Capital Duplicators Pty Ltd & Anor v Australian Capital Territory and Anor

[1993] HCATrans 90

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IN THE HIGH COURT OF AUSTRALIA

Registry No CS of 1990

B e t w e e n -

CAPITAL DUPLICATORS PTY LTD

and LUHAZE ACT PTY LTD

Plaintiffs

and

AUSTRALIAN CAPITAL TERRITORY

and COMMISSIONER FOR

AUSTRALIAN CAPITAL TERRITORY

REVENUE

Defendants

Questions Reserved pursuant

to section 18 of the

Judiciary Act 1903

MASON CJ
BRENNAN J
DEANE J

DAWSON J
TOOHEY J
GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 22 APRIL 1993, AT 10.18 AM

(Continued from 21/4/93)

Copyright in the High Court of Australia

Capital(4) 175 22/4/93

MASON CJ: Yes, Mr Jackson.

MR JACKSON:  Your Honours, before my learned friend

recommences, may I just say that my learned friend,

Mr Bennett, has given me, before we started, copies

of some amended documents in relation to the matter

and also some draft documents in a new case which

is proposed to raise the question about the

validity of the 1993 amending Act. Your Honour, I

have only just received the documents, really, and

we thought a convenient course might be if we could

mention the progress of it at the resumption this

afternoon.

MASON CJ:  Very well. Mr Solicitor for South Australia.

MR DOYLE:  If the Court pleases, before I move on to

paragraph 4 of the outline, could I just return to

one point on which Your Honour Justice Deane

questioned me yesterday and just say something

briefly further on the notion of uniformity which

Your Honour was putting to me, as distinct from

equality, the point we were putting as the

underlying point.

Our submission is that when one looks at the

relevant materials, the concern was with equality,

not uniformity, and by equality we mean equal

access and then equal treatment once you are in a

market. And although, in some instances, the route

to equality was uniformity in the sense that

customs had to be uniform, excise had to be

uniform, bounties had to be uniform, taxation not

discriminatory, nevertheless the underlying concept

was equality of access, not uniformity of burden

all around Australia.

And even when one looks - and to some extent I

am harking back now to materials that were before	the Court in connection with Cole v Whitfield - at
the debates there about wharfage rates and railway
rates and the complaints that the railway rate wars was taking trade out of its natural flow or natural
course, they saw the clear linkage between things
like railway rates and trade, but none of them were
saying they had to be the same. The most they were
saying actually was, in effect, "Stop this warfare
through railway rates and at least keep your
railway rates sensible and commercial so that trade
will follow its natural course". And, again, even
in that area there was no suggestion, "Well, let's
make railway rates uniform, let's make wharf rates
uniform", but "Stop using your rates selectively to
draw trade from another State to your ports".

DEANE J:	Did you see the phrase "uniform tariff" or
"uniform tariffs" used in that sense of equality as

Capital(4) 176 22/4/93

distinct from uniformity in the pre-Federation

materials?

MR DOYLE:  Yes, Your Honour, certainly it is used and in a

sense, I suppose, it is ambiguous because we agree

with the tariff. Uniformity was the route to the

equality we talk of. Certainly it was used and

there it meant equality and uniformity but our

submission is - - -

DEANE J: That had been my understanding.

MR DOYLE:	Yes. Well, of necessity with customs and excise they were saying, we get equality of access
through, on this particular matter, a uniform
customs tariff and because of the linkage to excise and then the necessity, again, that the excise be
uniform throughout Australia.  So I do not deny
that, but the underlying notion was not uniformity of burden. In other words, they were not saying,
to put it in modern terms, the taxes on cigarettes
should be the same in Victoria as in New South
Wales. They were saying let Victorian cigarettes
come into New South Wales without facing a burden
at the border, and when they are in New South Wales
let them be treated equally with New South Wales
cigarettes.

They were aware that consequences may flow if

New South Wales taxes were higher, or New South

Wales railway rates were higher or lower, but what

they were concerned about was - just putting it in

slightly different language - letting trade follow

its natural course, not distorting it by the
selective use of burdens or using railway rates as

a stalking horse, as it were, to get trade across a

border.

DEANE J: Possibly nothing much turns on it, Mr Solicitor,

but what I was directing my questions to was it

between establishing a uniform or unified customs	seems to me that there is a difference in concept
and excise or tariff area and between abolishing
discrimination between different customs and tariff
areas and it was only towards that distinction that
I was asking the questions.

MR DOYLE:	Yes, I understand that.
DAWSON J:	I am not sure if it was you who made reference to

the Commonwealth Solicitor General said that it is

a question of - perhaps "uniformity" is not the

right word - but is it your position that if there

is a tax on first sale across the board, that is,

upon first sale of goods whether or not they are

imported goods or locally produced goods, then that

is neither an excise or a customs duty. But if one

Capital(4) 177 22/4/93

selects imported goods and imposes a tax on first
sale, that would in all likelihood be a customs

duty and if one selected locally produced goods and

put a tax on first sale, that would in more

likelihood be an excise. So that the notion of

discrimination, in one sense, is relevant. Is that

the position that you are putting?

MR DOYLE: That is, Your Honour, and that is part of the

reason why we would submit COR was rightly decided

because, although in COR the tax on the imported

and the locally produced petroleum was in the same
amount, when one looks at the form of the law

there, "vendor" was defined - and I can not render

it exactly - as the first person to sell after

importing and the first person to sell after

production in South Australia.

So what we say is that law was, in form,

selecting the act of import and the act of local

production as the occasion for the imposition of
the burden, and it was not saved by the fact that
the two amounts were equal. Obviously, if the
amounts had been unequal, the selection of the act

of importing and the act of local production would

have been all the more obvious, but our submission

is that it is probably a relatively rare incident.

It is a law which probably one would not come

across very often but that, in form, it was

precisely and exactly the customs and an excise,

and it is not saved by the fact that the monetary amount of the duty was the same in each case. So,

yes, that is our position.

DEANE J: So, if the Commonwealth put a sales tax on sales

only in South Australia, whatever else might be

said about it, it would not be a customs or excise

duty?

MR DOYLE:  No, it would be offensive to, is it,

section Sl(ii) but - - -

DEANE J: Well, that is a different question.

MR DOYLE:  Yes, a tax on all sales is neither customs nor

excise, no.

DEANE J:  And if the South Australian Government put a tax

on sales in the city of Adelaide, but nowhere else,

that would not be a customs or excise duty?

MR DOYLE:  No, but say the Commonwealth Government put a tax

on the sales of Gruyere cheese, and let us assume

Gruyere cheese can properly, so called, can only be

made overseas and, therefore, when you find Gruyere

cheese you know it is an imported item, then that

Capital(4) 178 22/4/93

is a case where the selection of the item to be

taxed may cause you to conclude that it is, in
truth, a customs because it is a disguised way of

taxing the import.	They just avoid the use of the
word "import" .

Now, that is a difficult area but we do not

deny, or we do not say that the test is purely

formal, in other words, the law does not have to

refer explicitly to the act of importing. There

may be other ways in which one concludes that that

is in fact what - - -

DAWSON J:  The difficulties are difficulties of fact rather

than concept.

MR DOYLE: Precisely, Your Honour.

DEANE J: Well that really means that if Tasmania put a tax

on almost anything, it would be a duty of excise;

whereas if New South Wales put a tax on almost

everything, it would not be a duty of excise.

MR DOYLE: Well, not in our submission, Your Honour.

DEANE J: Take margarine. No doubt, the Solicitor will tell

me he has a thriving margarine industry, but I have

not noticed it; assume there is not any.

MR DOYLE:  Is Your Honour postulating a tax on sales and

because the relevant State makes no margarine -

DEANE J: Presume Tasmania puts a 20 cents a kilo tax on

sales of margarine obviously for the purpose of

protecting the Tasmanian dairy industry.

MR DOYLE:  Yes, well, the difficulty is the attack may come

through section 92 in that situation; it may be

seen to be protectionist.

DEANE J: Well no, I am just directing it to section 90,

"Excise and Customs".

MR DOYLE: All I can say, Your Honour, is that the issue is

one that turns on the facts and what one has to

decide is whether the selection of the product and

the way in which the tax is imposed, indicates that

although not in form, the tax on import, it is in

fact, and I do not know that I can say much more

than to say that that is the inquiry you would have
to pursue in such a case, but I would not, with

respect, say that simply because the item is not

made in the State that you immediately conclude it

is an excise.

DAWSON J: Perhaps I should direct the question to

Justice Deane and not you, perhaps you could answer

Capital(4) 179 22/4/93

it, I do not understand how that would be a

protection of Tasmanian margarine. If you put a 10

or 20 per cent duty on all margarine sold in

Tasmania, margarine is more expensive in Tasmania,

but it does not favour the local product as against

the imported product.

MR DOYLE:  No. I understood His Honour to be saying to me,

"Forget about potential attacks under section 92

and just focus on, whatever the fate of such a law

is under section 92, whether you would call it an

excis~."

DAWSON J: But it is not favouring the local product. It is

not a tax on manufacture because it is a tax on

everything, wherever it comes from. In other

words, the price of margarine wherever it comes

from would go up by 10 per cent. Arn I right in

saying that?

MR DOYLE:  Yes, Your Honour.

DEANE J: There will not be any margarine; there will be

butter.

MR DOYLE:  No, but the point is once one starts to pursue

the example "All margarine sold in Tasmania is

bearing the tax" - I suppose in a sense one can still say it is only imported margarine that is
bearing it, but all margarine corning into Australia

is bearing it, and so I suppose the question is:

what significance do you give to the fact in this

example that all of the commodity tax is corning

across the State border?

In our submission, that would be prirna facie a much less significant thing than if all the product and the only product taxed was corning across the

Australian border. But in the end one has to

embark upon that factual inquiry. One other

approach is to say you can ask the question: is the

reason for the tax that the item is not produced in

Tasmania? It is only another way of formulating

the factual inquiry. But prirna facie, the attack,

one would think, would come under section 92 rather

than section 90.

We acknowledge that what will sometimes be

difficult inquiries of that nature will have to be

engaged in but, in our submission, they are by no

means insoluble and probably no harder than the

sort of inquiries the Court engages in under

section 92.

DEANE J:  Or is the real question whether the notion of a

uniform tariff area throughout the Federation

Capital(4) 180 22/4/93

excludes the need for that sort of inquiry as

between States by reason of discriminatory taxes?

MR DOYLE:  Your Honour, I think the answer may be that it

would. In other words, if the States are excluded

from the field of taxes on goods, then the issue

cannot arise. But, in our submission, to argue for

that wide meaning of "excise" in a sense - I know

Your Honour does not mean literally - but in a

sense because it gets rid of some awkward questions

or some awkward problems, is not a satisfactory

approach. One has to go back to look at the terms

of section 90 and its purposes, and if one

concludes that it had certain purposes and that one

is left at times facing some difficult questions,

so be it.

DEANE J: But it is not arguing that it gets rid of the

problems. It is arguing that an understanding of

the nature of the fiscal union means that those

problems do not exist.	I am not saying it is
right.

MR DOYLE:  Then, I suppose, Your Honour, we would submit one

is driven back to looking at the Convention Debates

to get a proper understanding of the nature of the

fiscal union that was being sought, and that one

has to be careful not to make assumptions as we

would suggest Mr Justice Dixon did about the nature

of the union being sought, and in a way perhaps

that crystallizes yet again the point I started on,

namely, was the sort of fiscal union sought one in

which governmental burdens on goods would be

uniform throughout Australia, or was it a fiscal
union in which there would be equality of access

and then equality of treatment once you are in the

market. What we do submit fairly strongly is that

while I would not say there is nothing in the

debates or discussions which supports the view

Your Honour expresses that the preponderating

weight is in favour of the view we put.

DEANE J: Thank you, Mr Solicitor.

BRENNAN J:  Mr Solicitor, what would be your analysis of the

COR case if the vendor had been defined as the person selling the petroleum to the consumer?

MR DOYLE:  So that it was then a tax on sales of petrol

wherever produced to a consumer?

BRENNAN J: Yes.

MR DOYLE:  We would submit it is neither a customs nor an

excise, it is simply a tax on sales of petroleum

wherever produced.

Capital(4) 181 22/4/93

BRENNAN J:	So the real distinction is one of criterion of operation?
MR DOYLE:	In that particular case, Your Honour, yes. The

law, one might almost say, drafted itself into

difficulties. One thinks, looking back, there must

be some reason that we have not found why the law

was drafted that way, some controversy at the time

that caused the law to be drafted in that

particular fashion. But, yes, in that particular

case, the definition of "vendor" drew the law right
into the problem area, and for some reason that we

cannot identify at the moment, they did not take

that simpler course.

There is something I will come to a little

later, actually:  Mr Justice Dixon's evidence to

the Royal Commission where he talks about some

States bringing in laws which he referred to

something as disguised as income taxes to, in

effect, get at imported goods. Now, whether there

was some, in effect, scheme going on at the time -

because this was 1926 I think, when he gave his

evidence, whether there was something happening at

the time that we are not aware of now, but it seems

to be an illusion perhaps, to COR, and something

that the State parliament was doing, but he talks

about it as, in effect, saying the States are

really trying to get at imported items. Now, maybe

there is something back there in time that we have

lost track of that would explain it.

So, Your Honours, I was going then to the

manner in which the term "excise" was used in the

Convention Debates, and what we submit is that once

again, when one moves from the legislative and

statistical material to the debates themselves, one

finds the term "excise duties" used quite

consistently to refer to duties on local producers

and, of course, in particular, as it happened at

the time, producers of beer, spirits and tobacco.

Could I invite Your Honours' attention in our

book again, "The Meaning of Excise in the

Australian Colonies", to the very first portion of

the book, before appendix 1 and page 8 where we, in
the interests of brevity, summarize the effect of

the debates. We set out a few extracts from the

debates, and as we indicate at the top of page 8,

where there is an asterisk against an extract or a

page reference, then that is part of the Convention

Debates which are included in the book in

appendix 23 at the back.

Now, Your Honours, I am not going to take the

Court through it. I just want to make a couple of

points. First of all, Your Honours will remember

Capital(4) 182 22/4/93

yesterday I referred to the Victorian report in

appendix 13 where the authors said, "Well, when we

look at the debates we are not sure that you have quite expressed yourself as well as you should" -

that is page 110 of the book - and they offered a

definition of "excise" towards the bottom of the

page which fits very closely with our meaning, and

they say, in effect, "Well, we are sure the debates

meant that".

Now, that was brought to the Convention's

attention, Your Honours, and in our appendix 23

that appears at page 157 and, Your Honours will

see, in the left-hand column, what was being

debated was an amendment there, about a quarter of

the way down the left-hand column, expressed as

subclause 2. Mr Isaacs, at the bottom of the left-

hand column and to the top of the right, brings to

the attention of the Convention that particular

report and says - in the right-hand column, quarter

of the way down:

At the present day the word "excise" has a

very much wider meaning than we intend in this

bill. It includes in England all auctioneers'

licenses, gun licenses, licenses of various

descriptions, taxes on carriages.

And Mr Barton says:

Does it not include those by definition?

Mr Isaacs says:

I do not think so. What we intend by excise

would be covered by the definition in this

report -

and he quotes it. Then there is reference to the

American experience, which goes on over the next

page, and then at page 159, in the left-hand

column, Mr Isaacs, referring to a question by

Mr Gordon:

Will the hon. member point out any objection

to a state being allowed to impose an export

duty -

Mr Isaacs said -

It would interfere with the commerce as

between the commonwealth and other countries,

or between the state and other states, and the
object of the Commonwealth Bill here, as of

the United States Constitution there, in

respect of trade and commerce, is to have

uniformity -

Capital(4) 183 22/4/93

and again, we would say he means "equality" -

of trade as soon as that trade ceases to be

confined to the limits of the particular

state.

And then, at the bottom of that column, Mr Barton

responds and, at the top of the next column, says:

As far as the drafting matter is concerned, I

think we may promise that we will see if there is any necessity to give any definition of the

meaning of the word "excise".

He refers again to the paper and the reference to

the English illustrations and, after the second

quotation, says:

They -

which is the authors of the report -

go on to show that, in all the tables they

use, they have adopted that meaning. Which, I think in context, is clearly the narrower

Australian meaning.	And then, at the bottom of the
column:

I am rather of the opinion that the use of the

word as it occurs in this bill will be held to

carry with it the same meaning;

which, we submit, is clearly the Australian

meaning -

but, if on consideration we find there is any

doubt about that, I think it will be a

comparatively easy matter to provide for it.

Again, it can obviously be said, well, they did

not, and so they must face the consequences, but

our submission is, if one finds that the word has

different senses, and if it is permissible in that

context to inquire as to the sense in which it is

used, then here is very clear evidence that the

sense in which it was used was the narrower

Australian sense.

Your Honours, as I said, at pages 8, 9 and 10

of our notes we summarize that material. I just

want to make a couple of comments. At the bottom

of page 6 we refer to some notes provided by

Sir Samuel Griffith which are included - and I am

not going to read from them - in appendix 12, for

the Court's convenience. But even there, while he

is commenting on the question of whether the

Capital(4) 184 22/4/93

Commonwealth power as to excise or the exclusivity

should be limited to items in respect of which

customs duty is imposed, once again it is very

clear when one looks at it that his understanding

of what is an excise is once again precisely the

same. The only issue he is debating there is

whether the Commonwealth power should be exclusive

across the field of excise or only in the area

where the product is also the subject of a customs

duty.

Could I also make the point apropos of

paragraph 8 on page 10, which is where we refer to

the passage I read from a moment ago, that the

Commonwealth material omits a reference to what we

would submit is very important discussion. Of

course, that then makes perhaps more acceptable the conclusion in the Commonwealth materials that there

was no real consensus as to the meaning of the

term. In relation to that paragraph, we would also

submit that what was said by Mr Barton in debate

fits very closely with what appears in Quick and

Garran as the meaning of the term, the Australian

meaning. I think, Your Honours, that is all I want

to say by way of oral submission on the manner in

which the term was used in the debates and we ask

the Court in due course to consider the written

submission on that.

DEANE J:  Does Sir Samuel Griffith indicate whether he

thought an excise on products which were the

subject of customs duty would include those

products which attracted customs duty, because if

it applied to products which had already attracted

customs duty, it would be quite inconsistent with

your argument, would it not?

MR DOYLE:  I am not sure I accept Your Honour's premise that

it would be inconsistent.

DEANE J:  Because if you had an excise duty on products

which had attracted customs duty because they -

MR DOYLE:  Yes. I am sorry, I misunderstood Your Honour. I

do not recall anything in what Sir Samuel Griffith

said that bears on that, Your Honour.

DEANE J:  Which means that implicit in the notion of excise

duties on products in the generic sense that are

subject to customs duty would be the notion that

the excise duty would reduce the protection which

customs duties supplied, which never seems to have

been contemplated by anyone, as I understand it.

MR DOYLE: Again, I am not sure I have properly understood

Your Honour. In our submission, what emerges from

the Griffith material is a concern about the extent

Capital(4) 185 22/4/93

to which taxing powers were to be withdrawn from
the States and the suggestion that it would be

sufficient if - - -

DEANE J:  I am being obscure, no doubt, but what I was

suggesting to you was that unless the underlying

assumption was that excise duty on products which

were the subject of customs duty would not be

payable on that percentage of those products that

had already borne customs duty, unless that was

implicit, it would be quite inconsistent with your

argument. I was suggesting to you that that is not

at all implicit in any of the discussion in that

area.

DAWSON J:  On your argument it would be an increased customs

duty, would it not, in so far as the :~1. .. ty was

imposed on imported goods?

MR DOYLE: Well, if in terms it was, yes.

DAWSON J: It could not be an excise.

MR DOYLE:  No. Your Honours I think I - - -

DEANE J: But your argument is directed to the meaning of

terms and it is neither here nor there to say, get

away from an argument as to the meaning of terms.

My question was only directed to your argument as

to the meaning of the term "excise" and the use of

this material to support it.

MR DOYLE:  Yes. Well, I think all I can say in answer to

Your Honour is that it is clear, in our submission,

that Sir Samuel Griffith understood excise to mean

a duty on local production, customs on the imported

item, therefore in the nature of things, an item

that attracted the customs duty would not also bear

the excise duty and that, clearly enough, in his

treatment of the topic also, as I recall it, is the

tariff linkage, namely the ability to create a

differential between the local and the imported

item, and all his comments are directed to that

link with the notion that if we are trying to give

the Commonwealth the ability to control the
external tariff, and understanding that that means
control over excises, really implicit in his

thinking is, well if they have not imposed a

customs tariff, why would they worry if the State

imposes an excise tariff? To which the answer is,

nevertheless, in that situation still, you are

imposing a burden selectively on local production,

even though there is no customs duty, because it

may be designedly no customs duty. So while he is,

in effect, assuming, or it is implicit, that the

item which bears the customs will not also bear the

excise, it is in that framework.

Capital(4) 186 22/4/93

DEANE J:  I suppose another answer is that they were

speaking in a context where the convenient way of

extracting excise duty, whatever that may mean, was

from the manufacturer.

MR DOYLE: True, Your Honour, yes.

MASON CJ: But, Mr Solicitor, I thought that the discussion

on the resolutions in 1891 was very much concerned

with the question as to whether or not the

Commonwealth should have exclusive power to impose

excise duties on goods which were the subject of

customs duties, in a context in which a number of

the speakers seem to have the view that an

additional duty imposed on goods the subject of

customs duty would properly be considered to be an

excise duty. If you look, for example, at pages

between 139 and 143, it is not particularly clear,
but that is an impression I did gain from reading

that material.

MR DOYLE:  Your Honour, it is not, I must say, an impression

we had gained and, secondly, I do not know whether

any answer to that is that at that time they were

thinking of items coming into Australia, say, in

New South Wales, and then later into South

Australia, whether the discussion was complicated

by the existing situation in which what
post-Federation, prima facie, would not happen,

namely, an item would bear both, pre-Federation

could happen, I think, to the extent they are

talking of that. That may be the answer,

Your Honour, but if I could just glance for a moment at those pages.

