I refer to your memorandum dated 13th March, 1946, in regard to two draft Cabinet Minutes in relation to Farm Mechanization and Machinery Pooling, respectively.

The Minute in relation to Farm Mechanization proposes that the Commonwealth should grant a sum of £15,000 per year for three years for the development of new types of agricultural machinery. It is intended that this money should be used for assistance in importing new machines for trial and possible adaption to meet the needs of the Australian rural industry and also for assistance in the manufacture of new machine prototypes in Australia in cases where the development of such new machines would not take place without government assistance.

In view of limitations on the ‘appropriation’ power of the Commonwealth as revealed by the recent decision of the High Court in the Pharmaceutical Benefits Case,¹ some doubt is entertained as to whether that power would justify the appropriation of moneys for the purpose abovementioned. It seems clear from that decision that there is no general power of appropriation and that any proposed appropriation should be limited to the legislative, executive or judicial functions under the Constitution, or to some other function which necessarily flowed out of the creation of the Commonwealth itself.

The proposed expenditure on new Farm Machinery might be viewed either as expenditure on research or, as suggested by you, as expenditure in relation to overseas trade. If the connexion with overseas trade were clear, I think the matter could be disposed of simply on the basis that the proposed expenditure was for a purpose within the legislative powers of the Commonwealth. However, I am not sure that I appreciate the connexion that the proposed purchase of machinery would have with overseas trade except that the actual importation of the individual items of new machinery would, in fact, constitute trade with other countries. It seems to me that the object of the proposed expenditure is not so much to ascertain whether the machines should be imported or not, as to ascertain whether particular machines, whether imported or manufactured in Australia, are suitable to Australian conditions. In other words, the object in view is research and the legality of the proposed grant should be considered on this basis.

Opinions vary as to whether research comes within the functions of the Commonwealth. I think the better opinion is that research would come within the functions of the Commonwealth, particularly if conducted on national lines with a view to the development of the Commonwealth as a whole. Accordingly, I think that the proposed grant could be legally appropriated and I suggest that, for paragraph 7 of your draft Cabinet submission, the following be substituted:

7. The question whether funds could be lawfully made available for this purpose has been considered by the Attorney-General’s Department, which has expressed the view that, notwithstanding the decision of the High Court in the Pharmaceutical Benefits Case, funds for research in relation to farm mechanization would probably be authorized.

The draft Minute in regard to machinery pooling envisages a long term plan for hire purchase machinery pooling which would be subsidised by grants to the States and also an interim plan to ensure continuity of machinery pooling between the war-time plan and the proposed long term plan. The interim plan would involve the expenditure of £100,000 from Commonwealth funds.

No constitutional difficulty is anticipated in respect of the long term plan as the assistance would be in pursuance of grants to the States under section 96 of the Constitution. Whether the grants should be made only after investigation by the State Grants Commission is a question of policy which, I suggest, you might discuss with the Treasury.

The provision of funds for the interim plan could, I think, be justified as funds for a defence purpose, the purpose being to maintain machinery pools during a short transitional period from a war to a peace-time rural economy.

Accordingly, I agree generally with paragraph 4 of the proposed Cabinet submission. However, I suggest that the following alterations be made in that paragraph and in paragraph 5:

1. The first sentence of paragraph 4 should commence with the words ‘The Attorney-General’s Department considers that …’
2. Page 3—Omit the sentence beginning with ‘The Federal Aid Roads Act’, also the sentence in parentheses.
3. Page 3—The words ‘The power should be used’ should read ‘The power could be used’.
4. Paragraph 5 should be altered by omitting the words ‘For these reasons it is believed’ and inserting in their stead the words ‘For these reasons the Attorney-General’s Department is of the opinion’ and also by omitting the words ‘reasonable short’ and inserting after the words ‘transitional period’ the words of reasonably short duration’.

[Vol. 37, p. 56]

¹ Attorney-General (Vic): Ex rel Dale v Commonwealth [1945] HCA 30; (1945) 71 CLR 237.