The idea that the Cth and the States may be impliedly wholly or partly immune from each other’s laws
Prohibits the Cth and the States imposing upon each other’s agents and instrumentalities burdens that fetter, control or interfere with the free exercise of the legislative or executive power
To what extent is the executive of the State/Cth government immune from interference from the other level of government?
Three stages in the HC’s approach
Dual sovereignty (1903-1920) – extensive ‘immunity of instrumentalities’ was recognised (very strict)
Legislative sovereignty (1920 – 1947) – no immunities were enforced. The Cth was given broad power to regulate the States (this shift was caused by The Engineer’s Case)
Dual Federalism (1947 – present) – immunities revived in a modified form. A balance between the two previous stages (compromise of strict and relaxed)
Dual Sovereignty
Early days – the court was prepared to subject federal powers to heavy scrutiny
Doctrine of reserved powers - where a power wasn’t expressly given to the Cth, it belonged to the States
D’Emden v Pedder (1904)
Interference with Cth by a State
Looked at whether salary paid by the Cth to a Cth employee was subject to State stamp duty
Held: this was not allowed as it was a form of interference by the States. The statute was read down so not to apply to the Cth
‘When a State attempts to … fetter control or interfere with, the free exercise of the legislative or executive power of the Cth’ the attempt is invalid (p.111) – need to keep the two levels of government separate
Followed by Deakin v Webb, Cth v NSW and Baxter v Commissioner of Taxation
KEY CASE: established that the two levels of government were wholly immune from the other level of government
Railway Servants’ Case (1906)
Interference with States by the Cth
Cth law relating to industrial arbitration scheme that was to bind NSW government instrumentalities (businesses that are under the control of the gov’t –e.g. Australia Post, provision of utilities)
While the Cth has the power to make laws with respect to this under the conciliation and arbitration power (s.51(xxxv)). However, need to consider implied immunities – this will restrict the exercise of Cth power
Held: the Cth could not force NSW to take part in the industrial arbitration framework. Need to keep each government level separate
R v Barger (1904)
Interference with States by Cth
Question – could a Cth law impose a special tariff on agricultural machinery used by factories that didn’t grant their workers certain conditions
Held: no as this was outside the Cth’s taxation power (can’t use taxation to interfere with an area of State power – indirectly interfering with workers conditions) and it discriminated between the States
The Cth can’t use the taxation power to interfere with a State area
Exception to the Immunities - 3 main exceptions:
Interference is permitted in regard to a Cth power that involved control of some aspect of State government –(e.g. Cth power to regulate interstate trade and commerce)
Trading activities of State instrumentalities may be subject to Cth regulations as long as regulations are the same as other businesses (general regulations that only apply to trading activity, not employment conditions)
Local governments do not enjoy immunity from Cth laws
Legislative Sovereignty
Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920)(The Engineers’ Case)
Concerned a union award for engineers that was endorsed by a Cth industrial relations tribunal. Was the award binding on the States as employers?
Question – Does the Cth government have the power to make laws binding on the States with respect to conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of one State?
s.51(xxxv) – arbitration power – read broadly to cover all disputes across State borders. No reason why an Act based on this power would not apply to States.90
States that the Railway Servants’ Case was decided wrongly
What changed? – different judges (influential judges left)
West v Commissioner of Taxation (NSW) (1937)
Concerned whether the NSW State government could tax the pension of a retired Cth public servant
Dixon J stated that ‘where … separate and exclusive governmental powers have been allotted to two distinct organisms, neither is intended … to destroy or weaken the capacity of functions expressly conferred on the other’
Dual Federalism (this is where we are at now – look at these cases)
Concerned an attempt by the Cth government to nationalise the banking industry. The Banking Act 1945 (Cth) attempted to prevent private banks from providing services for a State or a State instrumentality (s.48 made them bank with the Commonwealth Bank). The Melbourne City Council challenged this law on the grounds that it was not within the Cth banking power and it was an impermissible interference with State governments
Held: the HC struck s.48 down and stated that it was invalid based on the fact that the law singled out the States
Dixon J – Laws that impose a disability or burden upon the States are unconstitutional. ‘A distinction is drawn between laws of general application and laws singling out governments and placing special burdens upon the exercise of powers or the fulfilment of functions constitutionally belonging to them.’ (pp.81-82)
This applies to all powers under s.51 – except for some powers which authorise discrimination against the States (xxxi, xxxii, xxxiii, xxxiv)
Dixon J: - stated what he believed to be the legal proposition of the Engineers’ Case– a power given to the Cth to legislate in respect to a given subject allows the Cth to make laws that affect the operations of the States and their agencies
Reservations – the use of federal legislative power to make a law that discriminates against States
Stated that the Cth cannot enact a law ‘aimed at the restriction or control of a State in the exercise of its executive authority’
Starke J – stated that legislation will be invalid if aimed to destroy the other level of government. Question: does ‘the legislation or the executive action curtails or interferes in a substantial manner with the exercise of constitutional power by the other’? (p.75) – if so, the legislation is invalid.
