Queensland Electricity Commission v Commonwealth

159 CLR 192
61 ALR 1

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(Judgment by: Wilson J)

Between: Queensland Electricity Commission
And: Commonwealth

Court:

Judges: Gibbs CJ
Mason J

Wilson JBrennan J
Deane J
Dawson J

Subject References:
Constitutional Law (Cth)

Hearing date: 19-20 June 1985
Judgment date: 5 September 1985

Adelaide (heard in Canberra)

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Judgment by:
Wilson J

These two actions come to the Full Court for the hearing of a demurrer by the defendant in each case, the Commonwealth, to a claim by the plaintiffs that the Conciliation and Arbitration (Electricity Industry) Act 1985 (Cth) ("the Act") is outside the powers of the Parliament and invalid. The parties do not raise any issue which would require the cases to be considered separately.

The long title of the Act describes it as "An Act relating to the prevention and settlement of disputes in the electricity industry". It is a law with respect to "conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State " (Constitution, s 51(xxxv)) and hence prima facie within power. It is not suggested, nor could it be suggested, that the Act is open to attack merely because it is binding on the Government of a State or on an authority engaged in the electricity industry which draws its powers from a law of a State. It is fundamental doctrine that the Commonwealth Parliament has power, under s 51(xxxv) of the Constitution, to make laws binding on the States: Amalgamated Society of Engineers v. Adelaide Steamship Co. Ltd. (1920) 28 CLR 129 ; Australian Railways Union v. Victorian Railways Commissioners (1930) 44 CLR 319 ; Ex parte Professional Engineers' Association (1959) 107 CLR 208 . However, the exercise of the power is subject to limitations, as yet not precisely formulated, which are "necessarily drawn from the federal structure of the Constitution itself": Re Coldham; Ex parte the Australian Social Welfare Union (1983) 57 ALJR 574 , at p 580; 47 ALR 225 , at p 236.

It is an implied limitation of this kind upon which the plaintiffs rely. They claim that the Act is invalid because it "discriminates against or 'singles out' a State or imposes some special burden or disability upon a State or inhibits or impairs the continued existence of a State or its capacity to function" (per Mason J. in The Commonwealth v. Tasmania (1983) 57 ALJR 450 , at p 487; 46 ALR 625 , at p 694). It is clear from the context of this passage in his Honour's judgment that Mason J. was not attempting a precise formulation but merely drawing together in a general statement the descriptive features of the implied limitation doctrine as they are to be gleaned from the discussions in the cases to which he then referred.

Before I proceed to examine the provisions of the Act upon which the plaintiffs rely to make out their case it is desirable to define the central issue more precisely. It is unnecessary to consider the scope of the implied limitation on the power of the Commonwealth, whether by a general law or otherwise, to inhibit or impair the continued existence of the States or their capacity to function in a constitutional sense. The argument for invalidity of the Act is based squarely on the proposition, first mentioned in earlier cases and then discussed very fully by Dixon J. in Melbourne Corporation v. The Commonwealth (1947) 74 CLR 31 at pp 78-84, and accepted in substance in later cases, that a Commonwealth law which discriminates against the States in the sense that it imposes some special burden or disability upon them so that it may fairly be described as a law aimed at restricting or controlling the exercise of their executive authority will be invalid: Railways Union Case, at p 390; West v. Commissioner of Taxation (NSW) (1937) 56 CLR 657 , at pp 681-682, 687; Bank of NSW v. The Commonwealth (1948) 76 CLR 1 , at pp 243, 326, 335-338, 397; Victoria v. The Commonwealth (1971) 122 CLR 353 , at pp 391-392, 410-411, 424. The question in the present cases is whether this test can be seen to be satisfied when it is applied to the Act now under challenge.

The Act is to be read as one with the Conciliation and Arbitration Act 1904 (Cth) ("the principal Act") but has effect notwithstanding anything in the principal Act (ss. 3, 5). By s 6(1) the Act is made to apply to a particular industrial dispute, namely, the dispute between the Electrical Trades Union of Australia and certain authorities that was found to exist by a Commissioner on 18 April 1985. The finding of a dispute referred to in s 6(1), so far as it relates to those of the plaintiffs which are electricity authorities in Queensland, has been the subject of challenge in other proceedings in this Court on the basis that there is no real or genuine dispute. However, for the purposes of the present actions the parties have agreed to be bound by the decision of the Court on that issue. That decision, upholding the decision of the Commissioner and on appeal the decision of a Full Bench of the Australian Conciliation and Arbitration Commission finding a dispute to exist, has now been delivered (on 5 September 1985): In the Matter of an Application for Writs of Prohibition and Certiorari against the Honourable Mr Justice Ludeke; Ex parte Queensland Electricity Commission. The reasons for judgment provide a convenient description of the dispute to which the Act is expressly applied.

