Home
| Databases
| WorldLII
| Search
| Feedback
Monash University Law Research Series |
Last Updated: 23 November 2011
Greg Taylor
Federalism in Australia
This paper was originally published in Volume 4 of International Constitutional Law, pp. 171-179.
1. A BRIEF
HISTORY[1]
The
six Australian States of today's Australian federation – the
Commonwealth of Australia, to use its formal
name[2] – are
the six Australian colonies founded by the British between 1788 and 1859. As is
well known, all were from the start (or,
in the case of Western Australia,
became) dumping grounds for convicts, replacing the lost American colonies which
had previously
filled that role. There is however one important exception to
this convict heritage, namely South Australia, which began as and remained
a
colony of free settlers.
Having learnt its lesson in North America in the
late eighteenth century, the Colonial Office of the nineteenth century was only
too
keen to accede to requests by the colonies for the greatest possible degree
of self-government consistent with their place within
the Empire (which the
colonists themselves hardly wished to question for a variety of reasons ranging
from emotional attachment to
Great Britain to the advantages of Imperial
defence). Five of the Australian colonies received grants of self-government in
the 1850s;[3] Western
Australia had to wait until
1890[4] because of its
isolation, comparative poverty and the fact that its population remained very
low until discoveries of gold caused
a rapid increase. Coupled with the grants
of self-government in the 1850s were suggestions from Whitehall that the
colonies should
consider
federating,[5] but the
adolescent colonies were not then in the mood for limiting their freedom within
the Empire by subjecting themselves to an
Australian federation.
It was not
until the 1890s that federation of the six colonies was anything more than the
subject of occasional speculation and speechifying.
As the 1890s progressed,
inter-governmental discussions culminated in constitutional conventions which
produced draft constitutions
for the Australian federation. By the standards of
the times, this process was remarkably democratic. Many colonies elected the
representatives
they sent to the constitutional conventions, and in all colonies
the draft constitutions were submitted to referenda of the people
for approval.
The second set of Australia-wide referenda produced a majority of voters in all
colonies for an approved constitutional
text. In most colonies, of course, only
white men could vote, thus limiting the democratic credentials of the Australian
Constitution by modern standards; but in South Australia women received the vote
in time to vote in both referenda, and Aborigines also had, and
actually
exercised, the vote in the referenda – special arrangements were made
for them to cast their vote in some remote locations,
and in those locations the
poll greatly favoured the proposed
Constitution.[6]
The Constitution thus endorsed was sent, accompanied by an Australian delegation, to the British Parliament, as the only body capable of exercising legislative power over all Australia. With one small exception the Constitution was enacted at Westminster[7] as approved by the Australian people; the exception increased the powers of the Judicial Committee of the Privy Council, the highest Court of appeal for the colonies, to hear appeals from the Australian Courts, but this jurisdiction has long since been abolished by legislation[8] and this qualification is thus of historical interest only. From the start the Constitution provided for disputes about the powers of the federation and the States to be finally resolved by the local federal supreme Court it set up, the High Court of Australia.[9]
The federal Constitution of the Commonwealth of Australia was proclaimed by Queen Victoria, in the month before she died, to take effect with the new century on 1 January 1901. The Australian colonies became States of the new federation, which remained within the Empire (there being no declaration of independence associated with the federation). While Australian independence came gradually with the gradual dissolution of the British Empire at some time probably around the Second World War,[10] the Crown remains a part of the Australian constitutional framework as a reminder of its origins. The absent Monarch is represented at federal level by a Governor-General and in each State by Governor;[11] each of these officials is in practice selected by the government concerned.
