Northern Suburbs General Cemetery Reserve Trust v Cth (1993) – held that the ‘training guarantee shortfall’ (the difference between how much an employer was required to spend on training and how much they did spend) paid into a Training Guarantee Fund was a tax, not a penalty due to a number of factors
A fee is not a tax if it is arbitrary (that is, based on other than ascertainable criteria)
Presumption that if an exaction is paid into the CRF, it is a tax (can be rebutted) – Australian Tape Manufacturers
If there is an exaction which is held to be a tax, it will fall within the core of s.51(ii). If the law does not involve a tax, it may still be characterised as a law ‘with respect to taxation’ because it falls within the implied incidental aspect of s.51(ii) (s.51(xxxix) – Mutual Pools & Staff Pty Ltd v Cth (1994)
The power to impose tax is controlled by:
Procedural Limits:
s.53 – taxation laws imposing taxation must originate in the HoR
Because the government is responsible for fiscal policy and government is formed in the HOR
s.53 – the Senate cannot amend taxation bills (can still reject bills)
The Senate may request a taxation bill to be amended but the HoR does not need to comply
s.55 – laws imposing tax must only deal with tax
Practice of splitting tax legislation into two Acts – one dealing with the imposition if taxation and the other providing the machinery for assessing and collecting the tax (Moore v Cth (1951))
s.55 – laws imposing tax (other than customs or excise) must deal with only one subject of taxation (State Chamber of Commerce v Industry v Cth (1987))
s.55 – laws imposing duties of custom must deal only with customs
s.55 – laws imposing duties of excise must deal only with excise
Substantive Limits
Discrimination – there cannot be discrimination between States or parts of Stated (s.51(ii) and s.99)
R v Barger (1908): an excise duty, of which manufacturer’s giving ‘fair and reasonable’ labour conditions were exempted from, was held as discriminatory as the duty could differ between States
Subject to express and implied limitations in the Constitution
E.g. implied freedom of political communication, freedom of religion (s.116), non-impairment of State’s capacity to function as States (taxation law struck down in Austin), separation of power
Tax laws may be used to regulate economic activity or change behaviour
Governments use taxes to reallocate wealth, regulate the economy or influence social behaviour (e.g. carbon tax, alcopops tax, cigarettes tax)
Must still be a law with respect to taxation: Fairfax v Commissioner of Taxation (1965) – an Act that provided that income from superannuation funds were taxed unless they were invested in prescribed public securities was held to be not a law with respect to taxation
Customs and Excise Duties
s.55 – ‘laws imposing duties of customs shall deal with duties of customs only, and laws imposing duties of excise shall deal with duties of excise only.’
s.90 – the power to impose customs and excise duties is exclusive to the Cth
Customs and excise duties are indirect taxes – taxing one person with the expectation that they will indemnify themselves at the expense of another
Customs duty = tax on goods as they come in or leave the country
Dennis Hotels v Victoria (1960) – the taxpayer is taxed by reason of, and by reference to, his importation or exportation of goods
Different goods can attract different rates – a way of encouraging or discouraging imports or exports
Excise duty = a tax on goods when they move from one party to another (e.g. manufacturer to wholesaler, wholesaler to retailer, retailer to consumer)
A tax on goods, not services
Narrow view – ‘a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured’ – Peterswald v Bartley (1904)
Two requirements: a tax imposed upon goods (1) either in relation to quantity or value; and (2) at the point of time where the goods are ‘produced or manufactured’
States argue this view so that they can impose such a charge without it being considered an excise duty
Broader view – ‘a tax upon a commodity at any point in the chain of distribution before it reaches the consumer’ – Parton v Milk Board (1949)
‘The tax must bear a close relation to the production or manufacture, the sale or the consumption of the goods and must be of such a nature as to affect them as the subjects of manufacture or production’ – Matthews v Chicory Marketing Board (Vic) (1938)
Cth and manufacturers argue this view so to avoid having to pay such charges
Ways States avoid s.90:
Mechanism of Marketing Boards – States set up a marketing board for a particular commodity funded by a charge levied on marketed goods – Parton v Milk Board (1949) (a Milk Board was to be financed by a levy upon ‘every dairyman’ and ‘every milk depot who sells or distributes milk’. The levy was held to be an excise duty, thus not allowed)
Mechanism of Licensing Fees – States require traders to pay a licence fee based on the amount of sales in the previous year – Dennis Hotels Pty Ltd v Victoria (1960): licence granted to hotel owners upon payment of fees based on the cost of liquor purchased by them in the previous years. Not an excise duty as the connection between the goods and service was broken by the scheme
Model still exists – need to consider proximity of the criterion of calculation; the high rate of tax indicating the revenue raising nature of the tax; absence of regulatory content
Appropriation and Spending
s.81 – All revenues or moneys raised or received by the … Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner … imposed by this Constitution
No money can be drawn from the treasury without an appropriation made through law
Appropriation must be for a purpose of the Cth, not a private purpose
Purposes not confined to s.51 powers – AAP Case (1975)
s.54 – a proposed law appropriating money ‘shall deal only with such appropriation’
Appropriation for OASG:
s.53 – the Senate cannot amend a bill for OASG
Unclear as s.53 provides that the Senate and HoR have the same powers in regards to all proposed laws
What constitutes OASG?
