Northern Suburbs General Cemetery Reserve Trust v The Commonwealth of Australia

[1992] HCATrans 98

--~~

•

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl08 of 1991

B e t w e e n -

NORTHERN SUBURBS GENERAL

CEMETERY RESERVE TRUST

Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

Demurrer

MASON CJ
BRENNAN J
DEANE J
DAWSON J
TOOHEY J
GAUDRON J

MCHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 1 APRIL 1992, AT 10.20 PM

Copyright in the High Court of Australia

!:

Cemetery 1 1/4/92

MR B.W. WALKER:  May it please the Court, I appear with my

friend, MR I.McN. JACKMAN, for the plaintiff.

(instructed by Speed & Stracey)

MR D.J. ROSE, QC: If the Court pleases, I appear with my

friend, MR S.J. GAGELER, for the defendant.

(instructed by the Australian Government Solicitor)

MR K. MASON, QC, Solicitor-General for New South Wales: If

the Court pleases, I appear with my learned friend,

MR L.S. KATZ, for the Attorney-General for New

South Wales, intervening in support of the plaintiff, in relation to the law being not one

with respect to taxation.	r~~structed by the Crown
Solicitor for New South Walf

MASON CJ: Yes, Mr Walker?

MR WALKER:  May it please the Court, I hand up the

plaintiff's outline of submissions.

MASON CJ: Yes, Mr Walker.

MR WALKER:  May it please Your Honours. The legislation

which we challenge includes the Training Guarantee

(Administration) Act 1990, the principal objects of

which include the increasing and improvement of the

quality of the employment related skills of the

Australian workforce so that it works more productively, flexibly and safely, thereby increasing, amongst other things, the efficiency of

Australian industry. The objects of the Act,

including that principal object, are to be
achieved, according to the Administration Act by

guaranteeing a minimum level of expenditure by

employers on quality employment related training.

The long title of the Administration Act

includes the expression "scheme". The

Administration Act itself is to be read as one with

Act 1990 which we shall call the Guarantee Act.	and is incorporated into the Training Guarantee	The Guarantee Act imposes what is called "charge",
namely, training guarantee charge. It is the
characteristic of that charge as a tax or not which
is at the heart of one of the three arguments we
wish to present for the invalidity of the legislation as a whole.

Your Honours will appreciate that were we

putting this argument during a particular nine day

period in March of 1908 a very different

jurisprudence would have obtained, and Barger's

case argued back then has an immediate similarity

with an argument which the Court will not hear from

us, namely, that encouraging employers to spend

Cemetery 2 1/4/92

their own money on training is clearly something

which a State can do and that a charge, called a

tax by the Commonwealth, if under challenge,

designed not to raise revenue but to drive people

by rational inducement to spend that money of their

own on training is not a law with respect to

taxation. That is an argument which would have, it

would appear, persuaded the majority in Barger's

case. It is not an argument which is open to us,

and it is not one we put.

Our three arguments operate independently of

each other though two of them inform each other.

made in legislation for the destination of revenue raised or moneys received by the

In order they are that section 81 of the purportedly

Commonwealth and that, on a proper reading, this

legislative scheme and, in particular, the

Administration Act, purports to command the destination of the moneys received by way of

training guarantee charge in a manner which would

contravene section 81. Invalidity of those

provisions must follow and then, by reason of what

we will seek to demonstrate is a seamless whole as

the proper nature of this whole scheme, severance

being impossible, the invalidity of all must

follow. That is the first argument concerning

section 81 of the Constitution.

The second argument challenges head-on, and we

hope on orthodox grounds, the characterization of
this charge studiously, we would note, not called a

tax and not called a payroll tax, for example, as a tax. We accept that if it is a tax, the law, in so

far as it imposes the tax and deals with the

imposition of a tax, are laws within the power of

the Commonwealth Parliament under section Sl(ii) of

the Constitution. And our argument concerning the

identity of the charge as a tax or not turns on the

detailed provisions of the scheme and identifying

the real nature of the quid pro quo, if there be

any as we seek to persuade the Court, between

employer and the Commonwealth and the States on the

other hand.

In summary, it is our second argument that this is a form of user pays legislation, and that

the definition of user pays in that political

notion does not require, in all cases, as strict a

matching of outlay and benefit as might be found,

for example, in the examination of whether

something is a fee for a service as, for example,

in Air Caledonie.

The third argument - I should say, before

moving to the third argument, while the section 81

Cemetery 3 1/4/92

and section 5l(ii) arguments operate independently,

we seek to draw strength for the section 51(ii)

argument in the characterization process from the

presence of the section 81 argument, namely that it

is not to be imagined that the Parliament

designedly set out to levy a tax and similtaneously

to direct the revenue raised by that tax otherwise

than to the consolidated revenue fund.

So that, as a pointer to the parliamentary

intention to be gathered from the Act, what would

otherwise be a breach of section 81 very plainly,

in the case of tax revenue, suggests this is not a

tax.

The third argument, which stands

independently, concerns the operation and will no

doubt come to concern the justiciability of

section 54 of the Constitution. It is our

contention that section 54 is justiciable at least

at the stage presented by this case, namely

challenge by a person who would be affected by

legislation, if it were valid, being a challenge to the effect that it is invalid because the manner in

which the Constitution directs it to be made has

been not observed.

The linchpin of the section 54 argument is the

characterization of certain provisions of the

Administration Act,

purporting to reimburse the costs of administering the scheme.

Your Honours, as it will appear from that

outline, the detailed terms of both Acts are

critical to the foundations of each of those three

arguments. Could I, therefore, take the Court

immediately to the two Acts which I understand have

been made available to the Court in a folder.

MASON CJ: Yes, we have it.
MR WALKER:	Thank you, Your Honour. Act No 59 of 1990, the

Training Guarantee Act, which is found after tab 2

in the folder, assented to on 16 June, like the

next Act, is entitled:

An Act to impose a charge equal to any shortfall in the amount spent by employers on

training employees.

Section 3 is in a familiar form and

incorporates the Administration Act into the

Guarantee Act, and commands that it be read as one

with the Training Guarantee Act.

;

Cemetery 4 1/4/92

Section 5 is the provision imposing charge and would be the provision imposing taxation if my

friend Mr Rose were to persuade Your Honours that

this is an exercise of Sl(ii) power.

Section 6 begins the process of defining the

amount of training guarantee charge but uses
expressions such as "shortfall" which requires the

definitions supplied by the Administration Act in

order for any calculations meaningfully to be made.

In section 7, for what it is worth, there is a

limited express severability provision which does
not concern my client. It may, or may not, concern

my friend the Solicitor for New South Wales. Act No 60 of 1990, assented to on the same

day, is entitled - that is the Training Guarantee

(Administration) Act 1990 found at tab 1 in the

folder:

An Act relating to the establishment and

administration of the Training Guarantee

Scheme, and for other purposes.

That expression, "Training Guarantee Scheme", does

not enjoy any greater definition and it is clear,

in our submission, that the scheme describes the

entirety of the legislative provisions for the

encouragement of private expenditure, in default the collection of a charge and the setting up of

systems for both the encouragement, the collection

and the expenditure of charge - that is an

encouragement of private expenditure and the

collection and expenditure of the collected charge.

Could I draw Your Honours' attention in

particular to the objects of the Administration Act which, read with the Guarantee Act, in fact provide

in section 3 the only express declaration of the
objects of this legislation.	The principal ones

are described in subsection (1) and, with

immaterial exceptions, are those I paraphrased in

opening. Other objects include firstly, in

paragraph 3(2)(a):

improving the quality of employment related

training provided by employers by encouraging

the adoption of structured training - Your Honours will see eventually the detailed

manner in which that is thought implemented.

Paragraph (b) again has as an object the

encouragement of further employer investment - that

is investment by employers in employment related

training. (c) begins to come close perhaps to the

Cemetery 1/4/92

area in which the charge might be thought to

operate, namely:

ensuring a more equitable distribution of

effort in relation to employment related

training among employers -

and then at (d) there is an overall educative

effect, namely:

accelerating change in industry perceptions -

this is legislation directed at industry, and in

particular at employers -

of the value of employment related training.

The value of employment related training is an

important concept for the nature of the scheme as a

whole and the benefits which Parliament obviously

considers is being provided to employers by the

scheme as a whole.

Subsection (3) describes how these objects are

to be achieved and they use the word which appears

in both of these statutes' short titles, namely

"guaranteeing". This concept of guarantee is a

little protean as it appears in this legislation

but it would appear, in our submission, to begin

the indications that this is not a scheme of

legislation designed to raise in the traditional

way moneys for the Commonwealth to be then expended

pursuant to appropriations out of consolidated

revenue fund for public purposes of the

Commonwealth.

What is to be guaranteed is a minimum level of expenditure by employers. An early clue to that

which a reading of the legislation as a whole

clearly reveals, namely that these are not Acts

which are calculated or designed to raise revenue.	The definitions section, in section 4, does not	include anything of great moment except that it
becomes clear, by expressions used later in the
Act, that there is a very wide class of person
encompassed in the definition of "employer" and
"employee"; that "persons" include almost the
widest imaginable. class of persons, at the foot of
page 4 of the consolidation reprint.
"Training", I draw your attention to, at the foot of page 6 of the consolidation reprint.
"Training" which is the central concept to the Act, being the conduct upon which expenditure is
eligible or not is laid out:

Cemetery 6 1/4/92

includes instruction and closely supervised

practice -

"School" has a meaning which would include most

schools. "Training advisory body", which is one of

the monitoring and advisory entities, which would

belong to the encouragement class, so far as the

Parliament's intention is concerned, at the top of

page 7 of the reprint, means a body called:

The National Training Board Ltd or - some other body. I can pass over extended matters

in the interpretation sections until one comes to

section 8 which defines a "threshold amount" and

begins the definition of the incidence of this

charge. The threshold amount for the first year of

operation was $200,000 and, for later years, that

amount, and successively, plus an indexation factor

which is yielded by section 5 of the Act and is

designed to provide an appropriate inflation

accelerator.

Section 11 which commences, "Subject to this

Act", renders the -

charge imposed on ..... a shortfall -

that by the Guarantee Act -

payable by the employer.

Under section 76 of the Act, that is payable to the Commonwealth. Under section 37 of the Act the administration of the Act is given to the

Commissioner of Taxation, which is why in

paragraph 76(1) it -

may be sued for and recovered ..... by the

Commissioner or a Deputy Commissioner suing -

in their official names.

BRENNAN J: What is meant by "charge on a shortfall"?

MR WALKER:  "Charge on shortfall", Your Honour, is defined

by sections 13, 14 and 15, to which I was about to

come immediately - - -

BRENANN J: Thank you.

MR WALKER:  - - - merely noting as I pass to them that there

are provisions in sections llA, llB and 12 for some

kind of commercial approach to the question of

partnerships and related businesses.

Cemetery 7 1/4/92

Then in section 13 the definition of "charge"

is slid first into subsection (1). It is said not

to be payable "unless the employer has a training

guarantee shortfall", which must follow, in any

event, from section 5 of the Guarantee Act. Then

there are exemptions for particular employers which

are foreshadowed, and they are to come.

Section 14 defines the "training guarantee

shortfall" as an amount calculated by using the

formula -

minimum training requirement-net eligible

training expenditure.

Your Honours will find that defined and explained

in section 24(1) of the Act to which it would be

convenient to go just briefly. "Net eligible

training expenditure" is also calculated using a

formula, that is -

total eligible training - total eligible

expenditure	training subsidies
and reimbursements

a formula designed to ensure that net eligible

training expenditure is net of offsets from other

sources.

TOOHEY J:  Mr Walker, in what sense is there a charge as

opposed to an obligation to pay, an obligation that

apparently can be sued for and recovered under that

later section of the Act?

MR WALKER:	Your Honour, there is an obligation to pay imposed by section 11. It is a debt, section 76.
In that sense it is an obligation to pay,
notwithstanding the label charge.  I think
Your Honour is asking me about the language of section 5 of the Guarantee Act which imposes charge.
TOOHEY J: Yes, it is the notion of the charge apparently

not secured over any identifiable property.

MR WALKER:  Your Honour, it is our speculation perhaps, but

certainly our contention, that the word "charge" in
this legislation connotes fee or price rather than

security or hypothecation.

TOOHEY J: Yes, I see.

MR WALKER:	That certainly is consistent with our arguments, whereas the security notion is not only
inconsistent with everything else in the legislation, and would appear not to be supported
by any of the ordinary characteristics of the
Cemetery	1/4/92

security, though it would not damage our argument

either.

To return to section 24(1), the formula is

then explained in the immediately following
subsections in words which appear to be ordinary

English, so that the:

net eligible training expenditure -

is designed to be, the difference between what you

have outlayed on training and that which you have

been rewarded for or reimbursed for by reason of

subsidies and reimbursements in relation to

eligible training programmes, an expression which,

unfortunately, will spin one off yet another

definition. But I might resist that temptation at

the moment, Your Honours, and return to section 15

because it continues the definition, finally, of

how Your Honour Mr Justice Brennan's question comes

to be answered, what is charge on shortfall:

The minimum training requirement of an

employer in a year is the amount calculated,

in relation to the employer and the year -

these are particular to particular employers, using

the formula -

minimum training rate -

which is 1 per cent to start with and has risen to

1.5 per cent multiplied by the -

annual national payroll -

that is not of the nation but of that employer, so

that the minimum training requirement becomes, for

"someone who manages to reach the threshold amount

in section 8, $200,000. So that $2,000 was the

minimum training requirement for such an employer

in the first year of operation. In order to work

out, first, whether there was any shortfall and,

second, how much it was, one would subtract from

that his or her or its net eligible training

expenditure, calculated in accordance with

section 24(1), and if it had turned out that only

$1800 had been spent during that year on eligible

training programmes, then a charge is imposed equal

to the shortfall, namely, $200.

I hope that explains to Your Honour

Mr Justice Brennan how the system is intended to

work. Charge is calculated inexorably always to be

for the particular employer the difference between
the prescribed minimum and what the employer has

actually done out of, ultimately, his own pocket.

Cemetery 9 1/4/92

BRENNAN J: It explains very loosely, thank you, the

statutory provisions but I must confess that I am

still puzzled by the question which Justice Toohey

directed to you, and that is, what is imposed by

the Guarantee Act? The notion of a charge being

imposed on something seems to suggest that there is

something on which it is susceptible of being
charged, and yet when one looks at the definitions

to which you have taken us, there is not only nothing there; it is, if anything, a negative quantity.

MR WALKER:  Yes, quite, Your Honour. It will ever become

negative - Your Honour will note that - - -

BRENNAN J: No, it is not a negative quantity. There is a

difference between the two.

MR WALKER:  - - - the mathematical safety has been observed

by the parentheses being an amount not below zero

at the relevant points.

BRENNAN J: But is a shortfall, and in that sense it is a

negative quantity. It is a shortfall on a negative

quantity.

MR WALKER:  Yes. It is, to extend or use the words of the

objects, it appears to be an amount equivalent to

what Parliament appears to be saying - and I am

using very loose terms now - should have

been - that is, as a minimum - invested by the

employer in employment related training, and that

which the employer has invested - to use the word

of section 3.

DAWSON J: Then, it is a charge on the employer. It is not

a charge on the shortfall, notwithstanding the

wording of section 3.

