Opinion Number. 1758

Subject

DISTRIBUTION OF COAL IN PEACE TIME: POWERS OF COMMONWEALTH AND STATESPOWERS OF COMMONWEALTH AND STATES TO CONTROL INTERSTATE AND INTRASTATE DISTRIBUTION OF COAL IN PEACE TIME: EXTENT TO WHICH COMMONWEALTH PARLIAMENT MAY RELY ON DEFENCE POWER TO CONTROL DISTRIBUTION IN PEACE TIME: POWER OF COMMONWEALTH OR STATUTORY BODY ESTABLISHED BY COMMONWEALTH TO ENGAGE IN INTERSTATE COAL TRADE: FREEDOM OF INTERSTATE TRADE: COMMONWEALTH POWER TO CONTROL DISTRIBUTION OF COAL BY TRADING CORPORATIONS: COMPULSORY ACQUISITION OF COAL BY A STATE: COMMONWEALTH POWER TO ESTABLISH A BODY TO CARRY ON BANKING BUSINESS: COMMONWEALTH POWER WITH RESPECT TO INSURANCE

Key Legislation

CONSTITUTION ss 51(i), (vi), (xiv), (xx), 92, 99, 109

Date

NOTES ON POWER TO CONTROL DISTRIBUTION OF COAL IN PEACE TIME

Defence Power.

The defence power would not authorize general legislation to control the distribution of coal in peace time. The Commonwealth could, no doubt, enact suitable legislation to obtain supplies of coal for purposes directly within the defence power, as, for example, for use for naval shipping purposes or in munitions factories.

Trade and Commerce Power.

The Commonwealth has power to legislate with respect to trade and commerce among the States (Constitution, s. 51(i)). This power is subject to certain limitations, including those that trade and commerce among the States must be ‘absolutely free’ (sec. 92) and also that no law or regulation of trade or commerce may give preference to one State or any part thereof over another State or any part thereof (sec. 99).

The question is whether this power may be used to control distribution of coal in peace time. It may be stated at the outset that the Commonwealth has no power to control distribution of coal within a State; that is to say, intra-State trade in coal is outside the Commonwealth’s jurisdiction. It follows that such distribution is within the power of the States although in exercising that power it would be necessary to avoid infringing section 92, but an appropriately framed law could avoid doing so.

To control interstate distribution of coal, it is assumed that it would be necessary to do one or both of two things, namely—(a) to control or regulate the sending of coal from one State to another; and (b) to foster or compel the sending of coal from one State to another.

With respect to (a), this is, of course, subject to section 92. It is difficult to say in general terms whether control or regulation would limit freedom of interstate trade. No doubt, many forms of control or regulation would be impossible, but it is possible that some form of valid control could be devised. Thus State legislation setting up licensing system for motor vehicles carrying goods interstate has been held to be valid, but on the ground that it did not suppress or retard trade but facilitated it and protected State highways. Legislation which, however, was directly aimed at limiting interstate trade in coal would be difficult to sustain.

With respect to (b), the extent of the trade and commerce power must be considered. Most laws relating to interstate trade and commerce regulate such trade and commerce and some may prohibit it, up to a point. No doubt, a law fostering interstate trade and commerce would be valid. It is not by any means clear, however, that a law compelling a person to engage in interstate trade would be valid. Here again much depends on the precise form of the law; the remarks hereunder are directed to a law requiring a person, who did not otherwise intend to do so, to sell coal interstate.

Quick and Garran point out (p. 519) that ‘commerce does not come within Federal … control until its transportation from one State to another … has begun. Even preparation for exportation is not sufficient’. Presumably the authors would have agreed that preparation for interstate trade was not sufficient.

In the Huddart Parker case (8 C.L.R. 330) it was held that the power to legislate with respect to corporations did not extend to the creation of corporations. By a parity of reasoning, it might be held that the power to legislate with respect to interstate trade and commerce can only be exercised with respect to trade and commerce which has come into being dehors the Parliament and that the Parliament cannot legislate to compel a person to undertake interstate trade or commerce.

(It is convenient to mention here that the same case denies the Commonwealth Parliament authority, under the power to legislate with respect to trading corporations, to control the distribution of coal by such corporations.)

A similar question arose in connexion with the scheme of national insurance provided for by the 1938 legislation. The matter to be considered was whether the power with respect to ‘insurance’ authorised legislation with respect to what may be called ‘compulsory insurance’. The following appears on pp. 144 and 145 of Dr. Wynes’s work on the Constitution:

The constitutional aspects of a National Insurance Scheme were dealt with in a recent article in the Australian Law Journal where the view is suggested that ‘insurance’ in pI. (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, the Union Label Case and Huddart Parker & Co. Ltd. v. Moorehead. 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.

The force of this view must be admitted; indeed, the power of the Commonwealth to compel interstate trade in coal must, at the best, be regarded as weak if it exists at all.

The question arises whether the Commonwealth, or a statutory corporation created by the Commonwealth for the purpose, could deal in coal on an interstate basis and so conduct its business as to bring about the desired distribution of coal. The Commonwealth has set up a body—the Commonwealth Bank—and empowered it to carry on banking business. The power of the Commonwealth to do so has been faintly questioned but if the matter were put to the test, there would seem to be little doubt that the legislation would be upheld. Recently, a body was set up to engage in interstate trade and commerce by air, but the validity of this legislation is under attack. Pending a decision, it is not possible to say with any certainty whether the Commonwealth, or a statutory corporation created by the Commonwealth, could engage in interstate trade in coal.

Powers of the States.

The power of the Commonwealth with respect to interstate trade and commerce is not an exclusive power. The States also have this power, although its exercise is subject to section 92 of the Constitution and also, of course, to section 109. Assuming that New South Wales is the only State which sells coal interstate to any extent, it might be possible for legislation to be devised whereby the distribution of coal from this State would be regulated consistently with section 92. Further, it would be within the power of the State to acquire coal compulsorily and so long as that power was exercised so as not to exclude interstate trade it would probably be upheld.

My general impression is that the State has greater and more certain powers in this matter than has the Commonwealth.

Note: The opinion is undated and unsigned. However, references in the third-last paragraph to the recent setting-up of a body to engage in interstate trade and commerce by air, a current attack on the legislation and a pending decision indicate the opinion was written between mid-August and mid-December 1945. The legislation apparently referred to the Australian National Airlines Act 1945; it received Royal Assent (but did not commence) on 16 August 1945. The relevant High Court decision, Australian National Airways Pty Ltd v Commonwealth (No. 1) [1945] HCA 41; (1945) 71 CLR 29,was delivered on 14 December 1945.