Laws 150 federal constitutional law wk 20/7/00 Introduction

WK 12.1

30/10/00
Grants

• 
  s 96 of Const: “During a period of 10 yrs after the establishment of the Cth & thereafter until the Parl otherwise provides, the Parl may grant financial assistance to any State on such terms & conditions as the Parl thinks fit”.
  

Background to Federal financial relations

• 
  The principal sources of revenue for States before Federation were duties of customs & excise.
  
• 
  This was taken from the States & given exclusively to Cth by s 90.
  
• 
  Where would States get their revenue if principal sources had been taken away? By s 87 (“Braddon Clause”), States got ¾ of customs & excise collected by Cth (State entitlements were better because of remaining ¼, States would get surplus). At end of 1898 Convention (draft Const from final Convention), States got ¾ of customs & excise + surplus revenue of Cth in proportion.
  
• 
  NSW was a free State (low tariff); Vic was protectionist.
  
• 
  NSW never keen on s 87 because if get ¾, there would be pressure for high tariff.
  
• 
  Bill went to referendum in all 4 States (not Qld or WA) & although ‘yes’, said it had to reach 90,000 which it did not, & therefore treated as ‘no’.
  
• 
  Changes made in 1899 – s 87 limited to 10 yrs.
  
• 
  “Braddon Clause” ended in 1910, & States have been in financial trouble ever since.
  
• 
  Cth took over State debts, made per capita payments from 1910, & States intro income tax.
  
• 
  As noted by Mathews & Jay (p 389), the main sources of revenue for the States were:
  

• 
  Cth grants (but can come with strings attached, therefore not much independence)
  
• 
  State income tax (ended in 1942)
  

• 
  In 1942, a uniform tax was intro for period of war but most realised at time of enactment that the scheme would probably become permanent & that federal financial supremacy would become entrenched (p 399 note 3).
  

• 
  SA v Cth (The First Uniform Tax Case) (1942)
  

• 
  States income tax pwr was ended by 4 Acts:
  

1. 
   Income Tax Act: imposed Cth tax at higher rate more or less equal to combined Cth & State income tax rates before the scheme.
   
2. 
   Income Tax Assessment Act: required that Cth income tax be paid ahead of State income tax.
   
3. 
   States Grants (Income Tax Reimbursement) Act: under s 96, granted to States more or less what collected before scheme on condition they had not levied any income tax.
   
4. 
   Income Tax (War-time Arrangements) Act: took over State income tax dept.
   

• 
  All but 1st were temporary Acts – they were to expire at end of 1st financial yr after war (30 June 1947).
  

• 
  All Acts were upheld:
  

1. 
   A law with respect to taxation (exacts from citizens a contribution to public revenue); it does not infringe any of limitations like s 51(ii) & s 55.
   
2. 
   Upheld under s 51(ii) or, for McTiernan J, under defence pwr.
   
3. 
   Upheld under s 96 (one dissent – Starke J on p 398).
   
4. 
   Valid by 3:2 under defence pwr [s 51(vi)].
   

• 
  Arg: this scheme was to prevent State from levying income tax, & Cth did not have pwr over this. This arg split into 2 (possibly 3):
  

1. 
   Condition in Grants Act that States not levy income tax was not a condition envisaged by s 96.
   
2. 
   Must look at all together as a scheme & was designed to coerce States to abandon income tax.
   
3. 
   Based upon discrimination – s 51(ii) – because amounts paid to diff’nt States varied, there was some discrimination among taxpayers (implausible arg & failed).
   

• 
  Basic arg: this was a scheme to stop States from levying income tax.
  
• 
  HCA looked at form.
  
• 
  Latham CJ:
  

1. 
   To look at nature of law (its substance), one should look at legal rights & obligs it grants (as Kitto J says in Fairfax) – p 396.3.
   
2. 
   Cth could not force State by law to abandon the levying of tax or forbid State from exercising this pwr over tax incomes (p 394.7, 395.2/8).
   

See Hematite (pp 408-9) where Mason & Murphy JJ said that Cth could effectively legislate pursuant to s 51(ii) to prevent States from levying taxation, at least by prohibiting persons from paying State taxes.

3. 
   VIP: There is no legal compulsion – only temptation, & temptation is not compulsion (p 394.8, 395.4).
   

Cth could not compel States legally to abandon income tax; can induce via $ (voluntary).

4. 
   Confirmed decision of Moran’s Case (1939) that s 96 is not subj to s 99 – ie, nothing to stop Cth from granting to States diff’nt amounts (p 396.8, 397.2).
   
