In the course of his speech on the motion for the Second Reading of the above Bill, Mr. Spender is reported to have said:

One must have regard to the difficulties presented by the limited powers given by the Constitution. I conceive this Bill to have been brought down under two powers only in section 51, those relating to ‘insurance other than State insurance’ and ‘invalid and old-age pensions’ … I doubt whether this Bill is constitutional at all, as it depends for its constitutionality entirely on the two placita of section 51 to which I have referred. Certainly, it has been stated that power to introduce this Bill is given under the invalid and old-age pensions power … Except under the placitum dealing with insurance other than State insurance, there is apparently no power under the Constitution to pass this Bill. I assume that the Government has satisfied itself whether insurance other than State insurance can be said to give power to introduce national insurance on a compulsory basis. The writings of Dr Anstey Wynes in his Legislative and Executive Powers in Australia⁽¹⁾ express the definite view that a scheme such as this is beyond the powers of this Parliament …⁽²⁾

Mr. Blackburn, although referring to the question of constitutionality, does not assert definitely that the measure is beyond the powers of the Commonwealth.⁽³⁾

In the work by Dr. Wynes referred to above, the following statement appears on pages 144 and 145:

The constitutional aspects of a National Insurance Scheme were dealt with in a recent article in the Australian Law Journal⁽⁴⁾ where the view is suggested that ‘insurance’ in pl. (xiv) merely refers to insurance contracts in their ordinary sense, and does not contemplate a compulsory levy or tax on the community for the purpose of a national Insurance Bill. Reference is also there made to the Whybrow (common rule) Case⁽⁵⁾ the Union Label Case⁽⁶⁾ and Huddart Parker & Co. Ltd. v. Moorehead.⁽⁷⁾ It is submitted that the views there taken are correct. In any meaning of the word ‘insurance’, it could not include legislation enacting a system of compulsory insurance. The power extends to the regulation and control of the matter, to laws ‘with respect to’ insurance if and when parties are desirous of entering into the contract. As well might it be argued that the Commonwealth could compel every person in the Commonwealth to keep an account at the Commonwealth Bank, and to pay certain sums by cheques upon the bank under penalty.

In the foregoing passage Dr Wynes submits that in any meaning of the term ‘insurance’, it could not include legislation enacting a system of compulsory insurance.

The compulsory element in the Government’s proposal is contained in two Bills to be introduced subsequently, namely Bills imposing obligations on employers and employees respectively to pay contributions in consideration of which the employees are granted certain benefits specified in this Bill. The benefits consist in the main of medical benefits, disablement allowances, old-age pensions and dependent children’s allowances. It will be seen therefore that this Bill is not open to the objection that it provides for compulsory contributions.

The legislation by which it is proposed to impose the compulsory contributions is based, at least primarily, on the taxation power of the Commonwealth, though it may possibly derive some support also from the insurance power. The Government has no doubt the measures are constitutional, the taxation power being unlimited subject to there being no discrimination between States or parts of States.

In so far as the funds for the provision of the benefits specified in the Bill are derived from the Consolidated Revenue Fund, the necessary authority is contained in the appropriation power of the Commonwealth. Looked at as a whole the legislation may be regarded as a comprehensive compulsory insurance scheme, the powers relied upon being the insurance, invalid and old-age pensions, taxation and appropriation powers of the Commonwealth.

The objection taken by Dr Wynes was, of course, expressed several years ago, and long prior to the introduction of the present legislation. In Vol. II of the Australian Law Journal, p. 219, to which reference is made by Dr Wynes, it is stated that ‘the point may be raised that the insurance contemplated by the framers of the Constitution merely refers to insurance contracts in their ordinary sense but does not contemplate a compulsory levy or tax upon the community for the purpose of a national insurance pool’. In the same article, it is further stated that the power with respect to invalid and old-age pensions does not confer on ‘the Parliament the power to make a compulsory levy or tax on the individuals who are thus to be required to provide for their own relief’. The writer of this article was referring to the National Insurance Bill which was introduced in 1928, and which included provisions imposing contributions.

