Defence power is narrowest during peacetime stull significant scope as the Constitution has been interpreted due to the Engineer’s Case
Defence power covers ‘defence preparedness’ and matters such as ‘the enlistment (compulsory or voluntary) and training and equipment of men and women in nay, army and air force, the provision of ships and munitions, the manufacture of weapons and the erection of fortifications.’ – Australian Communist Party v Commonwealth (Communist Party Case) (1951) – p.254
Successful use of the defence power:
Clothing Factory Case (1935) – HC upheld legislation creating a Cth factory to produce clothes for both military personnel and civilians (multiple characterisation – had both a defence and not defence purpose – enough to hold it within the defence power)
Capital Issues Case (1953) – HC upheld legislation allowing the Treasure to restrict businesses from raising capital in ways competing with government capital issues (defence power as raising money through governmental bonds was necessary to fund the military)
Unsuccessful use of the defence power:
Shipping Board Case (1926) – law authorised the Cth Shipping Board to produce and sell equipment for generating electricity. Cth argued that a reliable supply of electricity was needed for naval defence. HC struck down law – not a sufficient connection with defence (this law may have been okay during wartime)
Communist Party Case (1951) - The Communist Party Dissolution Act 1951 (Cth) outlawed the Communist Party, confiscated its property and allowed GG to outlaw other associated groups. Cth argued that these measures were needed for national defence. HC struck down the law – not supported by the defence power
This case would now raise concerns of the implied freedom of political communication
Military Discipline
Defence power supports the establishment of service tribunals to hear charges against military personnel (even during peace time)
R v Tracey; Ex parte Ryan (1989) –HC upheld the Defence Force Discipline Act 1982 (Cth) which established military tribunals. Limitations – can’t prevent civilian courts from also trying military personnel.
Internal Threats
s.51(vi) – extends to ‘the control of the forces to execute and maintain the laws of Commonwealth’ this could be construed as police power (establishing a Cth police force); however, the police power falls under the incidental power (s.51(xxxix)) – look elsewhere to find a power to cover internal threats
Terrorist attacks – lead to questions whether the defence power covers internal threats Thomas v Mowbray (2007) – HC upheld anti-terrorism legislation allowing ‘interim control orders’ under the defence power. Allowed the power to extend to internal attacks against body politic as a whole/against the government or public
Corporations Power
s.51(xx) – The power to make laws with respect to ‘foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth’
Concurrent power – Cth has been given enormous power to regulate economic activity (after Work Choices Case)
Two key questions in regards to this power:
What are the entities with respect to which the Commonwealth may make law under s.51(xx)?
What kind of law can the Commonwealth make with respect to these entities?
What is a Corporation?
s.51(xx) applies to ‘constitutional corporations’ – foreign corporations, trading corporations formed with the Cth and financial corporations formed within the Cth
What is a corporation?
An association that is given an artificial legal personality by law
Established by State or Federal Law – uniform Corporations Act in every jurisdiction
A corporation may be incorporated under a special statute (e.g. University of Queensland Act 1998 (Qld), City of Brisbane Act)
Incorporation means – the company is a separate entity from its shareholders and directors, the company can sue in tis corporate name, there is perpetual succession (employees change, company remains), power to acquire and hold property
Foreign Corporations
A corporation ‘formed outside the limits of the Cth’ (Incorporations Case (1990))
Entity must be a corporation at foreign law (Adamson’s Case (1979) – an entity is a corporation if, under foreign law, it is an entity separate from its members)
Foreign corporation does not need to be a trading or financial corporation – s.51(xx) applies to all corporations
Trading Corporations
s.51(xx) will apply to corporations that only engage in intra-State trading (trading only within one State)
Huddart, Parker & Co v Moorehead (1908) said that s.51(xx) does not apply to corporations that conduct only intra-State trade but this decision was overruled in Strickland v Rocia Concrete Pipes (Concrete Pipes Case) (1971) – said that the Huddart Parker decision was based on the reserved powers doctrine which was later overruled in the High Court
What is a trading corporation? – a corporation set up to engage in trade (What was the purpose of setting up the corporation? Look at memorandum documents). There are three tests to determine whether or not a corporation is a trading corporation?