2. THE DISTRIBUTION OF POWERS
When the Canadian colonies federated in the
1860s,[12] they did so
in the shadow of the greatest crisis ever to face the American federation. They
were therefore even more than usually
concerned to distinguish Canada from its
giant neighbour and produced a unique scheme for the distribution of powers
between centre
and
provinces.[13] The
Australian federalists of the 1890s were not subject to such pressures and
faithfully copied the outlines of the American scheme
for the distribution of
powers to the extent that they drew up a set of enumerated powers for the centre
set out in ss 51 and 52 of the Constitution and left the undefined residue
with the States under s 107. The paradox that has emerged since is that the
Canadian arrangements, which were meant to produce a strong centre and weak
provinces,
have succeeded in producing the reverse – a relatively
weak centre and strong provinces; while in Australia the reverse
aim
– a weak centre and strong States – has given way to
the strong centre and weak States much closer to that which the
Canadians had
hoped for in the 1860s but did not get. As will be shown, the Australian
federation is marked in practice by a very
strong legal position of the
federation.
This situation has been reached as a result of two factors. The
first is decisions of the High Court of Australia with which this
section deals.
The second is the federal government's extreme dominance of financial matters,
which is the subject of the next section.
The extra-legal background to all this
is, however, important. Stated briefly, it is the lack of any Quebec in
Australia and the
relative lack of differences among the Australian States. Were
it not for the great distances involved in Australia, it would be
seriously
questionable whether the degree of diversity among the Australian States would
justify a federal system at
all.[14]
Section 51
of the federal Constitution sets out forty subject-matters over which the
federation has concurrent legislative
powers.[15] Exclusive
federal legislative powers are rare and consist largely of three items in
s 52, together with s 90 on excise duties which is to be dealt with in
the next section. The concurrent legislative powers in s 51 range from the
trivial if mildly poetic 'lighthouses, lightships, beacons and buoys' of
s 51 (vii) to the enormously important areas of trading, financial and
foreign corporations (s 51 [xx]) and external (i.e. foreign)
affairs (s 51 [xxix]). The residue of powers not allocated to the
federation is, as mentioned, with the States (s 107), the result of which
is that there is in the Australian Constitution no list of State powers such as
appears in the Canadian.
In hindsight this lack of specification of State
powers can be seen as the greatest mistake in drafting the Constitution made by
the founding fathers.
Until 1920, the High Court of Australia, staffed by
those of the founding fathers who had accepted elevation to its Bench, attempted
to supply this deficiency. In reading the list of federal powers, it was
maintained, it was necessary to have regard to the unstated
but well-known
responsibilities which were intended by the founding fathers to remain with the
States. The list of federal powers
in s 51 was accordingly read with one
eye on an invisible list of State powers, and federal powers were read
restrictively in order to preserve
those to which the States were
accustomed.[16] In
1920, in the celebrated Engineers
Case,[17] the
centralist Judges found themselves for the first time in a majority, and this
doctrine of reserve State powers was forever abandoned.
Henceforth federal
powers were to be given their natural meaning, untrammelled by a priori
assumptions about the powers supposed to be reserved to the States. This view
dispensed with the obvious difficulty of relying on
an unwritten list of
reserved States powers as an aid to interpreting the written list of federal
powers. It also well suited the
formalist and positivist mood of legal thought
of the day. Extra-legal developments were also of importance, however, as one
Judge
of the High Court of Australia pointed out in 1971 :
[I]n 1920 the Constitution was read in a new light, a light reflected from
events that had, over twenty years, led to a growing realisation that
Australians
were now one people and Australia one country and that national laws
might meet national needs. [...] As I see it the Engineers' Case, looked
at as an event in legal and constitutional history, was a consequence of
developments that had occurred outside the law Courts
as well as a cause of
further developments
there.[18]
As the
century progressed, technical legal analysis further contributed to the
expansive reading of federal powers. It became established
that a law was to be
classified as within a subject confided to the federal sphere as long as it
directly operated within one of
the subject-areas of s 51. Whether the
law's primary concern was with such a subject or with some other subject was not
relevant and could not nullify federal
power. The opportunities which this opens
for federal power are best illustrated by the example of
Murphyores v.