Section 6(2), subject to the following provisions of the section, extends the application of the Act to any other industrial dispute involving an organization of employees declared by regulation to be an organization to which the sub-section applies if it could result in the making of an award that would be binding on an electricity authority of Queensland and would establish terms or conditions of employment of employees of that authority. There are a number of contingencies governing the operation of the provision.

Section 7 might be described as no more than window-dressing. It requires the Commission to "endeavour in accordance with this Act to settle the industrial dispute as expeditiously as is appropriate having regard to all the circumstances". Section 39(1) of the principal Act already imposes on the Commission a duty to deal with a dispute expeditiously. On the other hand, the presence of s 7 in the Act may well reflect the Parliament's appreciation of the urgency of a resolution of the dispute in so far as it affected electricity authorities in Queensland and its desire to facilitate the process of conciliation and arbitration with a view to the early settlement of the dispute.

Section 8(1) is one of the two provisions of the Act which the plaintiffs regard as of crucial importance. It reads as follows:

"8.(1)

The Commission does not, in relation to an industrial dispute to which this Act applies, have power, in so far as the industrial dispute exists between an organization of employees and one or more electricity authorities of Queensland, to dismiss a matter or part of a matter, or refrain from further hearing or from determining the industrial dispute, by reason that it appears to the Commission -

(a)

that the industrial dispute has been dealt with, is being dealt with or is proper to be dealt with by a State Industrial Authority of Queensland; or

(b)

that further proceedings are not necessary or desirable in the public interest."

The provision has the effect of denying to the Commission access to the discretionary powers conferred on it by s 41(1)(d)(ii) and (iii) of the principal Act in so far as the dispute involves one or more electricity authorities of Queensland. I shall return to this provision.

Section 9(1) provides that the powers of the Commission in relation to a dispute to which the Act applies shall be exercised by a Full Bench. The significance of this provision may be seen by reference to ss. 22, 31, 34 and 34A of the principal Act. The scheme of the principal Act is that, except as otherwise provided, a power of the Commission is exercisable by a single member of the Commission (s 22(1)). Section 31 identifies several matters of general importance as to which, in the circumstances described, a power of the Commission is exercisable only by a Full Bench.

Section 34 outlines the circumstances when the President, on application by a party to the proceedings, or by the Minister, on the ground that the matter is of such importance that in the public interest it should be so dealt with, may direct that a Full Bench determine the matter. It is noted that s 34(3)(b) contemplates that an application may be made in respect of part only of an industrial dispute. Section 34A, inserted by amending Act No. 110 of 1979, empowers the President, if he is of the opinion that there are special reasons that justify his so doing, to take steps which may result in a Full Bench undertaking the hearing and determination of a dispute or part of a dispute. A necessary consequence of the determination of a dispute being undertaken by a Full Bench is that there can be no appeal from an award of the Commission. When an award is made by a member of the Commission there may be an appeal if, in the opinion of a Full Bench, the matter is of such importance that, in the public interest, an appeal should lie (s 35(3)).

Section 9(6) is the second of the two provisions of the Act which the plaintiffs claim to be of significance. That sub-section provides:

"(6)

Where proceedings in relation to an industrial dispute are before a Full Bench by reason of sub-section (1) and the Full Bench is satisfied that it would be appropriate, in relation to the industrial dispute, to hear and determine so much of the industrial dispute as involves an electricity authority of Queensland or electricity authorities of Queensland separately from any other part of the industrial dispute, the Full Bench may make a declaration to that effect and, where such a declaration is made -

(a)

this section ceases to apply in relation to the part of the industrial dispute that involves employers other than electricity authorities of Queensland; and

(b)

... ".

The plaintiffs complain that by reason of this sub-section the operation of the earlier provisions of s 9 may be confined to proceedings in relation to the part of the dispute that involves an electricity authority of Queensland if the Full Bench of the Commission is satisfied that it would be appropriate to so confine it.

The submission of the plaintiffs is that the Act is invalid because in the course of legislating with respect to the conciliation and arbitration of an interstate industrial dispute the Parliament has singled out those electricity authorities of Queensland which are parties to a dispute, being agencies of the State of Queensland, for special treatment. It is argued by the Commonwealth that those of the plaintiffs which are Electricity Boards do not possess a sufficiently close relationship to the State of Queensland to enjoy any protection that may be available under the doctrine of implied prohibitions. It is true that, unlike the Queensland Electricity Commission, the Boards do not represent the Crown: Electricity Act 1976 (Q.), s 102(2). But the concept of "agency of the State" in this area of discourse is not confined to bodies which represent the Crown. The successful plaintiff in Melbourne Corporation was a local government authority. The Boards are corporations constituted by the Electricity Act and clothed with important statutory powers, functions and duties (ss. 102, 129). They are subject to governmental control in material respects (see, particularly, s 129A). In my opinion, the Boards are to be identified with the State of Queensland for the purposes of this case. It is accepted that the Queensland Electricity Commission is an agency of the State in the relevant sense.