Latham CJ – based his reasoning on either/or characterisation, which is now discredited
Rich J – There is no implication in the Constitution that the Cth is restricted from exercising its powers to the fullest extent due to reservation to the States. However, ‘the Constitution expressly provides for the continued existence of the States. Any action on the part of the Cth … which would prevent a State from continuing to exist and function as such is necessarily invalid.’ Action can be invalid in two cases –
‘where the Cth singles out the States or agencies … and imposes on them restrictions which prevent them from performing those functions’
‘where, although the States or their essential agencies are not singled out, they are subjected to some provision of general application which in its application to the would so prevent or impede them.’ (p.66)
Two key questions (Dixon J approach):
Is the legislation within power?
If so - Does the legislation violate any prohibitions? (offend an express or implied limitation on the Cth’s use of power)
It was held that the law was within the banking power but violated an implied immunity
Some confusion as to which criteria to address in regards to interference with State function as all judges adopted different approaches
Commonwealth v CIgamatic (1962)
Interference with the Cth by a State
Concerned a NSW statute that interfered with the Crown’s prerogative right of the Cth to be prioritised in the payment of debt after insolvency
Stated that the federal system is a dual system – if there is any supremacy, it belongs to the Cth (States do not have the power to regulate the rights, privileges, duties or disabilities of the Cth)
Uther v Federal Commissioner of Taxation (1947) – Rich J stated that a State is allowed to abolish a prerogative of the Crown. Dixon CJ held in Cigamatic that Uther should not be considered as binding
Victoria v Commonwealth (Payroll Tax Case) (1971)
Interference with States by the Cth
A Cth Act imposed a general tax of 2.5% on all wages paid by an employer (which included States and State entities). States argued that this was not within the Cth’s power as it interfered with the functioning of State governments as employers
HC held this was valid as it was a general law – didn’t only apply States in order to disadvantage them (applied to all employers – some exceptions)
Reaffirmed the principle in Melbourne Corporation
Barwick CJ – ‘the government cannot ‘aim’ its legislation against a State’
His understanding of Melbourne Corporation – ‘a law of the Cth which in substance takes a State or its powers or function of government as its subject matter is invalid because it cannot be supported upon any granted legislative power’ (p.372)
Looked at characterisation – if the Act has two subject matters (one within s.51 and one not), then you need to consider what is the true subject matter - ‘It is the lack of an appropriate subject matter rather than the presence of an implied limitation upon some granted power that such a law … would fail.’ (p.373)
Windeyer J – ‘implications arising from the existence of the States as parts of the Cth … may restrict the manner in which the Parliament can lawfully exercise its power to make laws.’ (p.403)
‘A law, although it be with respect to a designated subject matter, cannot be for the peace, order and good government of the Cth if it be directed to the States to prevent their carrying out their functions.’ (p.403)
Melbourne Corporation was decided on - Implied limitation to the power of the Cth due to the federal structure of the Constitution
Gibbs J – ‘there should not be implied in the Constitution a limitation upon the legislative powers of the Cth that would render invalid any law to the extent which it purports to impose a tax upon the States.’ (p.423-424)
Accepts Dixon J’s view that a law is bad if it discriminates against States in the sense that is imposes a burden or disability upon them
Key question: does the legislation discriminate against the States?
