#7319 - Economics Powers - Federal Constitutional Law

The reach of s 51 (“Trade and commerce with other countries and among the States” is wide
- The words are also found in s 92 that speaks of “trade, commerce and intercourse” which are also broadly construed
In W & A McArthur v Queensland, Knox CJ, Isaacs and Starke JJ iterated that what falls within the ambit of the expression in s 51 depends on the varying phases of ‘trade, commerce and intercourse’ itself
- They also explained that it not only includes transportation but also “commercial arrangements of which transportation is the direct and necessary result from part of ‘trade and commerce’” including “mutual communings, the negotiations…the bargain, the transport and the delivery”
The section enables the CTH to regulate and participate in T&C with other countries and among the states
Australian National Airways Pty Ltd v Commonwealth (ANA Case) (1945) 71 CLR 29
- Facts: The Australian National Airlines Act (ANAA) established the Australian National Airlines Commission (now Qantas) which was authorized to operate interstate airline services.
- Held: that the operation of the service was valid – the CTH had power to legislate WRT interstate trade and commerce which allowed it to established its own government instrumentality to engage in such trade and commerce
  - Australian Coastal Shipping Commission v O’Reilly (1962) 107 CLR 46
    - Facts: The court took a similar view as in the ANA Case but in that case sections of the Act attempted to confer a monopoly on the airline – these sections where held to be invalid
- Dixon J based his argument for this inclusiveness on the fact that the powers granted by the Constitution are wide enough for flexible application (“it is a constitution we are interpreting”) and laws authorizing the conduct of a transport service for inter-state trade (as a monopoly or not) definitely fall within it
The CB writers point out three distinctive inhibiting factors constraining the interpretation of s 51(i)

The section omits trade and commerce within a State and hence judges have construed the section as not allowing the CTH to encroach too far on an area of power not granted to it. The dichotomy is given considerable importance despite the interdependence between inter/intrastate trade (Gibbs CJ in A-G (WA) v ANAC)
Despite the close verbal parallels with the Commerce Clause of the USC the Australian equivalent is far less widely used than the American counterpart
1. One reason is that the grants of power to the AU Parliament are much more numerous (39 as opposed to 18) – these powers are more explicit, e.g. “banking” in 51(xiii); such areas were implicitly included in the USC Commerce Clause. These have allowed development to be spread amongst powers in Australia
2. The commingling doctrine accepted in America (the idea that inter/intrastate trade is so commercially interdependent that the congressional power must necessarily extend to it) has not been accepted in Australia
The need to harmonize s 51(i) and s 92 – s 92 inherently limits s 51 as it places area of State trade and commerce beyond CTH power (it must be “absolutely free”) – accordingly any expansive interpretation of the words will impose a large parallel interpretation. In the ANA Case s 92 precluded the CTH from giving the ANAC a monopoly due to s 92.

This idea that the CTH can’t encroach on intrastate trade has overtones of the ‘Reserved Powers’ doctrine (and was once used under a principle that such limitations can be extended to other powers – this however has been discredited)
- But this is clearly different – s 51(i) says nothing of Reserved Powers, it simply does not grant the power to enact laws with respect to intrastate T&C

R v Burgess; Ex parte Henry (1936) 55 CLR 608
Facts: The need for pushing the distinction between intra/interstate trade and the resistance to the US commingling doctrine is shown in this case. It involved the validity of s 4 of the Air Navigation Act 1920 (Cth) (ANA) which authorized the making of regulations for the control of air navigation in the CTH and territories.

The broad language of the section was used as it was agreed the States would legislate to refer to the CTH under s 51(xxxvii) legislative power on air navigation – this fell through (except in TAS) and hence the CTH tried to justify it on other areas of power
It was argued that effective control over inter-State traffic must involve control over intra-State traffic as the power to legislate to ensure safety of inter-state commerce relies on making air navigation regulations applicable to intrastate travel. This failed

Held: Even though “air navigation” in Territories could be regulated under s 122, that “in the Commonwealth” is a general topic that the CTH could only deal with in limited aspects. S51(i) provides a clear distinction in that regard.