MASON CJ:  You will notice at 141 in the second column

towards the end of the column the remark by the

chairman which indicates that they were considering

an amendment to the resolution, that the words:

"and duties of excise upon goods the subject

of customs duties" -

should be added to the draft.

MR DOYLE:  Yes, and maybe the other answer, Your Honour,

there is that it is not the same goods. What it is

saying is that if spoons are to pay customs, then

the Commonwealth is to have exclusive power to

impose duties of excise on spoons. It may be

saying if the item is selected for customs duties,

then only the Commonwealth is to have power to

decide whether it will be an excise duty. So it is

in that sense saying if an item is selected to bear

duties of customs, the Commonwealth will have the

ability to decide exclusively whether the same

Capital(4) 187 22/4/93

item, when produced in Australia, will bear duties

of excise.

In our submission, that, in fact, was the issue in discussion, namely, should the exclusivity

be confined to the power, because at times they got

a bit confused whether they were talking about

power or exclusivity, but the discussion was mainly

on the issue of whether the Commonwealth power or

exclusivity should be confined to items in respect

of which it was imposing a customs duty, and they

were not, in fact, thinking of that cumulative

thing, namely, the one example of the item, a spoon

coming in, attracts both a customs and then later

an excise.

DAWSON J:  "Goods" is used in a generic sense there. to my attention that bit on 141, because I think

MR DOYLE:  Yes. So I am grateful to Your Honour for drawing

when that whole discussion is read in that context

it does become reasonably clear that that is what

they were saying, namely, "If the Commonwealth puts

a customs on spoons, either then it gets the power

or then it gets the exclusive power to put a duty

of excise on home produced spoons".

Your Honours, the only other point we would

make about the meaning of the word is that it is

interesting to find that when the Commonwealth

moved to impose excise duties, it used the term

"excise" in the same sense, once again, of a burden

on local production. And it seems to have used

that term fairly consistently in its own

legislation.

One does find, as the years go on, that the

Commonwealth imposes levies and charges which may

well be excises and are not called excises, they

are levies and charges, and one can well understand

why, because it is almost always in the context of

an industry scheme where it would make more sense

to talk to the people in the industry of the thing

as a levy or a charge to communicate the notion

they are getting something for it.

But, certainly the Commonwealth's own usage of the term "excise" is consistent with ours. We have

some materials that I will not delay the Court by

handing them up now, we will leave them with the

Court staff at the adjournment, and so that will

also save me giving the Court the references, but

we have collected just a short bundle of early
Commonwealth enactments where one can see how, when

the early excises were imposed, the term was used in the manner in which, we have suggested, it was

understood in Australia.

Capital(4) 188 22/4/93

Could I go then, Your Honour, to paragraph 5,

which is purpose, and we submit that if there are

two potential meanings, an Australian meaning and a

wider English meaning, it is permissible to have

regard to the purpose underlying the section to

determine which of those two meanings is the

correct one.

Our submission is that when the debates, in

particular, are examined they support the view that
the purpose behind section 90 was to remove from

the States the ability to impose selective duties

on local producers and to grant selective bounties

to local producers and the direct or immediate

purpose was really no wider than than. And then

the wider purpose, for which that was done, was to
secure the vesting of control over tariff policy in

Commonwealth hands, and again, tariff policy meant what I have been calling in shorthand, equality of access and equality of treatment once you are in

the market.

Your Honours, I know that in Philip Morris, Your Honours the Chief Justice and Justice Deane

said at page 425 that the search for a

constitutional purpose had been contentious, but

our submission is that when contemporary materials
are examined that constitutional purpose does

emerge fairly clearly and, in particular, we would

ask the Court, in due course when it looks at our

materials on this, to pay particular attention to

the material on "bounties" where, as it happened,

we would submit, the purpose tends to emerge more

clearly, perhaps for understandable reasons,

because there was a broad consensus on customs and

excise.

It was bounties that caused the really hot

debate at the Convention Debates, and we submit

that when that material, which one perhaps would

not naturally look to in connection with

section 91, is looked at, constitutional purpose

does emerge more clearly.

DAWSON J:  Does the purpose emerge - or it seemed to be the

purpose, the ultimate purpose - does that emerge

clearly? Namely, that if you have a customs duty

on products - spoons, for instance - it will be to

encourage the local production and sale of the

product at the expense of the imported item. And

if a State could then impose an excise on locally

produced spoons you would destroy the effect of the

customs duty.

MR DOYLE:	Yes.
DAWSON J:	Does that emerge?

Capital(4)	189	22/4/93
MR DOYLE:	Yes.	That is what they are talking about all the

time and, in our submission, the material is

relevant in two ways. First of all one finds that

is what they see as the purpose and, secondly, one does not find them talking of taking away from the

States the whole field of taxation of commodities.

Certainly they understood the States were losing a very important source of revenue and one which, at the time, was one of the main sources of revenue

for the States. But one finds them, when one asks what are they on about, talking about exactly what His Honour Justice Dawson refers to, and mixed up

in it.equality of treatment once you are in the

market; in other words, that within a given State
market, by neither bounties nor burdens are local

producers to be treated in a way different from
producers within Australia who have come in to the

State market.

DEANE J: But you can find everything if you look hard

enough. You have a look at page 143 of your

document, in the left-hand column half-way down.

This is Sir Thomas Mcilwraith:

The honourable gentleman referred to the

familiar article of whiskey, and pointed out
that one colony could get all the trade of the
colonies by simply lowering the excise duty.

No doubt that is so, and on that account we must give the Federal Parliament the power of

controlling excise duties.

MR DOYLE:	Yes.
DEANE J:	It would be difficult to find a stronger couple of

sentences against your argument.

MR DOYLE:  Yes, Your Honour, that may be but, in my

submission, first of all we have got to look at the

material as a whole and if it was unerringly on

every single occasion precisely my way one would be

surprised. But, in my submission, one is looking

for the general tenor of the discussion.

DEANE J: But, I mean, we are right back - on one approach

that shows a full understanding of what Federation traced back to the movement for uniform tariff was

all about. On another approach that is just a

premature centralist talking a lot of nonsense.

MR DOYLE:  Yes. Well, two points, Your Honour. If one

looks almost straight across to the right-hand

column on that same page we find Mr Deakin saying:

An excise duty is often associated with a

protective tariff, and if an article is highly

Capital(4) 190 22/4/93

protected, it might, perhaps, be found

necessary -

et cetera. So there he is responding in the sense

in which we use the term, or can with reference to the purpose which we identify. But all I can say,

Your Honour, is that I certainly would not want to

suggest that the material is unanimous, because if I did it would perhaps be suggesting that the view

Your Honour is putting to me is, as it were, some

eccentric modern day invention.	We do not go that
far, with respect.

But, in our submission, the clear weight of

the material, and especially from what one can
legitimately identify as the significant speakers
in the Convention Debates, is the way we point.

And again, on section 92, the Court, in Cole v

Whitfield, my memory is that not every reference on

section 92 pointed the way the Court finally

concluded the thrust of the Convention Debates

went; the material had to be considered as a whole.

And we submit that when one considers it as a
whole, the conclusion can be come to.

Your Honours, back in our written summation of this material, which begins at page 12 of the book,

in paragraph numbered 11 we endeavour to express

what I have been endeavouring to express as the

purpose behind section 90 and, perhaps, if I could

just - I suppose in subparagraph (a), the first

line, I would perhaps take out the word "total"; I

think that perhaps gives an emphasis which should

not be there, and just have "control over tariff

policy", which we submit meant the ability to
decide if the tariff would be protectionist or free
trade which, in turn, meant the ability to control
or effect the balance between customs and excise,

the linkage between customs and excise, and that it

what sort of tariff will we have is what was	really does emerge very clearly that that notion of
concerning them all the way. Then secondly, our
subparagraph (b), because it was linked, equality
of trade in the sense that I have referred to.
Your Honours, we also - and I am not going to go to them - refer to two appendices which collect
together some judgments which have identified
purpose in the sense in which we refer to it there
and, of course, I do not for a moment suggest there are not lots of judgments identifying a broader
purpose.

But when you go through the materials,

Your Honours, as I said, first of all one looks for

material supporting what we say is the tariff

policy and then, secondly, one looks, we submit,

Capital(4) 191 22/4/93

pretty well in vain, for material supporting the

wider purpose, which we refer to in paragraph 12 -

exclusive control over taxation of commodities,

complete uniformity of trade, all those wider

notions which Dr Griffith advanced.

It is interesting when one bears in mind that

Mr Justice Dixon said in those words, "It may be assumed that the purpose is control over taxation

of commodities", that we would submit that one does

search in vain. Your Honours, we made some search for the origins of that concept and for what it is

worth, we suggest the concept may have actually

come from the COR case which is Commonwealth Oil

Refineries v South Australia, (1926) 38 CLR 408.	I
do not want to suggest that I put undue weight on
this, but it is interesting when you look at
page 415 in the argument of Mr Ham for the plaintiff, we find his opening proposition:

The effect of sec 90 of the Constitution of the Commonwealth is to place the whole fiscal regulation of commodities under Federal

control.

We have looked through some of the other cases and

at the arguments, and that was the first reference we could find to this wider notion in the material

before the High Court. He himself refers to

nothing in support of it. It is interesting to

find that it is then picked up in the judgment of

Mr Justice Rich who kept saying the same thing in

later cases, but at page 437 we then find at the

middle of the page in a short judgment where first

of all he calls in aid the English meaning very

heavily - and we would say why do that - but then

secondly, in the middle of the page says:

In my opinion, the Constitution gives exclusive power to the Commonwealth over all	indirect taxation imposed immediately upon or
in respect of goods, and does so by compressing every variety thereof under the term "customs and excise."

That seems to be, at least in terms of the Court,

the beginning of that chain of reasoning and

identification of the wider purpose.

It is also interesting, Your Honours, then to

look just very briefly at the evidence that

Mr Dixon gave to the Royal Commission on the

Constitution. Could we hand up to the Court copies

of one page of that evidence. Your Honours, after

the title page the next page shows Mr Dixon being

sworn, and this is in December 1927 - COR was

1926 - and on the one page we have extracted, which

Capital(4) 192 22/4/93

seems to be the only page dealing with section 90,

we look through to the end of his evidence and the

discussion with the commissioners, and there was

not any relevant discussion. I should add that

this was a submission prepared by Mr Ham and

himself and he indicates at the outset to a lesser

extent by Mr Menzies who had been on the committee

but was otherwise occupied. In the left-hand

column you will see he says:

subsequent events have shown that the scheme

of the Constitution for the regulation of
importations and the granting of bounties upon

production is defective ..... It appears to have

been realized that the policy which would

determine the central legislature in imposing

customs duties upon or controlling or

prohibiting the importation of commodities and

levying excise duties must necessarily be

carried out as a coherent whole -

which we would agree with if the terms are properly

understood. Then in the next paragraph:

It seems probable that the expression

"duties of customs" would be interpreted as
covering only a tax upon goods in reference to
the act of importation and collected at the
border -

which Carmody would suggest is too narrow a view.

Then he says:

Legislation has been passed by States, which

taxes the use of goods produced abroad either

in the guise of special income tax or by some

other indirect means -

which was the possible allusion to COR which I

referred to earlier. Then he says that does not

seem to be inconsistent - presumably in the

section 109 sense - with the Customs Tariff Act,

but he says:

It seems to us that, if the power of the

Commonwealth to control the economic

consequences of the importation of goods is to

be maintained free from the disturbing factors

which may be introduced by legislation of the

States, a greater area of Commonwealth power

than is described in section 90 should be

rendered exclusive.

So the concern he is expressing seems to be

disguised attempts to get at imported goods, but

then it is interesting when one looks at what he

suggests should be the new section, which of course

Capital(4) 193 22/4/93

is very much the meaning which subsequently he

identified in Parton as the meaning of the section,

although here he is saying we need an amendment to

achieve that effect.

But the other reason for looking at this was

to see whether here he might have identified the

basis upon which that wider purpose he ascribed to
the provision - the basis upon which it was founded
but, again, one finds no reference here to material
supporting that broader purpose.

So, Your Honours, back then to our written materials. Again, I do not want to delay things

and I will rest on what we have said there, but I
would, in the context of what we have there on

page 12, just like to comment on a couple of points

Dr Griffith made in his written submission; that

is, while we are looking at what we say was the
purpose. Could I ask the Court, if the Court still
has it handy, to look at the Commonwealth's written
submission, paragraph 2.4? Now, when one looks at

paragraph 2.4, we would not, with respect, quarrel with (a) on the descriptive sense, or with (b), as

long as one understands the term "excise"

correctly, or (c) if, once again, one puts
appropriate emphasis on equality in respect of the

burden of customs and excise. But again, we would

submit, one has to bear in mind steadily the

purpose for equality and the link to tariff policy.

But then, when the submission goes on to say:

The overriding objective is relevantly to free

circulation of persons and commodities -

our submission is that that is quite consistent

with our submission in the sense that it was all

directed to equality of entry and equality of

treatment once you were in the relevant State

market, and that one should not convert that into
some either wider notion.	To use the example I

used earlier: that if cigarettes cost more in

Victoria than they do in South Australia, that in

some way free circulation of persons is then

impeded. What we submit is the States recognized

the effect that could have on trade, but implicit

in it all is that they are acknowledging that would

continue. And again, if we go back to railway
rates, they did not say, "Make railway rates

uniform"; they said, "Stop using your railway rates

as a tool of a trade policy."

Paragraph 2.10, we would submit with respect,

is a non sequitur because, provided that

paragraph 2.4 is read, we would submit, correctly

and using the terms appropriately, it in no way

follows that it demands for its efficacy that

Capital(4) 194 22/4/93

duties of customs and excise be read in that compendious sense. We submit the purpose of section 90 was selective taxation, not that much

broader purpose of all taxation of commodities.	We
would also, with respect, dispute paragraph 2.11
that taxes on goods, when imposed equally on the
local and imported item, frustrate those elements.
We submit they frustrate none of them unless the
element is that there must be the same burden

Australia wide. That is all I wanted to comment on

there, if the Court pleases.

Now I do not seek, in our written material, to

develop paragraphs 13, 14 and 15 on page 12 of the

book. I just make the point that paragraph 14

draws really on Cole v Whitfield and a lot of

material there. And, again in paragraph 17, we

stress there the link of control of tariff policy

to determining whether tariff be free trade or
protectionist.

In paragraph 19 we refer to the debate in relation to bounties, and could I just take the

Court briefly to what Mr Barton said on that topic,

and we submit his speech .there is one which repays

consideration. It begins at page 173 in the book

of materials, and we submit what this material

indicates is that again, when they are talking

about bounties, they are talking about bounties as

being significant because of once again their

impact on that tariff policy in the sense of

whether it is to be free trade or protectionist,

and that is always the focus of discussion.

You will see at page 173 column two at the

bottom, Sir George Turner is proposing in effect to exclude from the prohibition on bounties, a bounty:

granted by any State with the consent of the

Governor-General in Council or of the

Parliament -

It is relevant to bear in mind that at almost every

convention, the same attempts were made by the

States to preserve or at least enlarge the area in

which individual States could impose bounties.

And, Mr Barton along with others, at every

convention resisted that, and one, when one reads

this, can feel the passion in his voice in parts as

he seems to be saying, "Every time we meet, we

raise this same issue, and every time we meet I

tell you this is central to the Federation".

If you look at page 976, and I will just pick out a couple of passages, half-way down the left-

hand column, he is saying:

Capital(4) 195 22/4/93

If we are to have inter-colonial free-trade

let us have it. I am a protectionist, sir,

but if we are to have intercolonial free-trade

- and I cannot conceive a Federation without

the entire operation of intercolonial free-
trade-then, by so much as we seek to derogate

from that free-trade by such proposals as this

one -

et cetera. Then he refers to the possibility of

bounties on gold and like commodities, and then,

more or less straight across to the right-hand

column:

If we are to have a Federation within which

you can impose duties of customs between the

goods of the various colonies, well and good.

That is a Federation which some people would

be in favour of. I, for one, would stand away

entirely -

et cetera. And, what he goes on to say is, in
effect, "Well, this would be just as much a

derogation from the principle of free-trade", but

again he is focusing there on burdens at the

border. And over the page 175 column 1 about a

quarter of the way down:

If you tell me that there is any substantial

difference between the position of a man who

has a 6d. a pound bounty on his butter - I

mean as related to the position of a similar

producer in another colony - and the position

of a man who has a 6d. a pound duty on his

butter, I should like to have that difference

explained -

and then, further down the column -

If this freedom of trade means anything, it

means equality of trade -

and then he goes on to assistance.

Your Honours, there is also, page 176, again

he links, in column 1, very closely bounties to the

notion of tariff and customs and, near the top of

column 1, refers to:

the power of balancing with the greatest

nicety in regard to every one of your

industries by the imposition of customs

duties, and in the balancing of those duties

of excise -

et cetera.	I will not delay the Court by reading
further.	I would ask the Court to look at it in

Capital(4) 196 22/4/93

due course but, in our submission, again, it is all

closely tied to that relatively narrow concept and

yet centrally important of the tariff policy and

protectionism and free trade.

What we argue is that a duty on goods, once

they have entered the local market and are in that market, provided it falls equally on the local and

imported item, cannot have the deleterious effects.

And, Your Honours, I do not seek to make any further comment on paragraphs 20 through to 24 of

that written material, and I will pass over

paragraph 7 of the outline, Your Honours, where

really we are just following on from that issue of

purpose and referring to judgments in which that

purpose has been identified.

Could I give, apropos of paragraph 7, the

Court just some references - I will not read from

them but I will just identify the relevant

appendices in that thinner book of appendices - appendix 4, where judgments referring to tariff

policy and equality of trade are collected; and
then appendices 2 and 3 in that thinner book where

judgments identifying the wider purpose are

collected; and also some judgments in appendix 3

making criticisms of that wider view.

Your Honours, the other thing we submit that

can legitimately be considered, apart from purpose,

in deciding in what sense the term "excise" was

used, is the constitutional context and that is the

subject of paragraph 8 of our outline.

Your Honours, there is only one point I want to

make on that, because we are content to rely upon

the discussion by in particular, I think it is

Justice Menzies, in Dennis Hotels, on that topic.

I think he probably says about all that can be said

in support of our position there.

In our submission, if one looks at the

constitutional provisions one by one and tries to

work out what is the class of things that are being

dealt with there, they can be broken into two

groups. First of all, entry into the local market,

and that is affected by customs at the stage of

import, by excise when it is local production, and

also by bounties on local production. Secondly,

export out of the local market, which again is

customs, assuming a duty on export is a customs,

and then bounty, being a payment in respect of

production for export.

What we submit is that when one looks at the

usage of these terms one finds that in the end they

can certainly be read very comfortably as covering

those two categories: entry into the local market;

Capital(4) 197 22/4/93

export or removal from the local market, and that

does not then include dealings in goods once they

are in the market as, as it were, a mix of both

local and imported. Again, we would submit that

the constitutional context also supports the view
that the term "excise" is part of, as it were, the

dealing with that class: entry into the local

market, and removal from the local market, and

excise, in particular, dealing with entry by the

means of local production.

My learned friend, Mr Bennett, argued that the

collocation of the terms "customs" and "excise" was

indicative and, in fact, meant, in effect, the

whole field of taxation of goods. Could I ask the

Court in particular to look at page 9 of his

written submissions. Your Honours, there in

paragraph vi, he says:

The juxtaposition of the words ..... is significant. A duty of customs may be imposed

on imported goods at any time before, during

or after importation.

That is true, but it must still, either in form or,

I will just say for shorthand, in substance, be a

duty of customs. As we read on he tends to reason

from the fact that -

a duty of customs may be imposed ..... before,

during or after importation -

to the fact	that a duty on imported goods at a
later stage,	whatever its form or nature, is a duty
of customs.	We submit that it is beginning of the
flaw.

So while that proposition is true, we submit

it does not follow that any duty falling on

imported goods is a duty of customs. Likewise,

then he goes on to say -

assuming that an "excise" is a tax on locally

manufactured goods, a reference to "duties of

customs and of excise" covers the field of

duties on imported or locally manufactured

goods.

Of course it does, but it covers the field of duties on those goods which are duties of customs,

and duties on those goods which are duties of

excise and, in our submission, it is erroneous as a

matter of logic to say that because a duty of

customs is a duty on import and a duty of excise is

a duty on local production, that it follows that

any duty on goods is one or other because all goods

will be one or other.

Capital(4) 198 22/4/93

In our submission, in effect, what he is

saying is - perhaps putting it slightly

different - not all taxes on goods are taxes on

import or taxes on local production, but his method

of reasoning is to say that because the only way

the goods can get into the market is by import or

local production, and because there is one type of

duty that burdens import and another type of duty

that burdens local production, therefore, any duty

on goods is one or other.

We submit that that is simply erroneous and,

in fact, the better approach and the correct

approach is to say, duties of customs are on

import, duties of excise are on local production,

and then duties on goods, simply in the market and

without reference to either import or local

production are neither.

We would submit that particular line of reasoning is flawed and it does also appear in some

judgments and we would submit that arguments based

on the collocation of those terms are logically

flawed and wrong. So, it simply does not follow

that, because a tax falls on both local and

imported goods, it must be a customs or excise.

That is to lose sight of where the argument begins, the meaning of those terms.

Could I also just refer to a linked proposition which came from Your Honours the

Chief Justice and Justice Deane, in Philip Morris.

Again, I do not think Your Honours need the report.
At page 426 in Philip Morris, Your Honours said, in

effect, that:

Customs duties, excise duties and bounties are

measures which are designed to affect domestic

production and manufacture of goods and the

supply of goods to the domestic market.

Now, again, we would argue that then to reason

backwards and say, taxes which have that effect are

effect of duties of customs and excise, that

duties of customs and excise is, in effect, flawed.

therefore any tax which has that effect must be a

duty of customs or a duty of excise.

What we would submit is that, while that

proposition is, with respect, undeniably true, that

customs excise and bounties affect domestic

production and supply of goods to the domestic

market, that notion of effect should be understood

in the context of tariff policy.

