Subject: CONTROL OF PRODUCTION AND DISTRIBUTION OF BUILDING MATERIALSPOWER OF COMMONWEALTH PARLIAMENT TO LEGISLATE TO GIVE A COMMONWEALTH AUTHORITY POWER WITH RESPECT TO PRODUCTION AND INTERSTATE DISTRIBUTION OF BUILDING MATERIALS: POWERS OF STATES WITH RESPECT TO INTERSTATE AND INTRASTATE DISTRIBUTION OF BUILDING MATERIALS: FREEDOM OF INTERSTATE TRADE; SCOPE OF DEFENCE POWER IN POST-WAR PERIOD: EXTENT TO WHICH CONTROL OF BUILDING MATERIALS IS WITHIN DEFENCE POWER: PROVISION OF HOUSING FOR RETURNED SERVICEMEN: WHETHER STATE LAW MAY DELEGATE POWER TO A COMMONWEALTH AUTHORITY TO CONTROL INTERSTATE DISTRIBUTION OF BUILDING MATERIALS
CONSTITUTION ss 51(i), (vi), (xxxvii), 92: NATIONAL SECURITY ACT 1939: NATIONAL SECURITY (FEMALE MINIMUM RATES) REGULATIONS: NATIONAL SECURITY (GENERAL) REGULATIONS reg 59: Control of Essential Materials Order made under NATIONAL SECURITY (GENERAL) REGULATIONS reg 59: BUILDING OPERATIONS AND BUILDING MATERIALS CONTROL ACT 1945 (NSW) ss 2, 17, 24
I refer to your telegram of 18th July, 1946, and your letter of 19th June, 1946, asking my advice on certain questions relating to the control of building materials.
The questions on which my advice is required appear to be—
(1) Whether it is within the constitutional power of the Commonwealth to enact legislation giving a Commonwealth authority power to control the production and distribution of building materials on similar lines to the control exercised at present under the Control of Essential Materials Order made under regulation 59 of the National Security (General) Regulations; and
(2) Whether the States can constitutionally delegate to the Commonwealth authority to control the distribution of specified building materials among the States.
With regard to the first question, I understand that the powers which it is contemplated would be vested in a Commonwealth authority would be—
(1) the power to direct a manufacturer as to the type of building materials he is to produce; and
(2) the power to direct a supplier of building materials in one State to supply those materials in quantities specified in the direction to a person (specified in the direction) in another State.
It appears to be contemplated that distribution of building materials within the borders of a particular State would be left to the authorities of that State.
The only heads of Commonwealth legislative power which appear to be relevant are the power to make laws with respect to trade and commerce among the States and the power to make laws with respect to defence.
For reasons arising out of the operation of section 92 of the Constitution (which I will discuss later) it appears to me that any legislation conferring the powers contemplated should not be expressed so as to confine the power to give directions to supply building materials to directions of an interstate character. This can only be achieved by relying on the defence power, and, as a result of the views I have formed as to the scope of that power, it does not appear to be necessary to deal further with the possibility of reliance on the interstate trade and commerce power.
The field over which the defence power may be exercised will diminish progressively during the period following the end of hostilities in the war, and it is a matter of great difficulty to state with any degree of certainty what the attitude of the High Court will be at any particular time in the post-war period to particular controls maintained after the end of hostilities. I understand that the control of building materials is required in order to ensure that the materials most urgently needed for the construction of houses will be produced, that a proper share of available materials will be used for the construction of houses and that that share will be available in the parts of Australia where it is most urgently needed. It is common knowledge that there is a shortage of houses in Australia resulting from the war. It is also common knowledge that a considerable percentage of the persons in need of houses are ex-servicemen. It appears clear, therefore, that a major purpose of the control is to assist in the re-establishment of servicemen by the provision of homes.