5. 
   Not much point in too many legal limitations because in reality Cth could not be stopped from doing what it wanted to (pp 397.8 – 398.2).
   

• 
  s 96 was held to be a pwr to give “assistance” & not a pwr to pass coercive laws (“temptation was not compulsion”).
  

Notes on p 399:

• 
  How important was war to this case? Look at 2 levels:
  

• 
  Defence pwr > only supported one of the Acts (War-time Arrangements Act). Sawer says most imp Act but Winterton says the 1st 2 Acts are most imp. Also played a reasoning in McTiernan J’s judgment.
  
• 
  Defence considerations > played a role in getting HCA to take a legalistic form rather than a substance view.
  

• 
  1st 2 Acts would have been enough & they did not rely on defence. At time of enactment, realised that scheme would probably become permanent.
  

• 
  Vic v Cth (The Second Uniform Tax Case) (1957)
  

• 
  Menzies Gov’nt elected in Dec 1949; new Federalism > give States back their income tax (p 400.9); weaker States wanted to retain scheme.
  
• 
  NSW & Vic challenged scheme in HCA; handled effectively – attack more narrowly focussed on 2 pieces of leg’n.
  
• 
  It was time of peace; Dixon CJ (seen as a Federalist) now sat (in previous case he was serving as Australian Minister in Washington).
  
• 
  2 cases before The First Uniform Tax Case – Vic v Cth (Federal Aid Roads Case) (1926) & Moran’s Case (1939).
  
• 
  In Federal Aid Roads Case (1926), Cth offered $ to States for roads on condition that for every $4 granted by Cth, States had to give $3, with Cth determining the roads & having discretion. This was challenged by State & was unanimously rejected by HCA in 4 lines. Dixon CJ summarised it in this case:
  

Pwr conferred by s 96 is well exercised although

1. 
   State bound to apply $ to defined object.
   
2. 
   Grant will be upheld even if outside Cth’s pwrs.
   
3. 
   At Cth’s discretion.
   
4. 
   States have to contribute.
   

It was held that grants can relate to any purpose.

• 
  In Moran’s Case (1939), HCA said prohibitions like discrimination did not burden s 96. Nothing prevented Cth from granting diff’nt amounts to diff’nt States (see Latham CJ).
  

• 
  There were 2 main args in The Second Uniform Tax Case:
  

1. 
   Attack on condition in grant (that States not levy income tax).
   
2. 
   Attack on prov’n that taxpayer pay Cth income tax in priority to State.
   

• 
  HCA rejected 1) & States might have victory under 2) but Dixon CJ says not make a difference because uniform tax still be around (now part of GST).
  
• 
  Dixon CJ’s points:
  

1. 
   Only point of s 96 is that law be non-coercive (p 403.2, 404.9) – it is a pwr to make grants of $ & to impose conditions on the grant (no pwr to compel acceptance of grant).
   
2. 
   This was Dixon CJ’s 1st case on s 96. Dixon CJ sees s 96 as more limited than how HCA had seen it up to this case.
   

HCA had said that s 96 satisfied if $ given to State despite the fact that in exercise of pwr to impose terms & conditions State is required to pay over $ to people connected with State so as to fulfil some purpose pursued by Cth & one outside its pwr to effect directly (ct placed no limit on terms or conditions it was competent to Cth to impose under s 96).

How would s 96 be reformed?

See Dixon CJ’s more limited view (p 404.2/7).

Focussed on “assistance” which indicated that it assisted States by going into their treasuries. Indicates that was requested so condition should relate to the purpose for which requested.

3. 
   Could not apply his view (p 405 para 2-4).
   

• 
  Pwr relies on s 51(ii) & s 51(xxxix).
  
• 
  Held s 221(1)(a) regarding solvent people, invalid (4:3).
  
• 
  Held s 221(1)(b) dealing with insolvent, unanimously valid under bankruptcy law – s 51(xvii).
  

Summary (The Second Uniform Tax Case):

• 
  In relation to grants pwr:
  

• 
  Not add a lot to 1st; it is an affirmation outside defence context.
  
• 
  Suggests a narrower interpretation of s 96 (that of Dixon CJ’s) but Dixon CJ said weight of precedence too strong (? as to if this was the reason – legal requirements will be ultimately pointless).
  

• 
  So long as the terms & conditions of assistance provided by the Cth under s 96 are voluntary, the Cth enjoys a plenary pwr to grant $ to the States which can be used in a way which circumvents the restrictions which might operate in respect of its other heads of pwr.
  

Notes on p 408:

• 
  In The First Uniform Tax Case, it was said that Cth could not have compelled States from levying tax.
  
