Queensland Electricity Commission v Commonwealth
159 CLR 19261 ALR 1
(Decision by: Dawson J)
Between: Queensland Electricity Commission
And: Commonwealth
Judges:
Gibbs CJ
Mason J
Wilson J
Brennan J
Deane J
Dawson J
Subject References:
Constitutional Law (Cth)
Judgment date: 5 September 1985
Adelaide (heard in Canberra)
Decision by:
Dawson J
In Queensland, electricity, with some relatively minor exceptions, is generated by the Queensland Electricity Commission and distributed by it to Electricity Boards which in turn distribute it to consumers within their respective regions. Both the Electricity Commission and the Boards are electricity authorities of the State under the Electricity Act 1976 (Q.). I am able gratefully to adopt the examination of that legislation made by the Chief Justice in his judgment which shows that, although the Electricity Commission alone represents the State in right of the Crown, both that body and the Electricity Boards operate under substantial governmental control and are the agencies whereby the State carries out the function which it has undertaken of supplying electricity to the public in Queensland. To the extent that electricity is generated privately and supplied to Electricity Boards, neither the quantity involved (some 3% of the total amount) nor the arrangements under which it is supplied would make any less obvious the conclusion that both the Electricity Commission and the Boards are instrumentalities of the State which operate for the purpose of providing an essential service within the State, namely, the generation and supply of electricity.
It is also unnecessary for me to set out the operative provisions of the Conciliation and Arbitration (Electricity Industry) Act 1985 (Cth) ("the Act") which may be found in other judgments. I am able, therefore, to turn immediately to those considerations which to my mind bear upon the validity of that enactment.
The first observation which I would make is that the Act, although it is incorporated, and to be read as one, with the Conciliation and Arbitration Act 1904 (Cth), is not an amendment of the latter Act. The Conciliation and Arbitration Act provides, of course, a machinery, as part of a general system of conciliation and arbitration, employing the Australian Conciliation and Arbitration Commission ("the Commission"), for the prevention and settlement of industrial disputes extending beyond the limits of any one State. The effect of the Act in relation to those industrial disputes to which it applies, and to the extent that one or more of the electricity authorities of Queensland is involved, is to deny certain choices which would otherwise be available. I shall return to this in a moment. It is first necessary to observe, subject only to minor qualification, that one of the necessary parties to a dispute to which the Act applies is the State of Queensland itself or the State in the guise of an electricity authority of that State.
In the first instance this flows from the application of the Act to the industrial dispute between the Electrical Trades Union of Australia and certain authorities which was, on 18 April 1985, found by a Commissioner to exist. That was a dispute which was the subject of the decision of this Court in In the Matter of an Application for Writs of Prohibition and Certiorari against the Honourable Mr Justice Ludeke; Ex parte Queensland Electricity Commission (unreported, delivered 5 September 1985). It arose out of the service of a log of claims by the Union upon the Queensland Electricity Commission and seven Electricity Boards together with electricity authorities in other States .
It also flows from the other application of the Act, which is to industrial disputes which could result in the making of an award that would be binding upon an electricity authority of Queensland and would establish terms or conditions of employment of employees of that authority. There is a qualification to this application of the Act in that it is not to apply if an award made in settlement of such a dispute would establish terms or conditions of employment of employees of an electricity authority of Queensland who are members of an organization which is a party to the dispute and there is already an award in operation establishing such terms or conditions. This qualification may be excluded by proclamation.
An authority is defined by the Act to include the "Government" of a State and thus includes the State of Queensland as well as the Electricity Commission and the Electricity Boards, which are clearly Queensland authorities. The small amount of electricity privately supplied to Electricity Boards is generated by persons who would not appear to come within the description of authorities and whose existence, in any event, would not alter the thrust of the Act. A reference in the Act to an electricity authority of Queensland also includes a reference to a person engaged (otherwise than as an employee) to carry out work on behalf of an authority engaged in the electricity industry in Queensland to carry out work in connexion with that industry, but this extended definition does not, I think, in its practical effect require any modification of the observation that a necessary party to a dispute to which the Act applies is the State of Queensland or one of its electricity authorities. Any person engaged to carry out work on behalf of an authority becomes an electricity authority itself only as an adjunct to an electricity authority in the ordinary sense.