In Australian Textiles Pty. Ltd. v. the Commonwealth ((1945) 51 A.L.R. 488) the High Court upheld the validity of the National Security (Female Minimum Rates) Regulations which were made after the Japanese Government had agreed to surrender, but before the actual surrender. The regulations were upheld as being a measure for the re-establishment in civil life of returned soldiers. McTiernan J., speaking of the power given by the National Security Act to make Regulations for securing the public safety, for defence and for the prosecution of the war, said (at p. 498):
It is incidental to this power, if not of the substance of it, to assist the members of the Defence Force to obtain civil employment and to make available upon such terms as the Commonwealth thinks fit, civilian necessaries, for example, homes, clothes, medical services, to enable them to settle in civilian life.
In my opinion, the High Court would, having regard to the present acute housing shortage, hold that a Commonwealth law giving control over building materials is within the defence power. Just how long such a control could constitutionally be continued is a matter on which it is impossible to make a confident prediction.
A Commonwealth law of the kind suggested, although within the defence power, would nevertheless be invalid if it offended against section 92 of the Constitution, which provides that trade, commerce and intercourse among the States shall be absolutely free. The application of this section is always a matter of difficulty. In my opinion, a law of the kind contemplated would be less likely to offend against the section if the powers conferred on the Commonwealth authority over distribution were not restricted to interstate distribution and left any territorial restrictions on their exercise to administrative discretion.
However, even if the legislation were so expressed, the argument would be open that it authorized directions involving an interference with the right, guaranteed by section 92, of the owner of materials to sell his goods freely interstate. Alternatively, particular directions would be open to attack on similar grounds. Having regard to the trend of recent decisions of the High Court, it cannot be said with any confidence that the legislation, or at any rate directions under it, would survive such attacks.
With regard to the second question, what is contemplated appears to be a delegation of administrative powers under a State law to a Commonwealth authority. It does not appear to be intended to raise any question of the ‘reference’ of a matter to the Commonwealth Parliament by the State Parliaments in pursuance of section 51(xxxvii) of the Constitution.
All of the States except Tasmania have enacted legislation giving control over building materials to State Ministers or other State authorities. I will take the New South Wales Act (Building Operations and Building Materials Control Act, 1945) as typical. Section 17 of the Act gives the Minister power (inter alia) to require the owner or holder of building materials (other than timber) to sell, supply or deliver such materials in accordance with the requirements as to priority set out therein, in such quantities, within such time and to such persons or class of persons as may be specified therein. Section 24 enables the Minister to delegate all or any of his powers under the Act. Section 2 provides that the Act shall be read and construed subject to the Commonwealth of Australia Constitution Act, and so as not to exceed the legislative power of the State.
In my opinion, the power of the Minster under section 17 does not clearly authorize the Minister to require a person in New South Wales to sell, supply or deliver building materials to a person in another State. If this is the true construction of the Act, a delegation under section 24 to a Commonwealth authority of the Minister’s powers under section 17 would not enable the Commonwealth authority to give ‘interstate’ directions. It would probably be found, on examination of the Acts in the other States, that the position under those Acts is similar.
In my opinion it would, however, be constitutionally possible (subject to the point made in the next paragraph) for any of these State Acts to be amended in such a way as to authorise the Minister or other State authority to direct a person in the State to consign building materials to a person in another State, or to deliver building materials to an agent in the State of a person in another State, while retaining similar powers over distribution within the State. It would be possible, under a State law as so amended (provided that the Act contained the necessary power of delegation) for the State Minister or other State authority to delegate to a Commonwealth authority so much of his powers as enable him to give ‘interstate’ directions. The Commonwealth authority would then exercise those powers not by virtue of any Commonwealth law, but as the delegate of the State Minister.
However, a State law of this kind would be open to attack, based on section 92 of the Constitution, on similar grounds to those which could be taken in the case of the Commonwealth legislation. The validity of the legislation could not, in my opinion, be relied on with any confidence.
[Vol. 37, p. 568]