Capital(4) 199 22/4/93

The issue is, assuming excises are a tax with

that effect, then the issue is, does it follow that

a tax with that effect is an excise, and that the

way in which, with respect, Your Honours express it

in Philip Morris at page 426, tends to conceal that

second issue there, namely, one has to decide as a

quite separate matter whether a tax with that

effect is an excise, and it is not a matter of

assumption, it is a matter of demonstration or

proof.

Then in paragraphs 10, 11 and 12 we deal with

three.approaches which have been significant
leading to the wider approach of the meaning of

excise, and approaches which, we submit, are

unsound. Paragraph 11 of the outline, I have

already sufficiently dealt with that and we just
refer to some appendices where judgments are

collected and particular cases which rely upon the

wider English meaning. In particular, we would put

the question: why would one depart from the

Australian meaning, if there is a narrow Australian

meaning.

Could I just say something briefly about paragraph 12, the third basis, which has led to the

wider meaning, and that is, the argument that a tax

upon a step in the distribution of goods has the

same effect as a tax upon production or manufacture

and, accordingly, its reason being equally a tax on
production or manufacture is an excise. Again, it

is another illustration of that reasoning. Excises

have certain effects and therefore if a tax can be

identified as having the same effect one reasons

back and says it is an excise.

Once again, in the outline we just identified

some appendices where judgments taking that

approach are collected, and I do not want to go to

them, but our respectful submission is that this

process of reasoning is unsound for the reason that

other particular taxes that they do tend to affect	first of all it cannot be said of excises or any
the price of goods and therefore production. That, as a matter of fact, will depend upon the state of the market at the time. Secondly, taxes which
clearly are not excises can be shown to have the
same potential and therefore this method of
reasoning cannot enable one to distinguish a tax
which is an excise from a tax which is not an
excise.
So our submission is that that method of reasoning is flawed in two respects. The tendency
is not there. It may be in a given state of the
market, it may not be for the same product and the
same tax when the market varies and secondly, it is

Capital(4) 200 22/4/93

not a means of discrimination between taxes. And

on that topic, could I refer the Court to the thin

book of appendices, appendix 12 and, in particular,

the first extract from a New South Wales review of

the State tax system. Page 22, the bottom of the

page where the authors say:

In any discussion of tax incidence, it is

important to observe the distinction between

the legal incidence and the effective

incidence of a tax. Legal incidents relates

to the legal obligation -

and -

effective ..... incidence of a tax describes who

ultimately bears the tax -

Then on the next page they give us an illustration

of the difference; they refer to payroll tax and

the point they make is payroll tax, which would not

ordinarily be called an excise:

may be backward shifted on to labour (by

paying wages or salaries lower than -

otherwise.

forward shifted to purchasers of the firm's

output (by charging output prices

higher ..... or not shifted at all (reducing

profits, share values and, probably,

dividends) .

And:

The final incidence outcome, which would

probably be some combination of all three,

would depend upon demand and supply conditions

in the factor and product markets.

Then, in the middle paragraph, they say that:

the effective incidence of a tax is largely

independent of its legal incidence.

At page 25, again they state:

some general conclusions about the effective
incidence of taxes whose legal incidence is on

business.

And again refer to forward shifting and backward

shifting and thirdly remaining unshifted.	So
there, the concepts are explained.

Capital(4) 201 22/4/93

In the next extract from a book, Public Finance in Australia and, in particular, at page 28

of our book,_ the author makes a point about the

problems and the frailty of this sort of tendency

analysis. At the middle of what is page 92 of the

book:

Take the case of the introduction of an

excise on wine, a commodity previously

untaxed. The initial result will be a rise in

price because the wine producers will attempt

to pass the excise on to the consumers. This

rise in price will lead to a fall in demand,

the extent of which will depend on the
elasticity of demand for wine, which partly

depends on the availability of close

substitutes. If the demand is inelastic, the

consumers will bear the greater part of the

tax ..... If the demand is elastic, the effects

of the tax will be different. In the first

place, the output of wine will be affected and

this result will be partly transferred to the

grapegrowers.

I just make the point that in their first

example, they are not saying consumers bear the

effect of incidence, they buy less. What they are

saying is if there is no elasticity, then they buy

just as much wine, they pay more and there is no

effect there on the producer. However, if there is

elasticity, then purchases drop and so the result

may be transferred back to the grape growers in

falling demand for their product. Then they go on

to say towards the bottom of the page:

Subject to the difficulties in the assumptions

about the relevant supply and demand

elasticities, the market structure of the

industry, and the time period of the analysis,

the incidence of commodity taxation can be

made relatively straightforward provided that

ceteris paribus clauses are allowed. It can

be argued, however, that these difficulties

are so great, particularly with respect to

supply elasticities, that the analysis of

commodity tax incidence is worthless for

practical purposes.

Then importantly:

It is no different with a tax on personal

income, company taxation, pay-roll taxes, and

local rates. For example, it is now accepted
in principle that personal income taxes can be

partially shifted forward, either directly

through the wage bargain or through higher

Capital(4) 202 22/4/93

charges ..... or indirectly through the effects

of income tax on the supply of labour.

Again, the two points which emerge, in our submission, are that one simply cannot say that a

tax on a product will, in the method suggested in

some judgments, tend to be a burden on the local

producer. What they are arguing here is that when

one really gets down to it, unless you at least

assume, all other things remaining equal, that you

will get nowhere and in fact they say that the

truth of the matter is that you can make no

assumptions, and then they make the further point

that the same principles apply to other taxes which

would never be called excises - - -

DEANE J:  But is not your underlying assumption for this

argument to have any credibility that the States

all get together and co-operate and effectively

produce a substitute for the Constitution? I mean,

say, for example, that South Australia puts a

general tax on sale of wine and Queensland puts a

general tax on the purchase of wine. Any

Queenslander who purchases wine from South

Australia is going to have to pay double tax.

What is the answer to that? The answer is, I

would assume: "The States will all get together and

they'll co-operate and they'll make sure that the

South Australian producer of wine isn't excluded

from the markets of all the other States or South

Australia will change its law to try and mirror the law of the other States." But that is what

section 90 was all about, to protect the trader

from the disadvantage that he would suffer under

section 92.

MR DOYLE:  In our respectful submission, section 90 was

intended to ensure that South Australian wine could

enter the Queensland market.

DEANE J: But take that example: South Australia has a tax

of 10 per cent on the sale of all wine without
discrimination; New South Wales, with the worst

motives in the world, says, "We'll fix them. We

won't have a sales tax, we'll have a purchase tax

of 10 per cent on all wine purchased". The result

is, New South Wales wine will be debited with the

10 per cent tax, South Australian wine with a

20 per cent tax. Now, South Australia's answer, I

presume, has to be to alter its law and somehow

bring it into conformity, because if it is not -

the whole argument, really, is that there will be

correspondence between State laws because it is

only if you get that correspondence that you will

not have a complete destruction of the guarantee of

fiscal unity.

Capital(4) 203 22/4/93

MR DOYLE: 

Your Honour, first of all, I suppose, as a matter

of fact, that situation might put some pressure on
the South Australian Government, in your

illustration, to alter its approach, but that is

not my answer to the problem which you identify.

DEANE J: But that is the point I am making.

MR DOYLE: 

Well, I do not rely on that as the answer. My answer, with respect, is that section 90 was not

intended to ensure that wine would be sold all

around the country bearing the same governmental

imposts; the problem they were facing was access to
those markets and equal treatment when they were.

And it would have been so easy for them to say, "We

want to make sure that South Australian wine will

not by any means be sold in New South Wales - that

is by any means or any result - at a higher price

than New South Wales wine", and they constantly -
well, not constantly, but they recognized in the
debates that all sorts of things might happen which

would mean that the landed cost in New South Wales

of South Australian wine would be higher so that it

would, when it went into the market, have what I

might call a natural disadvantage. And all they

sought to do was to prevent certain selective

burdens being imposed which would inevitably
produce that situation; they argued against the use

of railway rates or other disguised means of

producing that situation; and, in our submission,

section 90 was not seen as the universal solvent.

That is not to say that there may not be other

provisions in the Constitution which either as
sources of Commonwealth power might not enable the
Commonwealth by enacting legislation to prevent

that happening, or other provisions which might

bear, in a more negative way in the form of a

prohibition, on that thing happening. None occur

readily to mind.  I am just saying I am not

acknowledging that there are none, but the point

is, in our submission, Your Honour tends to see

section 90 as what I would call the universal

solvent.  We submit that in section 90 quite

clearly they said, "We have an underlying

concept - - -

DEANE J:  Not the universal solvent; I mean, it is part of

the Constitution. But you are right if you say I

am suggesting it reflects the ideal of a uniform

tariff in the sense that that was, as I understdnd

it, always understood in the movement towards

Federation.

MR DOYLE:  We would submit it was understood in the sense of

a uniform external tariff. You really have to put

"external" in to get the right sense of it.

Capital(4) 204 22/4/93

DEANE J: That is a matter, I suppose, of looking at the

document.

MR DOYLE:	Of course, yes.
DEANE J:	I am using "uniform tariff" in the sense the

phrase was used as I understand it.

MR DOYLE:  We would argue that when one looks at the

material it is by and large used in the sense of

uniform external tariff, and the reasoning was we

can only effectuate that by removing from the

States the power to impose the correlative of that,

as it were, the selective burden on the local

producer because that is the thing which affects

the external tariff, because in a sense, they did

not see uniform external tariff as an end in

itself. It was in part - - -

DEANE J: Well, can you point to anything in the relevant

documents in which it is said, "Putting aside

excise duties, the States will, of course, remain

free to impose differential tariffs on goods"?

MR DOYLE:  No, I can not, certainly not right now.

DEANE J: Using - I did not mean differential, unequal

tariffs?

MR DOYLE:  Yes.

DEANE J: Because, to my mind, that just does not fit in

with any of the thinking. It is true that, for

reasons of convenience, the tariff was seen as

being collected from manufacturers, and in that

sense, you can look at language and say, "Oh, they

are talking about manufacturers". But that was

because that was the obvious point of imposing the

tariff.

But you do not get from there the notion that

they were saying that the South Australian wine

makers can be priced out of the New South Wales

market if South Australia wants to put on a sales

tax of 10 per cent and New South Wales puts on a

purchase tax of 10 per cent.

MR DOYLE:  Yes. Your Honour, with respect, what Your Honour

is, in a sense, putting to me is in one way a

somewhat peculiar example because it suggests that

if South Australia chooses to tax its wine, or

sales of wine, necessarily affecting the local

wine, that then the ability of New South Wales to

do the same is under a cloud because, as

Your Honour would say, "Well, the South Australian wine will, in effect, get the duty twice and the

New South Wales wine will only get the duty once".

Capital(4) 205 22/4/93

DEANE J:  No, what I am suggesting, Mr Solicitor, is that

you will only get the free flow of product

throughout the country in the system that you are

arguing for if you presuppose, in replacement of

the constitutional provisions, some form of

agreement between the States to keep their

legislation in accord with one another.

Indeed, I seem to recall that under the regime

that we have established and confirmed by Philip

Morris, some of the States were protesting against

Queensland for not falling into line with the tax

it imposed on its cigarettes and New South Wales

was making adjustments round the border because of

the effects it was having on the natural trade.

MR DOYLE:  Yes, so they - - -

DEANE J: Well, it speaks for itself, does it not?

MR DOYLE:  Only in a sense, Your Honour, that it illustrates

what is a fact of life, that -

DEANE J: Well that is the point, is it not? Was that meant

to be a fact of life under the Constitution?

MR DOYLE:  Your Honour, two or three points: first of all,

Your Honour is using - I cannot quite remember what

the phrase was, either "free flow" or "free

movement of trade", in the sense that governmental

burdens on commodities have to be uniform

throughout Australia, and I am repeating myself,

but our submission is when one comes back to the

debates, one keeps - - -

DEANE J:  I was not using it in that sense at all. I was

using it in the sense of the tariff on goods

throughout Australia had to be uniform.

MR DOYLE: But, Your Honour, does not "tariff on goods", in

effect, mean that governmental burdens, that is

governmental taxes on goods, must be uniform? Now,

in our submission, one does not find, in the

contemporary material, people insisting upon that

as the objective. They insist upon removal of

burdens at the boundary, and then removal of

selective taxes within the boundary.	Now, that is
where, in our submission, the correct

identification of the purpose becomes so important,

and I could not, and would not, argue that what

Your Honour is putting might not have been an

equally worthwhile, query, better policy to pursue.

But it is simply not, we would submit, reflected in

the debates.	The theme is so constantly - the two
we point to.

Capital(4) 206 22/4/93

DAWSON J:  But it would be very hard to do it, would it not,

given section 92 as well, because in the example

that you are considering, there would not be -

presuming the wine producer exports to New South

Wales, you cannot tax the export. There would be

no sales tax on that wine in South Australia.

MR DOYLE: That is, in part, the point I was trying to

compress under my response to His Honour, that,

with respect, in our submission, Your Honour is

tending to use section 90 as the universal solvent
to this problem, and there are other limits on what
the States can do, which may mean the problem may

not arise at all.

DEANE J: What, do you say that interstate sales would be

exempt under your sales tax by reason of

section 92?

MR DOYLE:  No, Your Honour, what I am simply putting the

more - - -

DEANE J:	I think that is what was just put to you.
MR DOYLE:	But I am simply putting the more cautious but, in

a sense, general submission that Your Honour

is - - -

DAWSON J:  What I was putting to you is you would not sell

the wine as an export on South Australia to New

South Wales in South Australia. You would simply

export it to New South Wales where the first sale

would take place, and that being so, of course,

there would only be the New South Wales duty.

MR DOYLE:	There is no sale in South Australia, yes.
DAWSON J:	If you did then attempt to overcome that by

imposing a duty on the export, then you would

strike section 92.

DEANE J: Then let us say the tax in New South Wales is on

consumption, the tax in South Australia is on

sales, and your wine producer in South Australia is

the unusual one who has cellar door sales.

MR DOYLE:  Your Honour, all I can do is put again that the

consequence which Your Honour identifies may arise,

namely that it may be that South Australian wine

will have a landed cost in New South Wales because

of South Australian imposts such that it is in an

unfavourable position, but at the time of the
debates, in our submission, so many other means of

the same thing happening would have been present to

their minds that if the intent was to ensure

equality of trade in that very general sense, it is

inconceivable, we would submit, that it would not

Capital(4) 207 22/4/93

have been expressed quite clearly, because

Your Honour is really in the end saying that equality of trade meant that really nothing should

be done by governments which would put the item

from their State in any disadvantageous position in

another State. What we argue is that - - -

DEANE J: What I am really saying, I suppose, Mr Solicitor,

is I read all those documents that you refer us to

as using "excise duty" as a convenient way of

referring to the tariff.

MR DOYLE:	Yes, I understand that.
DEANE J:	In a context where the convenient way of imposing

the tariff on goods was by a duty 8n manufacturers,

you can read it one way or you c~~ read it the

other, but I really do not think~~ takes you

anywhere.

MR DOYLE:	Not the meaning alone, Your Honour, but, in our submission, the meaning, coupled with what they did
say about what tariff policy meant to them and what equality meant to them, and then furthermore what
they did not say - in our submission the clear
preponderance was not in the direction Your Honour
is going, namely that they were aiming to ensure that South Australian wine could be sold - I do not
mean literally at the same price because everyone
knew it would have freight and so forth, but they
were not aiming to ensure that as far as governmental action was concerned or governmental imposts were concerned, South Australian wine when
sold would be bearing no more in any market to
which it went than the local item.

DEANE J: But really I am beginning to argue rather than ask

questions, which is possibly a tribute to the

effectiveness of your argument.	I do not think you
really need trouble any more.	You appreciate the
point I was directing your attention to.

MR DOYLE:  I do entirely, Your Honour. As I said, one could

well understand that they might have developed that

notion but, in our submission, one would have

expected to see some somewhat different provisions

if that broader objective was the intent. It would

still sit rather awkwardly with all sorts of things

the States could do in the realm of licensing,

controlling production, prohibiting production and

perhaps rationing production, controlling land use. In our submission, that possibly worthy but broader objective simply is not to be found.

If in the end our problem is excise has a

narrower meaning or a wider meaning and if you

conclude in the end that the constitutional

Capital(4) 208 22/4/93

context, while perhaps suggestive of the narrower

meaning, is not decisive, then where do you go,

perhaps, but for a purpose, and what Your Honour is

really putting to me is one purpose behind the

provision, but we submit the evidence for that

purpose is lacking but we do not deny that one can reason that that would have been a very worthwhile purpose but, in our submission, it cannot be found.

On the approach which the Court has taken so

far, it has been by and large not to approach the

Constitution by saying this should have been their

purpose if they really understood what they were on about, but to say what were the purposes which they

identified. I would submit that Your Honour is in

a sense saying this purpose would have made much

more sense, to which our response is: that is not

the purpose they expressed.

DEANE J:  No. I am addressing the question whether at this

stage the Court should reject what was said in

Parton's case and accepted by the Court ever since,

which is a slightly different question.

MR DOYLE: Yes, although the defensive barrier, as it were,

Your Honour is putting in front of my attack on

Parton is to say, well, if this was their purpose

your submissions would lead to a state in which

that purpose would not be achieved. And as I

understand what Your Honour is putting to me, that

is really the barrier you are putting between me

and Parton. Your Honours, in that appendix the

only other page I want to refer to is page 31, the

sentence in the middle of the page, and perhaps

Your Honour Justice Deane would think this sentence

echoes, or perhaps it echoes Your Honour's thoughts

about some of the things I have been saying:

Now we can state a proposition that at

first glance is remarkable. All four of these

taxes -

and they have just referred to a general - it is in

the thin book, Chief Justice, that same appendix at

the back of the thin book, page 31 - the authors

have identified four types of tax:  a general sales

tax, an individual income tax, a value added tax,

and an expenditure tax and they say:

Now we can state a proposition that at

first glance is remarkable. All four of these

taxes have identical economic effects. This

is a proposition concerning the differential

incidence of these taxes and means that

substituting a general sales tax, for example,

for an income tax leaves the real disposable

incomes of all people unchanged.

Capital(4) 209 22/4/93

They go on down the page to develop this

proposition, that in the end, if one wants to talk
of tendencies they are the same for all these
taxes. That supports, we submit, the second part
of our proposition here, namely, this sort of

reasoning will not help you distinguish a tax which

is an excise from a tax which is not.

And so, we do submit that that sort of

reasoning, which is found in the cases quite
frequently is not either true, as a general
proposition about excises, namely their tendency

ultimately to effect production and secondly, not a

means of distinguishing an excise from other taxes.

BRENNAN J:  Mr Solicitor, was there any excise at the time

of Federation imposed on any goods other than

tobacco and liquor?

MR DOYLE:  I am trying to remember, Your Honour, whether

sugar - I know the first Commonwealth Tariff Act

imposed an excise duty on sugar; I just cannot

remember off hand whether Queensland itself had

imposed one. Certainly there is quite a bit of
discussion in the convention debates about sugar

and excises, but I cannot recall again whether that

expressed fears by the Queenslanders as to what

might be done or was a reference to what was

already happening.	Would Your Honour just pardon
me?

MASON CJ: In the outline document "Excise Statutes in the

Six Colonies" there is no reference to an excise on sugar.

MR DOYLE:  No. Mr Selway reminds me there was customs on

sugar, but no excise.

BRENNAN J: See, the material you have referred us to - I am

not speaking now the convention debates - tends to

show that the manner of collection of these duties

was to create bond stores and then to take the duty

when the goods were entered for home consumption,

removed for consumption or sale. So that one can

understand that customs and excise were thus parts

of the same kind of exercise of tax raising.	If
one understands that excise, in the Australian

sense, derived its meaning only because of the

difference in the bond houses, and that there was

only tobacco and liquor involved and excises were

to be exclusive to the Commonwealth, unless your
argument prevails, the historical material really
shows that the exceptions thus far to the doctrine

of the Court should be extinguished.

MR DOYLE: That is Dennis Hotels?

Capital(4) 210 22/4/93

BRENNAN J: Yes.

MR DOYLE:  Yes, well, certainly it is, one might say, a

surprise that the three paradigms are the products

in respect of which the States have been able to

collect revenue but does not that, with respect,

Your Honour, simply reflect what is an aspect of

this whole area of discourse, that it is agreed on

all sides that an excise is a tax of a particular

type and, therefore, it must follow that if the

States devise a source of revenue which is not a

tax of the relevant type, that source of revenue

may be raised. And what history tells us is that

probably, because of the volume of those products

and the way in which they are handled, they are

convenient subjects for the raising of revenue.

Enough of them is sold to generate plenty of

revenue, and they are sold in a manner which

facilitates the collection of revenue. So that

being so, one can say, in a sense, frankly, they
are a natural target of revenue raising and as long
as excise is a tax of a particular type, something

which is not of that type, revenue will tend to be

raised from those products.

So even if one went to the wider meaning of excise and abolished those exceptions, one still

might find then that the States revert to a system

of licensing vendors of liquor by a moderate fee,

doing all the sorts of things that Philip Morris

foreshadows that may cause the Court, once again,

to say, "Well, these are still licence fees". So

the revenue collected will be less, but even in
that regime one could say, "Well, isn't it odd that

still an important source of revenue for the States

are these three products, but we have to agree the

fees are genuine licence fees".

So, while I take Your Honour's point about the irony of the situation, it reflects, in my

submission, just the problem we face in this area.

BRENNAN J:  It just occurs to me that the meaning that you

derive for "excise" in the Australian context is

and produced goods which it kept in a different

really no more than an indication of the fact that

bond. It did not really give a meaning to the

words, it merely indicated the source from which

the tax was collected.

MR DOYLE:  With respect, I am not sure that is so,

Your Honour, because they did not talk of excises

as, as it were, duties collected through the local

bond store, if I can use that term; they talked of

excises as duties on local producers. So the

common way in which the term was referred, when

Capital(4) 211 22/4/93

someone sought to explain what he meant by an
excise, was not, we would submit, in fact a

reference to the means of collection, but a reference to·what it was that attracted the

liability, namely, local production.

