,406,665

(2) That 90% of the balance be distributed amongst all exporting firms

43,793,992

(3) That 10% of the balance be distributed amongst Australian firms and British companies with interests confined to the British Empire.

4,865,999

 

54,066,656 lbs

The quantities mentioned in recommendations (2) and (3) above were to be allocated to individual exporters on the basis of their average exports to the United Kingdom over the past 3 years.

The Queensland Meat Advisory Committee agreed that the total allotment made to that State be allocated intrastate on the basis of the average exports of the respective shippers during the past three years.

Intrastate allocations in respect of beef were also recommended for 1937.

In connexion with allocations recommended by the Board and the Advisory Committee, the Secretary to the Board seeks advice on the following questions:

    Interstate allocations

  1. Has the Commonwealth power to make allocations as between States?
  2. If Commonwealth has power to make interstate allocations, and such allocations are desirable or necessary, would the basis of allocation recommended by the Australian Meat Board meet the requirements of section 99 of the Commonwealth Constitution Act?
  3. If the allocations could be made on the basis recommended by the Board, would it be necessary to distribute the Commonwealth reserve in the same proportions?
  4. What basis of allocation, if any, could be applied to meet the position of those States which would be adversely affected if allocations were made on the basis of average export over the past three years?
  5. What legal objections, if any, could be raised to permitting either free export within the limits of the Commonwealth quota or to restricting the export of certain classes of meat as a means of avoiding the necessity for allocating the quota?
  6. Intrastate allocations

  7. Has the Commonwealth power to make allocations to individual exporters?
  8. If the Commonwealth has power to make allocations to individual exporters, should such allocations be made from the Commonwealth quota or from the proportions of the quota allocated to the respective States?
  9. If individual allocations can be made, and it becomes necessary to make such allocations, could the allocations be arranged on an arbitrary basis?
  10. If allocations to individual exporters cannot be arranged on an arbitrary basis, in what way could equitable provision be made for new interests or individuals who have not engaged in the meat export trade for any length of time?

The control of the export of meat from Australia is provided for in section 17 of the Meat Export Control Act 1935–1936 which reads as follows:

    1. For the purpose of enabling the Board effectively to control the export of Australian meat, meat products, and edible offal, the Governor-General may make regulations prohibiting the export from the Commonwealth of any meat, meat products, or edible offal except by persons who hold licences issued by the Minister or by any person thereto authorized in writing by the Minister, and in accordance with such conditions and restrictions as are prescribed after recommendation to the Minister by the Board.
    2. Any person who exports meat, meat products or edible offal from the Commonwealth in contravention of the regulations made in pursuance of this section (including the prescribed conditions and restrictions) shall be guilty of an offence.
    3. Penalty: Five hundred pounds.

    4. Where the Minister is satisfied, on report by the Board, that any person, to whom a licence under this section has been granted, has contravened or failed to comply with the prescribed conditions and restrictions, the Minister may cancel the licence.

The control of such export may, however, be provided for by means other than those contemplated in that section insomuch as section 19 of that Act provides that nothing in the Act or the regulations shall affect the operation of the Customs Act 1901–1935, of the Commerce (Trade Descriptions) Act 1905–1933, or of any regulations made under either or both of those Acts. Regulations have in fact been made under either or both of the last-mentioned Acts, namely, the Customs (Prohibited Exports) Regulations (cf. Third Schedule thereto) and the Commerce (Meat Export) Regulations.

Conditions and restrictions in relation to the export of meat have been prescribed in the Meat Export Control (Licences) Regulations which were made under the Meat Export Control Act. Regulation 4 of those Regulations is as follows:

4. The export of meat, meat products or edible offal, is hereby prohibited except by persons who hold licences, and subject to the conditions and restrictions prescribed by these Regulations.

Regulation 7 requires a licensee to comply with the Commerce (Meat Export) Regulations and the Customs (Prohibited Exports) Regulations in so far as those Regulations are applicable to him and, by regulation 14, a licensee shall, whenever so required by the Board by notice in writing signed by the Secretary or an authorized person, withhold from export the whole or any portion of any meat, meat products or edible offal intended for export. The form of licence is contained in the Schedule (Form B) and simply recites that the Minister issues a licence to an individual to be named to export from the Commonwealth for a specified period upon the terms and conditions prescribed by the Regulations.

