Australian Constitutional Law
Exam, Semester 1, 2013
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PART A – PROBLEM QUESTION
Question 1 – Advise UAVs-Australia Pty Ltd
UAVs-Aust wants advice on whether they have to:
(a) Move to South Australia under s 5 of the AUSDC Act (Cth)
(b) Pay the licence fee to the South Australian Government under s 20 of the DI Act (SA)
(c) Pay the licence fee to the Commonwealth Government under s 4 of the AUSDC Act (Cth)
Section 4 of the AUSDC Act (Cth)
Section 4 must be supported by a head of power. The Commonwealth would be arguing that the
section is supported by the defence power (s 51(vi)). UAVs-Aust would like to see it supported by the
taxation power (s 51(ii)). If it is supported by the taxation power, s 55 would operate so as to
invalidate the amending legislation (Air Caledonie).
Defence power – s 51(vi)
Fullagar J has described the Commonwealth’s defence power as having a primary and secondary
aspect (Communist Party Case). The primary aspect operates at any time whereas the secondary
aspect is enlivened only where it is necessary to implement measures to combat an immediate
threat to the government or the people. Here, it is arguable that the measures fall within the
primary aspect as arguably analogous to the provision of ships and munitions, the manufacture of
weapons and the erection of fortifications (examples given by Fullagar J in the Communist Party
Case). This conclusion is probably strengthened by reference to s 4(2), which emphasises that
relationship between the UAV licensing system and the defence force.
Taxation power – s 51(ii)
Even if s 4 is supported by the defence power, it is arguably also supported by the taxation power
because the licence fee is in fact a tax. If it is imposing a tax, s 55 will operate to invalidate the
amending legislation.
A tax is a compulsory exaction (s 4(1) requires all manufacturers of UAVs to have a licence) of money
(s 4(3) refers to a fee) by a public authority (the Commonwealth government) for public purposes
(here it seems to be for general government purposes) (Latham CJ in Matthews v Chicory Marketing
Board). However, a fee will not be a tax if it is either a fee for services (Air Caledonie) or a fee for
privilege (licence fee: Air Caledonie and Ha v NSW).
It could be argued by the Commonwealth that this is a fee for services – once a manufacturer has a
licence fee they can apply to the Commonwealth for access to classified information and consultancy
assistance in the course of UAV design and manufacture (s 4(2)). Further, s 4(3) indicates that the
Governor-General, in determining the fee, must have regard to the amount of information and
consultancy accessed.
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So, there is an identifiable service (access to classified information and consultancy assistance). It is
being provided to the persons paying the fee – although, it could be argued as in Air Caledonie that
some manufacturers are paying the fee but are not accessing these services, as it is only at their
discretion to access them (s 4(2)). A counter argument to this would be that all manufacturers can
access the services if they chose to (which distinguishes the position from Air Caledonie where
Australian citizens didn’t need the service). Further, if a manufacturer chooses not to access the
service their fee will be adjusted accordingly (s 4(3)). However, they still have to pay a fee, even if
they don’t access any services. The formula in s 4(3) demonstrates the relationship between the
services received and the fee paid. There does seem to be a rational reason (or commercial
justification) for discriminating between users (Gleeson CJ, Kirby J, Gaudron J in Air Services
Australia), at least in so far as the fee is based on services used. However, it is difficult to see how
the annual turnover of the business is relevant here. Maybe it is a way of discriminating between
users based on size?
It could also be argued by the Commonwealth that this is a genuine licence fee, a fee for privilege,
and therefore is not a tax. The nature of the goods that are being manufactured (UAVs) could
indicate that it is an industry that needs to be regulated, although there are very few regulatory
mechanisms that indicate that Commonwealth is setting standards, inspecting manufacturers and
ensuring compliance with those standards etc (Ha v NSW). The ad valorem nature of the fee is also
indicative of a tax, and it would seem the only reason for pegging the fee to the total annual
turnover of the business is to increase revenue by taxing larger companies more, this also indicates it
is more likely to be a tax than a licence fee (Ha v NSW).