The first disability which the Act imposes in relation to the scheme generally provided by the Conciliation and Arbitration Act is that in a dispute to which the Act applies the powers of the Commission must be exercised by a Full Bench. In relation to disputes generally, a power of the Commission is, except as otherwise provided, exercisable by a single member of the Commission: Conciliation and Arbitration Act, s 22(1). Certain matters are, under s 31(1) of that Act, required to be dealt with by a Full Bench of the Commission but they are matters of a general nature and that sub-section has a general application. Certain matters may, in the public interest, be referred to a Full Bench under ss 34 and 34A but again those sections have a general application. A right of appeal to the Full Bench of the Commission is given by s 35 of the Conciliation and Arbitration Act from an award made by a member of the Commission otherwise than under s 28, which deals with certified agreements and consent awards, but an appeal does not lie unless, in the opinion of the Full Bench, the matter is of such importance that, in the public interest, an appeal should lie.
This right to an initial hearing with a limited right of appeal may or may not in a particular instance prove to be of importance but it is the denial of the procedure by the Act which is the significant thing in determining the character of that enactment. That is because, in denying that procedure, the Act singles out the State of Queensland or its electricity authorities as necessary parties to the disputes to which it applies. Not only that, but where a dispute is required to be heard before a Full Bench because it is a dispute to which the Act applies, the Full Bench may, if it thinks it appropriate, separate out that part of the dispute which involves one or more of the electricity authorities of Queensland and allow the remainder of the dispute to proceed before a single member of the Commission in accordance with the provisions of the Conciliation and Arbitration Act with a consequent limited right of appeal. The State and its electricity authorities are thus further singled out as the objects of the Act and subjected to the contracted procedure for which the Act provides.
Perhaps of more immediately obvious importance is the denial by the Act in those disputes to which it applies of the power which the Commission would otherwise have under s 41(1)(d)(ii) and (iii) of the Conciliation and Arbitration Act to dismiss a matter or part of a matter, or refrain from hearing or from determining a dispute, if it appears to the Commission that the dispute has been dealt with, is being dealt with or is proper to be dealt with by a Queensland industrial tribunal or if it appears to the Commission that further proceedings are not necessary or desirable in the public interest.
The denial of that power is, however, only in so far as the industrial dispute exists between an organization of employees and one or more electricity authorities of Queensland so that as between an organization of employees and another employer - an electricity authority of another State, for example - the powers given by s 41(1)(d)(ii) and (iii) remain available. Once again the State of Queensland is singled out and subjected to a reduced choice of the procedures otherwise available under the Conciliation and Arbitration Act. It is, of course, not exclusively in this position since any other party to that part of the dispute which involves an electricity authority of Queensland is similarly subjected to the reduced procedures. But that would appear to be merely a consequence of aiming the legislation at the State of Queensland. The result is quite striking in that, for instance, a Full Bench of the Commission is required to proceed to determine part of an industrial dispute involving one or more electricity authorities of Queensland even if it appears that further proceedings are not necessary or desirable in the public interest and notwithstanding that it may refrain for those reasons from further hearing other parts of the same dispute which do not involve an electricity authority of Queensland.
The point to these observations lies in the established doctrine that the legislative powers of the Commonwealth Parliament do not extend to interference with the manner in which the States may exercise their constitutional functions, be they legislative, executive or judicial. That is not to say that validly enacted Commonwealth legislation may not lay the ground upon which, or erect the framework within which, those functions must be exercised. But a Commonwealth law which seeks to control, not the setting in which a State must make its decisions in the exercise of its functions, but its very capacity to decide, will be beyond power. I put the proposition in this way conscious of the difficulties of expressing it in an abstract form. Notwithstanding those difficulties, however, the principle has found clear acceptance in the cases and it is unnecessary to trace its history other than in the briefest manner.
Since Amalgamated Society of Engineers v. Adelaide Steamship Co. Ltd. ("the Engineers' Case") (1920) 28 CLR 129 it has been recognized that each of the powers given to the Commonwealth Parliament to legislate with respect to a given subject enables the Parliament to make laws which, upon that subject, affect the operations of the States and their agencies. That, according to Dixon J. in Melbourne Corporation v. The Commonwealth (1947) 74 CLR 31 , at p 78, is the effect of the Engineers' Case "stripped of embellishment and reduced to the form of a legal proposition". The Engineers' Case is, of course, not limited to denying the implied immunity of the States and their instrumentalities from Commonwealth legislation. It had something more to say about Commonwealth legislative powers in that it rejected the notion that those powers are to be construed with any preconception in mind of the extent of the States' residual legislative powers. It is, however, the first aspect of the Engineers' Case - the amenability of the States and their instrumentalities to Commonwealth legislation - which is presently of significance. It is to the constitutional limits upon the reach of Commonwealth legislation affecting the States and their instrumentalities to which I can now turn.