It is considered by the Government that both the objections taken in the article in the Australian Law Journal are without foundation, being based fundamentally on the view that the insurance and invalid and old-age pensions powers alone were being relied on. The writer of the article apparently overlooked the taxation power of the Commonwealth. Although the Bill of 1928 might have been objectionable inasmuch as it included the imposition of contributions, that objection has now been overcome by divorcing the imposition of the compulsory contributions from the measure which provides the benefits.

The question of the validity of the legislation now before Parliament has been considered by leading Counsel, and the following are extracts from the advice which has been received:⁽⁸⁾

In Wynes on Legislative and Executive Powers in Australia, pp. 144–145, the author suggests that a Bill on the lines of that proposed would not be authorised by the Constitution, section 51 placitum 14, which gives power to pass laws with respect to ‘insurance other than State insurance, also State insurance extending beyond the limits of the State concerned’ and also expresses the opinion that such a Bill would not be supported under placitum 23, which gives power to pass laws with respect to ‘Invalid and Old Age Pensions’.

He (Dr. Wynes) quotes an article in 2 Australian Law Journal p. 219 but says he does not agree with the author in saying that the compulsory levy would not be valid because individuals are thereby required to provide for their own relief. He, however, says that the legislation authorising such compulsory levy would amount to taxation, and in any event could not be said to relate to pensions. As regards this author’s opinion, having regard to the fact that the Commonwealth Parliament has power to pass laws with respect to ‘Invalid and Old Age Pensions’ and also power to pass laws with respect to ‘Taxation’, I cannot follow wherein the suggested want of authority lies. If the Parliament has the power of implementing a law with respect to Invalid and Old Age Pensions by providing for compulsory contributions, which are taxation, there seems to me to be nothing wrong; and on the point at issue, so far as his opinion goes, it appears to support the view that the compulsory contributions by both classes are taxation. As regards the article in 2 A.L.J. p. 219, the author there practically limits himself to the question as to whether legislation of this character can be supported under placitum 14 with respect to ‘insurance’.

Under the Australian Constitution, there is express power in placitum 14 to pass laws with respect to ‘insurance’, and under placitum 23 with respect to ‘Invalid and Old Age Pensions’; and under placitum 2, with respect to ‘taxation’. In my opinion, placitum 23 and placitum 2 are the main subjects of legislation supporting the proposed Act. In so far as the opinion of Mr. Wynes above referred to, and the opinion of the author of the article in 2 A.L.J. is concerned, they direct their attention mainly to whether the proposed Act can be supported under placitum 14. If placitum 14 were the only subject of legislation to support the proposed Act, I would be inclined to agree that upon the analogy of the High Court decision in Robert Harper & Co. v. Moorehead, 8 C.L.R., p. 330, it would be insufficient. But in view of the power granted by placitum 23, to pass laws with respect to Invalid and Old Age Pensions, coupled with the incidental power in placitum 39, I think there is clearly an implied power to provide for a scheme of insurance, and to implement that scheme by compulsory contributions in the way proposed.

In view of the foregoing, I have no doubt that the proposed legislation comprising the compulsory National Health and Pensions Insurance Scheme is valid.

[Vol. 31, p. 342]

(1) Wynes, WA 1936, Legislative and executive powers in Australia: being a treatise on the legislative and executive powers of the Commonwealth and states of Australia, under the Commonwealth of Australia Constitution Act, 1st edn, Law Book Co of Australasia, Sydney.

(2) Commonwealth of Australia, Parliamentary Debates, House of Representatives, 1938 (Vol. 155), p. 1493 (Mr Spender MP).

(3) Commonwealth of Australia, Parliamentary Debates, House of Representatives, 1938 (Vol. 155), pp. 1498–1504 (Mr Blackburn MP).

(4) Cantor, MEL, ‘National insurance in its constitutional aspects’ (1928) 2 Australian Law Journal pp. 219–220.

(5) (1910) 11 CLR 311.

(6) (1908) 6 CLR 469.

(7) (1909) 8 CLR 330.

(8) Opinion No. 1632.