Commonwealth.[19]
Stated simply, in this case the federal government wished to prohibit sand
mining on an island for environmental reasons. However,
the federal government
has no power over environmental matters. It does however have a power over
foreign trade (s 51 [i]), and accordingly it prohibited the export of
any sand mined, thus of course making the mining pointless and achieving the
desired
environmental result. This law was upheld by the High Court of
Australia : the technical legal operation of the law was on a matter
confided to the federal legislature, namely foreign trade, and neither the
motive pursued nor the principal environmental objective
of the law prevented it
from answering the description of a law about foreign trade.
Thus, for a federal law to be valid, the federal Parliament need select only one part of any process on which federal laws are authorised by s 51 and legislate on that aspect of the activity. The potential of this method of interpretation to enhance federal powers was illustrated most recently by the Work Choices Case.[20] Having achieved the unusual feat of obtaining a majority in both Houses of the federal Parliament, a conservative government passed wide-ranging reforms of industrial relations law. The federal Parliament has a very limited power over industrial relations in s 51 (xxxv), which is conditioned, among other things, upon there being a labour dispute 'extending beyond the limits of any one State'. Bypassing this, the federal Parliament enacted a law on industrial relations under its power over trading, financial and foreign corporations (s 51 [xx]), which of course form the vast majority of significant employers in Australia. The law was upheld. It had a direct legal operation on the rights, duties and powers of trading, financial and foreign corporations. The fact that it might also fairly be described as a law on industrial relations and would be outside s 51 (xxxv) in that capacity was simply irrelevant.
A further accession of federal power has resulted from the decision that the power over external affairs (s 51 [xxix]) entitles the federal legislature to make laws for implementing any treaty to which Australia is a party. Indeed, an earlier Labour government had made laws on industrial relations under this power, relying on agreements entered into under the aegis of the International Labour Organisation, and thus also bypassed the limited power on industrial relations expressly granted by s 51 (xxxv).[21] The matter has progressed to such an extent that Sir Gerard Brennan, a former Chief Justice of the High Court of Australia, has been moved to say recently, without much exaggeration, that '[t]he only practical limitation on the subjects of Commonwealth expenditure and regulation is a political one. The constitutional division of legislative powers between Commonwealth and States, though relevant, has become of secondary importance.'[22] That is not to say that these limits are of no account. The States are firmly entrenched in the political mindset of Australian voters, particularly those in the smaller outlying States of South Australia, Western Australia and Tasmania; in those outlying States in particular, the idea of having everything decided in Canberra would have very little appeal indeed. An attempt at a full-blown takeover of everything on the part of the federal government using its full legal powers is very unlikely to occur, and would be even less likely to succeed politically.
3. MONEY
Federal dominance has been greatly reinforced by decisions on the sparse financial provisions of the federal Constitution. There are three chief sources of federal power here : its power over taxation (s 51 [ii]), the exclusive nature of its power over duties of customs and excise (s 90) and its power to make grants of money to the States upon conditions (s 96).
Being in s 51, the federal power over taxation is – with the exception of the customs and excise duties mentioned in s 90 – concurrent rather than exclusive. It was so operated until the middle of the Second World War : as today in Canada, there were both federal and State income taxes. In 1942, however, with Japanese bombs falling on Darwin and Japanese submarines in Sydney Harbour, the federal government decided to centralise all income taxation of both individuals and companies in its hands. It had Parliament pass a series of laws : first, federal income taxation was raised to a level which engulfed State income taxation; secondly, it prohibited the payment of State income taxes until federal income taxes were paid; thirdly, it compulsorily acquired the States' departments of taxation (using its power of compulsory acquisition under s 51 [xxxi]); and finally it provided for grants of money under s 96 to the States – conditional upon their not levying income taxes. In the First Uniform Taxation Case,[23] an extraordinarily literalist and unimaginative decision which can be attributed largely to the absence of one of Australia's greatest Judges (Sir Owen Dixon) on diplomatic duties in Washington, this scheme was upheld in full. Trying again in 1957 after the return of Sir Owen Dixon to the Bench and his elevation to Chief Justice, the precedent set in 1942 was felt too strong to be overruled in any significant way.[24]
The result of this – together, it must be said, with States
governments' reluctance to take on the politically odious task of
re-introducing
State income taxation – is that the most lucrative source of taxation
is wholly in the hands of the federal
government. It has a vast surplus of money
compared to its needs, and fortunately for it there is a ready use that can be
found for
it that further increases its degree of control : it makes grants
to the States under s 96 subject, in many cases, to extraordinarily
detailed conditions about the use to which they might be put. It is currently
the law
that a condition under s 96 need not be authorised by a legislative
power under
s 51;[25] in
other words, s 96 is a free-standing power to make conditions regardless of
whether the federal legislature could pass laws directly imposing the rules
which it attaches to the State grants. Thus, whole fields of legislative
activity, entirely unmentioned in s 51, have fallen under the federal sway
via conditional grants. These include such significant fields as hospitals,
roads and education
and research at all levels. Another field for federal
expansion is cities : on 27 October 2009, the Prime Minister announced that
the federal government intended 'to take a much greater national responsibility
for improving the long-term planning of our major
cities'[26] by means
of attaching conditions about city planning to money granted to the States for
improving infrastructure in cities.