MR WALKER:  There is no sensible way in which this, in any

recognizable legal form, is a charge on a shortfall

except in the colloquial fashion in which one could	suggest, for example, in ordinary speech that there
is a charge on entry to a circus.

DAWSON J: It is a charge imposed - - -

MR WALKER:	On the person who wishes to enter.
DAWSON J:	- - - in relation to a training guarantee

shortfall.

MR WALKER:  Yes, it is only in that form of language that

charge on shortfall is sensible, in my submission,

in this legislation. It is most certainly not an

imposition of an obligation to pay money on what

is, as Your Honour Mr Justice Brennan points out,

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by definition, an absence of money, a negative

quantity of money.

Could I then take Your Honours to section 18A,

which is inserted by an amendment. It is not of

critical importance to our major arguments. It

becomes perhaps somewhat informative to the tax

argument. It commences in subsection (1) with an

exemption for employers:

if, under the regulations, the employer is

taken to be an eligible outstanding trainer
for that year or for a 3-year period that

includes that year.

So far, as it were, so good. It refers to

regulations which might define what is an eligible

outstanding trainer, but then in subsection (2),

provides the regulation making power in these terms

in paragraph (a):

empowering the Minister or a person specified

in the regulations to make decisions about

eligible outstanding trainer status -

not to make decisions about whether an employer
meets criteria which describe or define eligible

outstanding trainers, but simply to make decisions

about eligible outstanding trainer status, we

submit, that is the status of each individual who,

as the succeeding paragraphs make clear, queue up

with their applications to be or not to be granted

that status.

That, in our submission, would be a curious

approach to a tax. On the other hand, it may well

be.a very sensible approach, were this a State

government rather than the Commonwealth Parliament,

to ascertaining the equitable nature of a

contribution to be made with respect to annual

investment in training.

It is clearly, one would imagine as a matter of policy, designed to comprehend the case of

somebody who has spent massively over a minimum and

has an outstandingly well-trained workforce and has

contributed to appropriate institutions to supply

future workers, for example, who has completed a

programme and say, for the next two years, would

wish not to make any further investment, there

being no useful way in which that can be done

except perhaps by donations to universities and the

like. Clearly enough, such a policy would be

advancing the express objects of this Act if

decisions about such a status could be made in

order to ensure something called an equitable share

of the effort.

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One then moves, Your Honours, back to where we

had jumped ahead already, namely to the critical

and central definitions of how money may or should

be spent in Part 3. I have already referred

Your Honours to section 24 for "net eligible

training expenditure", part of the calculation of

the shortfall.

Then, in section 25, eligible training

expenditure begins its definition as, in

subsection (1):

expenditure incurred by the employer that is

directly attributable solely or principally to

eligible training programs.

In subsection (2), but without derogating from that

generality, included in those expenditures are

matters -

directly attributable solely or principally

to:

(a) determining the need for -

such programmes -

and

(b) preparing and reviewing ..... plans in

relation to -

them.

(c) developing, providing -

that must be one of the most expensive ones, of

course -

evaluating and administering ..... programs;

and

(d) developing and administering accounting

and information systems in relation

to ..... programs.

Then, in subsection (3), it is made clear that

others can be employed, perhaps a new industry
created, for the purpose of carrying this out. In
subsection (4), it very definitely does not include

payment with-respect to payroll tax.

Subsection (5) is another exception which will not

be material for present purposes.

Section 26 is designed to provide examples of

eligible training expenditure but Your Honours will

observe, in subsection (3) that:

Cemetery 12 1/11/92

The examples are not exhaustive.

And in subsection (4) that:

If an example is inconsistent with

section 25 -

the major defining section -

the example prevails.

In section 26(l)(a):

salary or wages ..... directly attributable to a

period during which the employee was solely or
principally engaged in participating in.an

eligible training program -

so send them to seminars and their wages or salary

during that period is eligible -

(i) meals and accommodation; or

(ii) child care -

while they are away at a programme or on a

programme. In (c), expenditure for travel to such

a program. (d), an important one -

(i) payment or reimbursement of:

(A) fees;

or contributions under the HEC scheme, as it is

called, the Higher Education Funding Act.	And in
(e), again, wages while and employee is -

solely or principally engage in an activity -

of the kind set out in section 25(2); and again,

ancillary costs in the nature of -

(i) travel, meals or accommodation; or

(ii) child care.

Then (g), an important one:

expenditure incurred by the employer in
relation to consumables whose consumption is

directly attributable solely or principally to

an activity -

back in section 25(2). Then (h):

capital expenditure -

Cemetery 13 1/11/92

it includes as well, picking up the notion of

investment in section 3 -

is directly attributable to the acquisition,

construction ..... of a building or depreciable

property intended solely or principally for

use ..... for the purpose of engaging in -

such activities. So the training hall or training

auditorium would be covered. Paragraph (j), the

rent paid for such a place; and (k) -

hiring or leasing of equipment.

Subsection (2) is an accounting provision with

respect to income tax in relation to the capital

expenditure in paragraph (h). Then there is an

important matter in 27 defining these things upon

which people can be sent, and upon which money can

be spent in order to be eligible, namely:

an eligible training program.

It has to be, section 27(l)(a), ttstructuredtt; (b) it has to have as its:

sole or principal object -

the development, maintenance or improvement of -

employment related skills of employees or

other persons -

an important extension, that is, eligible training

programmes need not be confined to one's own

employees for reasons which are tolerably obvious,

as a matter of policy, with respect to employers,

particularly, those larger ones with payrolls over $200,000 in 1990, with respect to the workforce or

the pool of possible workforce in general, (c) it

must not be play, significantly.	I do not know
that that means it is not allowed to be enjoyable.

In (d) it is:

a significant object of the program is not a

matter that is not directed towards the -

principal object, namely -

development, maintenance -

et cetera. Then in subsection (2), there is a

detailed definition of what it means to be

ttstructuredtt and that involves design or approval -

by a person who is appropriately qualified or

experienced -

Cemetery 14 1/4/92

and a degree of deliberateness and forethought. In

subsection (3) a programme need not be -

provided personally by the employer -

and it may consist of, but it need not consist of -

on-the-job training -

which picks up, of course, the closely supervised

practice which is part of the definition of

"trairiing". In subsection (4), if it -

includes on-the-job training -

it must include certain matters which would no

doubt remove simply looking over somebody's

shoulder as they did their ordinary work from

eligibility, namely -

periods of instruction ..... related periods of

closely supervised practice; but

(c) cannot include any generally supervised

practice or work experience.

I think I can pass over the other subsections of

that section. It is not relevant at the moment.

Section 30 introduces the way in which flesh

can be put on these bones in the future, that is

after the Acts were enacted by the making of

disallowable guidelines, and in subsection (4), as

part of the general erection of a structure of

specialized expertise in training, which as

Your Honours have seen, will include, for example,

a requirement of design or approval by an expert

for a programme, there is also at the higher level,

the more institutionalized level, in section 30(4)

a requirement for the Minister in making

guidelines: 

to take into consideration any relevant

recommendation ..... by the -

so-called -

training advisory body.

Your Honours, that minister is defined in section 4 as meaning -

the Minister administering the Employment,

Education and Training Act 1988.

Your Honours, could I then move to provisions which

are at the heart of, I think, all our arguments in

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Part 4 headed, Training Guarantee Fund. Section 32 establishes the fund and in subsection (2) renders

it -

a trust account for the purposes of

section 62A of the Audit Act 1901 -

with familiar consequences.

DEANE J: Well, they may be to you. They are certainly not

to me.

MR WALKER:  Your Honour, may I defer reminding Your Honour

of provisions which you have no doubt forgotten

more often than I have learned them. They are

important with respect to the relation with

consolidated revenue fund and thg like.	May I
defer that until after this part.

In section 33 there are in plain words a command directed, given the rest of the Act, to the

Commissioner of Taxation, that there be paid into

the fund:

amounts paid to the Commonwealth under this

Act -

which would include charge, with a specific

exception for -

(a) amounts paid in satisfaction or partial

satisfaction of penalties imposed by courts.

There are very familiar penalties imposed in this

Administration Act. Those penalties, of course, excepted from the command to go to the trust account, naturally and normally without any

specific requirement go in accordance with

section 81 of the Constitution to the consolidated

revenue fund.

Then in paragraph (b) a form of words lifted

from section 62A of the Audit Act -

(b) amounts paid to the Commonwealth for the

purposes of the Fund.

Again, in paragraph (c) words lifted from

section 62A of the Audit Act, but important for our

present purposes, a specific category for -

(c) money appropriated by law for the purposes

of the Fund.

And then finally interest, a matter which under

section 62A of the Audit Act requires to be dealt

with one way or the other, or is appropriately

Cemetery 16 1/4/92

dealt with expressly in such a provision in

relation to a trust account.

So it is made clear how the fund is to be

filled. Section 34, as is necessary for these

trust accounts, then specifies the purposes for

which it may be applied without which specification

the money could not be spent. The first one is an

important one. It reimburses a word which normally

and naturally means that it makes good an

expenditure somebody has earlier made from another

source, obviously in this case, consolidated

revenue fund. It reimburses the Commonwealth for

the cost of administering this Act, the Act that

sets up the scheme, and the -

costs incurred ..... in collecting, compiling,
analysing and publishing information about the

operation of this Act -

a process we have summarized as being monitoring

operation of the Act.

Then of great importance, and it would appear

in a financial sense of the major importance in a

scheme, section 34(l)(b) permits money in the fund

to be applied for the purpose of -

making payments under training guarantee

agreements -

an expression which unfortunately requires further

definition. Those are payments under agreements

which permit money clearly authorized under

section 96 of the Constitution to go to States.

Other purposes include the refunding in 34(l)(c). Subsection (2) gives to the Minister for

Finance the role of determining the amount of

reimbursement of the costs of administering and

monitoring operation of the Act. Subsection (3) is

to be any concrete case available or yet available	not part of our challenge. There would appear not
with respect to subsection (3) but, perhaps provocatively, subsection (3) is posited on there
being no agreement in relation to a State or
Territory and the minister using:

for furthering the objects of this Act, any

amount that would, in the Minister's opinion,

have been payable ..... if such an agreement

were in force.

That may raise issues which clearly are not

presented in this case and are clearly not in any

way other than hypothetical in this case. Then

under subsection (4) there is provision made for

-Cemetery 17 1/4/92

money coming back from a delinquent State or

Territory recipient. Section 35 is of great

importance to the scheme as a whole:

The Minister may make agreements with a State

or Territory about making payments out of the

Fund to the State or Territory and the

expenditure of those payments, or amounts

attributable to those payments, in relation to

eligible training programs -

the structured system of training approved or

designed by experts, to which I had taken

Your Honours earlier. Then in subsection (2) there

are relatively detailed minimum criteria or

compulsory criteria for measuring compliance of such an agreement with section 35 by denying it

effect unless it includes these matters. It
includes, interestingly, in 35(2)(a) - it must

include a clause to the effect that the State or

Territory:

supports the Training Guarantee Scheme -

which one may speculate may be designed to give

some substance, some form of estoppel argument, of
the kind considered and treated of no account in

the Pharmaceutical Benefits case with respect to a

State who takes money and then challenges the

scheme. The agreement must have the State or

Territory agreeing:

to distribute payments made to it under the

agreement ..... on the advice of a specified

tripartite body ..... State or Territory -

on the one hand; employers second, and then trade

unions, and:

to ensure that the payments ..... are expended

only in relation to eligible training

programs -

So that with the exception of the costs of administering the Act and monitoring its operation and refunds, which are of no present moment, 34(l)(b) plus 35(2)(b)(ii) ensures the charge goes

straight to the fund and out pursuant to an

agreement on to eligible training programmes, the

very forms of activity which, if an employer had

invested in it himself directly to an amount equal

to or greater than the minimum rate, would have

meant no charge payable by that particular

employer.

To put it colloquially, at this point we

submit to the Court that this scheme shows that the

Cemetery 18 1/4/92

design and overt, that is ex facie, effect of these

Acts is to provide a facility for employers who,

for some reason, choose not to spend this money directly themselves without the intervention of these agencies; provides a facility for them to

supply the money for eligible training programmes which, ex hypothesi, that is on the hypothesis of the Act in its objects provisions in particular,

will be of some benefit to employers generally,

including such a contributor.

BRENNAN J: Is it necessary that you add, "including that

person"?

MR WALKER: It is not necessary for my argument - - -

BRENNAN J: Not necessary, no.

MR WALKER:  - - - but I suppose I should have stopped with the word "general". The general body of employers,

by definition, includes contributors and

non-contributors, and the hypothesis of the Act

which, we would submit, is not a justiciable

matter, that is how Parliament thinks desirable

aims might be achieved, the hypothesis of the Act

is that the greater the general level of training,

the better industry is off and this Act says - and

I do not intend to be derogatory of those who designed it - the more money is spent on training,

the better the training will be.

BRENNAN J: But it is not essential to your argument to say

that he who contributes to the fund pursuant to the

Act necessarily acquires any benefit out of it.

MR WALKER:  Your Honour, in a narrow sense, no, that is not

essential to my argument at all, that is, in the

·narrow sense of benefit being able to name, as it

were, the worker whose dexterity has been improved

by a programme, no, that is not necessary to my

argument, that the contributing employer can say,

"Tom is a better lathe operator as a result of the

course he's undertaken, paid for by the fund under

an agreement with the State". That is not

necessary to my argument.

BRENNAN J: What I am thinking of is, you have got say, for

example, a computing company all of whose employees

have PHDs and the fund is going to be expended on

the training of lathe operators.

MR WALKER:	Yes.
BRENNAN J:	Or it may be that that employer would say, "I

would get nothing out of this fund". Does it

matter to the constitutional validity that that

result may occur?

Cemetery	19	1/4/92
MR WALKER:	We say not, Your Honour.	We say that the

purpose of the scheme as a whole is to raise the

efficiency of industry as a whole - and they have

latched on to one particular aspect of industry,

namely, the training of present and potential

future employees; not only one's own employees but

others' employees. Not only is there poaching, of

course, between different employers, there is also

what might be called a common interest in the

efficiency of all parts of an economy.

BRENNAN J:  I was merely looking forward to your fee for service argument.

MR WALKER:  Yes. I appreciate that, Your Honour. This is,

of course, not a fee for service in the traditional

sense. It is a contribution to a pool for common

benefit but not in the ordinary way in which all

taxes, for example, or all moneys generally paid to

government might be thought politically to be a

contribution for pool for mutual benefit.

McHUGH J:  You have got no claim that this is an acquisition

of property otherwise than on just terms.

MR WALKER:  Your Honour, what we have pleaded is that if it

is not tax, it is nothing.

McHUGH J:  The money is property, they take your money.

MR WALKER:  Yes. Your Honour, ~n reflection one corollary

of it not being a tax is that it takes property.

It is an acquisition on otherwise than just terms.

On the other hand, as we understand it, apart from

what we would call the marginal areas of operation,

such as departments and the like which are not of

concern to this challenge, it is not said that

there is any head of power other than Sl(ii) that

would justify the imposition of charge on my

client. In that sense - and if we are right in

that understanding - the challenge we have raised,

as we have framed it, is sufficient for our

purposes.

BRENNAN J:	We do not need to consider Sl(i)?
MR WALKER:	Your Honours will have noticed what words I did not read from section 3(1) of the Act and they
were:

thereby increasing the international

competitiveness of Australian industry.