That there are limits cannot now be doubted. In West v. Commissioner of Taxation (NSW) (1937) 56 CLR 657 , at pp 681-682, Dixon J. pointed out that nothing in the Engineers' Case precluded a conclusion reached by implication from the federal nature of the Constitution and went on to say:
"The principle is that whenever the Constitution confers a power to make laws in respect of a specific subject matter, prima facie it is to be understood as enabling the Parliament to make laws affecting the operations of the States and their agencies. The prima facie meaning may be displaced by considerations based on the nature or the subject matter of the power or the language in which it is conferred or on some other provision in the Constitution.
But, unless the contrary thus appears, then, subject to two reservations, the power must be construed as extending to the States. The first reservation is that in the Engineers' Case the question was left open whether the principle would warrant legislation affecting the exercise of a prerogative of the Crown in right of the States. The second is that the decision does not appear to deal with or affect the question whether the Parliament is authorized to enact legislation discriminating against the States or their agencies."
In Essendon Corporation v. Criterion Theatres Ltd. (1947) 74 CLR 1 , at p 23, Dixon J. added a third reservation relating to the power of taxation. It is unnecessary to pause at this point except to say that the manner in which Dixon J. expressed himself - by making reservations to the general proposition for which the Engineers' Case stands - was very much dictated by the terms in which that decision was expressed. These terms were in turn fashioned by the need to overturn the mode of construction of the Constitution adopted by this Court in the early years of its history. But even so, it was from the beginning apparent that lying behind the reservations is a major premise which does not turn upon the prerogative or discrimination or the extent of a particular power such as the power to make laws with respect to taxation.
This emerges, I think, from the decision in Melbourne Corporation v. The Commonwealth. In that case it was held that s 48 of the Banking Act 1945 (Cth), which provided that, except with the consent of the Treasurer, a bank should not conduct any banking business for a State or for any authority of a State, including a local governing authority, was not a valid exercise of the power to make laws with respect to banking conferred by s 51(xiii) of the Constitution. An analysis of the individual judgments in that case has been rendered unnecessary by the performance of that task in the subsequent decision in Victoria v. The Commonwealth ("the Payroll Tax Case") (1971) 122 CLR 353 , particularly in the judgments of Menzies J. and Gibbs J.
The view which was taken by the majority in the Payroll Tax Case was that the decision in Melbourne Corporation v. The Commonwealth was based upon an implication to be drawn from the guarantee afforded by the Constitution of the continued existence of the States. That implication is variously expressed in the judgments in Melbourne Corporation v. The Commonwealth and the individual expressions are examined in the Payroll Tax Case. It would not be profitable to repeat the examination here.
It is sufficient to say that support may be found in various places in the judgments in Melbourne Corporation v. The Commonwealth for the proposition that, unless it is otherwise apparent from the nature of a Commonwealth legislative power or the language in which it is conferred, a Commonwealth law may not unduly interfere with the exercise by a State of its constitutional or governmental functions. To put the matter thus is not to avoid the difficulties inherent in any attempt to formalize the doctrine. The obvious questions have been and will continue to be asked. What, for example, constitutes undue interference and what are constitutional or governmental functions? These difficulties explain why there has been a preference to speak in terms of those aspects of legislation which may evidence breach of the doctrine rather than to generalize in terms of the doctrine itself. Discrimination against the States or their agencies may point to breach as may a special burden placed upon the States by a law of general application.
Be that as it may, a general proposition arises by implication from the federal structure of the Constitution that the Commonwealth Parliament cannot impair the capacity of the States to exercise for themselves their constitutional functions: that is to say, their capacity, as Gibbs J. put it at p 417 in the Payroll Tax Case, to function effectually as independent units.