From the point of view of the States, the
constitutional arrangements and Court decisions have given them insufficient
income to match
their vast de facto responsibilities (including
expensive, labour-intensive items such as schools, hospitals and roads). This
leads them to undue dependence
upon federal grants and to reliance on
out-of-date, inefficient or even socially harmful forms of taxation such as
gambling
revenue.[27]
The
conservative government in office from 1996 to 2007 did something to ameliorate
this situation, however. It introduced a goods
and services tax, fixed at 10%,
and provided for the money so raised to be granted without conditions to the
States as if it were
their own
revenue.[28] This has
reduced the level of "vertical fiscal imbalance", to use the technical term, but
not eliminated it entirely. As a matter
of law, of course, the States are
dependent on the goodwill of the federal legislature for the continuation of
this scheme, as it
rests solely on federal
legislation.[29]
Another way in which State dependence even in this field comes to the fore is
the regular disputes among the States governments about
how much of the revenue
in question should be allocated to each State. The States' complaints and
requests about the formula for
dividing up the money raised by the goods and
services tax among the States must be addressed to the federal government as the
States'
benefactor and sole master in this
field.[30]
Finally,
there is s 90 of the Constitution, which makes excise duties exclusive to
the federal government and thus prohibits the States from raising them. The
difficulty was
long felt in this area that "excise" has no accepted meaning in
the law, nor does the Constitution provide a definition of it. The definitional
task was therefore remitted to the High Court of Australia. After decades of
doubt and
much case law, in 1997 Ha v. New South Wales
established that an excise was to be seen as 'an inland tax on a step in
production, manufacture, sale or distribution of
goods'.[31] (Taxes on
goods entering Australia – customs duties – are clearly
denied to the States by another provision in s 90, which has the obvious
purpose of preventing the balkanisation of the Australian customs regime and
outlawing pre-Federation customs
duties levied among the colonies themselves.)
Thus the taxation of goods is also denied to the States, and this of course is
the
reason why they were not able to impose a goods and services tax of their
own but had rather to rely upon the federal Parliament
to do it for them and are
dependent on the federal government for a share of revenue produced by the
tax.
4. CONCLUSION
One further remarkable feature of the Australian Constitution deserves
mention, and that is the difficulty of amending it.
As was mentioned above,
the Constitution was originally approved by referenda of the people of the
Australian colonies, as they then were. It was only natural, therefore,
that the
same method should be chosen for amendment. Section 128 of the Constitution
requires an amendment to be passed by a referendum. The proposed amendment must
be approved by a majority of the voters but also
– to ensure that the
rights of the smaller States were not trampled upon – a majority of
people in a majority of States.
A majority of six being four, a proposed
amendment thus needs to be endorsed by an overall national majority and by
majorities in
at least four of the States.