Latham CJ remarked of the obviousness of the interdependence of inter and intrastate regulations conforming to one another – without such measures there would be a “grave risk of serious accident”

But despite the fact that such considerations were “wise” and “expedient” – these could not be used to “control the natural construction of statutory language”
In recognizing the interdependence of the two topics, his honour extrapolated what would happen if this were to excuse legislation covering both – concluding that this was not possible as such an argument was always rejected by Courts\
His honour also recognized the US position but deferring to precedent said that the Courts have “definitely declined to adopt such a principle”
His honour did accept the possibility that case it might be impossible to regulate interstate trade without regulating intrastate trade but declined to deal with the situation

Dixon J, after considering the ambit of the section, also deferred to the express words of the power, saying that “the legislative power is to make laws with respect to inter-State commerce, and, under the power, the domestic commerce of a State can be affected only to the extent necessary to make effectual its exercise in relation to commerce among the States” – considerable inconvenience is not enough.

His honour also remarked that the second limb of s 4, concerning “air navigation” did not relate to commerce – but its place in the Act in regulating aerial navigation meant it was to cover a wider field
- This second limb would have been supported if it was expressly confined to inter-State navigation – but the legislature did not address itself to this

Evatt and McTiernan JJ also rejected the commingling theory but went on to say that this did not deny the possibility that:

“there may be occasions when parts of intra-State aviation will be seen to occupy so direct and proximate a relationship to inter-State aviation that the agents and instruments of the former will be drawn within the ambit of Federal power” – else the CTH power will be frustrated and nullified

But this doesn’t mean the CTH can legislate WRT intra-state trade – only that legislation WRT inter-state trade can operate in respect of persons/matters/things which are not directly involved in inter-state trade are brought into a sufficiently proximate relationship with such trade

The conclusions in this case were reaffirmed in relation to air navigation (again) but with development as to the concessions made by each judge as to proximate relationships with interstate trade
In the First Airlines Case the HCA held that the NSW system for aircraft operating solely within the State was not inconsistent with Commonwealth Regulations made under the ANA
- This was because the CTH regulations had no application to purely intrastate flights
Following this…

Airlines of NSW Pty Ltd v New South Wales (No 2) (Second Airlines Case) (1965) 113 CLR 54

Facts: After the First Airlines Case both governments amended their legislation and returned to the HC – the Court found no inconsistency once again but held that the CTH regulations were valid.

Reg 6(1) was amended to extend to purely intrastate aviation

Reg 198 provided that aircraft cannot be used in public transport operations except in accordance with a CTH license

Reg 199(3) and Reg 199(4) together provided that the D-G could have regard to the safety, regularity and efficiency of air navigation and no other matters in issuing such licenses.

Their honours differed in finding the source of the power to enact this legislation – Kitto and Windeyer JJ relying on s 51(i), McTiernan on s 51(xix) [ext. affairs], Menzies and Owen JJ on both and Barwick CJ preferring s 51(i). Taylor J dissented.

Kitto J tracked the development of the doctrine of “close and substantial relation” in America which was used to justify federal encroachment on State trade. He addressed the criticisms to this – namely that in practice it would mean that there was no real limit to federal regulation on local commerce. He concluded “To import the doctrine of American cases into the law of the Australian Constitution would in my opinion be an error”; instead relying on the with respect to test provided by the Constitution

The question is, when the factual situation in which the law operates is understood, whether the law, by its operation on the intra-State section of the relevant form of commerce is seen to operate also upon the conduct of an activity authorized by federal power
- If the intra-State activity (the federal law not extending to it) will/might have a prejudicial effect on matters merely consequential...

#7319 - Economics Powers - Federal Constitutional Law

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