Commonwealth economic powers Week 4, Module 2 Trade and Commerce Limitations – Laws Regarding T and C (s92)

Trade and Commerce . S51(1) Commonwealth has power to pass laws with respect to trade and commerce among the states, or between Australia and overseas . No express power to pass laws dealing with intrastate trade and commerce . 2 aspects to the power (a) does the law deal with T and C (b) does it relate to T and C that is interstate or overseas . Heart of power and ‘incidental’ to power

Meaning – Trade and Commerce . Buying and selling is at heart of trade (St George County Council) . All the commercial arrangements of which transportation is the direct and necessary result, mutual communings, negotiations, verbal and by correspondence, the bargain, transport and delivery are all but not exclusively T and C (W and A McArthur) . Professions, universities, hospitals, schools?

O’Sullivan v Noarlunga Meats . Cth export regulations dealing with storage and treatment of meat, registration of slaughter houses, State law also regulated . Issue was validity of Cth law, validity of State law . Cth possesses no direct power over slaughter houses, but has power over T and C . Fullagar J broad view of s51(1) expressed: Cth can regulate all matters which may beneficially or adversely affect export trade of Australia or anything manufactured in Australia

O’Sullivan v Noarlunga Meats . Including grade and quality of goods but also packing, getup, description, labelling, handling, anything likely to affect export market . May be necessary to enter the ‘factory, field or mine’ – broad . Cf cases saying that production cannot be regulated (Marrickville Margarine) . Constitution perhaps assumes easy to distinguish between (a) interstate and overseas T and C and (b) intrastate T and C – but sometimes it is not

Airlines of NSW Pty Ltd v NSW (No2, 1965) . Concerned validity of Cth regulations regarding licensing of aircraft involved in international flights, interstate flights, or navigation involving a territory . Later amended to include all navigation in Australia . Challenged as being beyond s51(1), NSW also had regs . Kitto J claiming that Australia must remain a system of ‘dual federalism’, court fails in its task if it moves away from model, however out of touch with practical conceptions or modern conditions it might seem

Airlines . High Court satisfied that the (a) international and interstate T and C and the (b) intrastate T and C was so integrated at airports that it was a necessity for the Cth to be able to regulate all of it . While HC has accepted physical integration as a valid argument for why Cth needs to regulate all industry, it has not accepted economic integration eg ANAC case – government airline (TAA) proposed flight Perth – Darwin via Port Hedland (to make flight economically viable), competitor challenged, saying Cth didn’t have power as Perth – Port Hedland leg purely intrastate, HC agreed . Must maintain distinction different types T and C . Murphy J (diss) court takes into account physical integration, should also take into account economic integration, majority’s interpretation keeps the ‘pre-Engineers ghosts walking’

Where Different Types of T and C are Mixed Together . Eg Redfern v Dunlop Rubber Australia – could Cth anti-competition law apply to range of agreements among competitors, some related to all different types of commerce including intrastate T and C . Court accepted necessity of Cth regulating all . Swift v Boyd-Parkinson – regulation of conditions in chicken slaughter houses, no-one knew where the chickens were going at the time

Examples of Use of Power . Licensing system for companies wishing to export (Murphyores v Cth, Cth taking into account environmental factors in assessing applications) . Regulating working conditions, at least of those working on ships involved in distributing products internationally or interstate (Foster) . Cth could not regulate payment of health insurance claims to policy holders, although many customers were interstate, policy did not expressly refer to payment going interstate (Hospital Provident Fund v Victoria)

Freedom of Interstate Trade and Commerce s92 . Is a limitation, applying to both Commonwealth and State laws, with most application to State laws . Literally provides that trade and commerce among the states shall be absolutely free . Key reason for federation . ‘absolutely free’ from what? . Section has never been taken literally . Two periods to consider – pre and post the landmark decision Cole v Whitfield . Pre-Cole, case law difficult, court distinguished between direct and indirect restrictions, used criterion of operation test, some reasonable regulation okay . Attempt to nationalise banks in Australia failed due to s92 (Bank Nationalisation Case)

Cole v Whitfield . Tasmanian law prohibiting person from having undersized crayfish in their possession, regardless where they obtained the crayfish . Whitfield bought crayfish from SA which complied with SA law, but not Tasmanian law . Charged with breach of Tasmanian law . He argued s92 in his defence

Cole v Whitfield . Made a new start, based on history and purpose of section . 2 part test proposed (a) does the law discriminate against interstate T and C on its face or in effect (b) was it passed for a protectionist purpose . Law might have genuine objective eg quality control, public safety . Here law burdened interstate T and C but didn’t discriminate – same rules applied to all commerce, and no evidence of protectionist purpose, more of an environmental objective

Barley Marketing Board v Norman . All barley grown in NSW transferred to Board, Board would market barley, contracts not involving Board invalid . Was scheme contrary to s92? . Court said no, law did not discriminate against interstate T and C, it was concerned with NSW grown barley only, court acknowledged law was protectionist but first limb of s92 test not satisfied

Bath v Alston Holdings . Victorian tobacco legislation required seller to have licence and pay licence fee . The licence fee (for a wholesaler or retailer) was a flat amount + 25% of tobacco sold in past period . In making this calculation of 25%, an amount was deducted from the retailer’s licence fee, to the extent of tobacco purchased from a Victorian wholesaler . Was the regime offensive to s92?

Bath v Alston Holdings . Court held 4-3 it was offensive to s92 . Mason CJ Brennan Deane and Gaudron JJ Act was discriminatory – effectively 25% of tobacco purchased elsewhere, protected locals from interstate competition from goods which might be cheaper . Doesn’t matter that all goods, as some stage, are subject to the fee – look at impact on Victorian retail market . Dissenters Wilson Dawson Toohey JJ all tobacco in Victoria at some stage subject to the fee, so no discrimination, economic effect is the same

Castlemaine Tooheys Ltd v SA . SA Act provided purchase of beverage must pay to retailer deposit on container – refillable bottles were exempt . SAB and Coopers in SA and used refillable bottles . Subject to increased competition from Bond, in three states, used non-refillables . Carlton based in Victoria, used non-refillables . SA amended Act to include 15c deposit on non-refillables, 4c on refillables

Castlemaine Tooheys Ltd v SA . Non-refillable suppliers had to accept return of all containers and refund deposits, no obligation on suppliers or refillable bottles . Price differential made Bond product non-competitive on price . SA claimed law had a legitimate environmental objective to encourage recycling . Expert evidence that to achieve this objective, only needed 2c differential, not 11c . Court invalidated Act, prepared to infer state had illegitimate purpose

Betfair PL v State of WA (2008) . Tasmanian coy has licence to run betting exchange, operated from Tasmania . Involves punters betting amongst themselves not with state-based companies like TAB . WA Betting Control Act made it an offence (a) to bet through the use of a betting exchange (b) to publish a WA race field without authority . High Court invalidated WA Act, dismissed argument that WA law for wellbeing of its people . Consideration of state’s right to legislate won’t support much state regulatory legislation in the ‘new economy’

Betfair (2008) . Court noted crucial role of trade in Australia’s creation, free commercial enterprise one of the most distinctive aspects of national unity . States may have pressure to favour locals at expense of interstate trader . Allowed some regulation of interstate trade as ‘reasonable regulation’ . Effective total ban on betting exchanges not, not reasonably appropriate and adapted to a legitimate objective

Subseqent . Subsequently, schemes which don’t distinguish in their operation between interstate and intrastate betting operators have been validated (Betfair, 2012, Sportsbet, 2012)