• 
  In Hematite, Mason & Murphy JJ said that under s 51(ii) Cth could prevent State from levying a tax. See also Gibbs CJ & Deane J. What do make of this dicta?
  

• 
  DOGS Case (1981)
  

• 
  DOGS challenged Cth leg’n which granted financial assistance to States on condition that it was paid to non-gov’ntal schools, saying it contravened s 96.
  
• 
  Distinguished Moran on 2 grounds: voluntary arg (here Cth made the choice & no practical effect for States to deny this); States used as conduits betw’n Cth & schools so that States did not receive “financial assistance”.
  
• 
  HCA unanimously rejected 2 args, saying that these are differences without any legal distinction.
  
• 
  3 judges (Wilson, Stephen & Gibbs JJ – most States’ rights) said Moran is worth challenging.
  

• 
  Saunders Article (p 412)
  
• 
  3 points:
  

1. 
   Influence of Federal Aid Roads Case on subsequent cases.
   
2. 
   Each of subsequent cases have had unusual features that complicate precedence – eg Moran’s Case was not only on s 96 but also s 51(ii); First Uniform Tax Case was at time of war. Results less settled than supposed.
   
3. 
   Far from settled where outer limits are set – concept of ‘voluntariness’ does not provide an adequate theoretical framework.
   

WK 12.2

2/11/00
Grants ctd

• 
  What is the only limitation on s 96? Everything must be formally voluntary. States must be legally free to say ‘no’.
  
• 
  Other limitations – one that States can legally accept (not really).
  

Use of s 96 to evade limitations (circuitous devices)

• 
  Several restrictions apply to Cth from which States are exempt:
  

s 51(ii) – discrimination

s 99 – preference

s 51(xxxi) – Cth must pay for compensation but States do not have to

s 116 – freedom of religion

• 
  Since s 96 enables Cth to co-opt States in the execution of Cth policies, can Cth employ s 96 to evade these limitations?
  

• 
  Moran (1939)
  

• 
  Classic case of substance vs form.
  
• 
  Addressed case of Homebush Flour Mills (1937) in which States wanted to levy tax on flour & pay proceeds to wheat growers. Trouble was tax on flour was an excise (contravened s 90) & States cannot levy excise. So, tried to evade s 90 (prohibition). State would compulsorily acquire flour from all millers & pay a certain price that was fixed & allow millers to buy it back at a higher price (diff being tax) – leg’n did not say it was a higher price. There were lots of inducements intro into leg’n to make sure States did not keep it. This was challenged in HCA as a tax (excise). It was held that in substance it was a tax but in form it was something diff’nt (masquerading as something else). HCA said in substance it was a tax & unanimously struck it down (looking for substance over form).
  
• 
  In Moran, States not able to levy & so called Cth in for assistance. Cth assisted – Cth would levy an excise on flour (no prob because Cth has monopoly), proceeds paid to States & States give to wheat growers. Prob was that no wheat growers in Tas.
  
• 
  Cth had to levy a uniform excise [s 51(ii) – discrimination] on flour. Paid proceeds to States & States gave it to wheat growers. In Tas, returned it to taxpayers.
  
• 
  This was challenged – to return proceeds of tax to taxpayers means that you are not taxing them but are really exempting them (amounted to a tax only in mainland States – so discrimination).
  
• 
  Maj of HCA held leg’n valid as an eg of a legalistic, non-pragmatic approach, with a pwrful dissent by Evatt J.
  
• 
  3 pieces of leg’n valid, & cannot add them together to make an invalid scheme:
  

1. 
   Cth Tax Act which taxes flour – s 51(ii) [must not & did not discriminate].
   
2. 
   Grants Act by which Cth granted $ to States [did discriminate (diff’nt amounts to diff’nt States) but s 96 is not subj to s 99 (revenue interpreted to mean taxation; so tax is subj to s 99 but not appropriation – so this should be re-opened by HCA) – affirmed in First Uniform Tax Case (p 417.5).
   
3. 
   Tasmania Act – got $ from Cth & returned $ to Tas taxpayers [State leg’n is not limited by anything].
   

See p 417.9.

• 
  Evatt J dissented, & is a strong eg of substance over form. He looked at scheme & said it was an attempt to evade s 51(ii) & impose tax only in 5 States. To pin that down legally, Evatt J has to make a dramatic conclusion > Cth Grants Act [this is the Act that is really contravening s 51(ii)] is in substance a tax Act. Holds a prov’n of Grants Act a law with respect to taxation & strips s 14 of its “disguise” (p 418.5/6, 419 line 6).
  