My client, which, as pleaded, carries on a business

which is entirely suggested by its name, namely

that of the Northern Suburbs Cemetery, not

unnaturally claims that it is not in any

Cemetery 20 1/4/92

international competition and, as a part of

Australian industry, it is not going to be served and simply is not an apt object of that kind of

legislative exercise. We understand, in plain

terms, that Sl(i) is not in question in this case.

It would raise, perhaps, and only

hypothetically, questions of distributive operation

and consequent severability which I do not think,

because Sl(i) is not being raised, need trouble the

Court. We would certainly, of course, contest the

notion that were a law vaguely resembling these

Acts or even closely resembling these Acts, were it

to be framed overtly and founded on appropriate

constitutional indicia to be justified under Sl(i),

we would certainly contest that it could apply to
us, that we could be swept up in some

internationalizing tendency for the whole

workforce.

Your Honours, just returning to the matter

that Justice Brennan has raised, an analogy which

breaks down fairly quickly but gives some

indication of the distinctions we seek to benefit

from is with the payment of insurance premiums

where there is, as it were, a contribution of money

to a pool. And if one is lucky, some people would

say, you get nothing out of that pool which is, of

course, in a direct fiscal sense clearly correct.

You pay your premium and no indemnity is ever paid

because you never suffer one of the relevant

accidents.

But everyone would say, one imagines now, that

a benefit is gained by contributing to a pool for

potential benefit to everyone who contributes.

And, we submit, there is an added dimension in the

case of contributions by way of charge to the

conduct of eligible training programmes. And that

is that it is not mere political rhetoric to say,

as Parliament has clearly said in section 3, with	great respect to them, that industry as a whole
provides a context in which individual enterprises within industry as a whole derives benefit from the health of the whole economy, including the
industrial sector.
So that, to return to the notion of user pays, because all employers benefit in greater or lesser
degree but all benefit from the existence of people
apt to be employed, that is with sufficient aptitude or skill, to carry out what is required of
them in their employment, then all employers - and,
in this case a threshold is imposed for financial contributions - should bear some of the effort - to use the word of section 3 - of ensuring that the

Cemetery 21 1/4/92

workforce as a whole remains skilled or becomes

more skilled and efficient.

Those are the ideas which, in our submission,

are in themselves non-justiciable, they are what

Parliament has said is the public purpose and how

Parliament says that may be served and they provide

the indications that something is being got. It

may turn out to be very concrete in the form of a

particular named better worker from a particular

programme or it may be simply participation in an

economy which itself is benefitting from more

efficient industry by reason of a more greatly

skilled workforce.

But the provisions which I have just left,

namely 32, 33, 34 and 35, show very clearly that

the money trail is directly from the charge into
the fund and out via the agreements with only a

little bit bled off for reimbursing costs on the

way. So that there is a closed circuit between

employers and the agencies, to use a neutral

expression, which provide these benefits, namely

the eligible training programmes.

The money is, to use an expression, earmarked

in a way which quite clearly opposes any notion

that it goes into the general pool of consolidated
revenue fund where it becomes unidentifiable as
such, then some equivalent or perhaps lesser

amount, because of the costs question, being

appropriated under an appropriate statute required

by section 83 of the Constitution. That pattern,

which is a familiar pattern in other statutes, is

not followed, and clearly desiredly so, in this

legislation.

. Your Honours, I think I can move past then the provisions which commence in Part 6, except to note

some very few of them. Part 6 as a whole contains

provisions which by and large are of a familiar

Assessment Act style - that is, in a pair which is

not the pair before this Court, in a pair of Tax
Act and Assessment Act, there are provisions in the

Assessment Act which bear close similarity on

scrutiny, and Part 7, with what occurs in this Act.

In section 40(1), Your Honours will see an

obligation is imposed to lodge a so-called training

guarantee statement that depends upon liability to

pay charge. So if there is a shortfall, you have

got to put in a statement. There are provisions
contained in section 101, for example, which also

impose obligations with respect to records and the

like in effect to permit auditing of compliance.

Cemetery 22 1/4/92

So a particular kind of document must be

created by people with a shortfall, and then there

is a general and new obligation to:

keep records that record and explain all

transactions -

et cetera - subsection 101(1). Could I draw

Your Honours' attention while on that page to the

nature of section 100. There are of course in, for

example, Tax Acts such as Land Tax Acts, provisions

for sharing the burden of the tax for which each

owner is severally liable in accordance with

proportions of ownership. They are a long familiar

form of provision.

Section 100 is, it would appear, very much of

a different kind. It gives a court power to

adjudicate on that which is just and equitable with

respect to joint and several liability and

contribution between such people. In our

submission - and this may be not much more than a

straw in the wind - that would appear to be more

likely as a badge of a civil liability in the

nature of a price paid for some benefit than it

would be of a tax.

After all, the kind of compulsory exaction

constituted by a tax is by definition the result of

legislation whose direct legal operation is to

impose on a person a liability, and that is

Parliament's command with respect to that tax and

that person. It is somewhat difficult to

understand how contribution according to just and

equitable judicial adjudication can then come in over the top of and qualify what Parliament in a Tax Act would declare to be the liability of the

particular person.

So, in our submission, as part of the overall

legislation, section 100 again pushes - or perhaps

and into that other field which, in our submission,	it only nudges - the charge out of the field of tax
is not completely or exhaustively described by the expression "fee for service".

Your Honours, it is not in the reprint and so

it may not be in the copies before Your Honours,

but section 103 of the Act amended specified other

statutes and relevantly it amended section 51(7) of

the Income Tax Assessment Act as follows:

A deduction is not allowable under

subsection (1) in respect of charge imposed by

the Guarantee Act.

Cemetery 23 1/4/92

Your Honours, that pattern of legislation is,

as we submit, scarcely one calculated or designed

to raise revenue. Your Honour Mr Justice Brennan

may be having difficulty finding section 103. It
has been deleted for Government Printer reasons

which I cannot explain from the consolidation

statute, no doubt because all it accomplished was

the amendment of a number of Acts set out in a

schedule.

BRENNAN J:	I see.
MR WALKER:	Your Honours, I will have a copy made of

section 103 and the relevant matters. My learned

friend the Solicitor for New South Wales explained

why the Government Printer has done what he has
done; because Parliament has repealed those spent

amending provisions. But 51(7) of the Income Tax

Assessment Act amended by Act number 60 of 1990

rendered it non-deductible, perhaps just the final

touch which shows clearly that this is not a scheme

designed to yield revenue.

What it presents as a choice to employers is

to spend money usually and without any doubt

deductibly on training or closely supervising the

practice of their employees, or to spend an

equivalent sum, calculated by the shortfall method

of which I have spoken, to send that off to the

Government to provide a pool of expertise and

possibilities which may become available to that

employer, but non-deductibly.

In my submission, in the ,:.,.::dinary case without

special circumstances, particularly at the sums

involved in this case with a one per cent and then

1.S·per cent, one might expect that the government

was not hoping that any fund, let alone

consolidated revenue fund, would be swelled to any

real extent at all. No doubt that is why there was

express provision, though it may not have been

necessary, in section 33 for the fund to include

funds appropriated by law into it out of

consolidated revenue fund.

Your Honours, could I move directly then to

the issue raised with respect to section 81. As we

have set out in paragraph 1 of our outline, the

plain words of the Administration Act would purport

to require breach of section 81 a constitutional

impossibility. As I have submitted to

Your Honours, the way in which sections 33 and 34

operate as to the different sources of money into the fund and as to the way money comes out of the

fund, in particular to reimburse costs which must

have come under another appropriation out of

consolidated revenue fund for administering the Act

Cemetery 24 1/4/92

and monitoring its operation, shows that by no

distortion of the plain words of section 33 can

there be implied into it without disturbing it the

obvious and overriding requirement to comply with

section 81.

Section 8l's operation, which is undoubted,

must descend on this Act so as to disturb and

displace provisions of it, particularly including

33(l)(a). If it does so, in our submission, it

disturbs the keystone of the scheme which is, as to

an important part of it, namely, the section 96

operation, to be funded out of this fund, and it is

certainly to disturb a central part of the evidence

scheme of the legislation, the charge go directly

devoted to eligible training programmes, for which

the employer might privately have invested in the

first place, subject only to the subtraction of

certified reimbursed costs.

It follows, in our submission, that the

entirety of the legislation which sets up that

scheme must go, and it follows that those matters
which define the way in which eligible training

programmes are set up and how money can be spent on

them, must also go. One cannot insert section 81,

after all, and put funds into the training

guarantee fund, because if one did that the money

would remain in consolidated revenue fund and would

require to be lifted out by an appropriation under

section 83, There is, of course, no such

appropriation, in this case, of money received on

account of charge.

MASON CJ:  Mr Walker, I noticed in the second reading speech

there was a reference to the requirement for a

standing appropriation?

MR WALKER:  Yes.

MASON CJ:  Now, what did that reference relate to?

MR WALKER: Nothing in the legislation, Your Honour, and

with some trepidation we submit that it must be an

error. It does refer to a very familiar device,

two examples of which we will show Your Honours,

where a standing appropriation is quite precisely

made into trust funds of a similar or tolerably

similar kind. There is no standing appropriation

in this case.	I will stand corrected if we are
wrong.	We can only do to the best of our
researches.	We have not found any such standing
appropriation.

MASON CJ: There would be an appropriation to cover the

initial period where no money is received from

employers. If the government wished to finance the

Cemetery 1/4/92

scheme, during that period of time, you would

require an appropriation from consolidated revenue

fund.

MR WALKER:  Not for the costs of administering the Act, in

so far as they are merely departmental costs of

probably the Australian Taxation Office and the

Department of Education, et cetera. They, as the words of section 34 would point out, are falling
within the ordinary annual services and have,
presumably, been spent pursuant to an ordinary

appropriation, thus, we imagine, the use of the

word "reimburse". So if the start-up period would

include only such costs, and we submit that must be

so or is likely to be so, there would not have been

some special appropriation which, in the first

year, would have fallen outside the ordinary into

the class of special appropriation.

MASON CJ: But, at any rate, as far as you are concerned

there appears to be no general appropriation from

consolidated revenue fund covering the amounts

raised and their expenditure?

MR WALKER: Covering the amounts raised by charge.

MASON CJ: Yes.

MR WALKER:  That is correct, Your Honour. The provisions of

section 33 and 34, particularly 33, identify the

amount of charge, for example. Those are words

which presuppose, correctly for the scheme being

set up, the relevant identity of the money as it

arrives and is banked immediately into the trust

account called the training guarantee fund. They

would be most inapt words, and words we have not

found of a kind used by Parliament for this purpose

anywhere else, if in fact section 81 was operating

so as to send this money into consolidated revenue

fund. We have given two references, the first in

the First Uniform Tax case, Chief Justice Latham,

the familiar statement at 414, just after half-way:

Thus no provision imposing taxation can be included in an appropriation Act and no

appropriation of money can be -

DAWSON J: What is the citation, Mr Walker?

MR WALKER:  I am sorry, it is 65 CLR 414. It is the matters

in paragraph 3 of our outline. The paragraph just

after half-way, His Honour was con~idering an

argument which bears no real relation to this one:

Thus no provision imposing taxation can

be included in an appropriation Act and no

appropriation of money can be made by any Act

Cemetery 26 1/4/92

imposing taxation. All taxation moneys must

pass into the Consolidated Revenue Fund

(sec 81), where their identity is lost, and

whence they can be taken only by an

appropriation Act. An appropriation Act could

provide that a sum measured by the receipts

under a particular tax Act should be applied

to a particular purpose, but this would mean

only that the sum so fixed would be taken out

of the general consolidated revenue.

That is the reason why in that case there could be

none of the earmarking which was part of an

argument which was rejected.

To similar effect, in the Swift Australian

Company case, 108 CLR 189 at pages 200 to 201,

Chief Justice Dixon at the foot of page 200, and

His Honour is considering the familiar problem of

fee for service or tax, about an inch from the

bottom:

But when the regulation is examined it appears

that the fees are not payable in respect of

any particular service but generally for the

purpose of defraying expenses. Further, and

this perhaps is fatal to the argument, the

expenses are not merely those of inspecting

meat but those of carrying the Act considered

as a whole -

of course, the Act in this case went far beyond the

meat inspection matters before the Court -

into effect, that is to say, for

administration expenses generally. The fees

collected are payable into Consolidated

Revenue and there they are of course subject

to appropriation by parliament. They are not

directed by law into any particular fund the

expenditure of which is limited even to the

administration of the Act.

His Honour appears to be contemplating the kind of possibility which, in our submission, appears in

this present legislation, where by law moneys - we

do not call them fees - charge, is directed into -

a particular fund the expenditure of which is

limited -

in a particular way. In our submission, the kind

of contrast being used in His Honour's reasoning is

one which is instructive for the present case and

in our favour.

Cemetery 27 1/4/92

Examples of the way in which it could have

been done, and we will submit in our second

argument most definitely would have been done had

it been supposed - - -

DEANE J:  Mr Walker, would not the type of receipt that you

say His Honour had in mind be within section 81

anyway?

MR WALKER:  Your Honour, it is very difficult to see why it

would not be moneys received by the Commonwealth.

DEANE J:  Which means what His Honour says there does not

help you, but perhaps suggests that provisions such

as sections 33 and 34 can themselves be regarded as

effecting a standing appropriation.

MR WALKER:  No, those words do not go so far as to suggest

that 33 and 34 could effect a standing

appropriation.

DEANE J: Well, I have put it badly. If what His Honour

said was seen by him as embracing section 81 it

could only be on the basis that a scheme such as

that set up by sections 33 and 34 involves, as it

were, a standing and notional appropriation, or

receipt and appropriation.

MR WALKER: There are two answers, with respect,

Your Honour. The first is that - - -

DEANE J:	I am not suggesting it is right.
MR WALKER:	But in answer to such a suggestion, Your Honour,

there are these matters: first, it needs to be

established that the receipt would be by the

Commonwealth. One, I think, may assume that in

that case. Second, the effect of section 81 itself

was very plainly not before His Honour.	It was a
section 90 "tax or not" issue that he was

addressing, and at the time His Honour was writing

there were familiar ways in which such standing

appropriations were made, that is, one cannot from

those words assume that when His Honour drew a

distinction for the purpose of "tax or not", he was

assuming that something which was not a tax in such

a contrast would be levied pursuant to a wholly

valid scheme. His Honour did not construct a fully

articulated example, and those words cannot be

taken as some implied endorsement of any scheme

which might answer in that summary way that

description. Section 81 and its effect was not
before His Honour.

However, with great respect, Your Honour, we do accept that at the heart of the exercise

involved in our first argument is the necessity of

Cemetery 28 1/4/92

determining what it is that Parliament has

purported to do in sections 32, 33 and 34, and it

is our submission that the only sure guide are the

words they have used and that those words are

antithetical to any process by which moneys go into

a fund in which their identity is lost and then

come out because the "and then come out" is

essential to give meaning to section 33 on that

implied or presumed section 81, section 83

argument.

DEANE J: Yes, I follow that, but why I am interrupting you

is, could I ask you this: is there anything

clearer and more authoritative than

Justice Latham's statement to the effect that the

consolidated revenue fund cannot, as it were, be a

house of many rooms?