Neither the Meat Export Control Act nor the Regulations thereunder expressly refer to the allocation of quotas which may or are to be exported. Any such allocation would, therefore, appear to be a matter of administrative action in respect of which the Board has power to make recommendations to the Minister under section 16 of the Meat Export Control Act and implementation of the allocation would be effectuated by the withholding of permits in pursuance of regulation 14. The significance of this will appear in the views now to be expressed in relation to section 99 of the Constitution.

Section 99 of the Constitution reads as follows:

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

Before considering whether the suggested quotas would give a preference, I think it is necessary to examine whether a quota fixed by the Minister is a ‘law or regulation’ within the meaning of those words in the phrase ‘the Commonwealth by any law or regulation of trade, commerce, or revenue’.

At page 876 of Quick and Garran’s Annotated Constitution of the Australian Commonwealth the following note appears:

Law or Regulation –’Regulation’ is a word which may be used in a general or a restricted sense. In its widest meaning it denotes any prescribed rule or order, and therefore includes every law; as, for instance, it does in the words of the United States Constitution quoted above. More particularly, it is often used to denote rules or regulations prescribed by the Executive under the authority of an Act or Parliament. Such rules, when within the scope of the authority given, have the force of law, and are in fact laws in every sense of the term. But the word ‘regulation’ also includes purely administrative regulations, not made under the direct authority of an Act of Parliament, and not being laws in the proper sense of the term. The words ‘law or regulation,’ taken together, are wide enough to include every rule or order prescribed by the Parliament or by any department of the Government of the Commonwealth.

In the case of Elliott v. the Commonwealth (54 C.L.R. 657), Dixon J. (at p. 682) stated that the expression ‘Commonwealth’ in section 99 covers the Executive as well as the Legislature and the expression ‘regulation of commerce’ extends to administrative acts which produce a regulative effect upon commerce. In that case, Regulations under the Transport Workers Act 1928–1929 empowered the Minister, by notice in the Gazette, to specify ports in the Commonwealth, called ‘prescribed ports’ in respect of which Licensing Officers shall be appointed for purposes of the Regulations. Subject to that Act and the Regulations, any such notice would have regulative effect and, in view of its relation to commerce, would accordingly be a ‘regulation of commerce’ as held by Dixon J.

The position with regard to any direction or order or approval of the Minister allocating quotas is in the same category. Any such direction or order would be regulative of the export of meat and therefore of commerce with other countries.

In my view, ‘regulation’ must be read in a very wide sense as including administrative acts of the class in question. Further as an allocation is in respect of a matter of trade or commerce (i.e., the export of meat), I am of the opinion that it is a regulation of trade or commerce within the meaning of section 99 of the Constitution.

With regard to the meaning of the phrase ‘give preference’, Latham C.J. reviewed, in Elliott’s case, the various meanings accorded to ‘preference’ in Crowe’s case. At page 669, he stated:

In the case of a law or regulation of trade and commerce the difference between the two places under consideration (whether they be States or parts of States) must be such as to amount to a trading or commercial preference which is definitely given to one State or part thereof over another State or part thereof. This is the view expressed in the case of Crowe v The Commonwealth. In that case Rich J. said that sec. 99 referred to ‘tangible advantage of a commercial character’. Starke J. said ‘The preferences prohibited by section 99 are advantages or impediments in connection with commercial dealings’. Similarly Dixon J. said ‘The preference referred to by sec. 99 is evidently some tangible advantage obtainable in the course of trading or commercial operations, or, at least, some material or sensible benefit of a commercial or trading character’. Evatt and McTiernan J.J. pointed out that the provision which was then challenged ‘neither puts any State in possession of trading advantages over another State nor gives it the power to obtain any such advantages’ and for that reason it was not obnoxious to section 99 of the Constitution.

In the present case, the Minister would allocate different percentages of the export quota of meat among the States (except Tasmania). Obviously there would be discrimination between the States as to the extent to which meat may be exported therefrom. Further, the State enjoying the highest percentage of the export quota must, I think, be regarded as enjoying, in comparison with another State, a ‘material or sensible benefit of a commercial or trading character’ to the extent of the difference between the percentages allocated to those States and, therefore, as enjoying a ‘preference’ within the meaning of section 99. Nor does the fact that the basis of allocation is uniformly applicable to all States affect the position where the proposed allocation expressly limits each State to a specified percentage of the quota.