In Melbourne Corporation, at pp. 83-84, Dixon J. explained that the efficacy of the federal system

"logically demands that, unless a given legislative power appears from its content, context or subject matter so to intend, it should not be understood as authorizing the Commonwealth to make a law aimed at the restriction or control of a State in the exercise of its executive authority...

...

At bottom the principle upon which the States become subject to Commonwealth laws is that when a State avails itself of any part of the established organization of the Australian community it must take it as it finds it. Except in so far as under its legislative power it may be able to alter the legal system, a State must accept the general legal system as it is established. If there be a monopoly in banking lawfully established by the Commonwealth, the State must put up with it.

But 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."

The plaintiffs rely upon these passages from his Honour's judgment. They say that the vice of the Act is that it attempts to isolate the Queensland authorities from the general system of Commonwealth conciliation and arbitration of interstate industrial disputes, denies them the choice of the machinery the system provides and so places the State of Queensland under a particular disability.

Counsel for the Commonwealth argues, inter alia, that to be beyond power a discriminatory law must be such as to threaten "the structural integrity of the State components of the federal framework, State legislatures and State executives", adopting the phrase used by Mason J. in another context in The Commonwealth v Tasmania (1983) 57 ALJR 450 , at p 492; 46 ALR 625 , at p 703, citing Stephen J. in Koowarta v Bjelke-Petersen (1982) 153 CLR 168 , at p 216. In my opinion, if this is the result of a Commonwealth law, it will offend the constitutional implica# tions whether it be a discriminatory law or a law of general application (cf. Victoria v The Commonwealth, per Gibbs J. at p 424; The Commonwealth v Tasmania, per Mason J. at p 487 of ALJR; p 694 of ALR, per Brennan J. at pp 524-525 of ALJR; pp 765-767 of ALR, per Deane J. at p. 543 of ALJR; p. 801 of ALR). But to purport to express the criterion of invalidity exhaustively in this way is to set too high a test in the case of a law which is aimed at or singles out a State or States. In such a case the appropriate test is not concerned with the effect of the law on the continued existence of a State or its structural integrity. It is sufficient that its operation imposes some disability, restriction or control upon the exercise of its functions, not necessarily amounting to an inhibition of its capacity to function as a government.

However, I have more sympathy with other submissions which are advanced for the Commonwealth. First, discrimination in the relevant sense involves not merely different treatment but burden or disadvantage. The law will only be beyond power if the differentiation is such as to work to the disadvantage of a State or States. It is discrimination against a State or States, in a manner unintended by the content, context or subject-matter of the particular power, that must be shown if a finding of invalidity is to follow. Secondly, discrimination must be the purpose of the law in the sense of its legal operation and effect. This proposition is supported by the requirement that the law must be aimed at or single out a State or an agency of the State. The State must be encompassed directly within the purpose of the law as distinct from it being affected incidentally by the operation of the law.

These submissions highlight the difficulty I find in resolving this case. There is no doubt that the Act varies the operation of the general system of Commonwealth conciliation and arbitration of interstate industrial disputes embodied in the principal Act. The variation is confined to that part of a dispute identified in s 6 of the Act the arbitration of which could result in an award binding on the electricity authority of a particular State. On its face, therefore, the Act would appear to single out agencies of Queensland for special treatment. But, even if that be so, does it impose a disability? In seeking to support the demurrer the Commonwealth argues that each of the two submissions to which I have referred has a relevant application to the case.

In the first place, it is said that the Act does not impose any significant detriment upon the electricity authorities of Queensland. It is convenient to deal first with s 9(6) of the Act. This provision confers a special power on the Full Bench of the Commission in its discretion to isolate that part of the industrial dispute that involves an electricity authority of Queensland so as to allow the remainder of the dispute to be dealt with otherwise than in accordance with the section. Upon the discretion being exercised, the remainder of the dispute may be handled by a member of the Commission instead of by the Full Bench. It is said that it is not necessarily a detriment to an employer party to a dispute to have that dispute arbitrated in the first instance by a Full Bench instead of by a single member. That may be so, although I doubt whether an employer would willingly forego the chance to bring an appeal from the initial decision of the Commission, however slender in a particular case that chance may be, having regard to the provisions of the Act to which I have already referred.

