I have given consideration to your minute, dated 6th August, in which, at the instance of the Minister for Air, you ask for my advice as to whether the Commonwealth has power to restrain shipping companies from having interests or controlling interests in interstate or overseas airlines.

The only provisions in the Constitution which appear to be applicable to the existing facts as I understand them are the trade and commerce power (s. 51(i)), the corporations power (s. 51(xx)) and the incidental power. As there is no suggestion that there is any international convention dealing with the matter, the external affairs power may be disregarded for present purposes.

In light of the judgments in the recent Banking Case,¹ I do not think that much assistance can be derived from the corporations power. The question must, therefore, be considered in light of the trade and commerce power. This power would enable legislation to be enacted in relation to the persons who may engage in trade and commerce whether interstate or overseas but, quite apart from any other objections, any law which had the effect of prohibiting a shipping company from engaging in interstate trade and commerce would not, in my view, be valid because of section 92 of the Constitution. In consequence the field of prohibitive legislation would be confined to overseas airline operations. The obvious way of preventing the shipping companies from participating in such operations would be by refusing an airline licence to a company the shares of which were held either wholly or in part by a shipping company. An alternative method would be to make shipping companies ineligible to hold shares in a company conducting an airline service.

Having regard to the views expressed by a majority of the Judges in the Banking Case, the validity of legislation which adopted either of these methods would be open to real doubt.

[Vol. 38, p. 155]

¹ Bank of NSW v Commonwealth [1948] HCA 7; (1948) 76 CLR 1.