MR WALKER:	Your Honour, if I have some short time - I think the answer is, yes. If it is not clearer, it is to
similar effect with a similar lack of expression of
any doubt.

DEANE J: At a convenient time, if you could just give me

the references, I would be grateful.

MR WALKER:  Yes, Your Honour. Your Honours, just developing

that matter about 33, one by may test the implied or presumed operation of 81 and 83 into this Act,

by inquiring why on earth would one destine this

money to the consolidated revenue fund out of which

there would already be an appropriation of some

kind or another for the payment of departmental

expenses and the like, and then send an equivalent

sum, not net, but an equivalent sum of all the

charges back, but not the penalties, which stay in

CRF, and then out of the fund have reimbursement

made after certification by the Minister for

'Finance of sums already paid out of CRF, that is a

circuitousness which, in our submission, indicates

that that was no part of the intention of

Parliament in drawing section 33, and would comfort

the Court, in my submission, in giving to the

opening words of section 33, and to the expression, "the amount of charge that is an identifiable sum",

as such. Their ordinary meanings, namely, a

requirement that without further ado and with no
other step intervening the money be paid in a

particular way.

That also emerges from the fact that the words

in parenthesis in 33(a), excepting from that

destination "penalties imposed by courts" naturally

and ordinarily assumes that that will be going

directly to the consolidated revenue fund. That

would be a most odd expression if this Act would be

read as in the first place directing that

Cemetery 29 1/4/92

everything went to the CRF because that it is the

direction for where the money is to be paid; not

what is to be paid out of CRF but what is to be

paid into the fund. And so, in our submission, the

wording of 33 is intractable and cannot bear the

interposition of 81 without being destroyed. Once

it is destroyed, for the reasons I have already

put, the whole collapses.

Your Honours, could I hand up copies of the

Higher Education Funding Act 1988, only for the

purpose of illustrating how that which the minister described as a standing appropriation of the second

reading speech might be expected to have been done

in the ordinary way.

At page 35 of the reprint, Part 4.3 commences,

headed, Higher Education Trust Fund, and it

commences in materially similar form.

MASON CJ:	What page is this?
DAWSON J:	On page 35?
MR WALKER:	I hope it is page 35, unless once again I have a

different print, for which I apologize.

MASON CJ: It does not seem to be.

MR WALKER:  I am sorry, Your Honours, section 59.

MASON CJ: Yes, that is it.

MR WALKER:  I do apologize. Section 59 establishes a fund

in an exactly similar way. Section 60 uses exactly

similar words of command in subsection (1),

including, in paragraph (a), which is the

equivalent of charge in our case, and then one

drops down to subsection (2), which has been used

for decades as a form for such legislation.

It is not to be thought, in our submission,

lightly, that the effect of, for example - or an

equivalent effect of section 60(2) of the Higher

Education Funding Act was achieved in the present

legislation by silence.

BRENNAN J: Is it not achieved by 33(c)?

MR WALKER:  (c) contemplates appropriations by law,

Your Honour.	Your Honour has asked me about
33(l)(c)?

BRENNAN J: 33(c) of the present Act.

MR WALKER: 33(c).

Cemetery 30 1/4/92

BRENNAN J:  Does that not have the same effect as

section 60(2) of the Higher Education Funding Act?

MR WALKER:  No, Your Honour. That refers to something which

is to be done elsewhere. It is in fact an

expression lifted from 62A of the Audit Act, to

which I will turn.

Paragraph (c) describes something which is not

done by paragraph (c) itself, not least because it
does not prescribe any quantum for that money and

an appropriation must prescribe quantum, albeit

not, of course, in a simple dollar figure.

Section 60(2) of the Higher Education Funding

Act, for example, in an ordinary and familiar way,

is a standing appropriation of an ascertainable

amount of money, namely the amounts paid as defined

in 60(l)(a) and (b).

DEANE J: But, on your argument, section 60(1) would be

invalid anyway, would it not?

MR WALKER: Section 60?

DEANE J: Section 60(1)(a) of the Higher Education Funding

Act.

MR WALKER:  No, because it must be read, of course, with

section 60(2).

There shall be paid into the Fund -

in 60(1)(a), means out of CRF, because that is what

subsection (2) says.

BRENNAN J: .Subsection (2) only refers to (b) and (c), it

does not refer to (a). (a) comes from the students

who pay the HEC, does it not?

MR WALKER:  I am sorry, Your Honours, I have misled you or

myself. It is (b), I am sorry, which I am chiefly

concerned with, because that is the equivalent to charge in this case. (a), the word "otherwise" I entirely overlooked with a yellow tab on it, I

fear.

money paid to the Commonwealth under this

Chapter otherwise than -

et cetera. (b) is the equivalent to charge. It is

(b) which I am concerned with as the analogy and I

apologize for wasting your time.

In answer to Your Honour Justice Deane's

question, I am not sure I would contend 60(l)(a) is

invalid. I certainly would not contend 60(l)(b) is

Cemetery 31 1/4/92

invalid. I contend that 60(l)(b) is validated or,

I should say, rendered wholly effective and

constitutional by reason of subsection (2).

BRENNAN J: Who pays HECS and to whom? Is HECS paid into

the fund or into consolidated revenue?

MR WALKER:  It is paid into consolidated revenue and then appropriated out of - - -

BRENNAN J: Out of, yes.

MR WALKER:  Yes, into the fund. Your Honours, could I show

you an older example demonstrating that this is not

a recent approach to how these funds can be funded

if it were in fact the case that Parliament

required, by reason of the operation of section 81,

payments to go first to the consolidated revenue

fund. This was one of the Acts in question in

Moran's case, and section 5 accomplished in much

less words and more plainly the same approach:

there shall be a Fund ..... into which shall be

paid, out of the Consolidated Revenue Fund,

which is hereby appropriated accordingly, all

moneys from time to time collected under the
Flour Tax (Wheat Industry Assistance)

Assessment Act 1938.

That was a trust fund within 62A. The manner in

which that operates and the constitutional reasons

why that must be so are referred to in Moran's case

at the pages which we have set out in paragraph 3

of our outline of submissions. I do not think I

need take Your Honours to those passages in

particular. In my submission, they show the

unexceptionable requirement that for money to go to

puch a fund, if it is money received by the

Commonwealth, there must be payment to CRF because

of section 81 and there then must be an

appropriation out of CRF of an appropriate sum by

reason of section 83.

MASON CJ: Would it be convenient now to refer to

section 62A of the Audit Act and satisfy

Justice Deane's desire for education?

MR WALKER: 

It would be, Your Honour.

MR WALKER: 

Your Honours, I will not try and use page

numbers. Section 62A commences by a ministerial
power to establish trust accounts but the relevant

provision is in subsection (3), that is:

All moneys standing to the credit of an

account which is a Trust Account established

under ..... any other Act as a Trust Account for

Cemetery 32 1/4/92

the purposes ..... shall be deemed to be moneys

standing to the credit of the Trust Fund.

The trust fund, of course, is, with the loan fund

and the consolidated revenue fund, one of the three

funds in the Commonwealth public accounts.

Subsection (5) permits certain moneys to be:

paid to the credit of the Trust Account to

which they relate -

and it starts with the familiar one -

All moneys appropriated by law -

that is not, of course, itself an appropriation.

It descripes the nature of money, a nature of

certain money created by some other legislation

under section 83, and in subsection (6) the

provision which the Auditor-General chiefly

polices, of course, in this regard that:

Moneys standing to the credit of a Trust

Account may be expended for the purposes of

the account.

In subsection 62B(3) is the provision

concerning interest to which I referred earlier,

namely it provides that:

Interest received from the investment of any moneys standing to the credit of the Trust

Fund shall be dealt with -

(a) in accordance with any Act making

provision with respect to that interest -

which is what has happened in this case; or

otherwise -

in accordance with that direction; or,

in any other case - by payment to the

Consolidated Revenue Fund.

So that subsection 62B(3) again underlines that

distinction between the destination of money, in

this case interest, and not directly of importance

to this case, to CRF on the one hand or some other place, but not assuming that it goes to that other
place via CRF. They are alternatives. Unless Your

Honour Mr Justice Deane wishes to go further, those

are the part of the Audit Act to which we would

presently draw attention.

Cemetery 33 1/4/92

Your Honours, could I then move to the second argument, which concerns Sl(ii) directly. We seek

to draw strength, as we have observed inter alia in

paragraph 7 of our outline, from the section 81

argument for the tax argument, only in this way.

As one of the subspecies of the validity of

presumption of legislation, the Court, in my

submission, would assume that what Parliament has

set out to do is not a plain breach of a

fundamental constitutional requirement. For tax

moneys to be directed not to the consolidated

revenue fund would be such a plain breach. That

ought to at least inspire doubt, in my submission,

begin the conclusion that these moneys are not tax

moneys.

I have already put to Your Honours the way in

which we submit that the charge is akin to a fee

for services. We do not say it is a fee for

services, but we do say, importantly, that fee for

services is not the only alternative for a

compulsory exaction to it being a tax. And, in my

submission, the Court would be slow before it

closed, as it were, the categories of contributions
compelled or induced, as in this case, by the

Parliament as matters such as a national economy

become more complex and sophisticated.

In my submission, it is an excessive

straitjacket to require that anything not a tax,

because it is being paid for something, must have

the direct connection between payer and recipient

of services which is clearly the case with respect

to traditional fees for services such as were in

question and thought to be justified in Air

Caledonie.

I have already drawn to Your Honours'

attention the way in which the scheme itself and

Parliament in its objects provisions has sought to give substance to this notion of a guarantee provision of training, or of a minimum expenditure

on it. The provisions which we have set out in

paragraph 4 of our outline are the provisions or

include provisions to which I have already taken

Your Honours.

In Air Caledonie itself we would seek to draw

support for our argument that the categories are

not closed in the passage at 165 CLR commencing at

466 and 467. At the top of 467, the criteria that

it not be:

by way of penalty and that it is not

arbitrary -

Cemetery 34 1/4/92

are referred to. And then three comments are made

about the general statement of
Chief Justice Latham, from Matthews v Chicory

Marketing Board, paraphrased at 466:

The first is that it should not be seen as

providing an exhaustive definition of a tax.

Thus, there is no reason in principle why a

tax should not take a form other than the

exaction of money or why the compulsory

exaction of money under statutory powers could

not be properly seen as taxation

notwithstanding that it was by a non-public
authority or for purposes which could not be

properly be described as public.

That is not a comment upon which we lean.

The second is that, in Logan Downs ..... Gibbs J made explicit what was implicit in the

reference by Latham CJ to "a payment for
services rendered", namely, that the services

be "rendered to" - or (we would add) at the

direction or request of - "the person

required" to make the payment. The third is

that the negative attribute - "not a payment

for services rendered" - should be seen as

intended to be but an example of various
special types of exaction which may not be

taxes even though the positive attributes

mentioned by Latham CJ are all present.

And then examples are given, which end up with the

anti-nominalist theory if you will, namely, that

the inquiry is not concluded by what Parliament has

called the imposition.

There are suggestions of the contrast which we

seek to draw between the charge and its fate in

this legislation and tax in a passage by

Chief Justice Latham in Moore v The Commonwealth,

82 CLR 561. In the middle of that page, His Honour

said: 

The object and the operation of the laws is to

make a compulsory exaction of money by law

from a subject. The moneys collected are paid

into consolidated revenue - Administration
Act, s. 25 - in accordance with the

requirements of the Commonwealth Constitution,

s. 81. The moneys can then be spent for any

purpose for which the Commonwealth may
lawfully appropriate money. These moneys are

not charges for services, they are not held in

trust, nor are they subject to any special

provisions regulating their control or

disposition.

Cemetery 35 1/4/92

Then he draws a contrast which does not matter for

the present case.

Those indications, which are clearly not

intended to be definitive or categorical in the

effect, are indications which, in our submission, favour the kind of distinction which we draw with

respect to the scheme required under 32, 33 and 34,

and the Guarantee Act, and a tax.

In Air Caledonie itself, 165 CLR 468, in

Your Honour's check-list, if I might call it that,

of the prima facie attributes of the fee to stamp

it as:

an exaction of money with the character of

tax -

we note, with respect, that the requirement:

exacted by a public authority (the

Commonwealth itself) for public purposes -

is a matter which is supported by the parenthesis: (consolidated revenue: see Constitution,

s. 81) - a matter which is, in our submission, starkly

absent in this case.

DEANE J:  How would you fit Chief Justice Latham's reference

to "moneys received by the Commonwealth Bank" into

your argument on section 81?

MR WALKER:	Your Honour, it would require a consideration of the kind of matter referred to by the Chief Justice
in Maguire v Simpson about the difference between
the Commonwealth, as it is sometimes understood as
an expression, and the Commonwealth, as it is to be
understood in section 81, so that our answer would
be that the Commonwealth Bank would not be within the meaning of the Commonwealth when used in
section 81.

DEANE J: Yes, it may raise even more difficult problems

than what you are concerned with.

MR WALKER:  I do not want to pretend, Your Honour, that it

does not raise problems. In our submission, this

is a relatively simple case because the words in

question here do not create invalidity by reason of any borderline difficulty or problem. There is, if

we are correct, a simple command to do that which

the Constitution forbids, there being no question

but that this is money paid to the Commonwealth

Cemetery 36 1/4/92

DEANE J: But your argument would, for example, preclude any

instrumentality of the Commonwealth which could not

be seen as distinct from the Commonwealth creating

a separate fund in which moneys received for its

activities, but not received as trust moneys, were

paid.

MR WALKER:  Yes, Your Honour, but not received as trust

moneys, yes.

DEANE J:  The argument against that notion might be to give

a wider meaning to the consolidated revenue fund

referred to in the Constitution, perhaps not in the

Audit Act.

Then he draws a contrast which does not matter for

the present case.

Those indications, which are clearly not intended to be definitive or categorical in the

effect, are indications which, in our submission,

favour the kind of distinction which we draw with

respect to the scheme required under 32, 33 and 34,

and the Guarantee Act, and a tax.

In Air Caledonie itself, 165 CLR 468, in

Your Honour's check-list, if I might call it that,

of the prima facie attributes of the fee to stamp

it as:

an exaction of money with the character of

tax - we note, with respect, that the requirement:

exacted by a public authority (the

Commonwealth itself) for public purposes -

is a matter which is supported by the parenthesis:

(consolidated revenue: see Constitution,

s. 81) -

a matter which is, in our submission, starkly

absent in this case.

DEANE J:  How would you fit Chief Justice Latham's reference

to "moneys received by the Commonwealth Bank" into

your argument on section 81?

MR WALKER:	Your Honour, it would require a consideration of the kind of matter referred to by the Chief Justice
in Maguire v Simpson about the difference between
the Commonwealth, as it is sometimes understood as
an expression, and the Commonwealth, as it is to be
understood in section 81, so that our answer would
be that the Commonwealth Bank would not be within

Cemetery 37 1/4/92

the meaning of the Commonwealth when used in

section 81.

DEANE J: Yes, it may raise even more difficult problems

than what you are concerned with.

MR WALKER:  I do not want to pretend, Your Honour, that it

does not raise problems. In our submission, this
is a relatively simple case because the words in
question here do not create invalidity by reason of

any borderline difficulty or problem. There is, if

we are correct, a simple command to do that which

the Constitution forbids, there being no question

but that this is money paid to the Commonwealth

DEANE J: But your argument would, for example, preclude any

instrumentality of the Commonwealth which could not

be seen as distinct from the Commonwealth creating

a separate fund in which moneys received for its

activities, but not received as trust moneys, were

paid.