So again, while I take Your Honour's point

that that was in fact a feature of the system, the

bond stores and that means of collecting the taxes,

their usage of the term did not in fact refer to

that, it referred to local production and

importers, and the fact of importers, the things

which enabled you to tell the difference. Now,

collecting for local production and collecting for

import meant you had to have bond stores, but the

existence of those bond stores was not part of the

way they explained the term.

Your Honours, finally, just on that matter of incidence analysis, could I just make clear that,

in our submissions we, when we talk about what is

an "excise", make no particular assumption about

the final or effective incidence of the burden, and

so when we talk of a burden on local production we

really just use that as a shorthand, I suppose, for
a burden on locally produced goods. Not, for the

purposes of our submissions, concerning ourselves

with the issue then of what is the final incidence

of it and, as we would argue, one should not, and

nor do we, seek to identify an excise by then

talking about the final incidence. We simply talk

at the high level of generality of a burden on

local production.

So, we do argue that that third plank, as it

were, of the Bolton approach, which is wide

purpose, wider English meaning, and then an

incidence-type analysis, is not soundly based.

So, Your Honours, then, we submit, that one

concludes that the Bolton or Parton approach is

unsound, and could we then come to our submission

as to the correct meaning: paragraph 14 of the

outline.

The first proposition, that an excise is a

tax. Well, I think that is common ground and we do

not seek, and it is not relevant in this case, to
develop the meaning of a tax.

The next point is that an excise is a tax on goods and, in our submission, as we put there, its

nature as a tax on goods appears from the fact that

it is imposed by reference to some relationship

between the payer and certain goods. If we have to

put it in a nutshell, the relationship, which we

would say is the relevant one, is that the tax is

Capital(4) 212 22/4/93

either imposed because the payer produced the goods

in Australia or because the payer has dealt with

goods produced in Australia, but to make that

second limb clear, we would have to add that we are

talking there of a tax which, because of its

selectiveness, causes one to concluded that it is

imposed on the person who dealt with the goods,

because they were goods produced in Australia. So,

they are the relevant relationships and in a moment

we will expand a little on them.

Next, paragraph 16, an excise is a tax on goods - now, with the three words in italics used

together as emphasizing a particular point. In our

submission, in that notion are buried two issues:

first of all, to call it a tax on goods, what

relationship does one look for between the amount

of the tax and the goods as distinct from the

relationship between the taxpayer and the goods;
and secondly, because it is wrapped up in this
area, how does one distinguish something which is
to be called "a licence fee" and not a tax on goods

from an impost which is a tax on goods?

In that area, our submissions ·are these: that

first of all, that difficult distinction between a

licence fee and a tax on goods should be

maintained. It is almost in a sense an undeniable

one, however, intuitive at times discerning the

distinction may be; and secondly, it is a

distinction which was observed in the usage of the

term "and in colonial practice". We would submit

it is not feasible to simply abandon the

distinction altogether and say that any fee in

respect of the taking of a step is of necessity an

excise.

So assuming that distinction is to remain, in

our submission, then from one point of view one can

hardly separate the issue of, "What is the

relationship between amount of tax and goods?" from

that issue of, "How do you draw the distinction?"

What we submit is, starting on the first one,

that accepting that the relationship between the

amount of the tax and the goods need not be a

strict one, and accepting that there must merely be

a sufficient relationship, we, with respect, would

not dispute, if I can put it compendiously, the

approach taken by the majority in Hematite in this

sense: that because the two things are linked,

what is the relationship between the amount of the

tax and the goods, and also can one call this thing

a licence fee, the combination of events, namely,

the way in which the person is selected who is to

bear the tax and the amount of the tax, and the

difficulty in saying it is a licence fee, may well

Capital(4) 213 22/4/93

lead one then to conclude that there is that

sufficient relationship. In other words, a

proportionate relationship between the tax and the

goods, either value or amount, is a reliable

indicator.

But as in Hematite, even though that

proportionate relationship may be missing - some

might try to analyse Hematite in a way that would

create one; we would say you do not need to - the

fact that one can see that it is a large fee

falling on only a person who is a producer, and

falling on that person in respect of something

which is always a step in production; and then

link to that, if one so analyses the facts, the

decision that it cannot be called a licence fee,

then in that somewhat negative sense causes one to

say that there is a sufficient relationship between

the tax and the goods.

So while some may say that is confusing

issues, we would, with respect, link those two

things; the sufficient relationship and the ability

to say notwithstanding there is some relationship,

can I nevertheless, in the light of established

approaches, call this a licence fee, because in the

end perhaps most would acknowledge that even under

the Dennis Hotels formula, there is a relationship.

In our submission, the easier approach is to say

but despite that, is it reasonable, is it natural

to call this thing a licence fee. That in turn

involves you considering the nature of the regime.

So that in broad terms is our approach to that

issue. I do not seek to develop it in any greater

detail because that seems to be an issue which,

whatever the test is, will be a recurring issue and a recurring problem unless, as at the moment no one is suggesting, one abandon altogether the notion of

an impost in relation to production which is put

into the category of licence fee rather than into

the category of excise.

DAWSON J: The irony of all this is that on your argument,

Gosford Meats, Hematite, Dennis Hotels were all

correctly decided in the result - and possibly

Philip Morris.

MR DOYLE:  Gosford, yes; Hematite, yes, because they fell

exclusively on local production.

DAWSON J: Dennis Hotels, not on production.

MR DOYLE:  Dennis Hotels, rightly decided, yes.

DAWSON J: Philip Morris?

Capital(4) 214 22/4/93

MR DOYLE:  I should not be hazy about the precise facts of

Philip Morris, but I am just - - -

DAWSON J:  If you classify it as a wholesaler and not a

producer.

MR DOYLE:  Yes, rightly decided because it was a tax which

fell uniformly on the local and the non-local item.

Yes, it is an irony in a sense, Your Honour, but as
Your Honour will appreciate, what really lies

behind all this argument is the question of whether

the States are excluded from the field of retail

taxes unless - perhaps I should say excluded from

the field of raising revenue by reference to
dealings post production, with the only exception,
revenue, in the form of a licence fee.

So, Your Honours, from the point of view for

the purpose of our submissions, we are content to
accept the approach in broad terms taken by

Your Honour the Chief Justice and Justices Brennan

and Deane in Hematite, explained as I have

endeavoured to do so briefly then.

The next point we deal with in our written outline, Your Honours, is the question of whether

the relevant relationship can exist, even though

goods are sold in a period preceding the imposition
of the duty, and what we would submit is that for

present purposes, that issue was generally resolved

in Philip Morris in the sense that what

Philip Morris, the majority say is, "Well, under

certain circumstances you will be able to do that,

under other circumstances, you will not". And, for

the purpose of our submission we do not seek to go
into that issue in any further detail, other than

to acknowledge the relationship may exist, because

if our broad submission is accepted, in our

submission, this issue would tend to lose all its

practical importance. If our broad submission is

not accepted, then we are right back where we were

when judgment was handed down in Philip Morris.

Paragraph 18 we make the point that reasoning

in terms again of whether the tax is direct or

indirect is irrelevant to the point, and we would,

with respect, put it as strongly as that, because

talking of direct and indirect taxes is, in our

submission, merely to resurrect the issue of

incidence analysis, because, as we understand the

cases, that is what lies behind that terminology,

and we submit that that approach is flawed.

But we do want to make the point that although

I think Your Honour the Chief Justice and Justice

Deane, in Philip Morris, did say at page 429 that

the concept of direct and indirect taxes was not a

Capital(4) 215 22/4/93

useful tool in this area, nevertheless,

subsequently in the same judgment at page 436,

Your Honours did refer to the tendency of a tax to

enter the price of goods as an indicator of an

excise because of its effect on demand.

Now we would submit, with respect, that that

is first of all, once again to resort to incidence

analysis which we submit is flawed, and secondly,

to hark back to the very concept which is embedded

in the distinction between direct and indirect

taxes which, on page 429, Your Honours said was not

a useful or valuable concept in this area, and we

submit that that highlights the difficulty of this

reasoning or identification in terms of effects,

but it really keeps coming back in the end, however

you call it, to incidence analysis, or a kind of,

with respect, simplistic form, talking of the

tendency without getting into details, and we
submit to talk of the tendency is not to escape the
problem. Because if, on a proper understanding of

things, you can never demonstrate, as it were, a

priori what will happen, it is impossible, we would

submit, to talk meaningfully of a tendency, because

a tendency must assume that generally a certain

thing happens.

Now, if the reasoning of the economists which

we put before the Court demonstrates that it cannot

be shown the thing generally happens, then the

tendency cannot be there. And so, with respect, we

do submit that when Your Honours said at page 436

that the tendency of the tax to enter the price of

goods was an indicator of an excise, you were, with

respect, resorting in the end to a concept which

you had some pages previously rejected.

Your Honours, the next step in our formulation

of the appropriate test is paragraph 19, that an

excise is a tax on goods imposed on or in respect

of their production in Australia. And, in our

submission, in a sense that is one of the key

expressions. What we submit is that at Federation

the framers of the Constitution would have had in

mind duties imposed on goods, on their production

or manufacture within the State imposing the duty,

but that since Federation the notion of an excise

must include a tax imposed in respect of production

anywhere in Australia, assuming that can be done

validly.

The reason for that, in the light of the

submissions we have already made, is that at heart

an excise is a tax on local production and we would

submit that local is to be judged in terms of State

boundaries when one thinks of equality of trade,

but national boundaries when one thinks of tariff

Capital(4) 216 22/4/93

policy, and that is why an excise is a tax on

production anywhere in Australia.

To revert very briefly to the example I gave

at the outset of our submissions: an excise could

take the form of a tax on Coonawarra wine, because

that could identify it as a tax on production in a

particular part of a State; a tax on South

Australian wine, which is a reference to the State

boundary; a tax on Australian wine. And as long as

it was, in each case, selective, then in our

submission what you have is an indicator of a tax

on local production provided, of course, the other

elements, tax on goods et cetera, are satisfied.

That is why, in Logan Downs v Queensland, for

instance, once one decided that was a tax on goods
or on production, it was inevitably a tax on

production of goods in Queensland, because the tax

fell only on persons owning or holding stock in

Queensland and, again, why, as Your Honour

Justice Dawson reminded me, Hematite was rightly

decided, if the other steps were passed, because

that was a tax which fell selectively on production

in Victoria, that is, only on such production.

Then, Your Honours, paragraph 20, the next

step in our development of the test that an excise

is a tax either on the production or the

manufacture of goods, or the taking of a step in

production and manufacture - omitting the bit about

Australia for the moment. In our submission, a tax

on a producer by reference to the fact of

production, or the taking of a step, that is the clearest example, but there must be more, in our

submission, than a tax which is paid by a producer.

It has to be imposed by reference to production or

a step in production. So, we would submit, income

tax and land tax which merely fall on producers

that are in no way referable to production or a step in production will not be excises.

We also accept that a duty may become payable

only when some further event has occurred, such as sale or consumption of the goods. In other words, a duty on production or a step in production is not
confined to a duty payable at that time.

So as in Carmody v Lovelock where a duty was a

customs duty, although imposed after the time of

import and, indeed, after the time when some of the

goods had been consumed, because of its reference

there in form, in terms, to the act of import, it

was still a customs duty. So we would accept that

in some cases one will be able to analyse the law

and say that is in fact the duty on local

production even though the time at which it becomes

Capital(4) 217 22/4/93

payable is a time later than production and that is

how we reason through in the end to the conclusion

that a tax on the retail sale of South Australian

wine - so it is after production but it is part of

the process of concluding that it is nevertheless

an excise if selective.

Yes, one of the difficulties in this area will

be one of characterization and again, we would

submit, that this is not a difficulty peculiar to
our test; as Logan Downs illustrates, it will at

times be quite difficult to decide whether the law

is one in respect of production or, as the issue

was presented in Logan Downs, merely in respect of

ownership. And so once again, we accept that that

difficult exercise of characterization has to be

carried out. The same problem arose again in

Hematite. In the end, although perhaps not quite so difficult there, it was necessary to decide

whether the tax was referable to production or

merely referable to, as it were, the right to use

the pipeline. Perhaps the problems which may arise

here may be illustrated by this example,

Your Honours: if one imagines first of all a tax of

X dollars per acre of land planted for chicory,

which was Matthews, now there one does not have

much difficulty in saying, "There is a tax on a

step in production, the planting of land for

chicory, and there seems to be the sufficient
relationship between the amount of the tax and the
quantum of production".

Then if you consider a tax of X dollars per

acre of land used for the production of fruit,
vegetables or crops, again there is, in the form of
the law, the linkage to the step in production, the
use of the land, and again, there seems to be the

sufficient relationship between the amount of the

tax and the product.	Then if you envisage a tax of
X dollars per acre on land used for the production

of fruit, vegetables or crops, and also for the
production of goods, now there with goods one can
see a link to production, and now what tends to
surface is the problem of the relationship; what is

the relationship between area of land and the

amount or value of production? And so, at that
level, the difficulty tends to shift, not from

identifying the step, but to identifying the

relationship. Then if one envisaged a tax of

X dollars per acre of land used for business or

commercial purposes, now one seems to have moved

away from a law which would be characterized as a

tax on the step. And, of course, the relationship

between the tax and the production becomes even

more illusive and then finally one can say, a tax

of X dollars per acre of land owned, and that seems

to be completely unrelated to production, and of

Capital(4) 218 22/4/93

course no relationship between amount of tax and

value of production.

What we submit those examples also illustrate

is that, first of all, the real issue often here is

characterization, namely, deciding is the law one

on a step in production. That secondly, often, the

issue of relationship will be mixed up in it.

But we submit this also illustrates the

difficulty of the reasoning in Chamberlain because

the Chamberlain reasoning tends to be that you do

not have to characterize the law, you look at,

selectively, the individual impact of the tax and

if the tax, however characterized, happens to fall

on a person who is a producer of goods, and because

of the way the tax works through, there is a

sufficient relationship between the impost or tax

and the value of its production, then it becomes an

excise.

Now, what we submit these examples illustrate

is that the appropriate approach is in fact to

focus on the characterization rather than to focus

on the specific incidence of the tax. We submit,

while that is no, as it were, magic solvent, the

Chamberlain approach tends to, we would
respectfully submit, ignore the need to

characterize the law as distinct from studying its

specific impact in a given case, because the

Chamberlain approach, we would submit, leads to

difficulties when - the sort of illustrations

gave - when the tax happens to fall on a producer

who is using his land for the production of, say,

fruit. All the features, in a sense, are there

because he is a producer. The tax, although now

expressed as a tax on land owned generally, the

amount he pays is referable to the amount of land

he is using. In our submission, that highlights

the difficulties with the Chamberlain approach.

So, as we say in paragraph 21, the law may tax

production directly or indirectly, that is,

indirectly on the basis of events occurring after

production is completed. But a law which does not
tax production or a step in production, which can
not be characterized as doing that, is not an
excise simply because it falls on a step in

production.

Your Honours, our next submission, paragraph 22, is in relation to first sales.	We
say a duty on a sale is not as such a duty on production but a duty on a sale may be, in

substance or in fact, a duty on production, that

is, a tax expressed to be on sales by a producer or

on the first sale after production.

Capital(4) 219 22/4/93

But in the end, one has to look carefully at

the law and it may be, perhaps, the commodity and

the way in which the commodity is described, eg,

Coonawarra wine, which leads to the conclusion.

So, while we accept that a thing may be an

excise, although raised in respect of sales after

production, one has to embark on that sort of

inquiry. I have already put my submissions as to

why COR was rightly decided, notwithstanding the

fact, that as it happened there, the duty was the

same on the two items selected for duty.

Paragraph 23, Your Honours, probably just

flows as a conclusion from what we have already

put, but could I just pause briefly to refer to

what was said by both Justice Windeyer and

Chief Justice Dixon in Dennis Hotels where they

did, as Dr Griffith said, ridicule this sort of

reasoning, saying that a tax on an import is a

customs, a tax on local production is an excise,

how can it be, they said, that when you tax them

all it is neither?

In our submission, that kind of approach

ignores the issue that if customs and excises are a

particular type of tax, then it flows quite

naturally that when you impose a different sort of

tax, even though it falls on the same goods, you

are not in the prohibited area. And we would

submit that, telling as those observations of the

Chief Justice and Justice Windeyer seem to be on a

first consideration, that they do, once again,

conceal what we submit is the real issue: what sort
of tax is an excise?

Paragraph 24, I think, Your Honours, is also

really simply a consequence of the submissions we

have already been putting, and again I will just

seek to make the point that what may indicate that

in truth the discrimen of liability is local

production may be that the law selects for the imposition of tax only Australian goods in the market place. And, again, this is not an incidence

analysis. Our approach is to say that that may

cause one to characterize the law as burdening the

local production of goods.

Paragraph 25 is simply drawn from Anderson's

in Victoria, and we do not seek to challenge the

result in that case or, indeed the broad reasoning.

Your Honours, could I then just go back to the

Commonwealth's written submissions, if Your Honours

could get those again, to paragraphs 3.3 and 3.4.

Paragraph 3.3 is the point I was just dealing with

where it is said that this would be an absurd

Capital(4) 220 22/4/93

result if you cannot tax import and local

production but can tax goods indiscriminately.

Paragraph 3.4, though, makes a point that:

The characterisation of a tax might also be

found to vary according to where goods happen

to be manufactured from time to time. If they

are manufactured only in Australia then a tax

on them could only be an excise.

We accept that consequence, Your Honours, and in

our submission it is no reason at all to be

deterred from the conclusion which we urge.
Consider Castlemaine Tooheys and the non-returnable

bottles. If prior to the hearing of that case

South Australian producers had started using
non-returnable bottles, one might think with some

reason the result of the case would have been

different. What was significant there in

concluding that the law was protectionist was that

when the Court examined the facts, the only person

using non-returnable bottles was the interstate

producer.

If in that key area of section 92 results can

vary according to the state of the market-place, is

it a problem if in this area of section 90 the same

consequence flows? One might say far from it being

a problem, it in fact reflects the fact that the

law is in touch with reality. Obviously in

relation to 3.4, one would not look at the market

narrowly, as it were, at that very moment. One

would want to know a bit more about the market and

whether what one is looking at is a merely

temporary feature of the market.

Presumably, if in Castlemaine Tooheys we had

thought that non-returnable bottles were likely to

come on to the market from South Australian

producers, we would have sought to tell the Court

about that. So one has to be a bit careful in, as it were, the moment of time one focuses on, but we submit it is simply not a problem and if it is a

problem, then it is an equal problem with

section 92.

The other paragraph of the outline,

Your Honours, I would like to spend a couple of

minutes on is paragraph 5 and the examples given

there. The example there starts with the

proposition that an:

external tariff raises the price of imported

goods to Australian consumers relative to that

of Australian produced goods -

Capital(4) 221 22/4/93

which we would not dispute.	And then an example is
given of

A Commonwealth -

presumably external -

tariff on imports on commodity A, designed to

stimulate a certain level of Australian

production of that commodity, could be

undermined by the following kinds of State or

Territory taxes:

(a) A State or Territory tax on the production of commodity A.

We would agree. That is an excise. And, of course, it does erode the differential.

Example ( b) :

a State or Territory tax limited to sales or

consumption of commodity A produced in the

State or Territory or in Australia.

We agree that would be an excise, in the sense that

we would expect that if the commodity produced in

those places is selected as the item for tax and it

is truly selective then that will be an excise.

Then, of course, the point of difference, example (c):

A State or Territory tax on all sales or

consumption of commodity A, whether locally
produced or imported.

Notice that now we have shifted from the

erosion of, as it were, the tariff margin, to
focusing solely on reduced demand for the local

product as well as the imported product. In the

first two examples we would submit the problem is

the erosion of the tariff margin which is created.

In the third example that, of course, has disappeared. Perhaps significantly and not

surprisingly the Commonwealth focus now shifts to a

wider thing, that is, effect on demand and of

course has to say, "Well, of course, we acknowledge

there will be an effect on demand for both, but

included in that will be some reduction of demand

for the local product".

Now, we just make the point that, as it were,

the field of discourse has shifted a bit, that does

not prove the submission is wrong, but it is

important to bear in mind that there is a shift.

So, having made that point, we simply would say

that in deciding on how telling that example is,

knowing that our answer is different, one has to

Capital(4) 222 22/4/93

bear in mind that first of all all sorts of other

laws could tave the same effect, and Your Honours

will recall yesterday I gave the example of tobacco

and made the point that the Commonwealth could have
an external tariff to stimulate local production of

tobacco; South Australia could ban the consumption

of tobacco products in that State, and not only

might that affect, in the sense, of depress demand

for the local product, it might cause people to

start consuming an imported tobacco substitute and

yet no one would suggest it was struck out by

section 90.

BRENNAN J: Take a practical example there: say Victoria

imposed a sales tax on sugar at a time when the

Queensland industry was having some difficulties.

Now, it may be that the tax applies to imported as

well as locally produced sugar, but it would be destructive of a Queensland industry unless the

Commonwealth then made a bounty payment.	Does that
not indicate that all these taxes are so

interdependent that it is difficult to credit a

sensible policy underlying the constitutional

provisions, other than the one that was put to you

in discussion by Justice Deane?

MR DOYLE:  There are probably two types of answer to that,

Your Honour. First of all, the burden of our

submissions is that the term is used in a limited

sense or, to put it slightly differently, that
section 90 is not expressed in terms similar to

section 92. It is not expressed in terms saying,

"States shall not impose taxes when to do so would

have a certain effect." That is a significant

difference.

Secondly, in the example Your Honour gave, the

external tariff creates the differential.	The
local sales tax does not erode that differential.

