The Comptroller-General of Customs has submitted the following memorandum for advice:

In connection with the drafting of the regulations to give effect to certain of the coasting trade provisions of the 1912 Act, which provisions it is proposed to bring into operation early in the new year, a difficulty has arisen owing to some doubt as to the extent to which those provisions may be applied to shipping engaged in purely intra-state trade.

2. At the time the various Navigation Bills (including the Bill which is now the Act of 1912) were in preparation a difference of opinion existed between leading constitutional authorities as to the source and extent of the Commonwealth power to legislate in respect of shipping and navigation. The more favoured view was that the Commonwealth had practically unlimited power of legislation over shipping within Australian waters, and the Bills were drafted accordingly.
3. The judgment of the High Court in the Kalibia case, in December 1910, made it clear, however, that the Commonwealth had very limited powers indeed in regard to trade carried on entirely between the limits of a State. But seeing that three-fourths of the Navigation Bill had by that time been passed by the Senate, and in view of the fact that a referendum was shortly to be held on proposals to increase the powers of the Commonwealth in regard to, inter alia, trade and commerce, it was decided to allow the Bill to remain in its then form and not to amend it to accord with the High Court's judgment.
4. In order, however, to safeguard the Act against being declared ultra vires as exceeding the constitutional powers of the Commonwealth, a clause was introduced into the Bill (now section 2 of the Act) as follows:

2(1) This Act shall not apply in relation to any Australian-trade ship, limited coast-trade ship, or river and bay ship, or her master or crew, unless the ship-

1. is engaged in trade or commerce with other countries or among the States; or
2. is on the high seas, or in waters which are used by ships engaged in trade or commerce with other countries or among the States; or
3. is in the territorial waters of any Territory which is part of the Commonwealth.

(2) This Act shall be read and construed subject to the Constitution, and so as not to exceed the legislative power of the Commonwealth, to the intent that where any enactment thereof would, but for this sub-section, have been construed as being in excess of that power, it shall nevertheless be a valid enactment to the extent to which it is not in excess of that power.

5. The view held by the Attorney-General's Department is, it is understood, that, the judgment in the Kalibia case notwithstanding, section 51 (xxxix) of the Constitution (which empowers the Parliament of the Commonwealth to legislate on matters incidental to the execution of any power vested by the Constitution in the Commonwealth) may be taken as conferring, as incidental to the power over inter-State and external commerce, authority to control by legislation the highways upon which such commerce is carried, and that this necessarily includes power to regulate intra-State shipping plying upon those highways.
6. Though the extent of this power of control over intra-State shipping has never been defined, there would appear to be a consensus of opinion that it is strictly limited, and that generally speaking it does not extend beyond the power to prescribe such matters as are necessary to be observed by these intra-State vessels, not in their own interests nor for the comfort or safety of their crews and passengers, but solely in the interests and for the safety of the inter-State and foreign-going shipping using the same waters.
7. If this view is correct, Part VI of the Navigation Act, which takes no concern whatever in matters affecting the safety of navigation, cannot be enforced upon vessels which do not trade beyond the limits of a State. The carrying of certificated officers and of minimum crews, as prescribed by sections 14 and 43 and Schedules I and II, can also, it is presumed, only be justified and enforced to the extent to which such officers and crews are clearly essential to the safe navigation of the ship.
8. In the above connection it may, however, be suggested that the power given by section 736 of the Merchant Shipping Act 1894 to the legislature of a British possession to regulate the coasting trade of that possession may be taken as supplementary to that conferred upon Parliament by the Constitution, and consequently as empowering the Commonwealth to regulate the engagement of a vessel in the coasting trade notwithstanding that the trade of the vessel may be confined within the limits of a State.
9. It may be pointed out as perhaps relevant to the question, that in the preamble to the Imperial Order in Council containing the formal assent of His Majesty to the Navigation Bill, section 736 of the Merchant Shipping Act 1894 is quoted in full, the implication apparently being that such provision constitutes the source of the Commonwealth's power of legislation, as exercised in the Navigation Act, in respect of the coasting trade.
10. Until the doubts in the matter have been settled, it is impossible to complete the drafting of the necessary regulations. It is therefore suggested that the Secretary, Attorney-General's Department, be requested to advise as early as possible upon the points raised.

Section 7 of the Navigation Act 1912-1919 provides that a ship shall be deemed to be engaged in the coasting trade within the meaning of the Act if she takes on board passengers or cargo at any port in a State to be carried to and landed or delivered at any other port in the same State. Before engaging in the coasting trade, a ship must be licensed to do so: section 288. Schedule I prescribes, inter alia, the scale of deck officers to be carried on river and bay ships of over 50 tons and running more than 20 miles from the place of departure.

From the above provisions it is clear that the Act covers vessels engaged in purely intra-State trade.

The question now raised is whether, in view of section 2 of the Act and of the decision of the High Court in the Kalibia case, the Commonwealth can validly assume that control over intra-State coastal shipping which the Act contemplates. It will be noted that the decision referred to was given in 1910, two years before the Navigation Act was passed by the Commonwealth Parliament. It must always be assumed, in the absence of any judicial decision as to the validity of an Act, that, in passing the Act, the legislature intended to, and did, act within its constitutional powers.

Section 2 (1) provides, inter alia, that the Act shall not apply to any Australian-trade ship, limited coast-trade ship, or river and bay ship unless the ship is on the high seas or in waters which are used by ships engaged in trade and commerce with other countries or among the States.

Sub-section (2) of section 2 provides that the Act shall be read subject to the Constitution and so as not to exceed the legislative power of the Commonwealth

so that any enactment which would, but for that sub-section, be in excess of that power, shall be a valid enactment insofar as it does not exceed that power.

Sub-section (2) was designed to avert the danger, in the event of a court contemplating a decision adverse to the validity of the Act, of the whole Act being declared by judicial decision to be invalid. That sub-section is therefore, in my opinion, a provision rather for judicial consideration than for that of the authority administering the Act.

I am of opinion that the coasting trade provisions of the Act, subject to the restrictions contained in sub-section (1) of section 2, apply to vessels engaged in purely intra-State trade, and that, in the absence of judicial decision on the subject, there is no legal objection to those provisions being so applied.

[Vol. 16, p. 348]