MR WALKER:  Yes, Your Honour, but not received as trust

moneys, yes.

DEANE J:  The argument against that notion might be to give

a wider meaning to the consolidated revenue fund

referred to in the Constitution, perhaps not in the

Audit Act.

MR WALKER:  Your Honour, there has not hitherto been a

suggestion as we understand it that payment

directly to a trust account is payment to the

consolidated revenue fund. The purpose of the

Audit Act is not to label something different with

a constitutional name, but is to set up an account

into which moneys required by the Constitution thus

to be paid are to be paid. The Audit Act does not

claim by any distinction between the three public

accounts to have in any way truncated, or for that

matter expanded if one could imagine it, the ambit

of the CRF. The response which I had in mind to

the example of Chief Justice Latham is the passage

in Maguire v Simpson by Mr Justice Mason,

139 CLR 398.

Your Honours, in final answer to

Mr Justice Deane, if it were the case that there

was, if I may use a neutral or non-technical

expression, some body or authority which upon the

kind of investigation suggested by Mr Justice Mason

in Maguire v Simpson does represent the

Commonwealth, is the Commonwealth for the purposes

of section 81 - - -

Cemetery 38 1/4/92

DAWSON J: But it is not the Commonwealth, is it? It is the

Executive Government, and that may be the big

distinction.

MR WALKER:  Yes, the government, I should say, is not the

Government of the Commonwealth for the purposes of

section 81, then so much the better that

section 81's compulsion operate for the money to go

into the consolidated revenue fund. And with

respect to what Mr Justice Dawson has corrected me

in my paraphrase of section 81, it may well be that
in future cases which remain hypothetical at the

moment, distinctions between trading emanations of

the Commonwealth and what might be called

emanations which remain governmental of the

Commonwealth, will be the indication for whether

money must go in accordance with section 81 or not.

In this case those problems do not arise because

the Commissioner is, with respect, clearly in a

position covered by section 81's command.

Your Honours, could I then touch on two other

matters which, in our submission, support the

approach that this does not exact taxation when it

exacts a charge. I have already drawn attention to

the first of those points, which is a short point.

The provisions, in our respectful submission, of

section 18A(l) when read with the limitation of

regulation making power in sections 18A(2)(a) and

(b), would render the charge, were it truly a tax,

an arbitrary tax. Now, this is not a case where we

argue that it is a tax, but that disqualifying

criterion of what the Commonwealth will argue was a
tax is an indication as part of the exercise of

construing the legislation that what was intended

was not intended to be a tax.

The second of those points concerns a use to

which we wish to put section 55, but not directly. This is not a case where we seek to have anything

part of section 55 upon which this argument turns struck down by reason of section 55 because that is the first paragraph. We do not wish to be left

with the laws imposing with taxation and dealing

with that imposition and to have the rest cut away.

But again, as part of the presumption of

validity in the particular sense, if the Court were

to come to the conclusion that the argument of the

Commonwealth that this is a tax would in turn lead

to set problems under the first paragraph of

section 55, then that is a matter which, in my

submission, would assist in impelling the Court to

a contrary interpretation if that is at all

available on the words of the legislation.

Cemetery 39 1/4/92

The argument proceeds by noting the familiar

incorporation of the Administration Act into the

Guarantee Act and the requirement that they be read

as one. In Air Caledonie, that kind of requirement

was described at - I am sorry, I have mistaken it,

Your Honours. In The Second Fringe Benefits Tax

Case, (1987) 163 CLR 329 at 344-345, that was

described as having the effect of:

The Tax Act is to be read in the light of the definitions contained in the Assessment Act

and of the provisions contained in that Act

with respect to the specification of the

persons who are liable to taxation and of the

circumstances in which they are subjected to

liability -

the authority cited being Moore, to which we now
turn to support a submission that such provisions

certainly, with great respect, have the effect
there described in The Second Fringe Benefits Case,

but they have other effects as well. There are other kinds of provisions, with which the Court

will be familiar, which simply say, for example,

"words used in this Act are to bear the same

definitions as those words used in another Act".

That is apt to have the limited effect described at

pages 344-345 of The Second Fringe Benefits Case.

The provisions of this legislation, the

incorporation provisions, can go further. Could I
take Your Honours to Moore's case, 82 CLR 547 at

page 565. Chief Justice Latham, in the first full
paragraph on page 565, turns to deal with an

argument concerning the final clause of section 55
and then, the next paragraph:

It is said, however, that Acts No 1 and

No 2 incorporate the Administration Act,

because ins 3(2) of each Act it is provided

that expressions used in the Act have the same

meaning as they have in the Administration

Act.

That, of course, is the more limited form which simply gives words the same meaning.

It is argued that the Administration Act is

therefore incorporated with each of the other

two Acts and that the incorporation of the

Administration Act in the other Acts which

impose taxation produces the consequence that

those Acts deal with other matters than the

actual imposition of taxation. But, first,

Act No 1 and Act No 2 do not "incorporate" the

Administration Act. They merely refer to the

Administration Act for the meaning of

Cemetery 40 1/4/92

expressions. They do not incorporate

Administration Act in any other sense than

that in which it may be said that all Acts of

the Commonwealth Parliament incorporate the

Acts Interpretation Act.

Then the passage upon which we rely.

Secondly, if Acts Nos 1 and 2 did incorporate

the Administration Act and if that Act was an

Act which dealt with matters other than the

imposition of taxation the only result would

be that that Act as incorporated in the other

Acts would be of no effect. But the

Administration Act itself as independently

enacted would remain in existence and in

operation.

In our submission, it is the meaning which may be given to that last sentence and to the kind of

operation being hypothesized by His Honour which

will determine the fate of this argument about

section 55.

In Cadbury Fry-Pascall, 70 CLR, at 388,

Mr Justice Williams, towards the top of the page

refers to what the Assessment Act does.

It is not therefore an Act within the ambit of

s 55 of the Constitution. The tax is imposed

by the Tax Act, which prescribes the rates of

taxation. This Act incorporates the

Assessment Act and provides that the two Acts

are to be read together.

Then he quotes from his preferred version of that

effect:

the legal effect of that is to write those

sections into the new Act just as if they had

actually been printed into it. It has also

been held that where two Acts are to be read

together the Court must construe every part of

each of them as if it had been contained in

one Act, unless there is some manifest

discrepancy making it necessary to hold that

the latter Act has to some extent modified

something found in the earlier Act.

The Tax Act and the incorporated

Assessment Act is, therefore, a single Act and

one which falls within this section -

that is 55 -

of the Constitution. But the only effect of

the section is to invalidate any provision

Cemetery 41 1/4/92

therein dealing with any other matter than the

imposition of taxation.

So that for His Honour, it appeared that the

effect of section 55 upon the incorporated Acts

which must be read as one would be to invalidate

all matters other than those dealing with the
imposition of taxation, in that case the Assessment

Act. It is our argument that one can see a similar

effect as possible in this case. Finally, Munro's

case

DEANE J:  You say in that case the Assessment Act, but

His Honour did not say that.

MR WALKER:  There was a Tax Act and an Assessment Act,

Your Honour.

DEANE J: What is the clearer statement; that the device of

separate Taxing Act and Assessment Act is
necessary, and that the Assessment Act is not
within the scope of the law imposing taxation for

the purposes of section 55. I had the impression

that that was something that was always avoided.

MR WALKER:  Yes, it is, Your Honour. I have a number of

cases if I might give them to you in an orderly

fashion.

DEANE J:  When I said that, I had the impression that these

explanations of the relationship between the

Assessment Act and Taxing Act tended to carefully

avoid what you said that Justice Williams had said,

and that is that the Assessment Act would have been

invalid.

MR WALKER:  Yes. Your Honour, this argument does not seem

~ver to have been deployed in a case where

necessary preliminary findings had been made. In
other words, there was always another reason why

decision of a case in accordance or using this

argument was not necessary, but the dicta that I

have already taken Your Honours to would show, with respect, that the argument has been acknowledged as one which is in principle sound.

The separation of Assessment and Tax Acts may,

as it is currently and has for a long time been

practised, go further than is required by the first
paragraph of section 55, yet has been more or less

studiously carried out for a long time because of

what Mr Justice Dixon at one stage called the

hitherto ineffectual menaces of section 55.

The necessity, however, of an incorporation provision is perhaps not so obvious. That is why

Acts ought to be read as one, which are plain

Cemetery 42 1/4/92

words, rather than simply giving to an Act

definition sections common or giving to the
calculation of charge, referring to calculation of

charge in accordance with another Act. So that the

Tax Act could refer to the Assessment Act for those functions which the Assessment Act performed so as

to render the Tax Act effectual.

The incorporation provision would appear to

have the potential effect, which has never actually
come up for decision, which I am now urging would

lead to an invalidity, which itself is not one we

seek because all it does is strike down the non-

taxing parts, but which should incline the Court

against characterizing this as a tax.

In Munro's case, 38 CLR, at 185 - this, by the

way, Your Honour Mr Justice Deane, is one of the

several cases which discuss in some detail the

perceptions which led to the pattern of

Appropriation and Taxing Acts as they are now

familiar. At 185, Mr Justice Isaacs, about an inch and a half down, refers to the incorporation of the

relevant Assessments Acts into the relevant Taxing

Acts which include in each case the particular

section which was alleged to impose a different
subject of taxation. That was the section 55

argument at this point.	I think this was
Mr Dixon's argument:

Therefore, when, as is the case, the Taxing

Act imposes the income tax by fixing rates

upon what it calls "taxable income", one has

to read the Taxing Act itself to see what is

meant by "taxable income." There is in that
Act no definition of that term other than that

which can be found in the Assessment Acts

incorporated. It is true that sec 55 of the from the Taxing Act all of the Assessment Acts

as incorporated, except such parts as deal

with the "imposition" of the taxation, leaving

Acts. But every part of the Assessment Act	them to operate independently as Assessment
establishing what is "taxable income" within
the meaning of the Taxing Act remains incorporated, because every such part is
essential to understand the term "taxable income."
It was put somewhat differently at 207 to 210

by Mr Justice Higgins. At the foot of 207, the

same argument being addressed, the fourth last

line:

Sec 55 in its first branch, if disobeyed,

would leave sec 28 -

Cemetery 43 1/4/92

which dealt with the imposition of taxation -

operative, but would make all the other

sections inoperative -

and then His Honour went on to take what was, with

respect, a pleading point about the objection
properly before the Court. Mr Dixon had somewhat

elaborated the argument from the court below.

At 209 to 210, there is a passage which raises

the same question of the relationship between

Assessment and Taxing Acts and, at page 210, at the

end of Mr Justice Higgins' reasons, there is a matter special to the first part of section 55

which turns on the important words "proposed laws"

in section 53 to -. .-,hich we will turn.

At 216, Mr Justice Starke - objection (4):

That the Assessment Acts and the Tax Acts

incorporating the Assessment Acts contravene
the provisions of sec 55 in that they deal
with more than one subject of taxation.

And, once again, that was not necessary to deal with the principle of the argument because the necessary preliminary foundation, namely, a

different subject of taxation or imposing taxation

rather than dealing with the imposition of taxation

was not made out.

Your Honours, I have given a ~eference to The

First Uniform Tax Case, 65 CLR 411. I do not need

to take Your Honours to it, but there is merely a

passing reference there which recognizes a
possibility by Chief Justice Latham of this

incorporation argument as having an effect on the

validity of Acts.

In Moore v The Commonwealth, to which I had

already taken Your Honours finally, there are

passages which, in our submission, support

reference to the avowed objects of this Act and its

calculated effect, as proper matters to take into

account in characterizing the charge as a tax or

not. Could I simply give Your Honours the page

references? They are in paragraph 8 of the

outline: 568 to 569, 576 to 577 and 579 to 581.

Your Honours, the exaction in that case was, a

fortiori, the exaction in this case with respect

to, for example, its destination and the like.

That was the case where the use of the money to

anticipate, as it were, payment of income tax as

the overall legislative intent, was discerned by

the Court as an indication that this was not a tax.

Cemetery 44 1/4/92

Could I then turn to the section 54 argument which requires - and this stands independently of

the others - the characterization of

section 34(1)(a) as, at least at the point when it

was yet a bill, a proposed law covered by

section 54 of the Constitution.

The definition of "ordinary annual services"

is not an easy one though, with respect, it is not

one of the more difficult definition exercises

required in, for example, section 57, which

contains much more difficult problems. In Colonial

Ammunition Co, not just at 220 but particularly at

221, there is a fleeting reference by way of

contrast between different heads of expenditure to

what would be and would not be within the ordinary

annual services.

The so-called compact of 1965 which we refer

to in paragraph 9 of our outline - and I hand up
the note of it - at page 1485 Mr Holt explained the

practice then instituted in light of difficulties

arising out of the definition of "ordinary annual

services" of having a separate bill, on this

occasion entitled "Supply Bill (No 2)" -

subject to amendment by the Senate containing

appropriations for expenditure on -

(a) The construction of public works and

buildings;

(b) The acquisition of sites and buildings;

(c) Items of plant and equipment which are

clearly definable as capital expenditure;

(d) Grants to the States under section 96 of

the Constitution; and

(e)

New policies not authorised by special legislation. Subsequent appropriations for

such items will be included in the

Appropriation Bill not subject to to amendment

by the Senate.

That would appear to be the clearest and most

categorical statement from any arm of government as

to what in that case was not within "ordinary

annual services".

In our submission, the payment of departmental

officers, the purchase of consumables used by

departmental officers, the meeting of expenditure

for them carrying out their tasks of administering

and monitoring the operation of this Act must fall

within the definition of "ordinary annual services"

Cemetery 45 1/4/92

unless a highly artificial expression were given to

the word "annual". That highly artificial

interpretation might say, for example, that

section 54 does not apply if for some reason,

perhaps in order to evade section 54 or the like,

it were intended to appropriate for the ordinary
services of the Commonwealth, those incurred in a
recurrent sense, by periods which are not annual.

Now, that is not the custom, and it was not the custom when the Constitution was made.

However, in my submission, the artificiality

of such an interpretation points out that the word

"annual" qualifies the nature of the services

tending to those matters which are, as it were,

recurrent rather than capital. And in that sense,

the appropriation, perhaps standing appropriation

as it may be, in section 34(l)(a) from the trust

fund, that is, authorizing expenditure out of the

trust fund, is an appropriation for part of the

ordinary annual services of the government.

The next question which arises is whether

section 54 or its breach are matters justiciable in

this Court at all, and the demurrer raises that

question. In our submission, the reasoning in

Cormack v Cope does not depend entirely on anything extraordinary as between section 57 and section 53

of the Constitution or, alternatively, the

principles to be found in Cormack v Cope concerning

this Court's relations with Parliament and the

procedures of Parliament are principles which ought

indifferently be applied to the equally important

routine matters covered by section 53.

The importance of section 53, section 54 and

section 55 is one which has been referred to in

many of the cases, most of which I have referred to

the Court and, in particular, in all the section 55

cases.	The role of section 54 is exactly similar
to that of section 55 as ancillary to or protective

of the restrictions on the Senate's amending power

in section 53, and the effect of section 55,

preventing tacking, is no more beneficial or no

more fundamental or no more important than the

effect of section 54 preventing appropriations other than ordinary annual appropriations from

being precluded from amendment by the Senate.

