Opinion Number. 1870

Subject

RATIONING: LIQUID FUELVALIDITY OF LIQUID FUEL (RATIONING) REGULATIONS IN RELATION TO BULK SUPPLIERS: WHETHER CONTRARY TO FREEDOM OF INTERSTATE TRADE: SEVERABILITY OF PROVISIONS RELATING TO BULK SUPPLIERS

Key Legislation

CONSTITUTION s 92: LIQUID FUEL (RATIONING) REGULATIONS regs 5(3), 8

Date
Client
The Controller of Liquid Fuel

My attention has been drawn to an opinion expressed by Mr. G.E. Barwick, K.C., to the effect that the Liquid Fuel (Rationing) Regulations of the Commonwealth, as applied to petrol in the hands of bulk suppliers, are contrary to section 92 of the Constitution and invalid and that there is no power in either the Commonwealth or a State Parliament to enact a scheme of rationing, whether by Act or by Regulations, which involves the determination of where and in what quantities petrol may be sold by the petrol companies in Australia. In the light of this opinion I am asked to advise briefly this morning on the validity of the Regulations.

(2)  Regulation 8, which prohibits a bulk supplier from moving out of any customs warehouse or excise factory any motor spirit in excess of the quantity authorized in writing by the Controller to be so moved out during any period, was inserted in the Regulations after considerable discussion, and with some doubt as to its validity. These provisions are however legally severable from the Regulations as a whole, and I understand that the rationing of petrol to consumers would remain a workable plan even without the quota system for distributors envisaged by regulation 8, though from a practical point of view it would not then work as effectively, and the difficulties of enforcement would be greatly increased. Coupon rationing from the bulk suppliers to retailers would similarly be legally and practically severable from the remainder of the scheme, though possibly with some machinery changes in the Regulations: assuming, of course, that the rationing of petrol to the consumer is itself valid.

(3)  Particularly if the provisions relating to bulk suppliers are taken out of their context, it must be conceded that there is strong authority to support the contention of Mr. Barwick that the quota system provided for by the Regulations in respect of bulk suppliers would be held to contravene section 92.1 On the other hand the Privy Council in its judgment in the Banking Case made clear that the regulatory, as distinct from the prohibitory, control of commerce, including interstate commerce, is compatible with the freedom predicted by section 92. In this regard it may be important to bear in mind that the rationing of petrol does not in the last resort deprive the Australian community of any portion of available petrol supplies; in this respect the scheme is sharply contrasted with the quota system formerly devised for regulating the marketing of dried fruits. It may also be noted that by virtue of regulation 5(3) all the powers and discretions conferred by the Regulations are to be exercised for the purpose of ensuring a just and orderly sharing of liquid fuel while there is a shortage of supplies of liquid fuel in Australia, and for no other purpose. The discretions conferred by the Regulations are not therefore, as I think Mr. Barwick appears to regard them, absolute or unlimited discretions. I think therefore that there is at least a reasonable possibility of distinguishing legislation of this character from the schemes of commodity control which were invalidated in the meat cases in the First World War2 and in the dried fruits cases later.3

(4)  In view of the wide generality of the tests laid down by the Privy Council in the Banking Case, and the fact that the application of these tests has not yet been considered in the High Court, I think it is impossible to advise with certainty that the provisions of the Liquid Fuel (Rationing) Regulations, more particularly as they apply to bulk suppliers, would be upheld if challenged under section 92.

(5)  A contention which produced the result that neither the Commonwealth nor the States could effectively ration a scarce commodity, either in peace or in war, would I think probably be rejected by the Courts. In the petrol rationing case in 1949, for instance, the High Court did not suggest any doubt as to a State’s power to control the fair distribution of the commodity, though holding that the Commonwealth’s war-time power to do so had come to an end.4 I do not regard Mr. Barwick as having questioned the validity of the petrol rationing scheme as a whole, but only the particular provisions affecting the bulk suppliers, which as already stated I do not think are in any event a vital part of the Regulations.

[Vol. 39, p. 7]

1 Commonwealth v Bank of NSW [1949] UKPCHCA 1; (1949) 79 CLR 497 (PC).

2 Duncan v Queensland [1916] HCA 67; (1916) 22 CLR 556 overruling Foggitt, Jones & Co Ltd v New South Wales [1916] HCA 28; (1916) 21 CLR 37.

3 James v South Australia [1927] HCA 32; (1927) 40 CLR 1; James v Cowan [1932] UKPCHCA 2; (1932) 47 CLR 386 (PC); James v Commonwealth[1936] UKPCHCA 4; (1936) 55 CLR 1 (PC); Hartley v Walsh [1937] HCA 34; (1937) 57 CLR 372.

4 R v Foster [1949] HCA 16; (1949) 79 CLR 43.