OASG = recurrent, routine expenditure of government required for government to operate (not specific projects)
1965 Compact states that the following are not OASG: construction of public works and buildings; acquisition of sites and buildings; items of plant and equipment; grants to States under s.96; new policies not authorised by special law
1975: the Senate failed to pass the Supply Bill which led to the dismissal of the government by the G-G
Degree of specificity:
Combet v Cth (2005) – government spent money on advertising campaign to promote labour law reforms. The money was appropriated for the departmental expenditure of the Department of Employment and Workplace Relations. Held that the Department cannot spend the money in any way they wish; rather, it is for the Parliament to determine the purposes
Grants Power
s.96 – allows the Cth to provide financial assistance to any State on ‘such terms and conditions as the Parliament thinks fit’
Allows the Cth to exercise control in areas constitutionally in the States power
States can reject grants; however, they do not have many sources of income as they cannot levy an income tax
Deputy Federal Commissioner for Taxation v WR Moran (1939) – the grants power allows the Cth to address inequalities between the States; s.99 (non-discrimination rule) has no application to s.96 grants
Conditions must no authorise taking property except on just terms (s.51(xxxi)) – ICM v Cth (2009)
The Cth is the only level of government that imposes income tax. A portion of this tax is then distributed. The validity of this arrangement was upheld in South Australia v Cth (First Uniform Tax Case) (1942) and affirmed in Victoria v Cth (Second Uniform Tax Case) (1957)
First Uniform Tax Case concerned four Cth laws that established the Cth’s monopoly over tax:
Income Tax Act 1942 (Cth) – fixed Cth income tax at a very high rate
State Grants (Income Tax Reimbursement) Act 1942 (Cth) – the Cth shall provide financial assistance to the States every year providing they don’t collect income tax
Income Tax (War-time Arrangements) Act 1942 (Cth) – provided for the transfer to the Cth of State public servants engaged in assessment or collection of income tax along with property of State taxation departments
Income Tax Assessment Act 1942 (Cth) – no taxpayer should pay a State income tax until after they had paid the Cth income tax
Four States challenged the regime – the HC rejected the challenge. Found that all four Acts were valid; thus, the scheme was valid
Freedom of Interstate Trade, Commerce and Intercourse
s.51(i) – The Cth has the power to make laws with respect to ‘trade and commerce with other countries, and among the States’ (concurrent power)
This power is subject to s.92 – ‘on the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.’
Guarantees that trade, commerce and intercourse among the States will be ‘absolutely free’ (freedom of trade and commerce)
Section 92
Main interpretation of s.92 – Cole v Whitfield (1988)
Joint unanimous judgment laid down a new approach to s.92
Regulations under the Fisheries Act 1959 (Tas) prohibited any person from taking, buying, selling, offering or exposing for sale or having possession or control of crayfish smaller that the prescribed minimum size. Whitfield imported SA crayfish (smaller minimum size in SA than TAS) that were above the SA minimum size but below the TAS minimum size. Prosecuted for breaching the Regulation. He argued that the Regulation was invalid due to s.92. The HC held that s.92 was not infringed.