The Australian people have been
extraordinarily conservative in approving amendments to their Constitution. Of
forty-four proposals submitted to the people since 1901, only eight have
succeeded. The last success was in
1977,[32] and the text
of the Constitution has remained unaltered since then. Needless to say, defects
in some of the proposals may be to blame for this record. It is not the
case
that every proposed amendment was without flaws. Nevertheless, the fact remains
that by international standards Australia's
Constitution has proved
extraordinarily stable.
Of the eight changes made, only three have affected
federal powers. In 1929, just in time for the Great Depression, s 105A was
added to the Constitution permitting the federal and State government to make
arrangements for their joint public debt. This has become the basis of an
agreement
between all Australian governments about the levels of and procedures
for borrowing to which all are
subject.[33] In 1946,
a limited endorsement was given to the welfare state :
s 51 (xxiiiA) was added, giving the federal Parliament power over
various pensions, unemployment benefit, student and family allowances
and also
medical and dental services. In 1967, finally, the federal legislature received
a concurrent power to make laws about Aborigines
(s 51 [xxvi]), who
had originally been expressly excluded from federal law-making power and thus
included within the realm of the States'
legislative powers alone.
On the
whole, however, the division of power conceived in 1901 has remained untouched
as far as the text is concerned – while
being subject to the great
pro-federal revolution in interpretation beginning with the Engineers'
Case in 1920 and continuing to this day. It may well be thought that the
judicial revolution in interpretation could hardly be avoided
given the great
changes in society and communications since the drafting of the Constitution in
the late 1890s. Given that the text was virtually impossible to amend, something
had to give, and that something was the original
States-friendly interpretation
of federal powers. In Australia there was, moreover, no Quebec to put a brake on
this process.
Thus the process for amendment, while appearing impeccably
democratic, has in fact resulted, paradoxically, in a series of silent
amendments to the Constitution augmenting federal power that have been made by a
process no more democratic than is involved in the voting among the seven
Justices
of the High Court of Australia. In so many respects, the history of the
Australian Constitution is a study in unintended consequences. But in that it
does not differ from many other human endeavours.
[1] For German speakers, there is a useful overview of Australian constitutional history in Rabe, Die föderale Entwicklung in Australien und Deutschland : ein Rechtsvergleich (Peter Lang, Frankfurt am Main 2008), C II.
[2] In Australia "the Commonwealth" is frequently used to mean "the federal government". As its use outside Australia is generally confined to references to the Commonwealth of Nations, the association of former parts of the British Empire, I avoid it as confusing in the text. But it will be found in the names of some of the cases cited.
[3] The statutes concerned, such as the New South Wales Constitution Act 1855 (Imp.), are all collected at http://www.foundingdocs.gov.au/ .
[4] Western Australia Constitution Act 1890 (Imp.), also available at the web site just mentioned.
[5] See for example the entry for Earl Grey in the Australian Dictionary of Biography, available on line at http://adbonline.anu.edu.au/biogs/A010440b.htm .
[6] There is an excellent history of Aboriginal rights to vote in Australian Electoral Commission, History of the Indigenous Vote (the Commission, Canberra 2006). This publication is available on line at http://www.aec.gov.au/pdf/education/resources/history_indigenous_ vote.pdf .
[7] As the Commonwealth of Australia Constitution Act (Imp.).
[8] Privy Council (Limitation of Appeals) Act 1968 (Aust.); Privy Council (Appeals from the High Court) Act 1975 (Aust.); Australia Act 1986 (Imp. & Aust.) s 11.
[9] The principal provision was s 74, which as a result of the compromise agreed to by the Australian delegates and the British government runs :
74. No appeal shall be permitted to the Queen in Council from a decision of the High Court upon any question, howsoever arising, as to the limits inter se of the Constitutional powers of the Commonwealth and those of any State or States, or as to the limits inter se of the Constitutional powers of any two or more States, unless the High Court shall certify that the Question is one which ought to be determined by Her Majesty in Council.
The High Court may so certify if satisfied that for any special reason the certificate should be granted, and thereupon an appeal shall lie to Her Majesty in Council on the question without further leave.