1. Nature of the corporation is determined by the purpose for which It was set up (purpose test)
R v Trade Practices Tribunal; Ex parte St George Country Council (1974) – The Council was set up to provide an essential service to inhabitants; thus, was not a trading corporation. What was the purpose for which the corporation was set up? (per Gibbs and Menzies JJ)
2. Predominant and characteristic current activity (activities test)
St George Country Council Case (1974)– a corporation will be a trading corporation if it’s predominant characteristic activity is trading. The ends for which the corporation trades is irrelevant. (per Barwick CJ)
3.Trading activities are a ‘substantial’ or ‘not insignificant’ part of its operation
Authority favours this case – but it is not certain
This is basically a judgment call
R v Federal Court of Australia; Ex parte Western Australian National Football League (Adamson’s Case) (1979)– applied the activities test but said the trading activity must not be insubstantial (per Mason and Murphy JJ). Held that the WA and SA football leagues were trading corporations
Applied in State Superannuation Board v TPC (1982) by Deane J – minority said that the superannuation fund was not a constitutional corporation because its predominant or characteristic activity was governmental in nature
Trading corporations – football leagues, state superannuation board, hydro electric commission of Tasmania (Tasmanian Dam Case (1983)), shelf companies (a company that has been set up but not in operation – Fencott v Muller (1983) – in the absence of activities, apply the purpose test)
Financial Corporations
Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) – a corporation is a financial corporations when it conducts ‘transactions in which the subject of the transactions is finance (such as borrowing or lending money) as distinct from transactions (such as the purchase or sole of particular goods …) in which finance, although involved in the payment of the price, cannot be properly seen as constituting the subject of the transaction.’ – per Deane J, p.642
Suffices if financial dealing is a substantial part of its activity
E.g. – banks, building societies, finance companies,
Superannuation Boar v Trade Practices Commission (1982) – approved above test and said that a corporation is a financial corporation if it engages in financial activities. Significant as it said that financial activities need not be the corporations predominant activities. But need only form a substantial proportion of its total activities
Bourke v State Bank of NSW (1990) – commonwealth can’t regulate State Banks
Development of Corporations Power
Corporation power was basically ignored as a basis for Cth legislation until Strickland overruled Huddart Parker
Huddart, Parker & Co v Moorehead (1909)
Held that the corporations power could not support the Australian Industries Preservation Act 1906 (Cth) (early version of trades practices legislation)
Court held that the corporations power should be construed narrowly in order to protect the reserved powers of the States
Fear that a broader interpretation would give the Cth an uncontrollable power
Isaacs J dissented and said that the corporations power was exercisable wherever ‘these specific objects are found, irrespective of whether they are engaged in foreign or Inter-State commerce, or commerce confined to a single State’. The autonomy of the States is safeguarded to an extent in that the power restricted the Cth in regards to what type of corporations they could legislation on (foreign, trading and financial). This already limits the Cth power; thus, you shouldn’t put even further limits on it. (p.393)
Isaacs J essentially looked at two questions – which corporations fall within s.51(xx)? And what aspects or activities of a corporation can be regulated under s.51(xx)?
Strickland v Rocla Concrete Pipes Ltd (Concrete Pipes Case) (1971)
Challenge to aspects of the Trade Practices Act 1965 (Cth).
Overruled Huddart Parker – said that it was decided on the reserved powers doctrine which was now overruled in the Engineer’s Case (1920)
What kind of laws can Parliament make with respect to constitutional corporations?