A law infringes s.92 if it imposes ‘discriminatory burdens of a protectionist kind’ or if its effect is ‘discriminatory against interstate trade and commerce in that protectionist sense; or if its effect is ‘discriminatory and the discrimination is upon protectionist grounds’
A law will infringe s.92 if it is a law that places a discriminatory burden of a protectionist kind
Must have three elements: burden on trade, discrimination and protectionist
Discrimination – see Castlemaine Tooheys v South Australia
Protectionist – a law will be protectionist if it’s purpose or effect is to benefit local traders within one State and disadvantage their inter-State competitors
A law will also fail if the practical effect is to place a discriminatory burden of a protectionist kind even if it does not appear to do so on the face of it
Need to first consider discrimination on the face of the law and then the practical effect
(e.g. tariffs that increase the price of imports, quotas on imports, differential railway rates and subsidies for local goods)
Bath v Alston Holdings (1988)
A VIC law imposed a higher licence fee on wholesalers and retailers who sold imported tobacco. The VIC government said that as VIC wholesalers did not pay VIC wholesale licence fees, the heavier levy at the retail level for their products neutralised their advantage (the total burden on imported tobacco would be the same as the burden on local tobacco when it reached the consumer). The HC rejected this argument (f QLD tobacco was subject to wholesale tax in QLD, the VIC scheme would place it at a disadvantage and if QLD tobacco was not subject to wholesale tax in QLD, the VIC law would protect VIC tobacco by nullifying QLD tobacco’s competitive edge.
Restriction for the Wellbeing of the People of the State
Castlemaine Tooheys v South Australia (1990) – A SA statutory scheme stated that (1) non-refillable bottle carried a deposit of 15c while refillable bottles required a deposit of 4c; and (2) non-refillable bottles had to be returned to the retailer to get the refunds (more of a hassle) while refillable bottles had to be returned to collection depots. The purpose of the law was to render the sale of beer in non-refillable bottle as commercially disadvantageous. Bond sold beer in non-refillable while South Australian brewers sold beer in refillable bottles. The HC held that the disadvantage in this law was ‘protectionist’ of South Australian brewers against interstate competition as it limited the market of Bond (SA had an advantage as they had been producing refillable bottles for some time already).
SA claimed that the object of the scheme was (a) litter control and (b) conservation. Held that litter control is a legitimate object (however, this does not require different modes of returning bottles) but conserving resources is not a legitimate object when the resources are not produced in the State
The joint majority judgment developed a number of principles for a law to be consistent with s.92:
1. The law must be necessary or appropriate and adapted to the achievement of a legitimate object (i.e. it is not discrimination to impose limits aimed at either the protection of the community from a real danger or threat to its welfare; or the enhancement of the communities welfare)
2. The burden placed on interstate trade must be incidental (i.e. the law shouldn’t aim to impose such a burden)
3. Burden on interstate trade should not be disproportionate to the achievement of the legitimate object
4. There is no reasonable non-discriminatory alternative means
These principles limit the prima facie assumption that State legislators should be allowed a broad area of discretion in enacting regulatory measures for ‘the well-being of the people of that State’. (More limitations placed on this assumption in Betfair v Western Australia)
Betfair v Western Australia (2008) – A WA law prohibited (a) betting exchanges (using internet); (b) betting with such exchanges; and (c) publishing WA race field without authorisation. WA said hat the scheme was to protect the integrity of the industry and that the exchanges made no contribution to the industry. The HC struck down the law and stated that these objectives could be achieved through alternative, non-discriminatory means such as regulations.
