The following memorandum has been forwarded to me with a request for advice:

A question has arisen as to whether under certain provisions of the Navigation Act unlicensed ships may, in the interests of certain of the more isolated portions of the Commonwealth, be permitted to engage in the coasting trade.

2. A proviso to section 7 of the Act (as amended by the 1919 Navigation Bill) defining engagement in the coasting trade reads as follows:

Provided further that the Governor-General may by order declare that the carrying of passengers or cargo between ports in any Territory under the authority of the Commonwealth, or between ports in any such Territory and any other Australian ports, shall not be deemed engaging in the coasting trade.

3. In 1913 in response to a request of the Department of External Affairs, administering the Northern Territory, an assurance was given that trade between Darwin and other Australian ports would under this provision be exempted from the operation of the Act.⁽¹⁾
4. Again section 286 of the Act provides that the Governor-General may by order declare that the carrying of passengers between specified ports in Australia, by British ships, shall not be deemed engaging in the coasting trade.
5. The Premier of Western Australia in a recent telegram urges the exemption from the coasting trade provisions of the trade with the north-west portion of that State. This portion, he states, is largely dependent for shipping facilities upon oversea vessels which call in at the ports on their way to and from Singapore and Eastern ports. Exemption is, in this instance, desired in respect of the carriage of both passengers and cargo, but under section 286 consideration can be given in respect of the carrying of passengers only.
6. The Chamber of Commerce, Hobart, requests that consideration be given to the exemption pf British ships carrying passengers between Tasmanian ports and ports on the mainland.
7. Although the provisions of the Act quoted above are explicit as conferring on the Governor-General power to grant exemptions, they must under the provisions of section 2 (2) of the Act be read and construed subject to the Constitution and so as not to exceed the legislative power of the Commonwealth.
8. Section 99 of the Constitution provides that the Commonwealth shall not by any law or regulation of trade and commerce, or revenue, give preference to one State, or any part thereof, over another State or any part thereof.
9. An order by the Governor-General under the proviso of section 7 or section 286 would presumably be 'a regulation of trade and commerce' and as the effect of such an order, whether expressed in specific or general terms, would be to give certain States, or parts of those States, advantages in the way of shipping facilities which would not be available to other States, or parts of such States, the issue of the order would appear to be a departure from the standard of equality and to involve the giving of a preference within the meaning of section 99 of the Constitution.
10. The coasting trade provisions of the Navigation Act are to be brought into operation at an early date. The requests made for exemption call, consequently, for early consideration and decision.
11. It is requested therefore that the Secretary will be so good as to arrange that an early opinion be given in the matter. The following questions are involved in the above memorandum:
1. Whether an order made by the Governor-General under the second proviso to section 7 or under section 286 is a law or regulation of trade, commerce or revenue; and
2. Whether the exemption of vessels calling at specified ports in the Commonwealth from the coasting trade provisions of the Act amounts to a preference to one State or part thereof over another State or part thereof.

In my opinion an order declaring that the carriage of passengers or cargo between specified ports is not to be deemed engaging in the coasting trade is covered by the expression 'law or regulation of trade, commerce, or revenue'.

The answer to question No. (2) depends upon the circumstances of each case in which it is proposed to make an exemption order.

Section 99 is designed to prevent one State or part thereof being placed as regards trade etc. in a more advantageous position than another State or part thereof and it is possible that an order under section 7 or section 286, although resulting in a discrimination between States, would not give one State a preference within the meaning of section 99 of the Constitution.

An order, under the second proviso to section 7, whereby it is declared that the carriage of passengers or cargo between ports in a Territory under the authority of the Commonwealth and 'any other Australian port' shall not be deemed engaging in the coasting trade, would not in my opinion be an infringement of section 99 of the Constitution inasmuch as the exemption would apply to trade between ports of a Territory and all other Australian ports.

In paragraph 9 of the above memorandum it is stated that the effect of an order under sections 7 or 286 would be to give to certain States or parts thereof advantages in the way of shipping facilities which would not be available to other States.

I do not think that it is conclusive that the order would contravene section 99 of the Constitution. I think that the facts and circumstances, as well as the form of the order would have to be gone into to establish a preference to one State, or a part thereof, over another State or a part thereof; and that relevant questions would be: whether the advantage to one State were accompanied by a disadvantage to another State, and whether the differential treatment was arbitrary or in the nature of an unfair discrimination.

At the same time, an order as regards the ports of one State would, at the least, raise a suggestion of preference.

[Vol. 16, p. 325]

(1)See Openion No. 536.