Students need to draw a conclusion about whether the fee is a tax or not. If it is a tax, the entire
amending legislation will be invalid and this therefore has repercussions for s 5, which relates to
whether UAVs-Aust has to move to South Australia.
Section 5 of the AUSDC Act
If s 4 imposes a tax, s 5 of the AUSDC Act will be invalid because of the operation of 55 on the
amending act.
Defence power –
If not, section 5 must be supported by a head of power. It is arguable that this section is supported
by the defence power. It may be argued that if s 4 is validly supported by the defence power, then it
is incidental for the Commonwealth to be able to determine where UAV manufacturers operate
their business to monitor this defence industry.
Section 92 –
Even if s 5 is supported by s 51(vi), it would be necessary to show that it does not breach s 92 of the
Constitution. Section 92 is a limitation that applies both to the Commonwealth and the States
(James v Commonwealth) and prohibits discriminatory burdens of a protectionist kind (Cole v
Whitfield).
Section 5 requires all licensed UAV manufacturers to operate in SA or the Northern Territory. UAVsAust is an inter-state trader because it is a NSW company. All UAV manufacturers in Australia are
inter-state traders, making this a common characteristic (Betfair No 2). As such, requiring all UAV is
placing a burden on interstate traders. However, there will be a question as to whether this is
discrimination, because it would not appear that there is a market in which the substitutable
products/services of interstate traders as against local traders are being treated differently (Betfair
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No 1). Interstate traders are being placed under a burden, but it is not removing a competitive
advantage they have over local traders (Bath v Alston Holdings).
If it could be shown that there is a discriminatory burden of a protectionist kind here, it would be
unlikely the provision could be saved because it falls within the regulatory exception, that is, it is
‘reasonably necessary’ for the achievement of a non-protectionist purpose (Betfair No 1, modifying
the approach in Castlemaine Tooheys). The Commonwealth passes this law for a protectionist
purpose – in that it is responding to a request from SA that its economy needs a stimulus.
Section 51(ii) and 99 –
Note – it may be thought that s 5 is in breach of s 51(ii) or s 99. On its face this is an appealing
argument, however, if s 4 is indeed imposing a tax, s 55 would operate on the legislation before s
51(ii) and 99 become a problem.
If an analysis was engaged in under these sections, it should have been noted that there was the
necessary discrimination on the face of the law (James v Commonwealth). There seems to be little
room for arguing that the discrimination is not occurring between States because they are States but
because of the local conditions (Elliott v Cth) and therefore it would be easy to establish a breach of
ss 51(ii) or 99.
Section 20 of the DI Act (SA)
As a preliminary point, students need to note that UAVs-Aust will only have to be concerned about s
20 of the DI Act if s 5 of the AUSDC Act is valid and required them to move to SA.
Section 20 of the DI Act (SA) is supported by the plenary legislative power of the South Australian
Parliament (s 5 of the Constitution Act 1934 (SA)). However, it may be in breach of s 90 of the
Constitution or it may be inoperative (Carter v Egg and Egg Pulp Marketing Board) because of its
inconsistency with s 4 of the AUSDC Act the operation of s 109.
Section 90 –
The four judge majority in Ha v NSW confirmed the interpretation given to s 90 of the Constitution
by Dixon J in Parton that an excise is a tax on goods regardless of their point of
manufacture/production. While there is a licence fee in s 20 of the DI Act, there are no readily
identified goods that the fee is attached to. As such, it is strongly arguable that s 90 is not engaged.
It could be argued that the licence fee is actually trying to tax the various goods produced by
defence force industry. If this is accepted, the next question would be whether there is a tax. A tax is
a compulsory exaction (s 20(3) requires all businesses in the defence industry have a licence) of
money (s 20(2) a fee) by a public authority (the State government) for public purposes (here it seems
to be for general government purposes) (Latham CJ in Matthews v Chicory Marketing Board).
