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Constitutional Law

Topic 7 Trade and Commerce Power & Incidental Power

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Trade and Commerce Power

• S 51(i) gives power to make laws “with respect to” trade with other countries and between states.

• Note that section 92 also requires trade between states to be free.

• Incidental scope of power has historically been interpreted narrowly.

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Trade and Commerce

• W & A McArthur Ltd v Queensland (1920) 28 CLR 530• Australian National Airways Pty Ltd v Commonwealth (ANA

Case) (1945) 71 CLR 29• R v Burgess; Ex parte Henry (1936) 55 CLR 608• Airlines of NSW Pty Ltd v New South Wales (No 2) (Second

Airlines Case) (1965) 113 CLR 54• Wragg v NSW (1953) 88 CLR 353• O’Sullivan v Noarlunga Meat Ltd (1954) 92 CLR 565• Attorney-General (WA) v Australian National Airlines

Commission (WA Airlines) (1976) 138 CLR 492• Pape v Commissioner of Taxation (2009) 238 CLR 1

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W & A McArthur Ltd v Qld (1920)

• The plaintiff was softgoods business trading in calico, sheeting and sheets.

• Agents would travel with goods from NSW to QLD to act on the Plaintiff’s behalf.

• QLD Commissioner of Prices wished to prosecute agents for breaching fixed prices.

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W & A McArthur Ltd (cont.)

• The plaintiff brought action against on the grounds that the state could not impose restrictions on inter-state trade.

• The invalidity was based on s 92 allowing for inter-state trade.

• Obiter from majority: s 51(i) and s 92, both embrace all that is ordinarily comprised within the term "trade and commerce" when taking place "among the States."

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Australian National Airways Pty Ltd v Cth (ANA Case) (1945)

• The Australian National Airlines Act 1945 gave the power to establish, maintain and operate airline services for the transport for reward of passengers and goods between States, between Territories and other places in Australia.

• The key issue was whether the provision allowing interstate airlines was valid.

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ANA Case

• The law authorising the transport service for inter-state trade was found to be a law with respect to trade and commerce amongst the States.

• The Constitution is capable of flexible application.

• If any limitation existed, it needed to imported into the power (p 780 for limitations).

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R v Burgess; Ex parte Henry (1936)

• Vernon William Burgess, officer at Civil Aviation Department in Sydney, charged Henry Goya Henry, pilot for flying over Mascot.

• The Cth had passed the Air Navigation Regulations under the Air Navigation Act 1920

• An application was made in Henry’s absence challenging the validity of sections of the Air Navigation Act on the basis that it could not rely on the trade and commerce power.

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Burgess (cont.)

• Dixon J: Air Navigation requires that inter-state flying be controlled as a whole (p 782)

• Evatt and McTiernan JJ: Cth has the power to legislate with respect to trade and commerce, allowing inter-state trade through air transport, due to the “sufficiently proximate relationship with such trade.” (p 783)

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Second Airlines Case

• The Plaintiff (Airlines NSW) sought an injunction against NSW from enforcing state laws preventing or endeavouring to prevent the plaintiff from carrying passengers for reward by aircraft from Sydney to Dubbo.

• The issue was whether the Cth Air Navigation Laws applied to the intra-state transport of passengers.

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Second Airlines Case (cont.)

• The trade and commerce power and the external affairs power of the Commonwealth as authorising legislation on the subject of air navigation, and the extent to which the Commonwealth may validly legislate on that subject considered.

• Air Navigation was accepted as being within the federal power to make laws.

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Wragg v NSW

• Dixon CJ: The Constitution can include s 51(i) power, certain incidental or ancillary powers provided they are incidental to s 51(i) being trade between states or other countries.

• However, if the law purports to create an ancillary power that effects trade and commerce within a state, then it will not operate.

• See page 786 for excerpt.

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Noarlunga Meat Ltd (p 786)

• Section 52a of the Metropolitan and Export Abattoirs Act 1936-1952 (SA) and regulations required licenses for slaughtering and processing of meat.

• Fullagar J: The Cth possesses no specific power for slaughterhouses, but the trade and commerce power allows for the regulation of the quality of meat for export (p 787).

• Laws were within incidental power (p 788).

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WA Airlines Case (p 789)

• Australian National Airlines Act 1945 (Cth) s 19 constituted the Australian National Airlines Commission.

• Commission’s functions were to regulate the transporting of passengers and goods between states, states and territories, and within territories.

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WA Airlines Case (p 789)

• The Act also provided for transport between places in the one State to the extent that the purpose was for the efficient, competitive and profitable conduct of the business;

• “Or otherwise as incidental to the carrying on of that business”.

• This raised the issue of the incidental scope of the trade and commerce power.

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WA Airlines Case (p 789)

• Stephen J [508] quoting Dixon CJ in Victoria v Commonwealth (Cth) (at 614): “The nature and subject of the particular head of power in question will be critical in determining what is incidental to that particular power…”

• The constitutional division of power in the case of trade and commerce (i.e. s 51(i) and s 92) requires that s 51(i) incidental scope is narrow [509].

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WA Airlines Case (p 790)

• The validity of the law was founded on the plenary power of s 122 (power to make laws for the territories) not s 51(i).

• The basis for validity was argued by a 3-2 majority (Barwick and Gibbs CJ) dissenting.

• Murphy J found validity on s 122 and s 51(i), arguing a broad interpretation to remove any distinction between intra/inter state trade.

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WA Airlines Case (p 789)

• Stephen J: s 19B sought to exercise an incidental scope of the section 51(i) power, which is regarded as narrow in scope.

• More appropriately relied on s 122 to confer power on transport within territories and between territories and other parts of Australia (p 789).

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WA Airlines Case (cont.)

• In so far as it applied to the provision of air services between a place in a State and a place in another State s. 19B was not validly made under s. 51 (i.) or any other provision of the Constitution, and was pro tanto invalid.

• Stephen J: Commonwealth may establish an airline service to carry passengers and goods on interstate routes and on routes to, from and within territories: cited ANA case.

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Pape v Commission of Taxation

• (p 791) Bryan Pape sued the Commissioner of Taxation alleging that he was entitled to a tax bonus of $250 from the defendant under s 7 of the Tax Bonus for Working Australians Act (No 2) 2009 (Cth).

• The payment of the tax bonus was characterised as a gift and was not authorised on the grounds that the Tax Bonus Act was not a law with respect to taxation as provided by para (ii) or any other paragraph of s 51 of the Constitution and "as such" was invalid.

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Pape (cont.)

• Gummow, Crennan Bell JJ [213],[232]: Bonus Act may be supported by ss 61 and 51(xxxix) of the Constitution, however, question is whether there is a need for an immediate fiscal stimulus to the national economy; and

• Whether this falls within executive power and within the incidental exercise of executive power under s 51(xxxix).

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Pape (cont.)

• Section 51 (xxxix) relates to the incidental power regarding matters incidental to the execution of any power vested by this Constitution in the Parliament or in either House thereof, or in the Government of the Commonwealth, or in the Federal Judicature, or in any department or officer of the Commonwealth.

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Pape (cont.)

• French CJ, Gummow, Crennan and Bell JJ, (Hayne, Heydon and Kiefel JJ dissenting), that Executive Government having need for an immediate fiscal stimulus to the national economy enlivened legislative power under s 51(xxxix) to enact the Tax Bonus Act as a law which was incidental to that exercise of the executive power.