Viewed in the abstract, the impact of s 8(1) of the Act on the plaintiffs is plainly more serious. The provision in effect repeals the power which, by virtue of s 41(1)(d)(ii) and (iii) of the principal Act, the Commission would ordinarily have to dismiss a matter or part of a matter or refrain from further hearing or from determining a dispute or part of a dispute on the ground either that the dispute or part of it is proper to be dealt with by a State industrial authority or that further proceedings are not necessary or desirable in the public interest. The sub-section operates only in so far as the dispute exists between an organization of employees and one or more electricity authorities of Queensland. Thus it will be seen that the law limits the powers of the Commission in dealing with part only of a dispute, a part which is identified by reference to the involvement of electricity authorities of Queensland. The plaintiffs claim that the law amounts to a significant interference with the conduct of their industrial relations. On the other hand, the Commonwealth argues that having regard to the serious nature and national implications of that part of the dispute, referred to in s 6(1) of the Act, that concerns the plaintiffs it is quite fanciful to suppose that had the Act not been enacted the Commission would have been prepared to exercise the discretion conferred on it by s 41(1)(d) of the principal Act. The Queensland employers are already subject to the jurisdiction of the Commission and they could not command in their favour the exercise of that discretion.

In the second place, it is said for the Commonwealth that in any event the Act is not aimed at the Queensland employers. Its purpose is to facilitate the process of settlement by conciliation and arbitration of part of an interstate industrial dispute that threatens, if not settled urgently, to escalate into a national crisis of major proportions. There is no reason why the Parliament may not in the exercise of the legislative power conferred by s 51(xxxv) of the Constitution make a law with respect to a particular part of an existing interstate dispute. The power of the Commission to deal piecemeal with an interstate dispute is well established: Reg. v. Isaac; Ex parte State Electricity Commission (Vict.) (1978) 140 CLR 615 ; Reg. v. Hegarty; Ex parte City of Salisbury (1981) 147 CLR 617 . The fact that the agencies of only one State happen to be parties to that part of the dispute to which the Act is directed is merely a reflection of the way in which the dispute has developed. It is the dispute itself and not the identity of the disputants that has prompted the enactment of the law. To this submission the plaintiffs reply that whatever the circumstances may be with respect to the dispute affecting the Queensland electricity authorities the fact remains that the Act singles them out as the distinguishing feature by reference to which the provisions of ss. 8(1) and 9(6) of the Act are attracted.

In choosing between these rival contentions with respect to the dispute referred to in s 6(1) it is helpful to consider the scope and purpose of the Act as reflected in s 6(2) of the Act. That provision potentially casts its net very wide indeed. It is capable, subject to the following sub-sections, of attracting the operation of the Act to any industrial dispute that has, whether before or after the commencement of the Act, been found by the Commission to exist between a prescribed organization of employees and one or more electricity authorities so long as the dispute could result in the making of an award binding on an electricity authority of Queensland and would establish terms or conditions of employment of employees of that authority. With no particular dispute in view there is no compelling public interest which might evidence the purpose of the provision as being directed to the early resolution of the dispute and only incidentally to the electricity authorities of Queensland. The conclusion is inescapable that in relation to a dispute of the kind referred to in s 6(2) the Act is aimed at electricity authorities of Queensland with a view to imposing special rules on the conduct by the Commission of that part of the dispute which affects them. It necessarily imposes a restriction or disability upon them in relation to the conduct of their industrial relations and hence in the exercise of their statutory powers or functions. The sub-section in my opinion is clearly beyond the power of the Parliament and is invalid.

I think the same conclusion must follow with respect to the dispute referred to in s 6(1). Whilst there is always an element of fact and degree in determining whether a statute singles out a State for discriminatory treatment and that in the present case it is relevant to have regard to the not unreasonable concern of the Parliament to facilitate an early settlement of that part of the existing dispute which involves the electricity authorities of Queensland it remains the fact that the identity of those employers and their relationship to the State of Queensland was seen by the Parliament to be a central factor in the matrix of circumstances provoking its intervention. In my opinion, the Act in its entirety is aimed at agencies of the State of Queensland, singling them out for special treatment by the Commission in its approach to the settlement of the interstate dispute. That being the case, it does not avail the Commonwealth to argue that the interference by the Parliament is not particularly serious by reason of the fact that the Commission if left alone might well in the exercise of its discretion have adopted the same course as the Act obliges it to adopt. One cannot be certain of that. In terms, the Act denies to the Queensland employers courses of action which under the principal Act are secured to other employers who are parties to the dispute. In the words of Dixon J. in Melbourne Corporation, at p. 84, which I have already cited, the Act attempts

"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."

In such a case the magnitude of the disability, whether it is of great or of small importance to the State, is not a material matter for inquiry. It is enough that it interferes with the freedom of the agencies of a State to pursue that course in the conduct of their industrial relations which would be permitted by the general system of conciliation and arbitration provided by the principal Act.

I would overrule the demurrers.