s.51(xx) is a power in relations to persons or entities, not activities (like the aliens and races power)
HC refuses to place an outer limit on the power – each case is determined on a case by case basis with limits being pushed further out (Actors and Announcers Equity Association v Fontana Films Pty Ltd (1982))
‘The subject of the power is corporations … the power is not expressed as one with respect to the activities of corporations, let alone activities of a particular kind or kinds.’ – per Mason J, p.207
Tasmanian Dam Case (1983) – extended the scope of the power to allow the Cth to regulate activities undertaken for the purposes of its trading activities
Parliament has no power with respect to incorporation of companies generally
s.51(xx) does not enable the Cth to enact its own corporations law that would regulate all aspects of companies (including their incorporation)
Why? – NSW v Cth (Incorporations Case) (1990) said:
The words ‘formed within the Cth’ refers to corporations already formed
s.51(xiii) gives power to make laws with respect to incorporations of banks (expressio unius exclusion alterius – express inclusion of one thing excludes another)
Parliament cannot have the power to legislate on formation of foreign corporations
Parliament cannot make law to abolish corporations
Parliament may regulate the conduct of activities of corporations but not ban them – Cth v Bank of NSW (Banking Case) (1948)
E.g. the ABC and NBN were created under s.51(v) ‘postal, telegraphic, telephonic, and other like services’; Commonwealth Bank established under s.51(xiii) ‘banking, other than State banking’; Australian National Airways created under s.51(i) ‘trade and commerce with other countries, and among the States’.
Extent of power to regulate corporation – there are two tests:
The ‘Distinctive Character’ test:
The aspect or activities that the Cth can regulate must have something to do with the characteristic that brings the corporation within the Cth power (e.g. if the law is in respect to a trading corporation, the law must have something to do with trading activities of that corporation)
Objective of Statutory Command test:
No limits – Cth can regulate any aspect or activity of the corporation
Dominant test – fears of power being too broad
A law is valid under s.51(xx) if the object of statutory command is a constitutional corporation (directed at a corporation in s.51(xx))
Re Dingjan; Ex parte Wagner (1995) – ‘the corporations power is directed to persons and not subject matters … the power conferred by s.51(xx) also extends to any subject that affects the corporation…. the law must have ‘a relevance to or connection with’ a s.51(xx) corporation.’ – per McHugh J, p.368
Gave no clear answer – agreed that the question shouldn’t be ‘what aspects or activities of a corporation can be regulated?’; rather, should be ‘what degree of relevance or connection to ‘constitutional corporations’ is necessary?’
Also supports laws directed to protecting constitutional corporations from conduct intended and likely to cause loss or damage to the corporation (Fontana Films)
May regulate purely intra-state activities of trading corporations
See above about intra-state corporations (Strickland)
If the purely intra-state activity is banking, parliament has no power due to s.51(xiii) ‘banking, other than State banking’
Regulation of activities of third parties in relation to constitutional corporations
Actors and Announces Equity v Fontana Films (1982) upheld s.45D of the TPA, which prohibited secondary boycott of corporations.
The prohibited conduct is sufficiently relevant for the prohibition of it to be described as a law with respect to the subject of constitutional corporations – per Gibbs J, p.183. However, there are limits to the power to regulate third parties
Davies v Commonwealth (1998) – HC considered the validity of certain provisions of the Australian Bicentennial Authority Act 1980 (Cth). Provisions granted the Authority a monopoly of certain symbols and expression including the term ‘200’. In their joint judgment, Mason CJ, Deane J and Gaudron J stated that s.51(xx) could be used to grant protection to corporation against deceptive use of its symbols but they held that this went far beyond protection of that kind
Regulation of industrial relations by corporation power – The Work Choices Case
Work Choices Case – large expansion of the corporations power
Work Choices legislation was a series of amendments to the Workplace Relations Act (Cth). The main Act was supported by the conciliation and arbitration power. Gov’t used corporations power to support the new Act
Aim of legislation = use corporation power to install a comprehensive law governing industrial relations that radically changed the existing systems. The Act brought 85% of the Australian workforce within federal jurisdiction
Law not supported by s.51(xxxv) – power over industrial disputes extending beyond the limits of any one State
Challenged on the basis that:
There is a distinction between internal and external relations of corporations and s.51(xx) does not apply to internal relations
REJECTED – this added a new filter to the test and was indirectly based on the discredited reserved powers doctrine
The existence of specific industrial relations powers in s.51(xxxv) precludes the use of s.51(xx)
REJECTED – s.51(xxxv) deals with a narrower subject of conciliation and arbitration and a law may have several characters (the fact that is deals with IR doesn’t mean it isn’t a law on constitutional corporations)
Majority said the rejection of the plaintiffs’ arguments ‘is favoured by a consideration of the text and structure of the Constitution and by the course of authority in this Court since at least the demise of the reserved powers doctrine in 1920.’