DEANE J: You read "the" in section 54 as "a", do you?

MR WALKER:	We must, Your Honour.
DEANE J:	The "the" referring back to section 53?
MR WALKER:	Yes, in the same distributive, perhaps, way as emerges, albeit in a very different context, for

Cemetery 46 1/4/92

the same expression in section 57 with respect to

double dissolutions and joint sittings, exactly the

same reasoning. Were it otherwise, of course, one

can well understand that there would be many years

in which there may not be any such thing, that is

there would be more than one. And it cannot

possibly be that such an important guarantee of the

relation between the two houses spelled out by the

combination of sections 53, 54 and 55 would depend

upon such drafting accidents or such accidents of

the exigencies of the occasion. For example, it

could not be that only the first one in a year

would be protected but not the second.

Your Honours, therefore, as a matter of

principle, it is difficult to discern any
structural reason why distinction should be made

have referred to in paragraph 11. It has been

between 55 and 54 so far as justiciability is

concerned. It had been suggested in Osborne and in

suggested that the epithet proposed - and the

expression "proposed laws" - ensures that the Court

would never come to invalidate an Act by reason of

breach of section 54.

That suggestion is most strongly to be found,

of course, in the bitterly opposed partisan

speeches at the Melbourne convention, which

subsided, as it were, in an unhappy referral to

"committee" with no clear conclusion. The word

"proposed", it was said by some, would suffice, by

others it would not suffice. The history shows

there was an express clause concerning the extent

of invalidation considered and rejected. As

Mr Barton is reported as saying, at one stage, not even under the influence of a heavy fee could he easily or quickly determine what effect the word

"proposed" would have.	He, however, I think, drew
the matter in committee.

Both Mr Barton, as Mr Justice Barton, and the

Chief Justice in Osborne, made statements which we

expect will be relied upon by my learned friend for

the Commonwealth. At 336 of 12 CLR, in a case

concerning section 55, and at the foot of that

page, the Chief Justice said:

I would remark that the change of language in

sec 55 from that in secs 53 and 54 primarily
imports a change of intention. Secs 53 and 54

deal with "proposed laws" - that is, Bills or projects of law still under consideration and not assented to - and they lay down rules to

be observed with respect to proposed laws at

that stage.

Cemetery 47 1/4/92

We might interpolate, Your Honours, exactly that in

exactly those words might have been said of the

proposed laws referred to in section 57, and yet a

diametrically different approach from the one taken

by the Chief Justice emerges in Cormack v Cope, of

course in a very different provision: section 57.

He continued:

Whatever obligations are imposed by these

sections are directed to the Houses of

Parliament -

that of course is true of the Governor-General and

the Houses of Parliament in section 57 -

whose conduct of their internal affairs is not

subject to review by a Court of law.

If that means, with respect, conduct of internal

affairs of the kind in England conducted by

standing orders and the like, there can be no

quarrel. Beyond that, we would quarrel.

Sec 55, on the other hand, deals with

proposals which have received the Royal

assent, and which can be reviewed by Courts of

law, if they offend against constitutional

provisions.

However, that distinction does not truly obtain between 54 and 55 because, if it did, it would also

obtain between 57 and 55. In Cormack v Cope and

not doubted in the two succeeding cases, there is

no doubt but that breach of this constitutional

direction as to what a proposed law may and may not

be was said very clearly to provide a ground after

enactment and after it became an Act and ceased to

be a proposed law for persons affected by it to sue

for its invalidity.	So that that distinction by
the Chief Justice could not still be valid.	Then
he continued:

I should hesitate very much before holding

that a provision such as that, which in form

is prohibitory, is a mere counsel of

perfection.

That is section 55 of which he speaks, but one may

enquire, with respect, why one would not hesitate very much before holding that a provision such as

section 54, which in form is prohibitory, is a mere

counsel of perfection. All the difficulties of

directory and mandatory as a dichotomy unsuited to
constitutional law, and in particular to those

parts of the Constitution directing the manner in

which laws may be made, would arise, as were

discussed in Cormack v Cope.

Cemetery 48 1/4/92

At 351 to 353, at the very foot,

Mr Justice Barton noted that:

It is very plain that secs 53, 54, 55

and 56 show a sharp distinction between
"proposed laws" and "laws." ..... No lawyer, can

doubt that in legislation a "proposed law" is

what is known as a Bill, and a "law" is what

is known as an Act or Statute ..... But it was

contended by the plaintiff that while secs 53

and 54 relate, as is clear, only to the order

of business between the two Houses in dealing

with the progress of Bills, and are therefore,

and from the necessity of the thing, merely

directory -

it was a concession and not contested in the case -

sec 55 depends on quite different

considerations. It is then the completed Act

that is put to the test -

One may as well ask why a completed Act which has been brought about in a manner forbidden by the

Constitution, namely section 54, should not also be put to the test as proposed laws may be put to the

test pursuant to section 57.

Finally, at 373 to 374, Mr Justice Higgins, about an inch from the bottom of 373, records the

admissions.	He puts that the concession in
argument:

that an infraction of the provisions for

"proposed laws" does not make the Act invalid.

Then His Honour asks, for quite contrary

,Purposes from our present one, to the foot of that

page:

Why is an Appropriation Act not invalid by

reason of its substance if a taxation Act is

invalid by reason of its substance?

A question which His Honour intended to be

answered, "No reason at all, the Appropriation Act
should not be invalid and neither should the

Taxation Act".

Now, with respect, the question nowadays would

fall, with the clear jurisprudence on section 55,

to be answered differently, and the similarities of
constitutional purpose of section 54 and 55 would

lead, in our respectful submission, to a different

approach now from that taken in 1911 on a point not

argued, namely, whether section 54 would have an

Cemetery 49 1/4/92

invalidating effect if breached. In Buchanan -

Your Honours, I note the time.

MASON CJ:  We will adjourn until 2 o'clock Mr Walker.

AT 12.48 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.02 PM:

MASON CJ: Yes, Mr Walker?

MR WALKER:  Your Honours, might I make good some of my

undertakings by handing up copies of section 103 of
the Administration Act and the amending schedule,

as well as copies of the legislation considered in

Moore's case. Relevant provisions are contained

passim in the reports, but they are more

conveniently found in the full form.

As to the impact of section 55 or

apprehensions concerning it and the customary

division of Assessment and Taxing Acts, I would

merely repeat the references to Munro,

Cadbury-Fry-Pascall and Moore, which are set out in

our outline, in answer to Your Honour

Mr Justice Deane.

There are of course references, for example,

in Osborne's case near the passages to which I have

already taken the Court concerning the purpose of

55. Your Honours, sections 53 and 54 are of course provisions relating to the manner in which laws

appropriating money shall be made. That is a

description, for example, by Chief Justice Latham

in the Pharmaceutical Benefits case, 71 CLR 253.

That is conveniently also the page at which

the Chief Justice pointed out, at the end of the

first paragraph on that page, that:

there cannot be appropriations in blank,

appropriations for no designated purposes -

et cetera, a matter which is relevant to the

section 81 argument earlier put.

Section 81 picks up the manner prescribed by,

inter alia, sections 53 and 54 by its references,

thought by the Chief Justice to be more or less

tautologous to the manner of appropriation from the

consolidated revenue fund in the last two lines of

Cemetery 50 1/4/92

section 81. Section 83 is the natural partner of

section 81 having observed, of course, the first
charge in section 82.

Provisions in the Constitution of political entities, such as 81 and 83, are, in our respectful

submission, of fundamental importance in the

resolution of what would otherwise be contests

between executive and legislature, concerning the

expenditure of public moneys and the imposition on

the public of the burden to contribute to public

moneys. And sections 53 and 54 have a

commensurately important role in the internal

division between the Houses of Parliament

aspects of the body of electors which the	representing, as they do, the somewhat different the Senate represent. They resolve that tension
concerning those very important money bills and,
Your Honours, I do not need to labour the matters
of great import concerning supply, the powers of
upper houses and the tensions and controversies
that are to be found in the history of the last 200
years in legislatures, both in this country and in
the countries whose legislatures we looked at when
modelling our Constitution.

Section 53, in its second paragraph

restricting the Senate's amendment power, is

therefore one which cannot be seen as itself; for

example, a mere counsel of perfection. It would be

an astonishing thing for it to be argued that it

does not matter, in the sense that it will not

affect in any way the validity of a law, that

something as fundamental to that age old tension

and its resolution should be flouted, because

arguments concerning so-called directory and
mandatory which, in our submission, are
misconceived in the dichotomy they set up, have to

embrace not merely what might be thought to be

regrettable cases of mistake or inadvertence but

have to embrace as well questions of outright,
calculated disregard;	a disregard which may or may

not be publicized when it is being carried out.

There is nothing in the law concerning the

approach of a court to the consequences of
infringement of a provision such as the second

paragraph of section 53 which would permit a

distinction to be drawn according to the subjective

malevolence or understanding of the wrongness of

their act of the people.responsible for the

infringement.

For those reasons, arguments, so called, of

inconvenience, turning on hypothetical examples of

inadvertence or mistake, are, in our submission, of

Cemetery 51 1/4/92

no weight against what ought to be the ordinary

application of provisions such as section 53.	They
prescribe the way in which things can be done.

They proscribe what may not be done and the only way in which they can be given the force of law

and, particularly, constitutional law is to visit

with the consequence of invalidity laws made

contrary to the manner prescribed. That, in my

submission, is directly supported by the reasoning

of all but Mr Justice McTiernan in Cormack v Cope.

The question of whether the expression

"proposed law" in section 54 removes the question

of its infringement from any inquiry at any stage

by this Court, is also by some thought to be

touched upon by another dictum, this time by

Mr Justice Barton in Buchanan, 16 CLR, the relevant

passage at page 329. Once again, this was a

section 55 case and, in our submission, as the

later decisions concerning section 55, going right
through to this Court's decision, for example, in

Mutual Pools or in Air Caledonie, show it is not

necessary to use arguments concerning section 53

or 54 in construing section 55 as to the

consequence of its infringement.

Mr Justice Barton, commencing at 328, the last

paragraph:

The second paragraph of sec 55 is further

evidence of the protection sought to be thrown round the House which represents the States as

such. "Laws imposing taxation ..... That

provision, as I pointed out in Osborne's case

is designed to prevent the tacking -

which would -

"annihilate the intended powers of the

Senate -

et cetera. And then, the next paragraph:

Here there is a purpose running through the

provisions for the composition and functions of the two Houses, which has no relevance to the purposes for which the Parliament is

empowered to legislate for the territories of

the Commonwealth. It must be remembered that

the checks of sec 55 are imposed with relation

to Acts and not to mere Bills -

as he puts it -

to "laws imposing taxation," not to "proposed

laws imposing taxation." In this respect

Cemetery 52 1/4/92

sec 55 differs very markedly from the rest of

the cluster, except sec 59 -

disallowance -

which obviously refers to a complete law

passed by both Houses, and assented to by the

Governor-General. There is, therefore, much

to be said for the argument that if sec 55

were not obligatory to the Court it would be

futile, since after the Royal Assent, no

authority except the Court could interpret or

enforce the provision, while the Houses have

ample hold of Bills not yet passed.

That would appear to be His Honour's

reasoning, at least impliedly, for distinguishing
between the consequences of an infringement of

section 55 and thus its examinability, and the

consequences of an infringement of section 54.

In my submission, there is nothing alarming about adopting the solution which Cormack v Cope

illustrated for section 57, concerning the internal

procedures of the Houses as to matters which are,

in essence, far more difficult to judge than the

matters required by section 54, namely that at the
very least challenge is permissible after the
process has been gone through which involves the

infringement of section 54 and the proposed law has

become an Act which, if valid, would touch the

person who challenges it.

His Honour then continued, the middle of the

page:

if I had to decide the matter to-day, I should

perhaps hold that sec 55 is mandatory as to

its second paragraph -

His Honour was farsighted -

and we know that it is expressly made

mandatory in respect of so much of its first

paragraph as relates to provisions dealing

with any matter other than taxation. But

other sections in the same connection, such as

53 and 54, relating to Bills in course of

passage, are for the ordering of business
between the two Houses, and are clearly

directory only.

The language must mean that His Honour was saying

that infringement would lead to no invalidation.

It is quite conceivable that if a Bill were

being dealt with under the power given by

Cemetery 53 1/4/92

sec 122 and not under any of the powers

enumerated in sec 51, the purpose of such
directory sections could be served by

agreement between the two Houses ..... and, if

thought necessary, by any modification of the

processes contained in such sections. But on

this subject it is not necessary to be

definite.

So it is part of the reasoning by which His Honour expressed the conclusion of directory.

His Honour contemplates some kind of informal

conference between the Houses with respect to

compliance with section 54, it would appear, of a

kind which finds no place whatever in the

Constitution, and of a kind which, in my

submission, cannot be used as a shadowy possibility

to deprive section 54 of the only force in the

sense of binding compulsory effect which it could
have, namely, as a result of a suit by an affected

person in~this Court~ because it ought go without

saying that the Parliament could not be the arbiter

of the validity of its own law-making activities.

In essence, it is our case that the

prohibition in section 54 which says that a bill
may not be presented in a particular form does not

become spent by determined boldness in infringing

that prohibition, so that the delinquent can turn

round and say, "That was true of the bill. It has
now become an Act, and though the bill could not,

the Act can take a particular form". In my

submission, that flies in the face of the proper

approach to the manner - the laws requiring the

manner in which laws are to be made.

· Your Honours, I have given a reference, of course, to Cormack v Cope. The particular

reference is not, of course, the only reference on

which I would rely. There are references in

particular to the two authorities in which these
dicta were uttered:	131 CLR - if I could simply

give Your Honours the pages in particular - at

page 453 the Chief Justice suggested:

Whilst it may be true the Court will not

interfere in what I would call the intra-mural

deliberative activities -

That has led us in this case not to enter into the hypothetical question of whether an injunction

would lie at the suit of somebody like my client
who would be caught, if the bill were to become an

Act, to prevent breach of section 54. That is

hypothetical. It is not this case, and it may well

be that the privileges of the Houses expressly

recognized by section 49 would themselves at that

Cemetery 54 1/4/92

point come into conflict. On the other hand, it

may be that it would not be a question of

jurisdiction, but of discretion, and that while the

Houses had ample hold of the bills, to use

Mr Justice Barton's expression, this Court would

either as a matter of jurisdiction or as a matter

of discretion, almost certainly withhold from any

interference, but after the bills have become Acts. intra-mural deliberative activities.

BRENNAN J: What is the scope of the immunities which are

guaranteed by section 49?

MR WALKER:  Your Honour, it is such that it is difficult to

imagine, though perhaps not impossible, the

spectacle of this Court's officers grappling,

probably literally, with the Parliament's officers,

thus the immunities would prevent the enforcement
of civil process aimed at the deliberative process
of the House in the House, and certainly outside

the House as well.

As a proposition, that may be more true of an

English position than of an Australian position.

There is a possibility in my submission,

hypothetical in this case and not presented as a

concrete case, that this Court does have power to

prevent, by injunction if a declaration appears on
the facts of the case not likely to be efficacious,

a process which is designedly and deliberately

unlawful in light of, for example, section 54.