There was an industrial dispute between electricity workers and the QEC (QLD government body). The Cth government intervened by passing legislation to bring the case into Cth jurisdiction to be dealt with by the Cth Conciliation and Arbitration Commission
HC held that this law was discriminatory against QLD and was invalid
Clarified the test to apply to Intergovernmental Immunities cases (QEC test– per Mason J at p.217-218): (If yes, the law was invalid)
Does the Cth law single out or discriminate against the States? (anti-discrimination test – laws can’t place special burdens on State governments that don’t apply to other bodies)
Does the law inhibit the capacity of a State to function as a government? (function as a government test – laws of general application cannot operate to destroy or curtail the existence of States or their capacity to function as governments)
Key things to note:
Prohibits legislation that both discriminates against a particular State and States in general
A law that deprives a State of a right, privilege or benefit that places them on equal footing with other States is not discriminatory
These prohibitions apply both to States and agencies of the States (e.g. Melbourne Corporation)
Deane J – the fact that a general law places an onerous burden on the States does not necessarily mean that it is discriminatory – the law must ‘discriminate in the sense that its operation involves a singling out of the States in a way that would prevent them from performing their essential functions or which would impede them in doing so’ (e.g. Payroll Tax Case – just because the tax paid by the States was particularly large and had an onerous effect, the legislation was not discriminatory as it did not single States out
Western Australia v Commonwealth (Native Title Act Case) (1995)
Interference with States by the Cth
The Act limited the way in which State government could respond to native title claims. The State had to pay compensation in some cases. WA argued that this Act was discriminatory and that is interfered with their capacity to function as a government.
HC held the Act was not discriminatory (it may affect WA more as there is a higher percentage of Indigenous people; but this wasn’t intentional)
HC also held that there was no deprivation of the ability to function as government.
The case stated that the second limb of the QEC test applies to:
The ‘existence and nature’ of the State gov’t, but not specific powers
The essential ‘personnel, property, good and services’ the State requires to operate
Re Australian Education Union; Ex parte Victoria (1995)
Interference with States by the Cth
A dispute arose when the Victorian government offered redundancy packages to some school teachers and health workers. The union wished to bring the dispute under a federal award.
Distinction between two categories of employees:
(A) Non-high level officers (anyone not in the top level of managers)
(B) High level officers (e.g. ministers, ministerial assistants and advisers, heads of departments, parliamentary officers, judges)
Held that the Cth can’t interfere in State employment with respect to: (these aspects are critical to a State’s capacity to function)
For Category (A) (p.232)
The ‘number and identity of persons’ of people to employ
The ‘term of appointment’ of employees (part-time, full-time, casual, until retirement, etc)
The ‘number and identity’ of people who they wish to dismiss, with or without notice, on redundancy grounds
For Category (B) (p.233)
All those for Category (A)
Qualification and eligibility conditions
Number, identity, terms and conditions of employment for the higher levels of government
Basically – the Cth cannot interfere with category (B) employees in any respect
Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ gave a joint judgment.
Held: ‘the existence of the States … and their capacity to function as a government would not be impaired by the operation of federal awards made in respect of the vast majority of employees … if the award provisions were confined to minimum wages and working conditions which take appropriate account of any special functions or responsibilities’ (p.230) (F&R means amount of work done, skill level, responsibility level
Basically – the Cth arbitration system could extended to industrial relations within the States on matters such as minimum wages and working conditions; however, cannot extend into areas of policy judgment in relation to employment structure
As this law was about redundancy, it was invalid
Victoria v Commonwealth (Industrial Relations Act Case) (1996)
Interference with States by the Cth – application of AEU Case
The Actwas amended to increase protections for workers (restricted the grounds of dismissal)
The HC ruled that the legislation did not bind the States as employers, since it interfered with the protected areas designated in the AEU Case.
The ‘number and identity’ of redundancies.
The conditions of employment provided at the ‘higher levels of government’.
Re Residential Tenancies Tribunal of NSW (1997)
Interference with Cth by a State (rare – the Cth’s legislative powers have expanded over time)
Question – did the State tenancy legislation cover leases taken out by Cth instrumentalities (in this case – the defence force)
HC held that States can’t pass laws that interfere with the ‘capacities’ of the Cth, but they may regulate Cth ‘activities’ (State laws can’t single out Cth or remove special privileges enjoyed by the Crown)
Austin v Commonwealth (2003)
Interference with States by the Cth
Concerned a Cth ‘superannuation contributions surcharge’ directed at high income earners (included State judges)
HC held that the levy was invalid as it interfered with the ability of the States to discharge their functions under the principle set out in the AEU Case (relating to the appointment and remuneration of judges)
Reformulated the QEC test: Instead of two limbs, it was expressed as a single, overriding test (per Gaudron, Gummon and Hayne JJ, p.249)
Does the Commonwealth law curtail or interfere with the capacity of a State to function as a government?
