I refer to your letter dated 22nd July, 1947, in which you asked me to examine the question whether it is constitutionally possible for the Commonwealth to retain control over the flax industry. On 24th June, 1947, the Secretary of your Department, in a memorandum to the Secretary, Attorney-General’s Department, asked that this matter be considered and on 24th July, 1947, a memorandum was sent in reply.¹ I attach a copy of the latter memorandum for convenience of reference.

You will note that the Secretary, Attorney-General’s Department considered that it was within the general constitutional power of the Commonwealth to foster and develop the flax industry in Australia so far as this was necessary for defence purposes. He said, however, that it was rather difficult to advise on such a matter in general terms and preferred that specific proposals should be submitted to him for consideration.

The Secretary of your Department has now advised that the following is the action required to control the flax industry:

(a)  The letting of contracts with flax growers in the States concerned;

(b)  The processing of the resultant straw in Commonwealth owned and operated flax mills; and

(c)  The sale of the flax fibre and by-products to Australian spinners and to the United Kingdom Government.

It appears to me that this form of control is within the constitutional powers of the Commonwealth provided that the operations of the Commonwealth are limited to the requirements of defence and the Commonwealth does not engage in general commercial transactions. The requirements of defence should not be understood in any limited manner and include all that which, on my understanding of the facts, the Commonwealth has done in the past and proposes to do in the future. On page 7 of the statement dated 9th June, 1947, prepared by the Flax Production Committee, concerning the future of the flax industry reference is made to the likelihood of there being an overseas market for flax products for several years and the statement continues ‘it is not suggested, however, that Australia should plan to produce for export’. It would be such production for export, and for the local market, which would fall within the general commercial transactions which are forbidden to the Commonwealth. It seems clear, however, that no such operations are in fact contemplated by the Commonwealth.

In the circumstances I do not think there is any necessity to ask the States to pass legislation conferring on the Commonwealth any powers in relation to the flax industry.

 [Vol. 37, p. 550]

¹ Opinion No. 1814.