However, a fee will not be a tax if it is either a fee for services (Air Caledonie) or a fee for privilege
(licence fee: Air Caledonie and Ha v NSW).
There does not appear to be any identifiable service being provided. Therefore, there is a just a
question about whether this is an excise or a genuine licence fee. It is using a rough Dennis Hotels
formula. However, the previous period being used is a 12 month period, which is more likely to be a
licence fee than an excise (Dennis Hotels contra 2 months in Ha). Further, this period is not
immediately abutting the licence period, which again indicates it is more likely to be a licence fee
than an excise (Dennis Hotels). Section 20(1) establishes health and safety standards, which is
another factor that indicates the fee is likely a genuine licence fee rather than an excise (Ha v NSW).
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So even if it could be argued s 20 imposes a fee that relates to goods, it is likely that it is a genuine
licence fee and not an excise in breach of s 90.
Section 109 –
If s 4 of the AUSDC Act is a valid Commonwealth law, it may be that s 20 of the DI Act is inoperative
because it is inconsistent with the licensing scheme established by the Commonwealth Act.
While it would be possible for UAVs-Aust to obey both laws (by simply obtaining both licences) (Ex
parte Daniell), there still may be an inconsistency under either the modification of rights or the
covering the field tests.
It could be argued that once a Commonwealth licence is granted under s 4, it provides
manufacturers of UAVs with a right to operate across Australia. If this is correct, the requirement for
a SA licence in s 20 would ‘alter, impair or detract’ (Telstra v Worthing) from the Commonwealth
Act. However, if, as in Commercial Radio Coffs Harbour v Fuller, the Commonwealth legislation is
interpreted as not providing an absolute right to the licence holder, then the State legislation will be
able to continue to operate (this is a similar analysis to that in the third test, the covering the field
test). This will require an analysis into the purpose of the Commonwealth legislation and whether
allowing the State legislation to operate will undermine that purpose (AMP v Goulden). Here, the
Commonwealth legislation seems to be intended to ensure UAV manufacturers can be monitored
and provided with necessary defence assistance. It would not appear that if the State legislation
would be allowed to operate this would thwart the Commonwealth scheme (as would have occurred
with the Commonwealth insurance scheme in Goulden). Further, if the Commonwealth scheme were
to provide an absolute right to UAV manufacturers to operate across Australia, there is a myriad of
laws that they wouldn’t have to comply with that may cause regulatory chaos (Fuller). It would seem
therefore the better view is that there is no inconsistency and that the two regimes can operate
together.
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Question 2 – Advise Joe Radical
Joe Radical needs advice on two questions:
(a) whether s 2 of the AUSDC Act is valid
(b) whether he can used the defence of extended qualified privilege against any action in
defamation brought against him by the Foreign Minister
Section 2 of the AUSDC Act
Section 2 must be supported by a head of power – the most obvious heads of power here are s
51(xxix) and (vi).
External affairs power –
The High Court has held that one aspect of the external affairs power is the preservation of friendly
relations between Australia and other countries (R v Sharkey). This has been used to uphold
legislation that is analogous to s 2 in the case of R v Sharkey and also parts of s 104.4 of the Cth
Criminal Code in Thomas v Mowbray. Students needed to use these analogies to make a strong case
as to why s 2, at least in so far as it is protecting the United States government, would be supported
by s 51(xxix).
Defence power –
Insofar as s 2 protects the government of Australia from persons advocating hatred and contempt of
it or advocating disaffection against it, it may be supported by s 51(vi). It is likely that this type of
provision would fall within the primary aspect of the defence power. It is similar to the subversion
legislation upheld in R v Sharkey.
Implied freedom of political communication –
Students needed to clearly set out the Lange test, as modified in Coleman v Power and work through
each of the elements to determine whether s 2 breached the implied freedom of political
communication.