Other limits on the corporations power
Like all s.51 powers, the corporations power ‘is subject to this Constitution’
Nationwide News v Wills (1992) – s.51 powers are subject to the implied freedom of communication
Melbourne Corporation Case (1947) – cannot impair the capacity of the States to function as States
No taxation is possible except under the authority of an Act of Parliament
Relevant sections:
s.81 - government revenue must be paid into the Consolidated Revenue Fund (CRF)
s.82 – Commonwealth expenditure takes priority in applying CRF funds
s.83 – money can only be drawn from the fund under an appropriation law
s.54 – appropriation bills for ordinary services of government (OASG) must only deal with such appropriations
If the Budget is not passed by both houses, it is convention for the PM to resign
Power to Impose Tax
s.51(ii) – Parliament has the power to make lawswith respect to ‘taxation; but so as not to discriminate between States or parts of States’
This power has had a significant impact on the evolution of Australia’s federal structure
Cth uses this power to raise most of its revenue – income tax and GST
Only limit on taxation is that it doesn’t ‘discriminate between States or parts of States’
s.90 – power to impose duties of customs and excise belong exclusively to the Cth
Cth has a monopoly on income tax
Established In the State Grants (Income Tax Reimbursement) Act 1942 (Cth)
Uniform Tax Scheme 1942 – States receive reimbursements from the Cth on the condition that they do not impose income tax
States taxes – stamp duty, land tax, various sales tax
Federal and State taxes can’t conflict because a federal tax can only be fore federal purposes and State taxes can only be for State purposes – Victoria v Cth
What is a Tax?
Different types of taxes – income tax, wealth tax, land tax, stamp duty, duties of customs and excise
First question = is the exaction in question a tax?
Matthews v Chicory Marketing Board (Vic) (1938) – A tax is a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment rendered for services (per Latham CJ)
Compulsory exaction of money:
Air Caledonie v Cth (1998) – the Migration Amendment Act 1987 (Cth) tried to impose a $5 fee for immigration clearance upon international airline passengers entering Australia into the Migration Act 1958 (Cth). Plaintiff argued that the fee was a tax and couldn’t be inserted into the Migration Act as the Act dealt with matters other than the imposition of taxation (contravened s.55). Held that the $5 fee was a tax.
Rule: If the person required to pay is (a) given no choice about whether or not the acquire the services; and (b) the amount of the exaction has no discernible relationship with the value of what is acquired; the exaction is a tax
Also suggested that Latham CJ’s definition was not exhaustive (an exaction may be a tax even if a specified characteristic is missing or may not be a tax even if all characteristics are present)
Imposition by a Public Authority
A public authority is a body that performs function or delivers services of a public nature – independent, statutory bodies have been treated as public authorities
Australian Tape Manufacturers v Cth (1991) – the majority stated ‘that it is not essential to the concept of a tax that the exaction should be by a public authority’ (if Latham CJ’s definition is not exhaustive, this judgment is okay)
Requirement of Public Purposes
Taxes must no be used for the private purposes of the leader
Australian Tape Manufacturers v Cth (1991): money collected from a levy on the distribution of all blank recording tapes was not paid into the CRF but paid directly to the association of copyright owners. Held the levy was a tax as it was for a public purpose (finding a solution to a problem of public importance – copyright)
Distinguish tax from:
Payment for services (getting something in return for money)
Need to show that there is a specific identifiable service; the fee is payable by the person who received the service; the fee is proportionate to the cost of the service
Service must be to the individual, not the public in order to not be a tax – A-G (NSW) v Homebush Flour Mills (1937)
Air Caledonie v Cth (1998): held that a $5 immigration clearance fee paid by all incoming passengers and collected by the airline was a tax as it applied to citizens returning to Australia who did not need a licence; thus, there was no identifiable service
Air Services Australia v Canadian Airlines (1999): held that air traffic service fees were not a tax as the charge clearly covered and was reasonably related to the expenses incurred and the charge was not imposed to raise revenue
Held that the Ramsey Pricing Method is used to fix prices for monopoly services to ensure that a fair price is reached – if the price is not fair, the charge becomes a tax
A precise relation to the value of services is not required
There is no evidence of profit-making
The charge must bear a reasonable relation to the cost incurred by the provider