A law may fall within the subject matter of one of the enumerated heads of power conferred upon the Commonwealth Parliament but nevertheless fall foul of this limitation imposed by the federal structure. This was denied by Barwick C.J., with whom Owen J. agreed, in the Payroll Tax Case in an attempt to avoid recourse to implications. Their approach was at least countenanced by Latham C.J. in Melbourne Corporation v. The Commonwealth. They said that a law which attempts to direct or control the States in the exercise of their functions is a law upon that subject matter, namely, State functions, rather than upon the subject matter in respect of which the relevant State functions are or are not to be exercised. But such an approach cannot since the Payroll Tax Case be accepted because it is dependent upon the erroneous notion that a law cannot be upon more than one subject matter and thus cannot fall within one of the enumerated heads of power and at the same time be aimed at the States in the exercise of their functions. See the Payroll Tax Case, at pp.372-373 per Barwick C.J.; cf. Melbourne Corporation v. The Commonwealth, at p 61 per Latham C.J. and pp 78-80 per Dixon J ; Fairfax v. Federal Commissioner of Taxation (1965) 114 CLR 1 ; Actors and Announcers Equity Association v. Fontana Films Pty. Ltd. (1982) 150 CLR 169 , at pp 192-195.
Unacceptable as that approach now is, it is not difficult to understand why for some it had its attractions. There was a certain simplicity in saying that s 48 of the Banking Act was not a law with respect to banking but rather a law with respect to the manner in which the States were to carry out their banking. In the present case the contention would be that the Act is not a law with respect to conciliation or arbitration for the prevention and settlement of industrial disputes but is a law with respect to the use by the State of Queensland in particular instances of the system of conciliation and arbitration set up by the Conciliation and Arbitration Act.
The opposing contention would, presumably, be that the Act, at least in its application to the particular dispute, is a law with respect to conciliation and arbitration for the settlement of an industrial dispute within the relevant head of power because the particular dispute calls for particular legislation and it is mere coincidence that the State of Queensland is a party to that dispute and is therefore singled out for special treatment. But the matter cannot be approached in that way although the starting point must be that the Act falls within the Commonwealth head of power to make laws with respect to conciliation and arbitration. It flows from the Engineers' Case itself that the power extends to the States and their instrumentalities. See also Australian Railways Union v. Victorian Railways Commissioners (1930) 44 CLR 319 ; Ex parte Professional Engineers' Association (1959) 107 CLR 208 .
The power does not, however, as I have pointed out, extend to interference with the manner in which the States may exercise their governmental or constitutional functions and such an interference may be indicated if the law discriminates against the States by singling them out and subjecting them to special treatment which forms no part of any system of law of general application.
As was pointed out by Dixon J. in Melbourne Corporation v. The Commonwealth, at p 84, if there be a monopoly in banking lawfully established by the Commonwealth, the States must put up with it. Similarly one might say in this case, if there is to be a general restriction of the right of appeal in the Conciliation and Arbitration Act or a general deprivation of the right to have the Commission dismiss a matter or part of a matter or refrain from hearing or from determining a dispute, then a State must put up with it. But as Dixon J. went on to say:
"... it is the contrary of this principle to attempt to isolate the State from the general system, deny it the choice of the machinery the system provides and so place it under a particular disability. Whether the right to exercise such a choice is of great or of small importance to the States is not a material matter for inquiry. It is enough that it forms part of the functions of the Executive Government of the States in administering the finances of the States."
Clearly it cannot matter that one State rather than all the States is singled out by the Act. The principle may apply a fortiori when only one State is involved. What is important is that the Act places the State of Queensland in a different position in comparison with other employers coming before the Commission and it does so by narrowing the scope of the Conciliation and Arbitration Act in its application to that State, consequently reducing the range of choices available to it under that Act.
The point is not whether this undeniable discrimination is intended to place the State at a disadvantage so that the discrimination can be said to be discrimination against the State. The point is that to reduce the range of choices available to the State is to reduce its capacity to make its own decisions in the exercise of its governmental functions. This might occur as a result of a law of general application. But where, as here, the State's capacity to function is affected, not by reason of its place in the general legal system or as a necessary result of the exercise of a particular legislative power, but because it is singled out as a State, then its constitutional integrity is impaired in a manner which the federal structure does not permit, regardless of the extent of the impairment and however much the law may otherwise fall within a head of power.
I have pointed to those provisions of the Act which produce this result. They are essential to its operation and it follows, in my view, that the whole Act is invalid. I would overrule the demurrers.
ORDER
Demurrer overruled.
Declare the Conciliation and Arbitration (Electricity Industry) Act 1985 (Cth) invalid.
Order that the defendant pay the plaintiffs' costs of the demurrer and of the action.