So first of all, one has to be prepared to say that

less sugar will be being bought presumably because

people switch to other products. The effect, with

respect, is becoming much less direct already

because one has to postulate not that people are

switching to imported sugar, because there is no

reason for them to do that, but that people are

switching from sugar to other items. We, of

course, cannot deny that may happen, but our point

is one is moving then from what we would call

tariff policy in the properly understood sense, to

the use of the tariff to achieve somewhat broader

aims, and the Commonwealth may legitimately do

that. But in our submission, to argue that because

a State law interferes with those somewhat broader

aims it is into the realm of excise is to argue

erroneously, because it is to move from the nature

of the tariff properly understood to the slightly

Capital(4) 223 22/4/93

wider, but I accept related, purpose that a tariff

may be used to achieve.	So that would be the
second answer.

BRENNAN J: Yes, I was looking to see whether or not one can

derive, not from the historical material, but from

the terms of the Constitution itself, the

underlying policy between Sl(ii) and (iii), 90 and

92, and it seems to me that the examples that the

Commonwealth give here assumes that there may be

some underlying policy to be derived from the terms

of the Constitution itself.

My question was really whether your argument

is as strong, if one looks simply at the terms of

the Constitution and economic reality, as that of

the Commonwealth's?

MR DOYLE:  Yes. Well, when we look at the terms of the

Constitution, we submit the force of our argument
is what I put awhile ago, that the class of things

that are dealt with falls very naturally into those

two categories: import of goods, that is entry into

the local market; and removal from the local

market. There is really nothing when one studies

the text suggesting that section 90 is intended to

cover dealings in the market once you are there.

Furthermore, what we do find is that, in

relation to trade, section Sl(i) and in relation to taxes, section Sl(ii), simply give the Commonwealth

affirmative powers which would enable them at least

to have a very significant effect in controlling

those areas and achieving a broader sort of

uniformity if that was sought.

So, we would argue the mere study of the terms

of the Constitution favours us. As to economic

effects, there is a danger on both sides, I

suppose, of circular reasoning.	Our reasoning
tends to be, well example (c) is premised on a

wider notion of tariff policy than the true one,

and that is what makes example (c) look like a good

example.

We say, tariff policy is a narrower thing, it

is the differentials. We acknowledge that tariff

policy can be used to achieve the wider thing,

which is buried in (c), but we submit that merely

because a State law interferes with the wider thing

is not to demonstrate that you are in the narrower

area and we gain some additional support from the

points made, I think, by Chief Justice Gibbs in, I

think, Gosford, namely, look at all the other ways

in which States were left completely free to do

things that might well interfere with this wider

objective which underlies example (c).

Capital(4) 224 22/4/93

So the economic analysis, or the sort of reasoning in (c), we submit, what it really throws

up is the question on which I have spent so much

time, regrettably, namely: what really is tariff

policy properly understood and, to secure what end

was section 90 inserted, and we just keep coming

back to that issue.

Example (d), Your Honours: well, there we

would say, as to that one, first of all, we have to

characterize the law and, in a particular case one

might·well look carefully at the law to decide if it is, in truth, in fact, a tax on the production

of commodity A because if the goods selected were
always used to produce commodity A in Australia,

one might well conclude that this is what I have

called a disguised tax on the production of

commodity A.

But if one said no, for various reasons, that is not the conclusion, then what we would submit

is, well, it may be that a tax on the sale of a

given item in the market-place will mean that when

Australian producers use that item, the cost of

their next stage product will be consequently

increased. But again, we would submit, with

respect, "Well, so what?" We now do seem to be

moving away from tariff policy, once again, to the

notion that section 90 is all about controlling the

market for goods or demand for goods, and we can at

least surely say with confidence that is an issue;

that cannot be assumed, it has to be demonstrated

that that is what section 90 is about. And so that

would be our comment to (d), namely, characterize

what is your answer but if, having characterized

the law, you do not conclude that it is in truth a

tax on production of commodity A, then the next

question is: is that effect which is referred to

there one which is, as it were, part of tariff

policy properly conceived, or is it a wider effect

outside the area intended to be protected by

section 90.

Your Honours, I do not think I need to work

through the other examples. Our answers to them

are probably predictable. Similarly, in

paragraph 5.4, I think our answers would again be

along similar lines and are probably predictable.

If the Court pleases, I think I have completed my

submissions. As it is quarter to 1, I wonder if I

might have the indulgence of just considering the

matter over the lunch hour in case there is

anything else I wanted to put, if the Court was

proposing to adjourn now.

Capital(4) 225 22/4/93

MASON CJ:  We were proposing to sit on until 1 o'clock.

That does not mean that you cannot add something if

you want to later.

MR DOYLE: If the Court pleases. Subject to that, they are

our submissions.

MASON CJ: Yes, Mr Solicitor for Tasmania.

MR BALE:  May it please Your Honours. I would hope

Your Honours have before you a copy of our outline which was filed last week.

MASON CJ: Yes, we have.

MR BALE:  May it please the Court, in relation to point 1

contained in the outline, that submission has been

overtaken by events and is not pursued. The second

part of the outline sets out our opposition to a

reconsideration of earlier authorities. I do not

propose to state anything of what is contained in

there. I adopt what has already been said by my

learned friend, Mr Bennett, in relation to

reopening and I adopt also what I anticipate will

be said by the learned Solicitor-General for

Victoria on that issue and add nothing to those

submissions.

At this point I ought to refer to the information given by the Solicitor-General for the

Commonwealth to the Court yesterday, to the effect

that the Commonwealth had offered to the States to

legislate, to protect the States' position, in

relation to the recovery of the sorts of revenues

currently recovered by way of franchise fees, in

the event that the trilogy of cases which started
with Dennis Hotels were the subject of

reconsideration and a decision which altered its

effect.

The States, Your Honours, have a position in relation to that offer, and that position will be

put in due course by the learned Solicitor-General

for New South Wales, and I adopt, in anticipation,

what he will say as to that.

As to point 3 in our outline, starting at the

bottom of page 2, if there is a general

reconsideration of authorities by the Court which

might affect the validity of the franchise fees

which are currently recovered by States, I adopt,

in anticipation, the submission of New South Wales

to the effect that any such decision of the Court

should operate with prospective effect only.

And fourthly, if there is to be a general reconsideration of the meaning of "excise", I adopt

Capital(4) 226 22/4/93

generally the submissions advanced by the learned and the submissions of my learned friend,

Mr Jackson, in so far as they are coincidents with those submissions advanced by Mr Doyle. That

leaves me with only two points in my outline, to

which I would like specifically to refer, one for

the purpose of deleting it and the second for the

purpose of elaborating briefly upon the definition

which has been advanced by the Solicitor-General

for South Australia of the meaning of the word

"excise".

The point which I would seek to delete appears

on page 3 number (2)(a) and I would seek to delete

all of (2)(a), which postulates that a tax to be an
excise must be imposed in relation to the quantity

or value of goods, on page 3 IV(2)(a), and the

first words in (2)(b), "such". Otherwise that

submission will stand. And the reasons for that, I

hope, will emerge, as I turn briefly to the second

point, and the only other point in the outline that

I would seek to address, and that is a point which

emerges from paragraph (7) on page 5 of the

outline.

Our submission in that context is this: that

open to unfettered reconsideration, there is a view

of the meaning of "excise" which has occasionally

been alluded to by individual members of this

Court, which has never been the subject of a

unanimous opinion of this Court, but which is

consistent not only with the principles which have

consistent with the validity of by far the majority of the decisions which have already been handed down by the Court since Federation in the excise cases.

been carefully enunciated by the learned also

In order to highlight the point, it is

necessary for me to focus the Court's attention on

three points made by the Solicitor-General for

South Australia in his submission. Those three

points were these: firstly, that the meaning of
"excise" having not been defined by the

Constitution takes some colour from the

constitutional context in which it appears. The

second point is that, in the context of section 90,
the imposition of duties of excise is part of a
scheme for ensuring to the Commonwealth the
effective implementation of its external tariff
policies and, at the same time, for bettering the

attainment of free trade between the States. That

this was the essential purpose of section 90 is, in

my submission, well supported by the arguments

addressed by Mr Doyle and the cases that he has

Capital(4) 227 22/4/93

cited in support of them, and I do not wish to

revisit those.

The third point, an important point which he

has made, is that that purpose, that constitutional

purpose is fully served as far as can be by

reserving to the Commonwealth exclusive power to
impose duties of excise by treating excise as a tax

on home production only. I adopt his argument in

relation to that and, as he has pointed out, that
proposition was recently accepted in Philip Morris,

at least by Your Honours Justices Toohey and Gaudron, and I would add to that reference a

reference to a passage in the judgment of

Your Honour Justice Deane in Hematite at the top of

page 664, where Your Honour, on my understanding,

accepts the same proposition.

What flows from the fact that an excise is a

tax on home production is that just as a tax which

does not fall on home production is not an excise,

so a tax which falls more widely - that is, which

falls on imports - is not to be regarded as an

excise in the constitutional context because it

does nothing, in our submission, to serve the

constitutional purpose identified by the

Solicitor-General for South Australia.

So far as that purpose is the protection of

tariff policy of the Commonwealth, that policy is

necessarily unimpeded by a tax that applies equally

to imports as well as to locally produced goods.

And likewise, so far as free trade between the

States is concerned, such trade is not inhibited by

a tax which applies equally to all goods, whatever

their origin.

Now, if that is right, as we contend it is,

then a tax which is only on home production of

necessity discriminates against home production in

the sense that it subjects that production to an

impost from which other goods are free.

Applying those considerations, it is possible,

in our submission, to formulate a test, a very
brief test, to be applied in determining whether or

not a tax is an excise, and that test can be stated

as follows: an excise is a tax on goods which

discriminates against them by reason of their local

production or manufacture. And it is not

necessary, in our submission, to go beyond that

test, recognizing always, of course, that what

constitutes discrimination by reason of local

production or manufacture is a question of fact and

it is not always going to be easy to determine on

which side of the line the facts will lie. But

Capital(4) 228 22/4/93

that, of course, is going to be a problem with any

test which is formulated.

In our submission, that test, when applied to

the range of cases that have thus far fallen for
consideration in relation to section 90, would see
the decisions in the great bulk of them falling the

same way as they have in the past.

Those are the extent of my submissions, may it

please the Court. Perhaps I should indicate that

the interveners are agreed, if it is convenient for

the Court, that it would be appropriate for the

submission of the Solicitor-General for Victoria to

follow mine. May it please Your Honour.

MASON CJ:  We will adjourn now and resume at 2 o'clock.

AT 12.57 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.05 PM:

MR JACKSON:  Your Honour, I am sorry to keep doing this.

There should be, before Your Honours, in relation

to the existing case, two documents, one an amended

defence and demurrer which simply makes - - -

MASON CJ: Yes, we have that.

MR JACKSON:	Your Honour, that is in response to the statement of claim that was sought to be amended.
I really do it by way of indication what we
propose. You will see then the other document,
where there is an amended question covering the
proposed amendments and, Your Honours, my learned
after the words "or a duty of customs" and so might
friend has asked that the words "or both" go in
I indicate that is the course that is proposed in relation to the existing action.

In relation to the new action, the action that

has not started yet. I understand there are some

facts we would want to check before we pleaded to

it. Your Honours, once the action has started we

will endeavour to have it dealt with in such a way

that it comes before the Court without there to be

a need for further oral argument.

MASON CJ: Thank you, Mr Jackson. Now, could I ask this

question: how long is it thought the case will now

take because, once again, a question arises as to

Capital(4) 229 22/4/93

the case that is listed for hearing tomorrow. At the moment, we are inclined to take the view that unless this case was going to end by 12 o'clock

tomorrow, it may be that the case listed for

hearing cannot conclude tomorrow.

MR JACKSON:  Your Honour, I really am in my learned friends'

hands in that regard.

MASON CJ: Well, could I ask you, Mr Solicitor for New South

Wales.

MR MASON:  I would be about an hour. I think the bottom

line answer is that it will safely end by 12

tomorrow but I have not done the mathematics.	I
would be about an hour, at most.

MASON CJ: Perhaps I ought to ask each counsel who has still

to address, including counsel for the plaintiff and

the Commonwealth, how long they think they will

take.	You have said, Mr Solicitor for New South
Wales, an hour.	What about the remaining counsel.

MR GRAHAM:  If the Court pleases, I would anticipate being

no more than half an hour and, in one eventuality,

rather less than that.

MR KEANE:  If the Court pleases, we would expect to be no

more than 10 minutes.

MS WHEELER:  If it please Your Honours, I would expect to be

about 10 minutes.

MASON CJ:  Mr Solicitor for the Commonwealth?

MR GRIFFITH: Half an hour to 40 minutes, Your Honour.

MR BENNETT:	I would expect about an hour, Your Honour.
MASON CJ:	Now, Mr Solicitor for New South Wales, are you

going to address us now?

MR MASON:  It is proposed that my friend from Victoria will

go first and I will follow.

MASON CJ:  Very well. Mr Solicitor for Victoria.

MR GRAHAM:	May it please the Court, there is a written outline of argument and a document containing
certain statistical material which I would seek to
hand to the Court.

MASON CJ: Thank you.

MR GRAHAM:  If the Court pleases, the Court has been invited

by the Australian Capital Territory and by South

Australia to reconsider the correctness of the

Capital(4) 230 22/4/93

decision in Parton and those cases which were based

in whole or in part upon its correctness. No

invitation has been made to the Court to reconsider

specifically the decisions in Dennis Hotels,

Dickenson's Arcade, or H.C. Sleigh. I understand

no such application will be made in the course of

reply. It is our submission that no such

reconsideration is required or involved for the

purposes of determining the present case.

However, if we are incorrect in that

submission and some reconsideration of the

correctness of the decisions in those three cases, save to the extent indicated by my learned friend,

Mr Doyle, in considering the correctness of the

decision in Parton, then we would be bound not to
support the application that the Court should
reconsider the decision in Parton.

Further, we would say that if, for any reason,

the Court or any of its members in dealing with
this case found it necessary to reconsider the
correctness of the three cases and what they stand
for with a view to overruling them, then we would
also submit that there should be no reconsideration
of the actual decisions in those three cases.

I do not wish to be, to use an expression,

tilting at windmills, if the Court pleases, but we

put that forward and if there is a possibility of a

review then we go to our submission and place it

before the Court. Firstly we submit that the
decisions of this Court in what we call the licence

franchise fee cases should not be reconsidered. If

I could take the Court to paragraph 4 of our

outline, we draw attention to the history of the

decision of the Court in Dennis Hotels, which has

stood for 33 years; invitations to reconsider it

have been put to the Court in 1974, in 1977, in

1984, in 1989, and on each of those occasions the

Court has refused to reconsider the correctness of

Dennis Hotels and in Evda Nominees a majority of

the court refused leave to the plaintiff to present

argument on the question whether they should be

reconsidered, and we set out the passages in the

judgments in those cases where the Court adopted

that position.

We would add that the result, in our

submission, is to enhance the authority of

Dennis Hotels and the other licence franchise fee

cases, a proposition which Your Honour

Justice Brennan put forward in Philip Morris and

Your Honours Justices Toohey and Gaudron did

likewise, the relevant passages being at pages 442

and 456 in the case of Your Honour Justice Brennan,

Capital(4) 231 22/4/93

page 481 in the case of Your Honours

Justices Toohey and Gaudron.

Now, if I can move to our next main

submission, we submit that each of the following

matters tells strongly against the reconsideration
of the licence franchise fee cases: firstly, the

principle of stare decisis; secondly, the need to

have certainty in the law as laid down by this

Court; thirdly, the reliance which the States have

for many years placed upon their ability to charge

licence and franchise fees and the assumption on

their part that they may lawfully do so. And

finally, the consequences which would follow if the

cases or any of them were overruled.

As to the principle of stare decisis

generally, we accept that the principle is not
conclusive but the departure from earlier decisions

of this Court is only allowed with great caution

and in clear cases. The need for stability and

certainty in this particular constitutional context

is more important, we would respectfully submit,

than mere logical consistency. We give

Your Honours the citations to five authorities upon

which we rely in support of that proposition.

DAWSON J:  Does not the fact that it is a constitutional

case raise peculiar problems?

MR GRAHAM: 

It does, Your Honour, but peculiar problems

which perhaps tend in different directions, some in
favour of retaining the existing state of the law

and sometimes in departing from it.

DAWSON J: But how can you say the Constitution says

something which you think it does not?

MR GRAHAM:  Your Honour, we feel in preparing a judgment

that although Your Honour does not find the prior

decisions convincing, that there are strong reasons

none the less why the views of others should be

allowed to continue to prevail.

DAWSON J:	What would the strong reasons be?
MR GRAHAM:	Your Honour, if I can come in this case to the

financial consequences to the States if the trilogy

of cases, as we have referred to them, were
overturned there would be a strong reason.

McHUGH J:  Do these arguments apply to Parton, reconsidering

Parton?

MR GRAHAM:  We would submit not. If I can amplify the

answer: if Parton is reconsidered, presumably it is

either supported by the Court or a majority, in

Capital(4) 232 22/4/93

which circumstances the status quo remains; or it

is departed from on the footing that the concept of

a duty of excise was too widely stated, and these

arguments would not tell against the Court adopting

that view either.

We would point out, if the Court pleases, that

the Court has identified five considerations
relevant to the question whether it will

reconsider, and if appropriate, depart from an

earlier decision, and the Court is familiar with

them. They are set out there and the authorities

on which the group of five has been formulated and

stated are set out.

The list is, of course, not exhaustive and

some of the considerations may overlap. None the

less, it is our submission that all of those

considerations, perhaps save the second, support
the conclusion that in this case there should be no

reconsideration of the licence franchise fee cases.

McHUGH J:  I am sorry to interrupt you again, but what if

Parton remains? What about the consumption tax

exception in Parton? What do you say about that?

MR GRAHAM:  Your Honour, in the present case it does not

fall for consideration. Its position as a part of

the exception is doubtful and cannot be supported

in the sense that it has been acted upon

consistently as the other aspects of the licence

franchise fee cases have been. So it may fall into

a sub-category, within what some have described as

the exceptional category of the licence franchise

fee cases. In our submission, it can be safely

left on one side in the present case.

We have advanced the following propositions in support of the application of the principle of

stare decisis in the present case. Firstly, the

authority of Dennis Hotels, as we would read Bolton

v Madsen, was recognized in the unanimous decision

of the Court in that case. Bolton v Madsen was, of

course, itself followed by the unanimous decision

of the Court in Anderson's.

Secondly, we would respectfully point out that

it would be difficult to find another area of the

law in which this Court has been invited so

frequently to overrule a particular decision, or

line of decisions, and to do so within a relatively

short space of time. Perhaps section 92 would

furnish another example of such an area, but beyond

that we suggest there are no others.

In H.C. Sleigh, Your Honour the Chief Justice referred to the fact that both in Dennis Hotels and

Capital(4) 233 22/4/93

in Dickenson's Arcade the Court had been invited -

I am sorry, in Dickenson's Arcade and in

H.C. Sleigh, the Court had been invited to reconsider Dennis Hotels, but had not done so.

Your Honour said, had it not been for

Dickenson's Arcade there may have been stronger

reasons for taking a different course, but in the
latter case the Court was invited to reconsider
Dennis Hotels, the Court rejected the invitation.

We go on to submit that this observation indicates that the reluctance of the Court to

reconsider a previous decision is increased by the

fact that it has been previously invited to do so

but has declined. And the Court has, of course,

since Sleigh declined two further invitations.

Now, as to the application of the principle of

stare decisis in this particular area of the law,

that is the licence franchise fee cases, in the

interests of certainty, we set out citations from

some of the judgments in Dickenson, H.C. Sleigh and

Gosford Meats. I will not take the Court to those

passages but the citations are there.

We would add that, as several members of the

Court have pointed out, the principle of

stare decisis has particular importance in relation

to the taxation powers of the States. That point

was made by His Honour Mr Justice Stephen in

Dickenson's Arcade at page 230 of the report, and by Your Honour the Chief Justice in H.C. Sleigh at page 501, and by His Honour Mr Justice Jacobs at

page 513.

We would also point out that the position

which now exists in relation to the licence

franchise fee cases is significantly different, we

would submit, from that which prevailed in

Street's case, and in John's case where there was

only one relevant prior decision, and the decision

in each of those cases had not stood for a period

as long as Dennis Hotels, 33 years.

DAWSON J: What do you say to the proposition that none of

the decided cases would go if the argument which is

put forward - - -

MR GRAHAM:	I am sorry, Your Honour?
DAWSON J:	What do you say to the proposition that none of the decided cases with perhaps the exception of
Chamberlain would go if the argument which was
being put this morning were accepted.

Capital(4) 234 22/4/93

MR GRAHAM:  Your Honour, we are perfectly content with that

state of affairs, as I endeavoured to make clear at

the outset. It is only if the process of reaching

a contrary to conclusion to that contended for by

Mr Jackson and my learned friend for

South Australia, that we need to present this argument.

McHUGH J:	You want your cake and want to eat it too.
MR GRAHAM:	I bluntly and frankly accept what Your Honour

puts. My learned friend for the Commonwealth has

already foreshadowed such a position, and we do not

shrink from it.

Your Honour the Chief Justice in H.C. Sleigh,

again at page 501, said that nothing had by then -

that was 1977 - had occurred to suggest that

Dickenson's Arcade had been wrongly decided, and we

would respectfully add that nothing of that kind

has occurred since.

Now, if I may take the Court to the booklet containing statistical material entitled "Revenue

Collections and Rates for Franchise Fees and Liquor

Licences", may I indicate what is contained in the

document without endeavouring by any means to go

through it. It sets out the receipts of all of the

States and both Territories from liquor, tobacco

and petroleum fees. Queensland now is the only

State or Territory without a fee in respect of

petroleum. It has, since Philip Morris, acquired a

fee in respect of tobacco. The amounts of revenue

and the changes in rates over a fairly lengthy period in each case are set out in the booklet

which contains not only, as I indicate, receipts,

but also the rates levied.

There is at the back of the booklet a sheet

setting out a summary of the rates of the fee

levied in respect of liquor, petroleum and tobacco.

It is to be noted that there is no uniformity of

rate in respect of any of the three commodities.

