I have already given to the Right Honourable the Treasurer an opinion dated 1 August 1901⁽¹⁾ that the Commonwealth is not liable for rates and taxes assessed by municipalities upon Commonwealth property.

The Right Honourable the Treasurer has now obtained returns from the Defence, Postal, and Customs Departments as to the rates and other charges paid by those Departments to the municipal bodies and State boards, and as to payments for sanitary and other services rendered to the Commonwealth, and he asks me to look into the matter and advise what the Commonwealth is bound to pay.

The questions which are raised by the papers are with respect to:

1. general municipal rates;
2. special rates-e.g. water and sewerage, sanitary, or lighting rates;
3. charges for services rendered-e.g. water supply, sanitary services, electric light;
4. rates on buildings rented by the Commonwealth, where the Commonwealth has contracted to pay rates.

As to (1) and (2), it is only necessary to repeat my previous opinion that the Commonwealth is not liable to pay rates imposed upon Commonwealth property by a State authority. This would be taxation by the States of the Commonwealth property, which is forbidden by section 114 of the Constitution, except by the consent of the Commonwealth Parliament. Although the Commonwealth, in common with other property owners, may derive benefit from the expenditure of the rates, they are strictly a tax and not a charge for services rendered.

(3) Payments for services specially rendered to the Commonwealth are, however, on altogether a different footing. The Commonwealth cannot claim that such services, for which charges are made to the citizens of the States, should be supplied to it free. The State authorities are entitled to charge by meter for water, electricity, etc. supplied to the Commonwealth, and to charge for sanitary services rendered specially to the Commonwealth. In such cases however it should be made clear that the charge is for services actually rendered, and not by way of a rate upon property. The amount of the charge should, where practicable, be fixed by agreement, and should be according to the service rendered.

(4) Where premises are rented by the Commonwealth, and under the law of the State in which the premises are situated the owner is liable, notwithstanding the occupation by the Commonwealth, to be rated in respect of them, then if it is a term of the lease that the Commonwealth shall pay the rates it is bound under its contract to pay them. In future agreements for leases it would be advisable to provide that rates shall be paid by the landlord.

[Vol. 1, p. 278]

(1) Not published [Vol. 1, p. 30].