So that perhaps at the instance of senators who complained that the restriction on amendment
was being abused by reason of the tacking of

special appropriations, for example, with ordinary

appropriations, the possibility does exist in this

country of this Court being able to adjudicate on

that matter. But, Your Honours, I would stress

that that is hypothetical in this case and that we	need aim only at the much less ambitious target	already displayed in Cormack v Cope, namely to look
at the result of the unlawful legislative process
and to ask whether it can be attacked by somebody
affected by it on the basis that it is not a valid
law, it having been enacted contrary to a
constitutional proscription.

BRENNAN J:  Does that involve this Court going behind the

certificate of the presiding officers?

MR WALKER:	No, Your Honour, because it is ex facie the Act, because it is the Act which displays on its face
the latest form in which it was a proposed law or
the proposed law, and if on its face it contained matters which were more than appropriation for the

Cemetery 55 1/4/92

ordinary annual services, then there is nothing

certified by any of the presiding officers or

signified by royal assent beyond which this Court

goes, this Court would be looking only at the very

words which give it legal operation as against the
public. Thus, for example, this is not the kind of
case that the United States Supreme Court

considered in Field. There is nothing being looked

behind; there is no prospect of members of

Parliament swearing affidavits; there is no prospect of challenge to the accuracy or truth of a

certificate by a presiding officer as to the course

of the Bill through the House.

It is exactly the same, in that regard,

Your Honour, as an Act which is said to breach

section 55 in any of its limbs. That is, nothing

is being done which offends any of the House's

privileges because all that is being done is an

attempt to demonstrate, by characterization ex

facie of the Act, that it contains subject-matter

which it should not contain according to

section 55. The same process is carried out with a

section 54 challenge.

Your Honours, I am conscious of the time.

Could I simply give you references to

Mr Justice Menzies at 131 CLR 464 to 5,

particularly his caveat at 466;	Mr Justice Gibbs
at 466 to 467;	Mr Justice Stephen at 469 and 472
to 3;	Mr Justice Mason at 474 and, I should say,

at 473 most importantly.

Your Honours, in one of the succeeding cases, the Petroleum and Mineral Authority Act case,

134 CLR, could I simply give the Court references

which could not be seen, in my submission, as
ringing endorsements to Osborne. They are to be

found at 161 and see also 164, and at 184.

Your Honours, generally and to conclude, the challenge that this is not a justiciable matter

depends, in my submission, on either an argument

that some privilege of the Houses would be attacked

- for the reasons I have already put, that is not

so - or in a manner similar to one of the ways in

which the political question doctrine is put in

America, decision would be invited from the Court

on matters which are not susceptible or amenable to

decision according to legally manageable or

acceptable standards.

This Court's approach to section 55 amply

demonstrates, in my submission, that that cannot be

true of section 54, and this Court's approach to

the much more difficult matters in section 57 even

more amply demonstrates that the definitional

Cemetery 56 1/4/92

difficulties, such as they may be in ordinary

annual services, is not such as to render

section 54 non-justiciable. We have given two

references in paragraph 11 to examples of the

American approach to that aspect, at least, of the

so-called political question doctrine.

Your Honours, could I conclude by giving three further references on the standing assertion made

in paragraph 13 of our outline? As to the record

keeping obligations, I would ask the Court to

compare that with the approach taken in Crouch,

77 CLR at 349, 352, 354 and 357 to 358. As to our

standing to argue the invalidity of an Act which affects us, one of many possible examples, Logan

Downs, 112 CLR at 187, or Robinson v W.A. Museum,

138 CLR at 328. May it please Your Honours.

MASON CJ:  Thank you, Mr Walker. Mr Solicitor for New South

Wales?

MR MASON:  May I hand up an outline of our submissions.

MASON CJ: Thank you.

MR MASON:  As Your Honours will see, we seek to take an

entirely different route to that of the plaintiff,

although one I was glad to see fell within the

terms of the statement of claim. I had not

discussed the matter with my learned friend,

Mr Walker, but we submit that the law is not a law

with respect to taxation, though our argument

accepts that it is a law which imposes a tax.

The basis of the argument is one that submits

that the Commonwealth Parliament has passed beyond

that bound, difficult though it is to identify,

which draws a line between what is an acceptable

characterization of a law with respect to taxation
or, indeed, any other subject-matter, and one which

cannot, in the words of Mr Justice Stephen, be

fairly described as one of that import.

We submit that it is proper, and does not transgress the principles established in Engineers,

to have regard to the fact that section 51(ii) is

found in the Constitution of a Federation and to

acknowledge the fact that anything just about could

be dressed up as a tax, being a tax in form, and

yet would not necessarily, in our submission, be a

law with respect to taxation; a law that said that
any person who does not within the preceding 12

months commit murder shall pay a tax would not, in

our submission, be a law with respect to taxation

on a very general application of those principles.

Cemetery 57 1/4/92

Your Honours, we submit that Fairfax's case is

not authority against us and, indeed, contains

support for the distinction which we seek to draw

and, of course, it is silent on the application of

that.	May I take Your Honours to it briefly, at
114 CLR 1.	The facts will be well known to

Your Honours. Proceeding through the judgments in

their order, at the top of page 5, in the judgment

of the Chief Justice, His Honour said that:

It is possible that a law increasing or decreasing the extent of an existing exemption

from liability to pay a tax validly imposed

may in some circumstances - for my part not

readily envisaged - be held not to be a law

with respect to taxation.

Here, he is contemplating something where the

existing law is clearly a tax law but a variation

of it might mean that at the end of the day the law

was not one with respect to taxation.

At page 7, in the judgment of

Mr Justice Kitto, at the top of the page,

His Honour said that:

Under that section -

referring to section 51 -

the question is always one of subject matter,
to be determined by reference solely to the

operation which the enactment has if it be

valid, that is to say by reference to the

nature of the rights, duties, powers and

privileges which it changes, regulates or

abolishes; it is a question as to the true

nature and character of the legislation: is

it in its real substance a law upon, "with

respect to", one or more of the enumerated

subjects, or is there no more in it in

interference so incidental as not in truth to

affect its character?

relation to any of those subjects than an

And he cited the passage from Chief Justice Latham in Bank of New South Wales which is on the first page of our outline.

At page 14, in the judgment of

Mr Justice Taylor, and admittedly a much less clear

acknowledgement but one nevertheless, we submit,

right in the middle of the page, just near the

bottom of that paragraph:

if it be, in substance, a law with respect to

.a particular subject matter the motives which

Cemetery 58 1/4/92

influenced the legislature or the indirect

consequences of the measure cannot operate to
change its character.

The reference to the substance of the law.

Mr Justice Menzies, at 17 and 18, near the

bottom of the page, this being a passage discussed

in Second Fringe Benefits, in a passage I will

briefly come to, where His Honour said that:

Whether or not a law is one with respect to taxation cannot be determined by looking at

its economic consequences, however apparent

they must have been at the time of its

enactment; nor is an enquiry into the motives

of the legislature permissible. There may be

laws ostensibly imposing tax which,

nevertheless, are not laws with respect to

taxation. For example, a special prohibitive
tax upon income derived from the sale of

heroin ..... may not be a law with respect to

taxation but rather a law made for the

suppression of the trade in that drug by

imposing penalties described as taxes for

participation in it. The reason for denying

to such a law the character of a law with

respect to taxation would not be either its

economic consequences or the motive behind its

enactment. It would simply be that its true

character is not a law with respect to

taxation.

Finally, at page 19, Mr Justice Windeyer in the

last full paragraph:

I do not mean to say that a case could

not be imagined in which an Act in the guise
of a law with respect to taxation might be

seen to be in its true character something

else.

But he went on to say that in the true character of

this Act, since it was, among other things,

directed at raising revenue to replenish the

treasury, and that being one of the prime purposes

of income tax, as he said, it was clearly within

the characterization of section Sl{ii).

Your Honours, what distinguishes this

legislation from that considered in Fairfax, or

Barger for that matter, are the provisions of section 3 of the Administration Act which, on the

face of the legislation, state a purpose which is
foreign to the purpose of the taxation power.

There is not even, in our submission, a ritual obeisance to the formal entry formula that allows

Cemetery 59 1/4/92

the federal Parliament a very wide scope of power

under this placitum, because one finds in section 3

statements of the objects of the Act which are

clearly non-federal and, more particularly, non-tax

objects. 3(3) says:

The objects of this Act are to be achieved by

guaranteeing a minimum level of expenditure by

employers -

and expenditure on what? Not by guaranteeing that

they will pay it to the federal revenue, but that

they will spend it on quality employment-related

training. Whilst the legislation and its cognate

charging Act go on and enact a scheme which we

accept is in form a scheme that imposes a tax,

against this statement the tax must be seen, in our

submission, as the stick to achieve not just

secondarily, as occurred in Fairfax, but
exclusively the objects of the legislation.

Your Honours, if the Court accepts the statement of principle adverted t.o by Justice

Stephen that there is ultimately in

characterization a need to find whether the law can

fairly be described as one with respect to a grant
of power, that those are not just themselves some
indication of a non-existent class of cases that

are not truly characterized, we would submit that

this Act has gone beyond what can fairly be

characterized having regard to the matters which we

summarize in paragraph 7.

As we point out in paragraph 6, one of the essential attributes of a tax is an exaction of money. If the purpose of the legislation is not to

exact money, not even secondarily, but to drive

employers into spending the money themselves, then

we would submit that on the face of the legislation

there is a purpose foreign to the tax power, and

that therefore the legislation cannot fairly be

characterized as a law with respect to taxation.

The support we seek to get from section 3(3)

is underlined by the ministerial second reading

speech, the key parts of which are summarized at

pages 3 and 4 of our outline, and that is in part 3

of the plaintiff's documents, the red folder.

Again and again the minister spoke about the

purpose being to require expenditure by employers,

and it was stated that the government aims to

collect nothing. To use the speaker's words, the

government's purpose is not to collect revenue. In our submission, it is all very well to say

that in a system of unitary government the tax

power, or indeed any power, can be used for an

Cemetery 60 1/4/92

ulterior purpose. But when one comes into a

constitutional context with enumerated powers and a

federal system, then broad though the tax power is

and great though its scope to achieve ulterior

purposes, nevertheless, in our submission, there

must be a purpose of collecting revenue, or to put

it another way, a law which avows its purpose to be

the contrary may not, indeed, we would submit cannot, be fairly characterized as a law with respect to taxation.

The point made in paragraph (b) on page 4 is

the matter to which my learned friend, Mr Walker,

drew attention, the way tax deductions under

section 51 have been handled. It is a very big

stick that is put to the employer's head. If the

employer spends the money, then there will be a
section 51 deduction. Indeed, alternatively, the employer could perhaps donate it to a university,

that being one of the classes of eligible training

expenditure through section 25(3). But the
employer who does not spend the money is penalized
in a very severe way through not having the
deduction, but having one hundred cents in the
dollar of the shortfall confiscated under the form

of a tax.

In The Second Fringe Benefits Case,

163 CLR 353 and 354, five of Your Honours quoted

Mr Justice Menzies' statement in Fairfax that I

have read about ostensible laws and the example of

heroin, and made three comments about it. The

first was that the test suggested by His Honour

does not explain how the true character is

determined. In one sense, with respect, any

contest about characterization does not really

yield a hard and fast rule. If the ultimate rule

is whether one can fairly characterize it as a law

with respect to a given head of power, well sooner

or later one falls off the edge even though one

cannot say exactly what it is that has caused the

camel's back to break.

Secondly, Your Honours referred to the

prohibitive statement and said that the Fringe

Benefits Tax case was not prohibitive in that

sense. We would respectfully submit that attention

to the word "prohibitive" perhaps misses the point

of the statement that was being made by

Mr Justice Menzies and that the real point is that

a prohibitive tax, coupled by a condition for its

avoidance, is capable of being characterized as

something other than a law with respect to

taxation.

If it is a prohibitive rate of tax where the

intention is to collect it, well we would accept

Cemetery 61 1/4/92

that the remedy is political and not by way of

legal challenge, but we would submit that

prohibitive plus conditional exemption plus

legislative statement, that the purpose is not to

raise any money, plus the scheme of this

legislation is such as to take it outside of that

which can be properly characterized as a law with

respect to taxation. If the Court pleases.

MASON CJ: Thank you, Mr Solicitor. Yes, Mr Rose?

MR ROSE:  If the Court pleases, may I hand to the Court our

outline of submissions?

MASON CJ: Thank you, Mr Rose.

MR ROSE:  If the Court pleases, as Your Honours will have

seen from the outline, we do not seek to justify

this legislation on the basis of anything but the

taxation power in section Sl(ii) of the

Constitution despite the incidental references

which the Act contains to international

competitiveness, and so on.

So far as section Sl(ii) is concerned, my

learned friends have put at the forefront of their

arguments the point that the primary purpose of

this legislation is not to collect revenue, but the

same could, with respect, be said of any protective

tariff. Many protective tariffs would work best if

no revenue were collected at all from them. One

could well imagine an objects clause, perhaps,
inserted to say that that was the purpose of it

but, in my submission, it would be none the less a

law with respect to taxation, and in my submission,

too, it cannot be said that there is no element of

a purpose here of collecting money. There

certainly is with the intention to collect it from

those employers who have not spent the specified

amount on the training requirements.

The provisions for the collection and all the

associated assessment, and so on, and recovery are
there in considerable detail in Parts 6, 7 and 8 of

the legislation along the same model as is to be

found in any standard taxation legislation coupled,

of course, with the fact that the charge is imposed

by the separate Guarantee Act.

BRENNAN J:  Mr Rose, to whom is the charge payable and by

whom is it recoverable?

MR ROSE:  It is made payable, Your Honour, as a debt due to

the Commonwealth.

BRENNAN J:  By what section?

Cemetery 62 1/4/92

MR ROSE:  By section 76 of the Administration Act, and by

section 11 of the Administration Act it is made

payable by the employer. So we have the

legislation creating a debt by any of the employers

as defined, payable to the Commonwealth. And for

those employers who are within the terms, which

have been outlined by my learned friend, Mr Walker,

those employers who have a training guarantee

shortfall, those employers are required to pay that

money. It is a compulsory exaction, it is for

public purposes and it is enforceable by law. So

that fulfils the basic requirements in the decision

of this Court and, in particular, Air Caledonie

which Your Honours have already been taken to.

My learned friend, Mr Mason, has already

quoted from the decision in Fairfax v The

Commissioner for Taxation, but if I may just draw

Your Honours' attention to a couple of passages there, 114 CLR at page 7, and at about point 8 on

the page, His Honour Justice Kitto said:

The appellant's argument in its final form

accepted this as its real starting point and

proceeded to say thats. 11, though it is

couched in terms of taxation and wears the

badge of a tax law prominently upon it, really

operates to expose trustees of superannuation

funds to a liability which it miscalls a tax,

a liability which in truth is a penalty or

sanction for a failure to pursue a prescribed
course of conduct by such trustees with

respect to the investment of moneys.

And if one turns to page 13 one finds His Honour's

conclusion, in relation to section 11. He

describes its operation as being - this is half-way

down the page:

The operation of s. 11 is to replace a total

exemption from all income tax with a

conditional special liability to income tax on
"investment income".	The legislative policy

is obvious and may be freely acknowledged: it

is to provide trustees of superannuation funds

with strong inducement to invest sufficiently

in Commonwealth and other public securities.