First, there seems to be an effective burden on political or governmental communication. Mr
Radical’s actions demonstrate the capacity of the legislation to burden this communication. Indeed,
the section seems targeted towards government and political communication and therefore directly
burdens it (ACTV). It will therefore be difficult to justify under the second limb of Lange.
Under the second limb, there must be an identifiable objective the law is pursuing that is compatible
with the system of representative and responsible government. The objective of this provision is the
protection of the Australian government against subversive elements and to prevent those elements
from encouraging subversive feelings against the government. This would seem to be a legitimate
end. Students may have been able to draw an analogy with Nationwide News and the acceptance
there that the protection of the reputation of the Industrial Relations Commission was a legitimate
objective.
The next question is whether the means are appropriate and adapted to the legitimate objective and
are compatible with a system of representative and responsible government.
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There is certainly room to argue here that merely advocating ‘hatred and contempt of or
disaffection’ the government should not be a criminal offence with a possible 10 years
imprisonment. There is no element of danger to the safety of the government or the people. In fact,
hatred and contempt of the government could be seen, like offensive language, to be part of the
Australian political environment (thus making an analogy with the judgments of French CJ and Hayne
J in Monis v The Queen and distinguishing the situation from Coleman v Power).
Extended Qualified Privilege –
The Foreign Minister is threatening a defamation action against Mr Radical. The pamphlet he is
complaining of states that the Foreign Minister has sold the Australian people out to American
interests and that he has not acted in the interests of Australia but has been improperly influenced
by his relationship with America. There are certainly defamatory imputations there.
Mr Radical will have to argue the defence of extended qualified privilege by reference to the test
established in Lange. The pamphlet certainly relates to government or political matters. It would not
appear that it was actuated by malice or ill-will other than an intentional to politically hurt the
government. The final question will be whether the comments were reasonable in all of the
circumstances. There are a number of arguments to be explored here. It would seem that Mr Radical
reasonably believed the comments to be true and had no reason for believing they were untrue. As
the President of the Citizens-Against-Drones, he clearly feels very deeply about these issues. The
biggest problem from Mr Radical is that he did not seek a response from the Minister, but rather
distributed the pamphlet containing only the CAD’s views.
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Question 3 – Advise Commonwealth UAVs Pty Ltd
This question asks students to assume s 20 of the DI Act is otherwise valid, and just advise
Commonwealth-UAVs Pty Ltd as to whether the section applies to it.
Implied Immunities –
This question therefore only requires an application of the implied immunities, Cigamatic doctrine,
as modified in Henderson’s Case. We know that the State legislation intends to apply to the
Commonwealth Crown because of the express rebuttal of the presumption it doesn’t in s 5.
The current test is that the States can’t discriminate against the Commonwealth, or pass laws of
general application that affect its capacities, although it can regulate the exercise of those capacities.
This seems to be a classic case of a law of general application (s 20 applies to all persons operating in
the defence industry in SA). Further, it does not prevent the Commonwealth from operating its
business, but regulates how it must do so through the requirement of a licence. Analogies could be
drawn between these facts and those of Henderson’s Case (the operation of a real estate agency) or
Pirrie v McFarlane.
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PART B – Short Answer Question
In the short answer questions we are looking for understanding of what the question is asking and
engagement with the critical part of the question.
Question A
This question was very specific and directed the students to the relevant principles/sections through
which they had to answer the primary question – does the Melbourne Corporation protect the
States from becoming ‘important debating societ[ies]’. Here, the students need to be able to explain
that the intergovernmental immunities doctrine protects only the institutions of the State
governments and not their powers. Protection of their powers falls into the trap of reserved powers
reasoning which was rejected in Engineers and has never been revised.
The Commonwealth’s powers are interpreted without reference to the impact that they will have on
the States’ legislative powers. Students could have drawn upon their understanding of the
corporations power post Work Choices, the treaty implementation aspect of the external affairs
power post-Tasmanian Dam Case and the defence power post-Thomas v Mowbray to demonstrate
the enormous inroads into the States’ legislative powers that can be made by the Commonwealth.