• 
  Moran [1940] – Appeal to PC
  

• 
  Leg’n upheld & judgment was analogous to earlier HCA decision (it was a swing betw’n Latham CJ’s legalistic view that if all 3 Acts valid, scheme is valid, & Evatt J’s strong dissent which was praised on p 421).
  
• 
  Take on board Latham CJ’s notion (p 417.5) that s 96’s purpose is to adjust inequalities betw’n States which may arise from applying uniform non-discriminatory Fed laws to States of varying wealth.
  

Discrimination per se > out.

Discrimination in line with s 96 > OK.

This discrimination is OK because an attempt to ameliorate inequalities.

See p 421.

• 
  How would Moran be decided today (see Saunders)?
  

• 
  Evading limitation of s 51(xxxi) thro’ s 96.
  
• 
  Magennis v Cth (1949)
  

• 
  Cth & State wanted to acquire property for settlement of returning soldiers for undervalue.
  
• 
  Cth has to pay fair compensation on just terms for compulsory acquisition of property. This applies only to Cth & not to States.
  
• 
  NSW & Cth agreed on scheme; NSW would compulsorily acquire prop after war but at 1942 prices (ie, not fairly because undervalue) & Cth would fund this; this was set out in agreements & statutes – all could read it (stupid).
  
• 
  Challenged in HCA – basically a Cth acquisition of prop & not on just terms, contravening s 51(xxxi) & struck it down:
  

1. 
   s 51(xxxi) is broad enough to incl acquisition by someone other than Cth, so could incl State.
   
2. 
   In any case, looking at substance, State acts as agent for Cth; it is a joint venture – Latham CJ says this is a scheme to evade s 51(xxxi).
   

• 
  Dixon & McTiernan JJ dissented because Cth leg’n did not acquire prop, only authorised making of contract.
  

• 
  How do you get around this? Do not put it in writing. They did this.
  
• 
  Pye v Renshaw (1951)
  

• 
  No agreement mentioned.
  
• 
  HCA unanimously upheld it.
  
• 
  No acquisition by Cth; no s 51(xxxi) issue.
  
• 
  It was a State acquisition, Cth Act granting $ > that is it.
  

• 
  Can only say s 96 is limited by s 51(ii), s 99, if you say it is masquerading as a tax – ie, in substance it is a tax.
  
• 
  Only apply s 51(xxxi) to some Cth law that relates to acquisition of prop.
  

• 
  DOGS Case (1981)
  

• 
  s 116 says that Cth shall not establish religion & shall not prohibit freedom of religion.
  
• 
  Does this apply to s 96? Yes.
  
• 
  Did it breach it in this case? HCA said ‘no’:
  

1. 
   s 116 is a general prohibition that applies to s 96 (covers all mechanisms).
   
2. 
   Maj said that leg’n did not breach s 116.
   

Summary of s 96:

• 
  General limitations – law must be legally voluntary.
  
• 
  Interesting q on issue of circuitous devices:
  

Mason more substantive than Dixon ct.

Current HCA slightly less substantive than they were.

WK 13.1

6/11/00
Constitutional Rights

• 
  Why do we not have a Bill of Rights?
  
• 
  Never proposed to adopt a Bill of Rights.
  
• 
  There was consideration of an equivalent to 14th Amendment – guarantee due process & equal protection of laws. This was rejected for 2 reasons:
  

1. 
   All Englishmen & we do not break rights; common law & democracy are sufficient.
   
2. 
   We do not want to guarantee equal protection to non-Whites.
   

• 
  Aust Convention did not overlook this but deliberately decided not to adopt it.
  
• 
  See Deane J in Street v Qld Bar Assoc (1989) on ‘rights’ (p 548): separation of judicial process & due process which flows from that; prohibiting discrimination; etc.
  
• 
  Has been proposal to incl express rights in Const; modern dev’nt is in implied rights (freedom of political communication).
  

• 
  ACTB v Cth (1992)
  

• 
  Concerned validity of Cth leg’n prohibiting TV ads at election & referendum time.
  
• 
  Purpose: idealists say to prevent powerful financial interests from dominating media; realists say to prevent poor Labor being dominated by wealthier Coalition.
  
• 
  2 things:
  

1. 
   Prohibit broadcasting of political affairs (excluded news & current affairs).
   
2. 
   Made provision for broadcasting of free airtime, favouring established political pties (people not pol candidates therefore did not have free time).
   

• 
  This was challenged. Prima facie fell in pwr [s 51(v)] but allegation that breached implied prohibition (restricting political speech).
  
• 
  Leg’n held invalid by 5:2 (Brennan & Dawson JJ dissenting) but 6 judges mentioned political freedom (& probably Dawson J did as well).
  