There is another objection to the allocation recommended by the Board. No portion of the quota is allocated to Tasmania. Assuming that the reserve of 10% is intended to apply only in respect of the State specified in the recommendation, the practical effect of omitting to mention Tasmania would be that, in the event of any person desiring to ship mutton or lamb from Tasmania during 1937, he would be absolutely debarred from doing so. It is clear, I think, that the other States would be given a preference which would be to the detriment of Tasmania and such a preference would, in my view, be a preference within the meaning of section 99. It is no answer to this objection that mutton or lamb is not shipped from Tasmania. The allocation would in terms differentiate between Tasmania and the other States in a way that would place an impediment on the export of any mutton or lamb from Tasmania during 1937, should any mutton or lamb be available for export–an impediment forbidden by section 99 (cf. Starke J. in Crowe’s case, 54 C.L.R. 69 at p. 86).

But although it would be unconstitutional in terms to allocate certain specified proportions of the Australian quota to the respective States such allocation could, in my opinion, be made by the application of a rule which does not differentiate between States or parts of States. Thus a legislative enactment or an administrative direction, applying to all States, that the quantity of exports of meat from any State during a certain period should not exceed a certain percentage of the exports from the State during some specified past period would not, I am inclined to think, be discriminative. The facts might discriminate but the law or direction would not.

Consideration will now be given to the several questions submitted by the Board for advice.

Questions (1) and (2)

In my opinion, the Commonwealth cannot, by a law or regulation of trade or commerce, allocate the meat quotas among the States in the manner recommended by the Board. An allocation might, however, be made by means of a formula which does not differentiate between States.

Question (3)

If a portion of the Commonwealth quota were reserved from allocation to the States, it would not be necessary to allocate it on the same basis as the main allocation. If, however, it were allocated among the States, the allocation would have to be on a uniform basis.

Question (4)

I am unable to suggest any basis of allocation which would validly be so applied. Prima facie any such allocation would give a preference to one State over another.

Question (5)

I am not aware of any legal objection to any proposal either to permit the free export of meat within the limits of the Commonwealth quota or to restrict the export of certain classes of meat.

Question (6)

In my opinion, the Commonwealth has power to enact or prescribe a law or regulation of trade or commerce in pursuance of which allocations may be made to individual exporters. Unless the allocation is in pursuance of or can be related to such law or regulation, I do not think it would be valid. As indicated above, the means to be adopted for effecting an allocation would probably take the form of a direction or order of the Minister regarding the principles that are to guide the Board in the issuing of notices for the withholding of meat for export. Such an allocation may, as already advised, be regarded as being within the meaning of the phrase ‘regulation of trade and commerce’. Any allocation to individual exporters must, however, be uniform throughout the Commonwealth.

Question (7)

If meat quotas are allocated among the States, I see no legal objection to allocations to individual exporters being made from the State quotas, provided the allocations are on a uniform basis throughout the Commonwealth.

Question (8)

By virtue of its power under regulation 14 of the Meat Export Control (Licences) Regulations to require meat to be withheld from export, the Board is practically in a position to regulate completely the export of meat. Neither the Meat Export Control Act nor Regulation 14 sets out the principles upon which the Board is to act in issuing notices to withhold from export. The power is unfettered by express restrictions or conditions and, subject to the Constitution (more particularly section 99 thereof), is arbitrary in nature.

In my opinion, therefore, the Board could, in issuing notices, act on any principles that are not opposed to the letter or spirit of the Constitution.

Question (9)

See answer to question (8).

As to Questions (6) to (9), generally, while an allocation to individuals, whether from the Commonwealth quota or from the State allocations appears theoretically to be possible, I am very doubtful whether in practice it would be found that an allocation constitutionally unassailable would effect a distribution of the quota which would be satisfactory to all exporters within a State.

Assuming that allocations are made to the States, it would appear to be fair and reasonable for the Board, without having any formula of allocation laid down, to deal with each application for a permit to export in the light of the circumstances of the particular case. The prescription of a formula of general application would, in my opinion, be likely to create anomalies and to accentuate the difficulties which would result from the imposition of a quota.

I would, therefore, suggest that, if possible, allocation amongst individuals should be avoided.

[Vol. 30, p. 215]