The provision prohibiting betting through a betting exchange was held to have infringe s.92 as it impaired the freedom of Betfair to deal with customers in WA and impaired the freedom of WA punters to use an interstate betting exchange
More limitations on the assumption:
The presence of a non-discriminatory object won’t save a law
A provision that grants a discretion to exempt a party from a prohibition will not save a law that has the object of prohibition
State Monopolies
Barley Marketing Board (NSW) v Norman (1990) – A scheme where all barley grown in NSW was vested in the Barley Marketing Board was upheld. However, there is a possibility that if the commodity was a scarce resource, a State monopoly may offend s.92
Possibility that State monopolies may not survive post-Betfair (current authority is Barley Marketing Board)
Freedom on Interstate Intercourse
Nationwide News v Wills (1992) – ‘freedom of inter-state intercourse is not confined to the physical movement or carriage of goods or things among the States. It encompasses all of the modern forms of inter-state communication’
A ‘personal freedom to pass to and fro among the States without burden’ – Cole v Whitfield (1988)
A burden on inter-state intercourse does not necessarily have to be discriminatory – Nationwide News v Wills
A restriction on the freedom will be valid if: (Nationwide News v Wills)
The law is enacted chiefly for a purpose other that preventing or impeding a crossing of a State border
Imposition of the burden is appropriate and adapted to the fulfilment of the other purpose
Impediment is an incidental and necessary consequence of the law’s operation
One activity may be both trade and intercourse (e.g. television broadcasting): in such a case, Nationwide News v Wills held that the question about whether to apply the narrower test in Cole v Whitfield or the more lenient test in Nationwide Newsshould be answered according to the relevant characterisation of the law
There are a number of express and implied rights and freedoms in the Constitution
Terminology
Right, liberty, power and immunity all have different meanings
Right = a right entails a duty on the part of another to do or refrain from doing an act
Every right has a corresponding duty – e.g. if students have the right to receive a lecture on a topic, the lecturer has the duty to provide that lecture
Liberty = a liberty entails that others have no right to prevent someone from doing a certain act
There is no corresponding duty, just no right – e.g. the liberty to move
Power = a power is the liberty to do an act that changes the legal status of another
A special type of liberty – e.g. the Minister has the power to grant a licence and change the legal position of the licensee
Immunity = the right that a power holder does not exercise a power
There is an exception to a power (a disability) in relation to those with an immunity – e.g. a diplomat has diplomatic immunity and cannot be charged
Common Law Freedom
Fundamental common law freedom = a person may do anything that the law does not prohibit (natural liberty – only limited by physical inability and legal limitations)
A person may refrain from doing what the law does not require
Freedom is limited by laws imposing duties (e.g. freedom of speech is limited by defamation law)
Source of Rights
Common law rights (judge-made) – e.g. contract law (a seller’s right to be paid for goods delivered); tort law (a pedestrian’s right not to be run over); crime (person’s right not to be robbed)
Constitutional rights (rights guaranteed by the Constitution and can’t be changed without a referendum)
Express Constitutional Rights and Freedoms
All powers in s.51 are subject to the express rights in the Constitution
Freedom to vote at parliamentary elections and referendum (ss.7 & 24)
Right to be compensate for acquisition of property by the Cth (s.51(xxxi))
Right to a trial by jury when indicated under Cth law (s.80)
Freedom of interstate trade, commerce and intercourse (s.92)
Right not to be discriminated against on grounds of religion (s.116)
Rights not to be discriminated on grounds of residency (s.117)
Right to Compensation for Property Acquired
s.51(xxxi) – The Cth has the power to make laws with respect to ‘the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws’
Based on the United States’ fifth amendment – ‘nor shall private property be taken … without just compensation’
It is widely accepted that the government has the power to take private property for public purposes
The power of the State government to acquire property is not limited by s.51(xxxi) – thus, the States can legally acquire property without paying just compensation
However, legislation requires compensation to be paid in some circumstances – e.g. s.18 of the Acquisition of Land Act 1967 (Qld)
The Cth has used State agencies to acquire property for federal purposes without paying the owners just compensation (is this right?)
Federal Acquisitions Power
Specific Acquisitions Power:
s.51(xxxiii) – acquisition with the consent of a State, of any railways of the State, on agreed terms (essentially power to purchase from State railways)
s.85 – acquisition of State property connected with public service departments that are transferred to the Cth, subject to compensation
s.125 – acquisition of territory or the seat of government
General Acquisitions Power – s.51(xxxi):
Exclusive power – only applies to the Cth (not States)
Territories made under s.122 are also bound (Wurridjal v Cth (2009))
