LWB242 Constitutional Law

1. LWB242 Constitutional Law • Lecture 8: Express Limits on Federal Power Photo from News.com.au: “Fortescue Metals Group launches MRRT High Court challenge”http://www.news.com.au/business/companies/fortescue-metals-group-launches-mrrt-high-court-challenge/story-fnda1bsz-1226405183971

2. Discrimination and preference (ss 51(ii) and 99) 51. The Parliament [has] power, subject to this Constitution, to make laws for the peace, order and good government of the Commonwealth with respect to:- … (ii) taxation; but so as not to discriminate between States or parts of States; 99.The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof.

3. Introduction • The anti-discrimination requirement of s 51(ii) only affects the Federal Parliament’s taxation power - it does not limit the power of the Parliament to grant money to the States pursuant to s 96 in a way that discriminates against the States or parts of the States. • Moran Pty Ltd v Deputy Federal Commissioner of Taxation (NSW) • Section 99 only applies to laws which are supported by ss 51(i) or (ii). • Morgan v Commonwealth • Two steps: • discrimination or preference; and • States or parts of States.

4. Discrimination or preference • The old cases on this point were based on reading the challenged Act literally - a “discrimination” was any difference on the face of the law. This meant that in theory while different rules for different States were prohibited, a uniform rule whose operation and effect differed between States was constitutional. • However, the High Court reconsidered this in Permanent Trustee Australia Ltd v Commissioner of State Revenue.

5. Discrimination or preference • Permanent Trustee Australia Ltd v Commissioner of State Revenue • The appellant entered into an instrument of lease regarding the development of a hotel at Tullamarine Airport. The airport was a Commonwealth place, for the purposes of s 52(i) of the Commonwealth Constitution. The respondent made an assessment to stamp duty in respect of the instrument of lease, purportedly under the Stamps Act 1958(Vic), as applied to the airport by the Commonwealth Places (Mirror Taxes) Act 1998(Cth). In this respect, the Treasurer of Victoria had modified the application of the Stamps Act, under s 8(2) of the Commonwealth Places (Mirror Taxes) Act. The appellant brought a proceeding in the Supreme Court of Victoria, objecting to the assessment. The grounds of the objection included any-preference provision in s 99 of the Constitution. The proceeding was removed into the High Court, where a case was stated for the consideration of the Full Court. • Held, there was no infringement of the prohibition in s 99. • “The essence of the notion of discrimination is said to lie in the unequal treatment of equals or the equal treatment of those who are not equals, where the differential treatment and unequal outcome is not the product of a distinction which is appropriate and adapted to the attainment of a proper objective.” at [89] • “Where then in the Mirror Taxes Act is there to be found the necessary element of discrimination between one State or any part thereof and another State or any part thereof? The scheme of the Mirror Taxes Act is to treat as relevantly of the same character the whole of the geographic area of each State, including those portions which are Commonwealth places; the taxation laws applying in the Commonwealth places are assimilated with those laws in the surrounding State. The scheme of the Mirror Taxes Act may produce differences in revenue outcomes between States, but that mirrors the differences that exist between the different taxation regimes from State to State. The differential treatment and unequal outcome that is involved here is the product of distinctions that are appropriate and adapted to a proper objective. There is no benefit or advantage enjoyed in or in relation to a Commonwealth place that is not shared by the remainder of the State in which it is located.” at [91]

6. States or parts of States • Elliot v Commonwealth • The case concerned special federal transport regulations which made provision for the licensing of seamen, with licensing officers appointed at prescribed ports, including Sydney, Melbourne, Brisbane, Newcastle and Port Adelaide (the main export ports). No other ports were specified. It was argued that the regulation preferred Western Australia and Tasmania because there was no port in either of those States to which the regulation applied. • Held, the regulations did not infringe s 99. • Starke J at 680 said: • “Special legislation may be required for some localities and special rules for various occupations. Such discriminations are often desirable, but they are by no means preferences prohibited by sec. 99. A licensing system applied to some ports in Australia and not to others is but an illustration of this kind of discrimination. In some ports the conditions may be such as to require some local regulation of labour whilst in others regulation may be wholly unnecessary. But this is not a preference of one locality over another, or of one State or part of a State over another: it is a regulation required for the circumstances of particular ports and the labour conditions of those ports. The Transport Workers (Seamen) Regulations do not, therefore, contravene sec. 99 of the Constitution.” • Dixon and Evatt JJ dissented, concluding that clearly ports are parts of States and that the companies at the five ports were being given a preference • This approach seems to be confirmed by Permanent Trustee Australia Ltd v Commissioner of State Revenue – if discrimination is for a reasonable purpose, not just to pick on a State (or part) arbitrarily, it is not a breach of s 99.

7. Activity Reading and Discussion Forum