Except as provided in this section, this Constitution shall not impair any right which the Queen may be pleased to exercise by virtue of Her Royal prerogative to grant special leave of appeal from the High Court to Her Majesty in Council. The Parliament may make laws limiting the matters in which such leave may be asked, but proposed laws containing any such limitation shall be reserved by the Governor-General for Her Majesty's pleasure.
The certificate referred to in the second paragraph has only been granted once and clearly will never be granted again : Kirmani v. Captain Cook Cruises (No. 2) [1985] HCA 27; (1985) 159 CLR 461. Otherwise laws (referred to in Kirmani) have been passed under the third paragraph abolishing the right of appeal to the Privy Council.
[10] Australia's path to independent nationhood is discussed in Blackshield/Williams, Australian Constitutional Law and Theory : Commentary and Materials (4th ed., Federation, Sydney 2006), ch. 4.
[11] Australian Constitution, s 2 (federal Governor-General); Australia Act 1986 (Imp. & Aust.) s 7 (1) (the State Governors).
[12] There is an interesting and accessible account of this in Moore, 1867 : How the Fathers Made a Deal (McClelland & Stewart, Toronto 1997).
[13] I compare the Canadian and Australian schemes and their interpretation in Characterisation in Federations : Six Countries Compared (Springer, Heidelberg 2006), chh. 1, 2.
[14] Australian society is now very diverse as a result of post-War immigration. It is just that the degree and type of diversity does not greatly vary within Australia. Australian diversity is rather uniform across Australia.
[15] The section is too long to be conveniently set out in full here. It and other relevant provisions may be found at http://www.aph.gov.au/SEnate/general/constitution/ par5cha1.htm .
[16] For a summary of this approach, see the materials collected in Blackshield/Williams, Australian Constitutional Law and Theory, pp. 303-307.
[17] (1920 ) [1920] HCA 54; 28 CLR 129.
[18] Victoria v. Commonwealth ("Payroll Tax Case") [1971] HCA 16; (1971) 122 CLR 353, 396 per Windeyer J.
[19] [1976] HCA 20; (1976) 136 CLR 1.
[20] [2006] HCA 52; (2006) 229 CLR 1.
[21] Victoria v. Commonwealth (1996) 187 CLR 416.
[22] Brennan, "The Parameters of Constitutional Change" [2009] MonashULawRw 1; (2009) 35 Mon ULR 1, 8.
[23] [1942] HCA 14; (1942) 65 CLR 373.
[24] Victoria v. Commonwealth ("Second Uniform Tax Case") [1957] HCA 54; (1957) 99 CLR 575.
[25] This was the basis of one of the shortest decisions ever rendered by the Court : Victoria v. Commonwealth [1926] HCA 48; (1926) 38 CLR 399, 406. I see no sign of any retreat from this view in Pape v. Commissioner of Taxation (Commonwealth) [2009] HCA 23.
[26] http://www.pm.gov.au/node/6282; reported also in "The Australian", 28 October 2009, p. 1.
[27] Williams, "'Come in Spinner' : Section 90 of the Constitution and the Future of State Government Finances" [1999] SydLawRw 24; (1999) 21 Syd LR 627.
[28] There is an analysis of this scheme in Saunders, "Federal Fiscal Reform and the G.S.T." (2000) 11 PLR 99.
[29] See in particular A New Tax System (Goods and Services Tax) Act 1999 s 1.3.
[30] Recently, during a dispute about the carve-up of the G.S.T. revenue, the Treasurer of one State picturesquely described two other States as part of an 'axis of evil' : Fehler! Hyperlink-Referenz ungültig. .
[31] [1997] HCA 34; (1997) 189 CLR 465, 490.
[32] The results of all referenda since Federation are summarised in Blackshield/Williams, Australian Constitutional Law and Theory, pp. 1447-1452.
[33] See Financial Agreement Act 1994 (Aust.).
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/journals/UMonashLRS/2010/11.html