There are in some instances differences between the

rates on ordinary and low alcohol liquor and the

rates in respect of motor spirit and diesel fuel

are different and as between the States and

Territories there are differences between the rates

levied on tobacco.

All of that information that is in the summary

sheet is to be found in the booklet. The other

additional sheet simply sets out an explanation in
relation to the Queensland material which was not

available at the time when the booklet was

prepared. The Court will notice, however, looking

at the several tables in the booklet that very

Capital(4) 235 22/4/93

substantial proportions of the total of State

revenue, leaving aside grants from the

Commonwealth, arise from these three fees or taxes, rising in the case of Tasmania to over 20 per cent

of the State's revenues.

We should add, as the outline indicates, that

members of this Court have from time to time

acknowledged the significance of the topic to which

we are addressing our submissions at the moment.

We give the Court references to Dickenson's Arcade,

Sleigh, Evda, Gosford Meats and Philip Morris. We

submit that the Court is entitled to assume, as it

has done in the past, that the basis upon which the

Commonwealth/State financial and fiscal affairs

have been ordered has assumed both the correctness

of the cases, the licence franchise fee cases, and at the risk of pointing out the obvious, that those cases if reconsidered and overruled will produce
the continuance of the ability of the States and

the result that the States and Territories will be
at least exposed to claims by vendors of liquor,

tobacco and petroleum products for reimbursement of

fees previously paid.

The further point that we seek to make is that

if those three cases are reconsidered and overruled

and the majority of the Court were to adopt a broad

view of the concept of a duty of excise, then it is

likely that the States would be excluded from a

very significant area of revenue raising. The

contraction of the financial powers of the States

which has already occurred as the result of the
inclusion of section 105A in the Constitution and

in the two Uniform Tax cases is well known.

Your Honour the Chief Justice adverted to that fact

in H.C. Sleigh at page 501 and the matter was touched upon by Your Honour Justice McHugh in

Philip Morris at pages 489 to 490.

The next main point that we would make is this: the significance of the section 90 cases is

in the nation's jurisprudence is not such as to

warrant the reconsideration of the licence

franchise fee cases. We would respectfully point

out that this is not a case where the present state
of the law may be perceived to be unjust or

unacceptable at the present stage of the nation's

history or development and we draw a comparison,

perhaps a rather broad comparison with this case

and Mabo v State of Queensland. We would add that

this is not a case where adherence to the previous

decision, to quote Mr Justice Jabobs in Sleigh's

case "is leading to social, economic or political

consequences which cannot be tolerated by the

nation, consequences perhaps not foreseen when the

Capital(4) 236 22/4/93

decision was given". His Honour said that at

page 513 of the report of H.C.Sleigh.

And we would also point out that at least in a

sense this is not a case where the interpretation

of the constitutional provisions in question will

affect the rights of individuals, except, I should

add, in so far as it may determine who is to tax

them in respect of their cigarettes and liquor and
petrol. But here we would compare Street's case

and also what Mr Justice Kitto had to say in

Chamberlain's case, where he drew a contrast

between cases arising under section 90 and cases

arising under section 92.

A determination of questions arising under

section 90 as to what constitutes a duty of

excise involves an inquiry into a quite
distinct and discrete area of constitutional

law.

That was a matter adverted to in a different

connection by Mr Justice Aickin in Queensland v

Commonwealth, a case which has already been

referred to in the report at page 630. Rather,

perhaps, I can quote from Mr Justice Kitto in

western Australia v Hamersleywhere he said the

inquiry in relation to the question whether a tax

is a duty of excise:

calls for no wide-ranging exploration of

constitutional principle and depends upon no

esoteric Federal conception of a general kind.

His Honour said that in Hamersley (2),

120 CLR 74, the passage appears at page 84 of the

report. We would respectfully suggest that there

would be no obvious advantage to be gained from

reconsidering the licence franchise fee cases. I

say that in the context of anything other than an

overall review of the kind invited by my learned
friend, Mr Doyle.	We point out, with great

respect, that cases arising out of section 90 have,

with fewer exceptions, been notable for marked

differences of judicial opinion. Reconsideration,

we would respectfully point out, will not

necessarily lead to a unanimous view as the cases

that have been decided after Bolton v Madsen show,

if I may coin a phrase, a cloak of unanimity, may

yet concealed differences of opinion.

If I can conclude by referring again to what

Your Honour the Chief Justice said in H.C. Sleigh,

page 501. Your Honour said:

Capital(4) 237 22/4/93

Yet the inherent difficultly of determining

what is an excise in the constitutional sense,

a difficulty reflected in the shifts of

opinion that have taken place in the judicial

exposition of section 92, makes it extremely

hard to say that a particular decision is

wrong.

For those reasons we would submit that the Court

should not embark on a reconsideration of those

three cases.

May I add one further point only. The Court

were the authors of the report to the Premier of

raised yesterday with my learned friend, the

Victoria. It appears in the South Australian

material. Five gentlemen are named. Your Honour,

I think, Justice Deane, pointed out that

Mr Wollaston was a man of some fame.

May I cause to be given to the Court without going to it any further extracts from The

Australian Dictionary of Biography which indicate

what extraordinarily distinguished people, not only

Sir Harry Newton Phillips Wollaston was, but also

the only other person mentioned in the ADB,

George Thomas Allen. Allen was the Victorian

Secretary to the Treasury and the first Secretary the first Collector of Customs for the
to the Commonwealth Treasury, and Wollaston was the

Commonwealth, both highly distinguished servants of

this country. I will cause that material to be

circulated without taking the Court's time up in

having it done in open Court. Those are our

submissions, if the Court pleases.

MASON CJ: Thank you, Mr Solicitor. Yes, Mr Solicitor for

New South Wales.

MR MASON:  Your Honours, we follow my friend from Victoria

in asking the Court not to reconsider Parton or the
exceptional line of cases. Alternatively, we ask

the Court to accept the argument of my learned

friend, the Solicitor for South Australia, as to

the incorrectness of the decision in Parton and
those cases which followed it in that respect.

My learned friend, the Solicitor-General for

the Commonwealth, informed the Court yesterday or
the day before about an offer from the Commonwealth

to pass legislation in relation to the State taxes

which are at risk in this litigation or litigation

that would follow.

Capital(4) 238 22/4/93

Without in any way challenging my friend's

authority to make such an offer, I would submit
that it would be quite inappropriate for this Court
to have regard to it in relation to a decision

affecting stare decisis. In the first place, the

details have not been made manifest, at what rate,

what is to be the reimbursement arrangements to the

States in relation to the taxes. But more

importantly, it is, after all, the Parliament and

not the Executive that makes law and in these days

one cannot be confident that a tax that could be

labelled a GST tax would necessarily find the

approval of the majority of the Australian

Parliament. So for those reasons, in our

submission, it would be quite inappropriate to have

any regard to that matter.

One small matter by way of supplementation to the submissions of my learned friend from South

Australia and the reliance upon economic analysis

the suggestion that a broader view of excise would

further the same purpose as may have been in the

mind of the founding fathers. We would submit that

that is an inappropriate approach to constitutional

interpretation. My learned friend, the

Solicitor-General for the Commonwealth, pointed out

in his outline of submissions at page 19, that the

States' expectations as to reimbursement were not realized because of what became known as the

"Braddon blot", section 87.

Why should the Commonwealth's expectations be

treated any differently if, on the proper

interpretation of what was put into the original

Constitution, a narrow Australian concept of duties

of excise was given? Why should the Court, in

order to achieve what could have been an intended

result, construe the legislation of the

Constitution in that way?

Perhaps it is true to say that ultimately there is a choice and that there is something of an

ambiguity in some of the original materials,
although we support the submissions that have said

that the preponderating balance of materials shows
the narrower view was the one that was

contemplated, but in exercising what may ultimately

be a judicial choice, it is relevant, in our

submission, that one is not dealing with a grant of power and one is not facing the risk of some hiatus

in legislative power and that the Commonwealth has

at all times through the proper exercise of its

tariff and excise power in section 109 the capacity

to set at nought such taxes that the States may

inappropriately levy.

Capital(4) 239 22/4/93

Ultimately, Your Honours, it is State

legislation that is to be challenged. If it

ultimately comes to a question of ambiguity, then,

as it were, to put it crudely, the State should be

given the benefit of the doubt if the matter is

finely balanced. I would refer the Court to the

statement by Mr Justice Isaacs in Federal

Commissioner of Taxation v Munro, 38 CLR 153 at

180, which was approved on appeal in the Privy

Council in Shell Co v Federal Commissioner of

Taxation, 44 CLR 530 at 545, about the application

of the general maxim, "ut res magis valeat quam

pereat", and the relevance of that to legislation

passed by democratically elected parliaments.

Your Honours, that leaves me with two matters.

Firstly, to take the Court briefly through a

booklet which has been, I believe, handed up to the

Court just now headed The Concept of "Duties of

Excise" in Late Nineteenth Century Economic

Literature. This departs from the Doyle model in

that we are not looking at the debates but at the

economic literature which would have been - and we

can establish in some respects was - known to those

who framed the Constitution.

We submit that four propositions are

established as set out on page 1, that

authoritative economic literature of the late 19th

century established four propositions: that a duty
of excise was a tax on the production of
commodities within a country and did not extend

taxing sale or distribution. There was a

distinction between excise duty and excise revenue

and some of the discussion about the English

meaning and the Australian meaning perhaps overlaps

and perhaps elides the distinction we are seeking

to draw, and excise revenue included a
miscellaneous group of taxes sometimes called

licence duties, excises or excise licences that

were collected by the excise but which were not

themselves duties of excise.

Thirdly, that revenue from licences was seen as conceptually different from revenue from duties

of excise albeit that that revenue would be

described as a tax on goods on any modern approach.

It is true that in most cases excise licence

revenue was charged at a flat rate, but there were

instances of such licence fees being charged at a

varying rate.

And finally that internal free trade and

prosperity within an economic unit was seen to be

fostered by removing local indirect taxes and

duties of excise and customs were linked because of

their economic effect on fostering a common tariff

Capital(4) 240 22/4/93

policy within a jurisdiction, and we submit it did not go further than that.

Your Honours, at pages 3 to 5, there is a

reference made to the authorities that are set out
or referred to in the later documents, showing
their standing generally and within Australia in
particular. Obviously, in some cases, it is a

matter of surmise, for example, item 5, A

Dictionary of Political Economy, just showing that

it was widely distributed or went through many editions; item No 8 on page 5 refers to a work

called The Australian Economist, one extract of

which which contains a paper by Robert Garran, is

set out later in the bundle and there is some

information about several of the founding fathers

having been members of that Australian economic

association. On page 6 then, Your Honours, we seek

to make good the four propositions from the

literature and Your Honours will see about point 7,
after citing from Smith, what is perhaps an
ambiguous statement, nevertheless fixing the duty

upon home produce, the definition from McCulloch

speaks of:

"duties on articles produced or manufactured

at home and paid by the producer".

In other words, it was not just an accident of

collection; it was the way the matter was seen at

the time that these were duties paid by the

producer.

There is then a passage from Mill, which was

quoted by Mr Justice Dixon in Matthews, but it is

the last sentence of it that His Honour did not

appear to make use of in the way we seek to make

use of it, where he said:

"Taxes on commodities are either on production

within the country, or on importation into it,

or on conveyance or sale within it; and are

classed respectively as excise, customs or

tolls and transit duties".

And we would submit that that puts duties on sale or fees or taxes on sale outside of the concept of

duties of excise as understood at the time.

Your Honours, on page 8 we collected some of

the key entries that seek to make good
thedistinction between "excise duty" and "excise

revenue". And, in Palgrave's Dictionary, half-way

down page 8, in effect the distinction is expressly

drawn where, in the second paragraph it said that:

Capital(4) 241 22/4/93

An excise duty properly so-called belongs to the category of indirect taxes, because though levied on the producer, its burden really

falls on the consumer. It is, however, the

practice to classify under the general head of

excise the railway duty on passengers, a

direct tax; ..... and a large group of assessed

taxes, being license duties paid to the state
in return for permission to practise or follow

certain sports, trades, or occupations;

DEANE J: Mr Solicitor, can I take you back? Did you see

any examples where a duty on sale was described as

a toll or a transit duty? It just sounds a bit

strange.

MR MASON:  I think I may be able to find a passing reference

in something that follows.

DEANE J: Do not trouble now. If subsequently there are

examples of duties on sale being called - I would

imagine it would be "transit duty" rather than a

"toll".

MR MASON:  Yes. The jar struck me but I said, "Well, maybe

Mills knew better than I did and passed on".

DEANE J: Well, he may well - - -

MR MASON:  Your Honours, page 9, the third proposition,

about revenue from licences being seen as

conceptually different from excise duty, although

in most cases excise licence revenue was charged at

a flat rate. There were some instances otherwise.

Perhaps at that stage, I will ask the Court to

look briefly at annexure F, a work by Nathaniel

Highmore called "The Excise Laws - A Practical

Arrangement of the Laws Relative to the Excise and

to the Stamp Duties on Cards and Medicines,

together with the Acts Relating to Licences Granted

by Justices". In the preface to the first edition, which

starts at page 94, the author speaks of the

division of the work into two volumes. As to

volume I, there are three parts, and Part II, near

the bottom of 95, includes:

the law relating to the Excise duties payable

on Beer, Chicory, and Spirits, and on fares
received from Passengers by Railway, and with

these are associated the duties - really excise, but imposed and still brought to

account as stamp duties - in respect of Cards

and Medicines. This part also includes the

law relating to the manufacture in this

Capital(4) 242 22/4/93

country and sale of Tobacco which is

controlled by the Inland Revenue.

On the next page, as to volume II:

Part I contains the Excise Licences Act -

contents for volume I and page 103 and following, the contents for volume II. At 104, Your Honours

and other enactments dealing with that. Then,

will see the wide range of licences which attract

duty, some of which related to licences to carry on

work or occupations.

Then, Your Honours, at page 107 and following,

is the appendix from Highmore, volume II relating

to the "Table of Duties upon Excise Licences" and,

with one exception, they are flat rates, but there

is one moving rate at page 119 with respect to

tobacco.

Your Honours, the fourth proposition at the

bottom of page 11 in the introductory material

about the link between excise and customs, and the

purpose for that link being the common tariff
policy, contains some quotations which I will not

read here, but may I ask the Court to go to tab I,

a paper given by Robert Garran called the Financial

Basis for Federation in the Australian Economist.

At page 131 in the right-hand column, just about

half-way down the page, he said that:

The object of the paper, however, is not to

propose any new scheme or any original views,

but rather to summarize the schemes and views

that have already been put forward, and to

consider them in the light of Australian

conditions and of the federal experience of

other countries.

And at page 132, the first full paragraph contains

that paragraph, after dealing with direct taxation	I think the key, and about a third of the way down
which will not be touched, he said:

But as regards customs and excise duties the case is different. These sources of revenue must be given exclusively to the federal

Government. One of the great aims of

federation is to establish the commercial

unity of Australia - to throw down all the

border customs barriers and made trade free

from one end of the continent to the other.

But if intercolonial tariffs are abolished, it

will obviously be impossible to keep up half a

dozen different outside tariffs along as many

Capital(4) 243 22/4/93

sections of the coast-line. A tariff fence,

to be effectual, must be a ring fence. The

fiscal policy of federated Australia must be

one and indivisible, and must therefore be

controlled by the federal Parliament.

Now, Your Honours, we read the expression

"the fiscal policy" as relating to the tariff

policy. There may be others who have a different

view, but the key is "a tariff fence to be

effectual, must be a ring fence". And so the - - -

BRENNAN J: That really does raise the problem, does it not,

of bounties? Because tariff you can isolate in one

way as producing the dichotomy between imported and

locally produced goods, and if you look at Sl(iii)

in the proviso and think in the context of what is

being said here, there is intention that the

Commonwealth should have the capacity, effectively,

to affect the production of goods within the

Commonwealth as a whole. That must be part of the

fiscal policy.

MR MASON:	From the bounty part of - - -
BRENNAN J:	The bounty point.
MR MASON:	The bounty part, yes.
BRENNAN J:	And, if you were to allow a tax by a State,

being a tax on sales of goods, the State tax could

sterilize the Commonwealth bounty policy.

MR MASON:  So could a lot of valid State laws. The question

BRENNAN J: Yes, I am not doubting that. I am just saying

that in terms of saying that here he is speaking in

terms of fiscal policy and terms of tariff only,

does not take account of the Sl(iii) provision.

MR MASON:  No, I accept that. that as regards the role of excise exclusivity, it
was seen as related to bolstering the tariff I am seeking to say, however,

policy. One cannot, as it were, bridge the gap by

saying that bounties was another step towards a

total unanimity in what we would express as fiscal

policy. The fact is they chose certain means and

they got a long way towards it, but it is not a

legitimate process of reasoning to say necessarily

that we construe each term as being directed at

closing the entire gap.

If they saw customs and excise in a bit of a

category of its own, as they did by drafting

section 90 separately, and if works like this help

to show that excise was there as a tag-along, not

Capital(4) 244 22/4/93

to defeat the tariff policy, that is as far as it

should go. We would submit that bearing in mind

that this is a restriction on power, on proper

interpretational methods that is as far as it ought

to go.

BRENNAN J:  Were there any taxes imposed by the colonies

which might have frustrated a bounty policy other

than what were then known as duties of excise?

MR MASON:  Not known to me. You are thinking of the bounty

policy of one colony that could be frustrated

by - - -

BRENNAN J: Assuming that there was intended to be, as there

clearly was, a uniform bounty policy throughout

Australia, that bounty policy may have been at

threat in the event of States imposing taxes that

would frustrate it. Was there any known tax at

that time on goods that could frustrate the bounty

policy, save duties of excise?

MR MASON:	Not known to me, Your Honour.
DAWSON J:	Do you agree with the proposition that the imposition of a sales tax could or would frustrate,
in certain circumstances, the bounty?
MR MASON:	No, I do not.
DAWSON J:	It may.  The only way it could do it was if the

bounty was to encourage production overall. The

fact that the price might go up in a State might

discourage production but vis-a-vis competitors,

the bounty and sales tax would have to be uniform,

vis-a-vis competitors, particularly external

competitors, the bounty would still give an
advantage.

DEANE J: But it might be less significant.

MR MASON:  A lot of things might make it less significant.

DEANE J: A bounty of 10 cents on something that costs a

dollar is far less significant than a bounty of 10

per cent on something that costs $2 after tax.

MR MASON:  Depending on supply and demand, perhaps. It is,

in our submission, not correct to, as it were, arm

the founding fathers with the knowledge of

Posnerian economics analysis, and the fact is they

chose certain means to achieve certain objects - I

know there is a bit of circularity in all of this -

but they cannot rise above the means they chose and

section 90 - - -

Capital(4) 245 22/4/93

DEANE J: Except if your argument be right Sir Robert Garran

was positively stupid in the last sentence of that

paragraph you have referred us to. I mean, he did

not see that all the States had to do was to move

their tax on goods from the producer to the sale

level.

MR MASON: Another way of putting it, though, is if they had

wanted to frame the prohibition as being one on

indirect taxes for which there was a Canadian

precedent, they could have done so.

DEANE J:	I was referring to the word "must".
MR MASON:	Yes, "must be raised - - -
DEANE J:	If you be right all they had to do was to say, oh,

let us take it off the manufacturer and put it on

the seller.

MR MASON: Well, again, this argument cuts a bit both ways

but sales taxes were not really in vogue in the

19th century.

DEANE J: Well, as you say, that cuts both ways.

MR MASON:  I think that is all I wish to say about that

document. There is some reference to the earlier

cases related to it. May I then turn to our

submissions about prospective overruling and seek

to put them in the context of the issues in this

case which is the risk the States face that this
Court or a Justice of this Court in the process of

reasoning will reverse the position adopted by the

Court in Philip Morris.

There are a number of issues involved in that.

The first is the question of the recoverability of

an unconstitutional tax, which I appreciate is not

directly in issue at this stage of the proceedings.

disposition of this stage of the proceedings could, But the concern is that the Court in its	if it goes down a certain process of reasoning,
impact in a way that is adverse to the State's position. Therefore, one needs to look just
briefly at the question of whether an
unconstitutional tax is itself recoverable and
whether it makes any difference that that tax has
become unconstitutional by virtue of a sudden shift
of the Court's position in relation to a particular legal principle.
In paragraph 2 we note the possibility that certain unconstitutional taxes could be recovered
by way of a claim based on mistake or duress. In
the past there was a simple answer often given that
mistake of law became a disqualifying right of

Capital(4) 246 22/4/93

recovery, whereas now it has become a qualifying

right of recovery. But we would venture to submit

that mistake will not often present an answer to

this issue because, as Your Honour Mr Justice

Brennan pointed out in David's case at 783, that if

a person makes a mistake and pays something that is

due anyway, then there is no restitutionary right

of recovery. So one is left with the question:

was it due anyway if the law according to the Court

was constitutional at the time it was paid, even

though the Court has later reached a different

position.

In paragraph 2, Your Honours, we have

referred, and I will not be reading, to a range of

cases which have taken different positions in

Commonwealth countries. The Canadian Supreme

Court, over a very strong dissent by

Justice Wilson, has in obiter dicta - I think three

or four of Their Lordships said, there is no right
of recovery of an unconstitutional tax because of

the disruption to the revenue that would occur.

The Woolwich case would be known to

Your Honours; the House of Lords dealing not with an unconstitutional tax, but a tax that was

ultra vires - because of sort of old fashioned
ultra vires. And not dealing in any way with the

sort of situation we have here, because Woolwich

paid the tax, in effect, under protest and sued for

its recovery the very next day and the case did not

involve any change in the law. So the issues we

are concerned with in this case do not arise, but

there is an open question which this Court may

address in the Royal Insurance case, at least
according to the exchange between Mr Merrills and

the Court in the special leave application.

American Law, which is referred to in

paragraph 3, has generally rejected the proposition

that an unconstitutional tax is itself a basis for

recovery of the tax and Professor Field's

conclusion is that an:

"effect is given to an invalid statute in the

tax cases; sufficient effect to permit the

government to retain the money, and sufficient

effect to deny the taxpayer any recovery".