Unlike, as explained by Latham CJ in Uther, or Kirby J in Henderson’s Case, the States can’t use the
supremacy clause (s 109) to protect their powers like the Commonwealth can. Because of this
dimension of our federal structure the States are more likely to lose powers to the central
government than vice-versa. So while Melbourne Corporation ensures the States’ judiciary,
executive and parliament are beyond the reach of the Commonwealth, they are left with very few
areas over which they have jurisdiction.
Excellent answers may also have touched upon the financial dominance of the Commonwealth over
the States and the Commonwealth’s ability to use s 96 grants to the States to make them implement
Commonwealth policies – another move towards an impotent debating society as flagged by
Callinan J.
Question B
As the question highlights, the High Court engages in proportionality analyses in a number of
different areas. However, these analyses are used for different purposes. Under the defence power
and the treaty implementation aspect of the external affairs powers, the High Court uses
proportionality to ensure that exercises of Commonwealth power that may be for the ‘purpose’ of
defence or implementing the treaty. This analyses is used to ensure that the Commonwealth
Parliament does not implement measures that lack the necessary connection back to the power. So
proportionality is used to ensure that the Commonwealth head of power is not used to drastically
expand and intrude on the residue powers of the States. This was particularly prominent in the High
Court’s use of the proportionality test to limit the treaty implementation aspect of the external
affairs power once it abandoned the requirement for the treaty to be of international character or
on a matter of international concern.
The proportionality analyses that the High Court engages in under s 92 or the implied freedom of
political communication is not for the purpose of ensuring the Commonwealth’s legislative power
does not extend too far into the jurisdictions of the States. This proportionality test has its roots in
the concept that rights are very rarely absolute and incursions into them are often justified because
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they are necessary for the pursuit of other social goods. And so some restrictions on rights are
accepted provided that the restrictions are proportionate to an identifiable alternative social
objective.
Students may have pointed out that the High Court’s use of the term ‘appropriate and adapted’
across the different proportionality tests has in the past been a cause of concern. More recently, you
see the Court moving to adopt different language and a stricter scrutiny test under s 92 (the
‘reasonable necessity’ test in Betfair No 1), and some of the judges adopting a similar test under the
implied freedom (for example, Crennan, Kiefel and Bell JJ in Monis).
Question c
The question asks students to engage with two s 92 cases – Cole v Whitfield and Betfair No 1 – by
reference to their interpretative methods. The two cases demonstrate that the High Court has failed
to adopt a consistent interpretative methodology even in relation to a single constitutional section.
First and foremost, students needed to identify the ground breaking use of convention debates in
Cole v Whitfield. Was this intentionalism or textual originalism? The High Court specifically dismisses
the use of the debates to determine the subjective intention of the individuals, so it is not
intentionalism. The Court explains that it is allowing reference to the debates for the purposes of
‘identifying the contemporary meaning of language used, the subject to which that language
was directed and the nature and objectives of the movement towards federation from
which the compact of the Constitution finally emerged’
The Court uses the debates to understand what the framers meant when they talked about ‘free
trade’ – settling on a definition that encompassed an absence of protectionism. This type of
interpretation is akin to textual originalism – the Court using the language as it was understood at
the time to develop an understanding of what the purpose of the section was.
Betfair No 1 did not overrule the interpretation given to s 92 by the Court in Cole v Whitfield.
However, the Court did reinterpret the regulatory exemption and the level of scrutiny of measures
that restrict trade but have as their objective a non-protectionist purpose. In terms of interpretative
methodology, the High Court uses the competition principles and their emphasis on free trade and
competition to justify this move towards stricter scrutiny of burdens on trade. This approach stands
in direct contrast to that adopted in Cole. By using modern economic policies to determine the
scrutiny of a constitutional test the High Court is engaging in a progressive/contextual approach.
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