Mere discrimination may not always be enough to infringe immunity
McHugh J maintained the QEC two limb test applies
Clarke v Commissioner of Taxation (2009)
French CJ identified 6 factors: (only one judge – only opinion, not binding) – these factors form a multifactorial test to determine the application of
1. Whether the law in question singles out one or more of the States and imposes a special burden or disability on them which is not imposed on persons generally
2. Whether the operation of a law of general application impose a particular burden or disability on the States
3. The effect of the law upon the capacity of the States to exercise their constitutional powers
4. The effect of the law upon the exercise of their functions by the States
5.The nature of the capacity or functions affected
6. The extent to which the constitutional head of power under which the law is made authorises its discriminatory application
Characterisation
When evaluating legislation, ask:
Does the Cth law match up with a s.51 power or another power within the Constitution?
What is the subject matter of the law? Does it fall within one or more enumerated heads of power? (Characterisation)
The HC approach to characterisation has changed over time.
Early view – Cth powers should be limited to protect the reserve powers of the State
Dominant characterisation – What is the true subject of the law? (e.g. is the true subject matter of the law taxation or is the Cth using the taxation power to interfere with education?)
E.g. R v Barger (1908) - A Cth law imposed a tariff on agricultural machinery used by factories that did not grant their employees certain minimum working conditions. This law was about both taxation (imposing a tariff) as well as industrial relations (the effect of the tariff was to try and improve workers’ conditions)
HC struck down the law (the dominant character of the law was not with respect to taxation – it was a law about working conditions) – stated that while the Cth can use tax to achieve an end not solely related to taxation; the Cth cannot use taxation to interfere with areas of state power.
E.g. Huddart, Parker & Co v Moorehead (1909) - Cth tried to use the corporation power to question the plaintiff about its trading activities. The company refused to comply
HC held that the dominant character of the law was not regulating corporations; rather, to regulate trade and commerce (a State power). Thus, the law was invalid
Engineers’ Case – moved away from the dominant characterisation approach
Dual/Multiple Characterisation – Is there a reasonable view of the law that places it within the head of power? (does not look at the true purpose of the law)
A law can have more than one legitimate subject matter – as long as at least one of the law’s subject matters is within Cth power, the law is valid
The connection between the law and the purpose must be genuine and not ‘so insubstantial, tenuous or distant that [the law] cannot sensibly be described as a law ‘with respect to’ the head of power’ (Re Maritime Union of Australia; Ex parte CSL Pacific Shipping Inc (2003))
This grants the Cth more power – they can make a law that impacts both a federal and State power and it will be valid
E.g. Fairfax v Federal Commissioner of Taxation (1965) – concerned attempts of the Cth to use taxation to encourage private investments in government securities as superannuation funds were exempted from income tax if they bought government bonds. The law was challenged on the basis that it was not truly about taxation, rather about the investment of superannuation funds; thus, outside of the Cth power
HC held that the law was valid and that Cth laws with respect to a s.51 power may also affect another area
As long as the law can be characterised as a law ‘with respect to’ a subject matter that is within Cth power, it is irrelevant that the law may also be characterised as bearing upon some subject matter not within the Cth’s power
E.g. NSW v Cth (Work Choices Case) (2006) – concerned legislation that relied on the corporations power but affect industrial relations.
HC held that the law was valid – stated that the Cth powers must be read with ‘all generality that the words admit’
Two types of powers in ss.51 & 52: subject matter and purposive
If the power is one of subject matter: test = Is there sufficient connection between the law and the head of power?
If the power is purposive: test = proportionality
Conflict of Laws
Must first determine if a law is valid
Cth – the law must be within the powers of the Cth (s.51)
State laws will not be valid if they concern an exclusive Cth power (s.52)
There are some heads of power that both Cth and States can legislate in regards to. What happens if there is a conflict?
For a conflict to arise, there must be a valid Cth and a valid State law
In most conflict of law cases, the initial step is determining if both laws are valid
The Cth cannot create an inconsistency in order to extend their powers (Airlines of New South Wales Pty Ltd v New South Wales (1965))