May I briefly refer your attention to Dr

Pannarn's article in the Texas Law Review in 1964, where he discusses the Australian and American law.

He is highly critical of the pre-David state of the

law, no recovery for money paid under mistake, and

a lot of his attention is directed attacking that.

But at page 793, in referring to the general body

of American law which denies recoverability of

Capital(4) 247 22/4/93

taxes paid under unconstitutional statutes, at the
bottom of page 793 he points out that even in

States that do not have the mistake of law rule, the principle still is that, what is called:

a voluntary payment of taxes under the assumed

authority of, what turns out to be, an

unconstitutional statute is not recoverable.

And the latest case is that of the New York

Court of Appeals cited in footnote 70 on page 794,

Mercury Machine Importing Corp, where the decision

is frankly put upon the basis of disruption to the

revenue and the impact that would have upon

government and, more importantly, the people whom

government seeks to serve.

At the top of page 795 there is a reference to

a New Zealand statute which was addressing the

mistake of law rule, but in that context qualified

the abrogation of Bilby v Lumley, by saying that:

Nothing in this section shall enable relief to

be given in respect of any payment made at any

time when the law requires or allows, or is

commonly understood to require or allow, the

payment to be made or enforced, by reason only

that the law is subsequently changed or shown not to be as it was commonly understood to be

at the time of payment.

Your Honours, 798 and following, the learned author discusses the void ab initio theory with its

Blackstonian connections. He quotes from

Chief Justice Latham, at the bottom of page 799,

where His Honour, in effect, expressed that

proposition.

And, interestingly perhaps, at 800 the author

criticizes the void ab initio doctrine as being

inconsistent with the modern acceptance of the
principle that judges make law.	He gives an

example at 800 to 801 which is the facts of this

case, about a State tax based upon a series of

High Court decisions favouring it, where the

High Court later ruled against it, and he expresses

certain strong conclusions about the result that

would follow if the void ab initio doctrine were

applied to its logical extremity.

He quotes Thomas Reed Powell:

"the law is full of collateral doctrines and

devices that keep it from behaving as badly as

it sometimes talks".

Capital(4) 248 22/4/93

Then he goes on to talk about the technique of

prospective overruling.

Your Honours, returning then to the outline at

page 2, we·note in passing the decision of the

Supreme Court in McKesson v Division of Alcoholic

Beverages which is consistent with the idea that

there is no common law right of recovery with

respect to unconstitutional taxes and suggests that American law is at variance with the position taken

by the House of Lords in Woolwich, albeit they were

not dealing with an unconstitutional tax situation.

In paragraph 4 of the outline, again we note

by way of clearing the way, the relevance of the passing on defence, whose status in this area is

yet to be determined as we understand it. But if

the theory - if it is correct as Judges of this

Court have said, that duties of excise have a

general tendency to be passed on to consumers,

something which Mr Doyle challenged by reference to

modern economic analysis - if that is true, then at

least one has the factual basis for an argument

about whether a restitution in remedy should lie in

that situation.

We then submit in paragraph 5 that the

certainty of a spate of recovery actions is itself

a strong reason for not overruling or narrowing the

Dennis Hotels line. As we would read the earlier

Evda Nominees Philip Morris,
decisions, and the future to stay financing, but if there is a risk

that taxes already collected are liable to be

disgorged, well so much more is the disruption.

The reference to the James Beam case, to which

I will come shortly, is that - - -

BRENNAN J:  How do we deal with that in this case, where

there is a claim for the return of moneys paid?

MR MASON:  One way would be to deny that claim. Another

way, and the James Beam case in America almost

suggests this is the only way to do it, is to

engage in what is called pure prospectivity, to say

"claim refused" even for a declaration - and, of

course, I am assuming that the present case is
within the trilogy of earlier cases, a big

assumption perhaps, but that is not our

concern - but assuming it was a claim for

invalidity of a petrol tax or a tobacco tax, one

approach would be to say "the claim is refused"

because that is what the law is and that is what

stare decisis drives us to maintain, but in the

future, and according to one American case allowing

12 months for legislative alternatives to be

Capital(4) 249 22/4/93

pursued. In the future the court says, "We won't

necessarily so hold.	You have been warned", in
effect.

That, of course, raises issues about

compliance with chapter 3, and I will briefly touch

upon those as I develop the submissions. One way

of dealing with it is to say, if the plaintiff succeeds, "We declare the statute invalid, but reserve all other questions of relief, including

remitter, to be looked at in the context of a

prospectivity decision." American courts have in

the past addressed the prospectivity issue often

separately from the case in which the new law is

declared.

In McKinney by contrast this Court which, in

our submission, is a case of pure prospectivity,

addressed it in the one stage. They said, "This is

the new rule, but the new rule will not apply

retroactively. It will not even apply to the instant litigant, but from here on in it will

apply. II

BRENNAN J:  The difficulty in the approach seems to me to be

that those who are most interested in the argument,

namely, taxpayers who have parted with their money,

are not being heard.

MR MASON:	Mr Bennett is a contradictor.
BRENNAN J:	He is not conducting a representative action, is

he?

MR MASON:  I realize I am an intervener, not a party, but if

his argument attacks a State taxing statute, then

surely the State may defend that attack and the

consequences that flow from it. He cannot say,

"Don't hear that defence because there are other

people out there who might want to join with me in

opposing what you have to say." Your Honours, we submit that McKinney's case

is an example of prospective overruling. That case

is certainly, I am sure, familiar to Your Honours.

May I briefly just refer to Savvas,

55 A Crim R 241, which followed it. Savvas was a

case where there was, in effect, a request for a

McKinney direction. The request was refused.

There was an appeal brought within time.

McKinney's case was decided. The appellant said,

"I want the benefit of the new McKinney rule, and

why should I be deprived of it simply because I was

unlucky enough to have my trial come on before

McKinney was decided rather than after?" The Court

of Appeal said, in effect, "Well, take that up with

Capital(4) 250 22/4/93

the High Court." The High Court made its position

very plain in McKinney that the rule - - -

DAWSON J: It was only a rule of practice that was an issue

in McKinney, was it not, whatever that might be.

MR MASON:  My submission is that when a court says "rule of

practice", that is just a shorthand way of saying,

"We are overruling prospectively." I hope that is

not an offensive remark, Your Honour.

DAWSON J:

MR MASON:  At page 267 in the joint judgment of

Justices Gleeson and Loveday, Their Honours just

said, "Well, McKinney means what it says and so be

it." At 289 and following, Mr Justice Kirby has an

extensive review of writings and cases dealing with

prospective overruling in a wide range of

jurisdictions. His Honour was obviously clearly

troubled with the result that had been directed in

what he said were the obiter of this Court in

McKinney, but nevertheless obiter that he was not

at liberty to disregard, and he concluded at 293:

With serious misgivings, however, I

consider that I am bound to comply with the

clear indication by the High Court that the

"rule" in McKinney is to apply to the future

only -

and he so ruled.

The matter came to this Court on an

application for special leave where the

constitutional validity of - albeit that this was a

State jurisdiction case, but the validity of the

ruling directed in McKinney was challenged, but the

panel which, I think, involved the Chief Justice,

Justice Deane and Justice McHugh, refused special

leave to challenge that part of it.

So our submission is that McKinney is an example of prospective overruling. We would refer

also to Bropho's case, which is not quite so clear

an example of it, but the Court said that what we

would submit is the new rule of interpretation of

statutes will apply from statutes enacted from here

on. The reference to Oceanic is a passage in the

judgment of Your Honour Mr Justice Deane, where

Your Honour said that you could:

see force in the view that, if this Court were

to adopt a broader forum non conveniens

doctrine for policy reasons, the adoption of that doctrine should be prospective only and inapplicable to actions which had already been

commenced in a local court and which could not

Capital(4) 251 22/4/93

properly be stayed on the ground that the

local court is a clearly inappropriate forum.

Your Honours, in paragraph 8 of the outline we

refer to three areas where there has been

prospective overruling in a constitutional context

in the United States, Bill of Rights, qualified

immunity and constitutional tort actions and

unconstitutional tax refund litigation, which is of

course the area which the Court is involved with
here.

We would respectfully refer the Court to the

very lengthy review in the Harvard Law Review,
although it predates the James Beam decision to

which I will come very shortly. These cases,

according to the learned authors, nevertheless

respond to concerns about the disruption of

government operations conducted in good faith and

the unfairness of holding governments and their

officials to constitutional standards that were

difficult to foresee.

In paragraph 9, Your Honours, we refer to the

oft-repeated principles in Chevron Oil v Huson,

although now somewhat under a cloud because of the

James Beam decision, which say in effect that

whilst retroactivity usually goes without saying, the Court has the power to overrule prospectively and it has regard to the three factors referred to

at the bottom of page 4 in exercising that

function.

Your Honours, the Supreme Court of America

has, however, recently taken a dislike to

prospective overruling and is in a state of

considerable division in its attitude to it.	May I
briefly take the Court to two cases: American
Trucking Associations v Smith, 496 US 167, a

decision of 1990, and shortly thereafter to James

Beam Distilling Company v Georgia, (1991) 59 LW

4735. There have been shifting majorities in the

court.

In American Trucking, four of the justices, Justices O'Connor, Rehnquist, White and Kennedy,

applied prospective overruling with respect to an

unconstitutional tax. It was a tax that violated

the negative commerce clause. There was a shift in

doctrine in a case called Scheiner. The Supreme

Court said that the Scheiner rule did not apply to

pre-Scheiner circumstances. That was the view of

four of the justices that I have mentioned.

Mr Justice Scalia concurred in the judgment

but he in this and later cases took the view that prospective decision making was incompatible with

Capital(4) 252 22/4/93

the judicial role and contrary to the power of the

judiciary under article 3 of the federal

Constitution. It is interesting to see how he,

nevertheless, came to the view that allowed him to

concur with the judgment. At page 177 of the

Lawyer's Edition Report, which I trust is the one

that Your Honours have, he said just below where it

says "496 US 205":

Though I do not believe I have the option of

suspending the principle of retroactive

judicial decisionrnaking, the doctrine of stare

decisis is a flexible command. I do not think

that a sensible understanding of it requires

me to vote contrary to my view of the law
where such a vote would not only impose upon a

litigant liability I think to be wrong, but

would also upset that litigant's settled

expectations because the earlier decision for

which stare decisis effect is claimed

(Scheiner) overruled prior law. That would

turn the doctrine of stare decisis against the

very purpose for which it exists. I think it appropriate, in other words - indeed, I think it necessary - for a judge whose view of the

law causes him to dissent from an overruling

to persist in that position (at least where

his vote is necessary to the disposition of
the case) with respect to action taken before

the overruling occurred.

Accordingly, I would affirm the decision

below with respect to Arkansas' HUE taxes

imposed pre-Scheiner, because in my view they

were constitutional. I would reverse the

decision below with respect to Arkansas' HUE

taxes imposed post-Scheiner because they were

unlawful -

So His Honour is really saying he would treat

the position of the old court as deeming them to be

constitutional and he would apply stare decisis,

but once, to enable the new law to come into

effect, he would in a future case, overrule the

pre-Scheiner decisions.

Now, in that case, Your Honour, the other four

Justices, Stevens, Brennan, Marshall and Blackmun

dissented, and turning then to James Beam there had

been a shift in the membership of the Court and in

effect the minority view became a majority

position, although not consistently.

In James Beam there was an earlier decision

called Bacchus Imports which invalidated a Hawaii

law for breach of the commerce clause, a Hawaii

taxing law. James Beam sued Georgia for a similar

Capital(4) 253 22/4/93

law and said, "We want the benefit of the Bacchus

decision."

The Supreme Court, in dealing with the Bacchus

decision had remitted it, but in such a way as not

to separate the issues of prospectivity and remedy

and the Court - in fact, some of the Justices said,

"We made a mistake, but that is what we did", and

therefore they had, in effect, declared the law

invalid in Bacchus retroactively.

In James Beam, the majority of the Court said

that because of that, they had to give the benefit

of the Bacchus decision to similarly placed

taxpayers, even in other States, provided they were

affected by the principle of the decision. So to

translate this reasoning into this case, if Capital

Duplicators succeeds on the basis that the trilogy

is wrong, the American Supreme Court would say that

unless the Court prospectively overrules, and I

will explain what I mean by that in a second here,

then other taxpayers can recover State taxes in

other States if they are affected by the same line

of reasoning.

Now, there are several matters that complicate

it, Your Honours. The first is that the right of

recovery dealt with in these American cases I am

referring to, James Beam v Georgia, was a statutory
right of recovery, so these decisions are not

inconsistent with the principle in

Professor Field's work that there is no common law

right of recovery but there are numerous statutory

rights.

The second is that the matter that was really

at issue in James Beam was a category of

prospective overruling called selective

prospectivity. Selective prospectivity was a

decision which said to the Bacchus people - well, let us transpose into the present case. It would

say to Capital Duplicators, "We will overrule the

trilogy of cases, we will allow you the benefit of

that ruling" - in other words, it is retroactive

for you, but not for anybody else. For anybody
else, they have got to wait until tomorrow, as it

were, before getting the benefit of this ruling.

The majority of the court in James Beam said

that that form of prospective overruling was

unconstitutional because it violated a principle of
equality that was inherent in the constitutional

judicial function.

Your Honours, at the very bottom of page 5, we

would draw attention, certainly without adopting

it, to the statement by Your Honours Justices Deane

Capital(4) 254 22/4/93

and Toohey, in Leeth's case, and may I add,

Your Honour Justice Gaudron at page 502, with

apologies that it was overlooked. There, three of

Your Honours were expressing what appeared to be a

similar principle, although not based in the same

constitutional situation.

So five of the justices in James Beam said, in

effect, that selective prospectivity was

unconstitutional and that the benefit of the

Bacchus decision, which was retroactive, had to be

given to all like-minded persons. Some of

Their Honours said that that problem could have

been avoided by pure prospectivity, which would

have refused a relief to Bacchus but said, for

anyone who comes along later, "We are telling you

the law will change". Blackstone would be

surprised at some of these results but nevertheless

that is the way it is.

Mr Justice Scalia, however, and in this case

he was joined by three justices - at page 4740,

there is a judgment by Justice Blackmun with whom

Justices Marshall and Scalia joined, and an opinion by Justice Scalia with whom Marshall and Blackmun

joined. Justice Scalia said that all forms of
prospective overruling are unconstitutional and so
they would have invalidated pure prospectivity as

well.

What does it all mean? Our submission is that

the minority position in James Beam should be

followed by this Court, that of Justice O'Connor,

which says that selective prospectivity is a valid

and appropriate judicial option in a proper case.

It is the way in which a court can keep the law

alive, as it were, provide an incentive to a

particular litigant to do that, but nevertheless

have respect to those principles of stare decisis

that have regard to settled and reliance interests.

We would respectfully submit that if the Court

or any Justice of the Court were of the view that

that is not an option, for constitutional reasons,
then the solution may be for the Court or that

Justice to apply stare decisis, because if the lesser means of giving effect to reliance interest

is not open, then there must be, in our submission,

some mechanism in a proper case for preserving the

reliance interest, and that would be the approach

of Justice Scalia, and it would be therefore to

refuse relief to even this plaintiff, but

indicating, if this were the Court's view, that for

future - it might not necessarily be the same

tomorrow.

Capital(4) 255 22/4/93

TOOHEY J: 

Mr Solicitor, does the view that prospective

overruling is constitutional, but that selective
overruling is unconstitutional, derive from a
particular clause in the American Constitution?

MR MASON: 

There is some reference to the cases and

controversies clause, but the case where it really

has taken off is in the criminal case of Griffith

v Kentucky mentioned in paragraph 11. In Griffith

v Kentucky, the court said that selective

prospectivity was no longer available in criminal

cases on direct review, as distinct from habeas

corpus type review. And there the principles, and

we have quoted some of the passages based on a very

broad-based equality principle, which is inherent

in the nature of the judicial function to decide

like cases alike and to treat the law, in effect,

as available for all like-situated litigants. Now,

Your Honours, we would submit that that is taking

the equality principle too far, that there is no

such constitutionally mandated requirement upon

judges, in any event it may only be a problem for

Chapter III cases, rather than for matters in the

State jurisdiction, but we would respectfully

submit that, in one sense, this Court in McKinney,

albeit that was a case of pure prospectivity, was

prepared to do it, although over strong dissents,

and Your Honour Justice Brennan adverted to doubts,

or stronger than doubts, about the appropriateness

of the function to the judicial role.

TOOHEY J: But the principle may be different, may it not?

It is perhaps easier to fasten on to the principle

that would strike down a prospective ruling of any

sort; perhaps not quite so easy to fasten on to the

principle that would uphold selected prospective

overruling.

MR MASON: Certainly, Your Honour, some of the justices in

James Beam drew that distinction. They said pure

prospectivity is okay, but selective is not. In

part they said that is because of earlier

precedent, notably a case called Ciprianou v City

of Houma, 395 US 701, but in part they saw no

difficulty with that approach. It seemed to have

been done, or contemplated, in a series of earlier

cases.

In my submission it is rather elusive to talk

about litigants in the same position, because if

the law does change, get away from the facts of
this case, if an appellate court changes the law

then there is inevitably a discrimination, at least

as regards those litigants whose litigation is

completed, or who have become statute barred or,

under the current doctrine, who have had a

direction to a civil jury given on the basis of the

Capital(4) 256 22/4/93

old law. As I understand the principle, you do not

get a new trial simply because the laws change

between trial and appeal.

So, however you draw the line, there is going

to be like-minded people who say "I lost out". If

the Court accepts its role of being a law reformer
or law changer, or keeping the law alive, however

one expresses it, it is just the inevitable that

the line has got to be drawn somewhere and drawing

it by way of selective prospectivity is not such a

bad way of doing it because it does preserve the

incentive to challenge.

One answer to that, that was given in James Beam by some of the justices were, to put it into

the present context, Capital Duplicators could have

its declaration which will operate in futuro, but

not even it will get its taxes back. So one can

say, well, it has had the benefit of its endeavour

but without the disruption.

What I said about distinctions inevitable, in

one sense this applies even if the law is changed

incrementally, that those who were there, people

who were born before Donoghue v Stevenson did have

different rights to people who were born after

Donoghue v Stevenson. Perhaps that is not a good

example of incremental change.

Your Honours, in paragraph 13 we simply draw

attention to the fact that it was not in issue in

Woolwich. What, with respect, complicates. this

issue is that one has two unresolved issues

bubbling around at the same time: prospective

overruling and the recoverability of

unconstitutional or invalid taxes.

In paragraph 14, Your Honours, we refer to

earlier Australian authority about the effect of an

unconstitutional statute and it has generally been

assumed or held that it is void ab initio, although

the sort of issues that have been agitated in more

recent cases just have not been addressed, and we

would refer your Honours in particular to the

discussion of Your Honour Justice McHugh in Peters

case, 16 NSWLR 24 at 39 and 40. Although, with

respect, we would not agree that Antill Ranger is

an example of the judicial acceptance of the void
ab initio theory because what was at issue there

was the validity of legislation which itself was

based on the assumption of the void ab initio

theory but did not really address it.

What Your Honour pointed out in Peters was

that the void ab initio theory was really based

upon the declaratory theory of law and we submit

Capital(4) 257 22/4/93

that this Court has now rejected that theory and we

give some of the authorities in paragraph 15.

DAWSON J:  But what would be the cause of action if that is

so?

MR MASON:	I beg your pardon?
DAWSON J:	What would be the cause of action for recovering

moneys, if that is so, because if one is not

declaring the law as it has been at all times and

is changing the law, as it were, prospectively,

then there is no mistake of law, no mistake at all.

MR MASON:  There was no mistake, no.

DAWSON J: Well, what is the cause of action?

MR MASON:  We would hope, none, but that is of course, in

one sense a matter for another day, but the cause

of action is the consideration upon which the

payment was made has totally failed because the
statute which authorized its exaction has been

found to be invalid.

DAWSON J: It is not a contract.

MR MASON:  I submit it is not right because the statute - -

DAWSON J: All this is an unnecessary difficulty, is it not?

MR MASON: Well, there may be a difference between a statute

that was, as it were, stamped with

unconstitutionality from birth, and one which

looked good according to High Court precedent, but

that High Court precedent changed.

If it was, as it were, stamped with invalidity

from birth, then the argument - and again I would

argue at the appropriate state to the contrary, but

the argument is that you apply the House of Lords

principle in Woolwich that it is invalid, it never

was, and that the mere invalidity is itself the

ground of restitution because there is an unjust

enrichment by the revenue at the expense of the

taxpayer.

As I say, American law has not gone that way

and we would submit that neither should Australian

law at the appropriate stage.

Your Honours, in paragraph 17, drawing upon an

article by my learned friend, Mr Katz, we refer to two earlier cases where there is some effect given

to an unconstitutional statute. In James' case -

this was the action before Mr Justice Dixon -

Capital(4) 258 22/4/93

62 CLR 339. The action by Mr James were at the end

of his constitutional successes for some money and
he sued the Commonwealth for damages for conversion
of his fruit. Now, Mr Justice Dixon held that
section 92 did not give a cause of action, but

nevertheless, if there were a tort that had its

only justification in a law that was held invalid,

then there would be damages. And, to that extent,

this case supports the void ab initio approach.

But at pages 359 and 360 His Honour nevertheless gave some effect to the unconstitutional statute by

saying, near the bottom of the page, that it had

this much effect, that it could ground the

vicarious liability of the Commonwealth for the

tortious acts of its servants.

One could argue, well that is based upon some

extension of the de facto officers doctrine, but my

submission is that what in fact happened was some

effect was given to an unconstitutional statute,

just because it was part of the reality of things

when the tort took place.

The passages from McKinlay's case are in the

judgments of Chief Justice Barwick and

Justice Gibbs, with whom Justices Steven and Mason

agreed on this part. Just very briefly, it is at

the bottom of page 34 and 35 where the

Chief Justice said that:

The use of the then existing electoral

divisions and ..... determination of the number

of members of the House of Representatives -

did not invalidate any election of the House,	which
has already taken place, nor bring into doubt	the
validity of the membership of the Parliament.	And
to like effect, Mr Justice Gibbs.