• 
  Maj (principally Mason CJ):
  
• 
  No express prov’n for political communication in Const – has to be derived by implication.
  
• 
  Const provides that there is direct election of members of Parl via ss 7 & 24 > inferred that we have a sys of representative gov’nt.
  

1. 
   Public needs to be informed of policies & people.
   
2. 
   Need to instruct/indicate to reps what we feel – need communication about gov’nt betw’n public, & betw’n public & members of Parl. Implied freedom of political communication is essential to our sys of repres gov’nt (p 621) but cannot be absolute, it must be subj to some constraints – adopted Castlemaine Tooheys (is it in pursuit of some legitimate gov’ntal objective & is it proportional to accomplishing it?). Balancing the need to have freedom of pol comm’n with gov’nt it protected.
   

• 
  There is nothing more at core than to discuss election matters at time of election.
  
• 
  Maj held that it failed (not satisfy proportionality).
  
• 
  Broadcasting election issue at time of election is essential (putting restriction on free time was bad).
  

• 
  Brennan J dissented because he allowed a margin of appreciation (p 632) – could Parl have reasonably believed that what it was doing was reasonably proportional to …
  
• 
  Brennan J looked more at the ads issue whereas others looked mostly at free time which was more agregious.
  

• 
  Can’t have restriction of material that prevents an intelligent vote [Dawson J].
  
• 
  Not only voting booth but also election period [McHugh J].
  
• 
  All times (State & Cth matters) [Mason CJ, Brennan, Deane & Toohey JJ].
  
• 
  How can you divide pol from non-pol > maybe there has to be freedom of speech in general [Gaudron J].
  
• 
  Or maybe there has to be freedom all together.
  
• 
  Right of equality.
  
• 
  Where do you draw the line with this implied freedom? This is still an unfinished process today.
  

• 
  ACTB v Cth (1992) ctd (imp pts)
  

• 
  Leg’n held invalid by 5:2 (Brennan & Dawson JJ dissenting & holding it valid).
  
• 
  Several imp issues:
  

1. 
   issue of implications:
   

• 
  View expressed after Engineers was that Engineers opposed the making of implications – this is not true (p 618.7, 619.2 line 6). Mason CJ regards that this might not be right to say (p 619 para 2). Necessity may be too stringent a test from the textual implication (can be more liberal like “appropriate”) but not from the structural implication. See also pp 641-2 Notes 5 & 6.
  

2. 
   Cannot infer a Bill of Rights. Framers expressly rejected a due process clause. See p 620.4, 633.2, 640-1 Note 3 (dialogue betw’n Deane J, who said we cannot be ruled by framers, & Mason CJ, who said we should be influenced by Const writers). See also Toohey’s silly speech on p 643 Note 9.
   

3. 
   Representative gov’nt established by Const. This is inferred from ss 7 & 24. This has 2 connotations – reps are accountable to people & have responsibility to take people’s views into account (Mason CJ on pp 620-1).
   

4. 
   Indispensable to representative gov’nt is freedom of communication re: public affairs & political matters (Mason CJ on p 621.8 & 647.2, Gaudron J on p 628 para 2, Brennan J who says pol & eco matters on p 631.9).
   

5. 
   Freedom of communication will incl communication among people & betw’n people & resps (Mason CJ on p 622.3, Gaudron J on p 629.3, McHugh J on p 637.8).
   

6. 
   Freedom of communication is so indispensable that it is implied into Const (implied prohibition in Const guaranteeing freedom of political communication). See Mason CJ on p 623.
   

• 
  What is the ambit of the implication? Few leave open speech & not just political (Mason CJ on p 624.1 & 621.8, Gaudron J on p 629.1, McHugh).
  

7. 
   Incl State political matters & not confined to Cth.
   

• 
  See Mason CJ on p 624.3, Deane & Toohey JJ on p 625-6, Gaudron J on p 630.8/9).
  
• 
  Dawson J did not agree because did not agree with the implied freedom.
  
• 
  Brennan & McHugh JJ did not express opinion.
  

8. 
   Freedom is not absolute.
   

• 
  See Mason CJ on p 624.8, Deane & Toohey JJ on p 626.7, Gaudron J on p 631.1, McHugh J on p 639.5.
  
• 
  Brennan J dissented on this pt.
  

• 
  What is the test for infringement?
  
• 
  Several judges called on US distinction > restrictions going to content & those to mode & manner. See Mason CJ on p 624.9, McHugh J on p 639.9-640, Deane & Toohey JJ on p 643 Note 7.
  
• 
  2 elements: