Opinion Number. 714

Subject

PREFERENCE OR DISCRIMINATION BY STATE RAILWAYS WHETHER CERTAIN FREIGHTS ON WHEAT CHARGED BY NEW SOUTH WALES RAILWAYS AMOUNT TO DISCRIMINATION AGAINST QUEENSLAND FLOUR MILLERS: POWERS OF INTER-STATE COMMISSION

Key Legislation

CONSTITUTION, ss. 102, 104: INTER-STATE COMMISSION ACT 1912, s. 19. Part V

Date
Client
Senator E. J. Russell, Assistant Minister

It has been brought under notice that the operations of Queensland flour millers have been considerably reduced owing to their inability to get wheat, and it has been suggested that this is brought about by unfair railway freights charged by the New South Wales railway authorities. It appears that some months ago the Queensland millers were drawing supplies from the Tamworth district (New South Wales) and that the New South Wales railway authorities placed freights from that district to the Queensland border in the same rate class as freights to Sydney, a reduction by comparison with ordinary rates of approximately one-half. When, however, it became necessary to obtain supplies from the southern and western districts of New South Wales, the railway authorities refused to extend the concession, and Queensland millers had consequently to train wheat to Sydney and ship it thence to Brisbane. On the other hand, it appears that New South Wales country millers can rail flour for export to Queensland at a specially low rate. This flour is carried at a rate approximately one-half that which the Queensland miller would be compelled to pay to rail wheat over portion of the New South Wales railways.

In view of section 102 of the Constitution and section 19 of the Inter-State Commission Act 1912, the validity of these rates may be questioned.

Section 102 of the Constitution gives to the Commonwealth Parliament power to pass a law with respect to trade and commerce forbidding-

... as to railways, any preference or discrimination by any State, or by any authority constituted under a State, if such preference or discrimination is undue and unreasonable, or unjust to any State; due regard being had to the financial responsibilities incurred by any State in connexion with the construction and maintenance of its railways. But no preference or discrimination shall, within the meaning of this section, be taken to be undue and unreasonable, or unjust to any State, unless so adjudged by the Inter-State Commission.

Section 19 of the Inter-State Commission Act 1912 provides that:

It shall not be lawful for any State, or for any State Railway Authority, to give or make upon any railway the property of the State, in respect of inter-state commerce, or so as to afreet such commerce, any preference or discrimination which is undue and unreasonable, or unjust to any State.

The main question is whether the freights charged by the New South Wales railway authorities amount to a discrimination which is 'undue and unreasonable, or unjust to any State', due regard being had to the financial responsibilities of the State in connection with the construction and maintenance of its railways. To determine this question all the facts of the case must be considered. A short haul over mountainous country may cost more than a long haul over level country. Therefore mileage alone is not a satisfactory test.

In this connection, section 104 of the Constitution must also be considered. This section provides that nothing in the Constitution shall render unlawful any rate for the carriage of goods upon a State railway, if the rate is deemed by the Inter-State Commission to be necessary for the development of the State, and if the rate applies equally to goods within the State and to goods passing into the State from other States.

The details given are not sufficient to enable one to form a decided opinion as to whether the rates amount to a preference or discrimination which is undue and unreasonable, or unjust to any State, within the meaning of the Constitution and the Inter-State Commission Act 1912. In addition they are unsatisfactory in that they relate to freights on different commodities. In other words, the Queensland millers complain that they have to pay higher freights on wheat to Queensland than the New South Wales millers have to pay on flour shipped over the same mileage. As pointed out above, section 104 of the Constitution permits the imposition of special rates necessary for the development of the State if such rate applies equally to goods within the State and to goods passing into the State from other States. It is open to the State to explain the difference in the rates by asserting that the rate on flour is a specially low rate, which is necessary for the development of the milling industry in the district in question, and that the rate on wheat is therefore not really an unreasonable rate.

Even if these rates do constitute an infringement of section 19 of the Inter-State Commission Act 1912 the question arises whether the Commonwealth can take any action in connection with this matter.

In the Wheat Acquisition Case 20 C.L.R. 54 it was held by the High Court that Parliament had no power to create the Inter-State Commission a court, and that Part V of the Inter-State Commission Act 1912 (sections 23-44) was invalid.

No machinery, therefore, exists at the present time for obtaining the adjudication of the Inter-State Commission upon the question, and in the absence of such machinery no action can be taken under section 102 of the Constitution.(1)

[Vol. 14, p. 348]

(1)This Openion was furnished to the addressee in reply to a report recieved by him from the Prices Adjustment Board.