So, some effect was given to an

unconstitutional statute and to that extent there

precedent of the Court. is a dent in the void ab initio theory in earlier We would submit that by precluding the

retroactive effect of its decision, the Court would

bring about the situation that past licence fees

were due when paid, and this is to do no more than

the Court and litigants have done to date. That

is, treat Dennis Hotels as good law. Prospective

overruling amounts to a judicial choice in the
appropriate circumstances and the decisions, thogh
have later overruled, are law nevertheless, for

intermediate transactions.

So, what does it mean in terms of the ultimate

disposition of this case?

Capital(4) 259 22/4/93

The Court should, in our submission, assuming

the Court or any Justice reaches its decision
through the process of invalidating the trilogy,

declare that that result will only apply purely

prospectively. In other words, in such a way that

not even Capital Duplicators gets any further

benefit.

Now, it might be said, why am I being so

unfair to Capital Duplicators. It is because of the risk that the Court may apply the James Beam approach and the result applies to other taxpayers.

Alternatively, the Court, if it declares

invalidity, reserved for another day the question

of whether any further relief is available,

including relief by way of remitter, that itself

will involve some of the issues I have endeavoured

to put.

A third alternative would be to refuse a

declaration altogether, indicating that if that is

the way the things go and Capital Duplicators were

to sue the day after judgment with respect to a

cause of action that depends upon the overruling of

the trilogy, well, then there might be a different

result would follow.

As to tolls and sale agreements, in our bundle

of materials at page 129, in the Encyclopaedia

Britannica definition of "excise" near the top of

the right-hand - one difficulty with this is it is

obviously in an English context, but at the top of

129, right-hand column:

Yet excise duties can boast a respectable

antiquity, ·having a distinct parallel in the

vectigal rarum venalium (or toll levied on all

commodities sold by auction, or in public

market) of the Romans.

That is a sales tax in other words.	If the Court
pleases.

MASON CJ: Yes. Thank you, Mr Solicitor. Mr Solicitor for

Queensland.

MR KEANE:  May it please the Court, I think Your Honours have an outline of our argument.

MASON CJ: Yes, we have.

MR KEANE:  I think Your Honours should also have with it a

bundle of extracts from the economists, or economic

writers, writers on public finance, contemporary

with the Constitution; the kind of material that my

Capital(4) 260 22/4/93

learned friend, the Solicitor from New South Wales

had in his bundle. '

MASON CJ: Yes, we have those.

MR KEANE:  Your Honours, as to Queensland's position, we

support the view argued by the Solicitor-General
for Victoria in relation to re-opening, and we

support, in the alternative, the view advanced, if

indeed it be a true alternative, by the

Solicitor-General for South Australia in relation

to an alternative test, should there be one.

Your Honours, we would not intend to take

Your Honours through our submissions, we fear they

will become, or they have probably become rather

familiar to Your Honours by now. We would like,

though, if we may, to take Your Honours briefly to

elaborate upon the submission that is made on

page 7 of our outline in relation to the heading,

subparagraph (e) Contemporary Discourse.

We take Your Honours to this material, not because we urge the views of Mill and Bastable upon

Your Honours as being appropriate, or even because

we urge upon Your Honours their usage, but rather

simply to demonstrate a much shorter point, and

that is the familiarity of those involved in this
field of discourse at the time of the

Constitutional Debates - Bastable's first edition

was 1892 and Mill had been published much earlier -

the familiarity of those engaged in public finance and public affairs at the time with the notions of

customs and excise and the notions of sales tax and

internal taxes on conveyances.

Our learned friend from New South Wales took

Your Honours to a passage that had been extracted

from Mill's Principles of Political Economy. If we

could refer Your Honour to the passage that follows

that - in our outline, Your Honours, I should

apologize for this, our reference is to pages from
the edition of Mill that were extracted by the

Solicitor-General for the Commonwealth and which

Your Honours will find in their bundle at 85 to 86.

We sought to find some copies of editions of Mill

that were slightly more legible. I am not entirely

sure that we succeeded in that but if we can take

Your Honours to Mill, which is the second of the

extracts in our bundle, to page 504, that is the

page from the extract numbered 504, and

Your Honours will see there that it is headed,

"Chapter IV. Of Taxes on Commodities", and the

paragraph that is numbered 1 in the left-hand

column, Your Honours will see contains the passage

that is extracted in New South Wales written

submissions.

Capital(4) 261 22/4/93

Can we take Your Honours to paragraph

numbered 2, which begins in the left-hand column on

505 and concludes in the right-hand column at the

bottom of that page, to simply make the point,

Your Honours, that there, in the classic work on

political economy current at the time of the

constitutional debates, it had been recognized

that:

A tax on any one commodity, whether laid on

its production, its importation, its carriage

from place to place, or its sale - was of a kind likely to have a tendency to be

passed on and hence, ultimately, to have an effect

upon production. The whole of that passage also

identifies more immediate effects of taxes on

production which Mill would have called excises,

the immediate effects being the impact on the

producer as denying him the capital that would

otherwise be available to him and of causing him to

be more concerned with meeting the regulatory

regime of the revenue than pursuing the efficient

management of his enterprise.

The point of the passage, Your Honours, is

simply this: that it identifies that those involved

in this field of discourse at the time were

familiar with a range of taxes on goods, that those

taxes were not limited to taxes immediately on

production and, in our submission, it indicates the

choice of language in section 90 was deliberate and

limited and that it was not a case where those

involved in framing section 90 referred to duties

of excise and customs as if they were referring to

the universe of taxes, or even the universe of

indirect taxes, although it has to be said that

they were the major indirect taxes that were in

place in the colonies at the time.

The point is, they were not limited in their

appreciation, in their understanding and in their

experience, to the possibility of the imposition of

such taxes and nor were they ignorant of the

possibility of the imposition of direct taxes on

consumption and of the impact that may have had.

In that regard, Your Honours, can we invite

Your Honours to look at the reference or the passage in Bastable, to which we have referred at

page 368 and 369. If we might invite Your Honours

to go firstly to page 367 in Bastable, the

paragraph numbered 3, where Your Honours will see

that he is engaged in discussing the proper line of

division of local and State revenues. If we can

invite Your Honours to go over the page to the

first full paragraph of text on page 368, where he

refers to:

Capital(4) 262 22/4/93

Some important taxes are at once on sound

principles shut out from use as local

resources.

And he immediately refers to:

customs are only levied at the national

frontier -

and he refers to the pernicious nature of those

taxes, and about half-way down the page, half-way

across the line, he says:

The earliest step towards federation between

independent States has been the abolition of

custom houses at their frontiers, and there is

no probability that a reversal of this

salutary process will be witnessed.

Then he refers to octroi duties. They are imposts

imposed on people entering markets and towns, I

understand. But then he goes on, Your Honours, at

the last sentence on that page:

On the same grounds local excise taxes are

practically prohibited. To impose a duty on

an article without having the power of levying

an equivalent customs duty would mean the

sacrifice of local producers, unless they had

a strict monopoly up to the amount of the tax;

such a tax would be easily evaded by moving

outside the boundary. Thus the two great

forms of indirect taxation on commodities are

withdrawn from the list of local resources.

But then he goes on to say:

Direct duties on consumption might be used -

but concludes -

they are objectionable in either general or

local finance owing to the difficulties of

estimation.

The point is that their availability is recognized; their present practicability is doubted.

Your Honours, in our submission, this material

does tend to illustrate that the field of

discourse, the intellectual milieu in which the

founding fathers wrote, was such as to make them

alive to the limited nature of the language they

used. Your Honours, those are our submissions.

MASON CJ: Thank you, Mr Solicitor. Yes, Ms Wheeler?

Capital(4) 263 22/4/93

MS WHEELER:  May it please Your Honours. Might I first

offer to the Court the apologies of my leader who

had to be in Jakarta today for some sea-bed

negotiations. May it please Your Honours, Western

Australia adopts the submissions made by the

Solicitors-General for South Australia, Victoria

and New South Wales and as a result, Your Honours,

I can pass over the greater part of our outline of

submissions, which I think Your Honours have.

Your Honours will see it is in any event couched

more in the form of a summary of submissions than

an outline.

The first three pages of it deal with the question of reconsideration of previous decisions.

Those matters have been dealt with at length and I

do not propose to go to that portion of the

submissions at all. Then, again not needing

repetition, in paragraphs 6 to 8 we suggest briefly

that for the reasons there set out, any

reconsideration which did take place of previous
decisions would of necessity involve a fundamental

reappraisal of a much earlier course of decision.

Our submissions as to what should result from

that reappraisal in terms of an appreciation of the

purposes of section 90 and its meaning are set out

at paragraphs 9 to 14. At paragraph 9 I should add

an additional reference to the American case there,

Michelin Tire Corporation. We have provided to

Your Honours a copy of the lawyer's edition of the

relevant report and the reference to that is 46 LEd

495.      The pages to which we would particularly

refer there are 502 to 506.

Then at 15 and 16 of our submissions we

suggest some factors which have wrongly, we submit,

led to wider notions of duties of excise than are

appropriate. Again, that ground is well covered.

I would pause in those paragraphs, Your Honours,

only to refer very briefly to paragraph 16(c) which
deals with the Canadian decisions.	The

inappropriateness of use of those decisions in

order to establish what is an excise, except

perhaps in the very limited field of obtaining some

insight into when a tax is upon goods, has already

been dealt with but might I mention to Your Honours

at this stage the Commonwealth's supplementary

submissions dealing with the ACT legislation, the

thin Commonwealth submissions which I think were

handed up to Your Honours the day before yesterday.

I do not need to take Your Honours to it at

the moment but might I simply submit at this point

that in paragraph 1.2 of that submission, one

finds, in our respectful submission, a test very

much akin to that used for the very dissimilar

Capital(4) 264 22/4/93

Canadian provision, that is questions as to whether taxes enter into the price of goods and perhaps to

what extent, and matters of that kind.

The only portion of our submission which would

appear to be unique among the interveners is that

which is found at paragraphs 17 to 24 which deal

with the experience in the United States. So I

would wish to take Your Honours briefly to that

portion of the submissions at the moment.

If I could summarize so far as the use of the

term "excise" itself is concerned, the American

experience, the United States Constitution, of

course, does not require a distinction to be drawn

between excises and other kinds of imposts and

duties, and the United States experience therefore

shows no attention to the identification of an

excise as distinct from those other types of

duties.

The expression "in the cases" is sometimes

used interchangeably with the expression "indirect

tax", and the reason for that is that the
constitutional question has always been whether a

tax is direct or otherwise, direct taxes having to be apportioned according to population, and so the

constitutional concern has been, in part, to limit

the meaning of the expression "direct taxes" and to

distinguish between direct and other taxes. And in

that context one finds what we would simply submit

is a certain looseness of language in referring

interchangeably to indirect taxes, excises,

indirect imposts and matters of that kind.

The closest relation it would seem to us to section 90 in the United States Constitution is

found in Article 1 sl0(2) which is set out in

paragraph 22 of our submissions. It provides:

No State shall, without the consent of the

Congress, levy any impost or duties on imports

or exports -

and so on and, of course, Your Honours will

appreciate it is confined to imports and exports.

But it would appear the purposes of that

provision, as with section 90 of our Constitution,

seem to have been to prevent the States from

frustrating what has often been described as

federal tariff policy, and to ensure that the for its needs; and there was an additional concern

to do with the peculiar position of land-locked

States in the United States.

Capital(4) 265 22/4/93

In the context of that provision after the one

in section 10, the Supreme Court has often been

asked to consider the question of

non-discriminatory taxes which fall on imports or
importers, and the effect of those
non-discriminatory sales tax cases was summarized

in the decision of Michelin Tire Corporation v

Wages, which we cited at the foot of paragraph 22.

We have also provided copies of that decision to

Your Honours, and if I could just turn briefly to

it.

The facts in that case, Your Honours, very

briefly, were that there was a Georgia ad valorem
property tax which had been assessed against tyres

and tubes which had been imported and were included

in the imported inventory maintained at its

wholesale distribution warehouse. That was

challenged as a tax upon imports, and in a decision

expressing the views of seven members of the court

Justice Brennan held that that assessment of the

non-discriminatory ad valorem tax against the

imported goods no longer in import transit did not

violate the import-export clause, perhaps the point
of that holding as distinct from earlier cases

regardless of whether the goods had lost their

status as imports by being mingled with other goods

of the importer.

His Honour explained that decision first by a

reference to the purposes of the article, which
appear at page 503 of that lawyer's edition report,

at the passage commencing with the number (3a), and

His Honour says:

The Framers of the Constitution thus sought to

alleviate three main concerns by committing

sole power to lay imposts and duties on

imports in the Federal Government, with no

concurrent state power: the Federal Government

must speak with one voice when regulating

commercial relations with foreign governments,

and tariffs, which might affect foreign

relations, could not be implemented by the

States consistently with that exclusive power;

import revenues were to be the major source of
revenue of the Federal Government and should

not be diverted to the States; and harmony among the States might be disturbed unless

seaboard States, with their crucial ports of

entry, were prohibited from levying taxes on

citizens of other States by taxing goods

merely flowing through their ports -

and so on.

Capital(4) 266 22/4/93

Now, the first two of those concerns, in our

respectful submission, are very similar to those

which agitated the framers of the Australian
Constitution, although part of the Australian

concern with tariff policy was based upon the need to choose between strongly held competing views as to whether the nation as a whole should be

protectionist or free trade. The problem of land-

locked States, of course, did not exist in that

form.

Having regard to those purposes, the court explained, in a passage which is again on page 503

and commences at (2b):

Nothing in the history of the Import-Export

Clause even remotely suggests that a

nondiscriminatory ad valorem property tax

which is also imposed on imported goods that

are no longer in import transit was the type

of exaction that was regarded as objectionable

by the Framers of the Constitution. For such

an exaction, unlike discriminatory state

taxation against imported goods as imports,

was not regarded as an impediment that

severely hampered commerce or constituted a

form of tribute by seaboard States to the

disadvantage of the interior States.

It is obvious that such nondiscriminatory

property taxation can have no impact
whatsoever on the Federal Government's

exclusive regulation of foreign commerce,

probably the most important purpose of the

Clause's prohibition. By definition, such a

tax does not fall on imports as such because

of their place or origin. It cannot be used

to create special protective tariffs or

particular preferences for certain domestic

goods, and it cannot be applied selectively to

manner inconsistent with federal regulation. encourage or discourage any importation in a The court then dealt with any effect on

federal revenues and it was the same on the next

page, page 504, then at the top of the next column

the court observed:

It may be that such taxation could diminish

federal impost revenues to the extent its

economic burden may discourage purchase or

importation of foreign goods. The prevention

or avoidance of this incidental effect was

not, however, even remotely an objective of
the Framers in enacting the prohibition.

Certainly the Court in Brown did not think so.

Capital(4) 267 22/4/93

The reference there to Brown and the cases

that there follow is significant for our purposes

only in this, Your Honours: Brown was decided in

1827 and there were some later cases before

Federation and around the time of Federation.	They
were a series of cases holding that

non-discriminatory taxes including ad valorem taxes

were permissible once the goods were within the

general commerce of the State, that is, they were

not merely passing through to somewhere else.

This case, Michelin Tire itself, differed from

them only in overruling an earlier evidentiary type

requirement which had been interpreted as meaning

that the goods were exempt from State taxes if still in their original packages, but lost the

exemption once they were taken out.	It was in that
context that the court continued:

What those taxes -

that is those in that series of decisions -

and non-discriminatory ad valorem property

taxes share, it should be emphasized, is the

characteristic that they cannot be selectively

imposed and increased so as substantially to

impair or prohibit importation.

And, of course, we would stress the

selectivity aspect there. The footnote on that

page I will not take Your Honours to, but it is

interesting, in our submission; it recognizes the

possibility of discriminatory taxation at a time

subsequent to the importation and says merely that

that can be recognized and dealt with when and if

it arises.

The only other matter I would refer to in that

case, immediately over the page at 505, is that the

court observed:  Finally, nondiscriminatory ad valorem

property taxes do not interfere with the free

flow of imported goods among the States -

The point of the reference to the United States cases is no more than this, in our submission, Your

Honours: firstly, it illustrates an understanding

and, we would respectfully submit, one which

accords with common sense and with the

understanding of the framers of the Australian non-discriminatory sales tax on tariff policy as

commonly understood.

Capital(4) 268 22/4/93

Secondly, in our submission, it is clear that

taxes of this kind were known in the United States

prior to Federation, and that experience was

available to Australia. They were thought not to

impair the objects which the provision which most

nearly corresponding to section 90 was known to

have.

Thirdly, for what it is worth, Your Honours,

that experience tends to contradict, in our

submission, the assertions on behalf of the

Commonwealth that one cannot have sales taxes

because they by definition destroy a free trade
area, the United States no doubt regarding itself

nevertheless as a free trade area.

McHUGH J: But what about their effect on Commonwealth

tariff policy. If the Commonwealth wants to

promote a particular industry in a State and the

States impose a general sales tax, it may have the

effect of destroying the local industry. It does
not affect the foreign industry because, by reason

of their volume, they are able to keep going.

MS WHEELER: There are a number of answers to that,

Your Honour. The first, in our submission, is that

it tends to confuse tariff policy with the intended

effects of tariff policy. The purpose of tariff

policy is generally - almost always - to encourage

production of one kind or another. The great

debate over what tariff policy should be and how it

should operate, what tariff policy decisions should

be made, is whether, if I can put it in very crude

terms, you achieve that objective by protecting

local goods by means of a differential tax regime

between imported and local goods or whether you

have a reduced differential or none; you expose the

local industry to overseas competition. It is

important in that context to understand that that

is only one of the means of encouraging local

production, and perhaps - - -

McHUGH J: But supposing in the illustration I gave that

Commonwealth, in addition, gave bounties on the production of the local industry, it is difficult to accept that the framers of the Constitution

would not have wanted to prevent the States from

interfering in that type of Commonwealth activity.

MS WHEELER:  Interfering is putting it too broadly; we would

accept that the framers wanted to, and did, we

would submit, prohibit the States from interfering

differential if, to take an example, the	by the means of saying, we will compensate for that industry in Victoria. If no motor vehicles are
made in Western Australia, but on the contrary

Capital(4) 269 22/4/93

Western Australian iron ore is shipped off overseas

and comes back in the form of imported motor

vehicles, .the Western Australian Government might

not share that objective, might not understand the

need for that protection to quite the same extent.

What was sought to be prevented, in our

submission, is the Western Australian Government
saying, in that context, all right then, these

people in Victoria do not need that sort of
protection really, or do not need it to the extent

the Federal Government thinks, we will impose a
tariff, an excise, on vehicles produced in

Australia, because after all, they can afford it - something along those lines. That is the only way

in which federal tariff policy was sought to be

protected. Similarly, for example, if there are an

overall differential between the price of imported

and Australian wine as a result of a customs duty,

one might think that the States would turn to

Australian wine as a potential source for revenue

raising on the basis that the imported goods were

already bearing enough; that was sought to be

prohibited.

What was not sought to be prohibited, in our submission, was any action which the States could

take which might affect the price of goods, and for
three reasons: firstly, because the concern was

really just with tariff policy, and that was at the

time of Federation and perhaps still a very

important, but a limited sort of concept; secondly,

and perhaps most importantly, because if that is

the purpose, it is impossible of achievement, and

we have set out in our submissions some of the

things which a State can do to interfere to an

enormous extent with a Commonwealth policy, of
either stimulating or discouraging local

production; they might do it intentionally, they

might do it unintentionally, and it ranges all the

way from, in relation to this case, videos, for

example, a prohibition as we have in Western

Australia on possession of certain types of

pornographic videos, for personal use or whatever,

all the way through to simply not paying much

attention to the upkeep of roads at the border so

that it is more expensive and more difficult for

goods from other States to come in. There are all sorts of things which can be done that will affect

the rate of production.

The third matter, which is perhaps peripheral but has not been mentioned, is that in the United

States cases and, to an extent, in the economic

materials the Commonwealth uses, there is some
discussion of the role of government services in

encouraging production and in providing an

Capital(4) 270 22/4/93

important service to producers generally,

facilitating their commerce and so on - it is in

the context of importers in the American cases, but

still.

One of the things that one is conscious of,

for example, in Western Australia, with a limited

population and with infrastructure difficulties, is

that government is really a package, that producers
traders, importers, all those who deal in the State

can to an extent benefit from non-discriminatory

taxes - they are the only sort we can impose, but

from non-discriminatory taxes on goods, depending

on what the State gives for the money, depending on

whether that is used for roads, research,

subsidizing commercial rates, whatever, which tends

to serve and increase the purposes of business.

So that it is too simplistic, in our submission, even if you are just looking at

discouraging production, to say, "Well, a tax is

always going to discourage production". If you

isolate it, it does, but it is part of a more

sophisticated package and, as I said, the main

point of the submission is, if it were that very
sophisticated end of making sure the States did not
interfere with Commonwealth policy, even in the
area of stimulating production, it simply cannot be
done because of all the other things that are

available. Those are the submissions, if it please

Your Honours.

MASON CJ: Thank you, Ms Wheeler. Yes, Mr Solicitor?

MR GRIFFITH:	Your Honour, before the Court is adjourned, could I, not by way of homework, Your Honour, but
just to give the Court the advantage of our first and only hand-up for tomorrow, give the Court a note which is directed primarily to answer the
inquiry Your Honour Justice McHugh made at page 62
of the transcript with respect to our example in
page 16(c) of our material.
MASON CJ:	Thank you.
MR GRIFFITH:	I apologize for intervening, Your Honour.
MASON CJ:	The Court will now adjourn and we will resume at

9.45 am tomorrow.

AT 4.17 PM THE MATTER WAS ADJOURNED

UNTIL FRIDAY, 23 APRIL 1993

Capital(4) 271 22/4/93