The raising of revenue may be of secondary

concern. But the enactment does not prescribe

or forbid conduct. Its character is neither

fully nor fairly described by saying that it

makes trustees of superannuation funds liable

to pay for failing to do what the legislature

wishes. To adapt the language of Higgins J.

in R v Barger, the substance of the enactment

is the obligation which it imposes, and the

only obligation imposed is to pay income tax.

Cemetery 63 1/4/92

In substance as in form, therefore, the

section is a law with respect to taxation.

And in my submission the description of that

imposition fits very closely to what we have here

in this legislation.

Your Honour's attention has already been drawn by my friend, Mr Mason, to the passage in The

Second Fringe Benefits Case, where the Court commented on an argument which had been based on

Barger's case. Discussion there centered on the

remarks by Justice Menzies in Fairfax's case where

he referred to taxes so high that they amounted to

a prohibitive charge, but here of course we have
got nothing in that category at all, in my

submission, even if the charge was so high it would

still be a tax, but that is not the kind of

legislation we have here. It is an imposition of

1.5 per cent of the annual payroll amount,
certainly with consequences that have already been
mentioned concerning the implications from the

provisions about taxation deductions and so on.

But, ultimately, what the employer here is faced

with is a choice whether to pay certain amounts of

money on training of the kinds specified in the

Act, and if he chooses not to pay those amounts,

then to the extent of the shortfall there is a debt

payable to the Commonwealth for that amount.

TOOHEY J:  Mr Rose, I suppose the same result could have

been achieved without the Training Guarantee Act

itself, could it?	I mean, what purpose does that
Act serve?	I appreciate that section 6 provides

that the amount of training guarantee charge

payable is an amount equal to the amount of the

shortfall, but say the term "charge" had never been

used and the Administration Act simply required an

employer to make good any shortfall?

MR ROSE:  Then, in my submission, the problem would be to

find a positive head of power under which to enact

that legislation.

TOOHEY J: Yes, I appreciate that, but it makes you wonder

about the use of the word "charge" which sits very

awkwardly in the framework of the legislation.

MR ROSE: With respect, Your Honour, the word "charge" is

often used interchangeably with "levy"; sometimes

"tax" is used; but "charge" simply has that - it is

a word that is sometimes used for -

TOOHEY J: That is true, but here the charge is nothing more

and nothing less than the amount by which the

contribution of the employer to the fund falls

short. I am sorry, I have put that badly. The

Cemetery 64 1/4/92

amount by which the expenditure by the employer on

appropriate training falls short.

MR ROSE: That is how the amount of the charge is

calculated, Your Honour.

TOOHEY J: That is how an amount is calculated.

MR ROSE:  An amount is calculated.

TOOHEY J: Which is described as a charge.

MR ROSE:  And then a charge is imposed and the reasons for

having the Guarantee Act is, of course, because

being treated as a tax, there is a need from

section 55 of the Constitution to have a separate

Act which imposes it.

TOOHEY J: True, but there is an element of begging the

question about it all, is there not?

MR ROSE:  With respect, Your Honour, the imposition of a

charge of an amount equal to the shortfall, ie, the
difference between a specified amount and the

amount that the employer actually spends, is not

unfamiliar in taxation legislation, to impose a tax

by reference to a calculation of that kind.	I
think if one were to recall similar kinds of

calculations of taxes imposed equal to an amount of

something in the nature of a shortfall and think of

the legislation passed in the early 1980s

concerning the unpaid companies tax, where taxes

were imposed upon people, the amount to be

calculated by the amount of the tax that had not

been paid by other people. There was a shortfall

in their tax payments and - - -

TOOHEY J: But that was an obligation to make good something

which was undoubtedly a tax but which had not been

paid and as a result of which liability to pay the

tax was extended beyond the taxpayer to

MR ROSE: With respect, Your Honour, we would submit there	shareholders in the relevant companies.	is no distinction to be made on the basis that
there the basic original liability was a tax
liability. In our submission, you could just as
easily have a tax imposed by reference to any other calculation. In this case, it happens to be an
amount equal to the difference between an amount specified by Parliament and what the employer has
actually paid. That is simply the measure of the tax that is then imposed by the Guarantee Act and for which the assessment and collection is provided
in the Administration Act.

TOOHEY J: Yes. Thank you.

Cemetery 65 1/4/92

MR ROSE: If Your Honours please, it is irrelevant that this

legislation could also be characterized as a law

with respect to the development of employment

related skills and of the beneficial consequences

for Australian industry as stated in section 3 of the Act. The question of double characterization

has been discussed in some detail by Your Honour

the Chief Justice in the Tasmanian Dam case at the

passage referred to there.	I do not propose to
read that.

In Air Caledonie, of course, there was

attention given to the classes of compulsory

exactions for public purposes that, although they

come within the basic concept of a tax they are

nevertheless not so, eg, penalties, 1nd in

MacCoi::mick v Commissioner of Taxati-,n, 158 CLR at

page 639, Chief Justice Gibbs, Just~ces Wilson,

Deane and Dawson, referred to that category of

exactions which are not taxes and, quoting from

Justice Isaacs in Barger's case:

They are not penalties -

they said -

since the liability to pay the exactions does
not arise from any failure to discharge

antecedent obligations on the part of the

persons upon whom the exactions fall.

And that is precisely the situation in this case,

since there is no purported statutory obligation

upon employers to spend that amount themselves; it

is simply legislation of the form that, to the

extent that they do not spend that amount

themselves, they must pay this tax to the

Commonwealth.

My learned friend Mr Walker submitted that this exaction comes within the category, if not of

charges for services, then charges akin to fees for

services. But, in my submission, the difficulty

with that argument is that fees for services, at

any rate, must be charges that are fairly closely

related - not precisely related to the value of the

benefit which the payer derives, but they must have

some fairly close relationship to that benefit. In

this case, the employers who are required to pay
the tax - charge, I should not beg the question -
will ordinarily not get anything whatever out of
the expenditure of that money.

I will be coming later, of course, to the provisions for the amounts to go into the Training

Guarantee Fund and, as has been explained to

Your Honours, that money is there to be spent,

Cemetery 66 1/4/92

apart from costs of administration, by way of

payments to the States and Territories in

accordance with agreements. A particular employer

who has paid a charge might not get anything

whatsoever back by way of any direct benefit. He

might get a benefit of a general nature of

participating in whatever benefits to the economy

might flow through from it, but certainly nothing

closely related in any way to take it out of the

basic definition of a tax.

If I could, on that point, refer Your Honours

to the Air Caledonie case, 165 CLR, at pages 469 to

470.       I do not think it is necessary to read the

passage to Your Honours. There is a supplementary passage in Harper v Minister for Sea Fisheries. I

regret that it is not on our list of authorities

but it is in a passage - 168 CLR, in a passage by

Justices Dawson, Toohey and McHugh, at pages 336 to

337, where Their Honours said:

If such an exaction otherwise exhibits the

characteristics of a tax it will properly be

seen as such. In particular, if the exaction

"has no discernible relationship with the

value of what is acquired, the circumstances

may be such that the exaction is, at least to

the extent that it exceeds that value,

properly to be seen as a tax".

And there is a reference to the Air Caledonie

passage that I have just mentioned.

If the Court pleases, another objection which

was brought against the legislation is that it is

not a tax because it is an arbitrary exaction. My

friend, Mr Walker, endeavoured to make something of

the terms of section 18A of the legislation which

Your Honours have there in the folder;	it is under
tab 1.

In my submission, section 18A is far from

arbitrary. The regulations need to be made as to

which employers can be taken to be "eligible

outstanding trainers" and from that very expression one could find limits which, if transgressed by the

regulations, would lead to their invalidity. In section 18A(2)(e), the regulations must require:

applicants for eligible outstanding trainer

status to:

(i) obtain certificates about compliance with

relevant criteria from persons specified in

the regulations -

Cemetery 67 1/4/92

In my submission, the scope of what can be done under section 18A is limited in accordance with

ordinary principles of statutory construction to

criteria that are relevant having regard to the

terms of the Act and should not, therefore, be

characterized as arbitrary in the sense in which

that word was used in cases such as MacCormick.

Next, if the Court pleases, I turn to the

submission by my friend, Mr Walker, that this

charge should not be characterized as a tax because

if it were, then the Administration Act, or at
least provisions of it, would be invalid because of

section 55 of the Constitution. In my submission,

the fallacy in that submission is that section 55

only applies to laws imposing taxation, and in this

context the only law imposing taxation is the

Guarantee Act.

The Administration Act is not a law imposing

taxation. On that, I would refer the Court to what

is still perhaps the leading case, Dymond's case,

(1959) 101 CLR 11. The remarks in Dymond's case

were referred to in The Second Fringe Benefits

Case, 163 CLR 341 to 342. As to the point made by

my friend, Mr Walker~ relying on the provisions in

the legislation that one Act is incorporated and

read as one with another, provisions to that effect

existed in the fringe benefits legislation. I

think though I have not had an opportunity yet to

check that they were also present in the

legislation in Dymond's case itself.

The Court might be assisted by a judgment of

Justice Lockhart in the Federal Court in

Amalgamated Television Services Pty Ltd v The where His Honour was looking at provisions not from

the constitutional point of view, but nevertheless

it appears, with respect, to be a helpful

discussion of those sorts of provisions. Certainly

in the constitutional context in this Court,

provisions such as those have never been thought to

have the result that an Administration Act on the

usual taxation model was an Act that imposed

taxation.

A further argument put by my friend,

Mr Walker, was that if this charge is a tax and not

a charge akin to a fee for services, it would be a

breach of section 81 of the Constitution and the

Court should therefore lean against that

interpretation. The difficulty with that, with

respect, is that section 81 is not limited to taxation revenues; it applies to revenues or

moneys.

Cemetery 68 1/4/92

It is an interesting question from the early

years whether that extended to moneys raised by the

Commonwealth by way of loan, and the Court will see

in Quick and Garran a discussion of the history of

that and the traditional view which was stated in

Quick and Garran and which has been adopted ever

since, that loan moneys are not revenues or moneys

within the meaning of section 81, but it would be

clear enough that fees for services, if that is

what this charge was, would be caught by section 81

just as much as taxation revenues would be caught.

So for that reason, in my submission, that further

argument by my friend, Mr Walker, also fails.

The total effect of the basic submissions concerning the nature of a tax and the exclusion of

it from any of the categories that have been

referred to as exceptions from the basic concept,

such as penalties and charges for services and so on, leads in my submission to the conclusion that

this is a tax within section 5l(ii) on those

employers who fail to meet the shortfall. When I

say fail to meet, I do not mean in the sense of

failing to meet an obligation imposed upon the Act

to pay that money, but simply that if they do not

pay it, then they are liable for the tax.

The next stage, if the Court pleases, is the

arguments put by my friend, Mr Walker, on

section 54 of the Constitution. His argument that
section 34 of the Administration Act, which is the

authorization to pay moneys out of the training

guarantee fund, is in breach of section 54 of the

Constitution on the basis, he submitted, that

section 34(l)(a), the costs of administering the

Act and so on, that those expenses are within the

expression "ordinary annual services" and that the

Act infringes section 4 because it deals with many

· other things bes ides .

The outline of submissions, if the Court

pleases, begins in paragraph 2.1 with the

proposition that that appropriation - we have said
by section 34, but it did not include, of course,
the whole of section 34 - is a standing
appropriation and certainly not an appropriation
for the ordinary annual services of the government
within the meaning of section 54. This Court has
already had occasion to consider the meaning of

bills for the ordinary annual services of the

government, and that was in Brown v West,

(1990) 169 CLR 207 to 208.

DEANE J:  On your argument, is section 34 really the

appropriating section? Is it not section 33?

Cemetery 69 1/4/92

MR ROSE:  I am addressing now, if Your Honour pleases, the

argument put by my friend, Mr Walker, that

section 34, which provides the authority to pay

moneys out of the trust fund for, amongst other

things, the costs of administering the Act - and it

is section 34. I will be coming back - - -

DEANE J:  I thought you had reached your own argument on

section 81. You are saying section 34 was the

appropriation section?

MR ROSE: Regrettably, I have not moved that fast,

Your Honour.

MASON CJ:  I thought you had reached it and passed over it

actually.

MR ROSE:  I am tempted to treat that as an invitation,

Your Honour. Section 54 of the Constitution is

dealt with in paragraph 2.1 of our outline, and we

are dealing there with section 34 of the authorizes expenditure from the trust fund, first

on costs of administration of the Act; secondly,

on paying money to the States and Territories.

Section 34 does not use the word

"appropriation", but ordinarily legislation

authorizing expenditure from the trust fund is

referred to as an appropriation. The basis for

requiring an appropriation would be section 83 of

the Constitution on the basis that the trust fund

is part of the treasury of the Commonwealth.

Section 81 is limited to the consolidated revenue

fund. Section 83 deals with the treasury. There

was, I might just mention, one passage in the

Surplus Revenue case, 7 CLR 193 and 196, where

Justice Barton seemed to take the view that the

trust fund was not in the treasury.	No other
justices seem to have taken that view.	And the
difficulty with that, at least to those concerned

with parliamentary control of public moneys, a

drawback in Justice Barton's approach of regarding

the trust accounts trust fund as being outside the

teasury within the meaning of section 83, would be

that there would be no constitutional requirement

for an appropriation from the trust fund, or from the loan fund for that matter. I am not aware of

any other justice having taken that view, and it

was not essential to Justice Barton's reasoning in

the Surplus Revenue case.

DEANE J: Probably, nothing turns on it, but one of you,

accepting your primary argument about section 81

for the sake of discussion, is that section 34,

having established the trusts of the trust fund,

the only appropriation which takes place both for

Cemetery 70 1/4/92

section 81 and section 83 purposes is that under

section 33.

MR ROSE:  To pursue that line of thought, if Your Honour

pleases, it would seem to rest at base on the

proposition that the trust fund is part of the

constitutional revenue fund in the constitutional

sense.

DEANE J: If one reads section 33 as applying to moneys

after receipt into the consolidated revenue fund

and appropriating moneys to a trust fund which has

been established, the appropriation to the trust

fund, in one sense, is an appropriation to the

purposes of the trust fund which means the

section 83 appropriation is affected not by what

constitutes the trust fund but by the appropriation
to the trust fund. Probably nothing turns on it

here.

MR ROSE:  If one reads section 33 as dealing with the

payment of the money into the trust fund, it may be difficult to see it as also doing the extra duty of providing authority to pay money from the trust

fund. If one, having got the money into the trust

fund, it may be possible to rely upon section 62A

of the Audit Act as a standing provision provided

you can say that the purposes of the trust fund are

there.

DEANE J: Query, if you appropriate money to A in trust to

pay it to B, there is something to be said for the

view that you have appropriated both the payment to

A and the subsequent payment by A to B.

MR ROSE: With respect, Your Honour, if it were really a

trust relationship in the private law sense, yes,

that certainly would be a line of argument one

could pursue, but although this is called a trust

fund only a very small amount of money in it is

trust money in any genuine sense, in which the

Commonwealth is holding it on trust for other

people. It is the mechanism used by the

Commonwealth for, in effect, earmarking moneys for

expenditure for particular purposes but they are

not trusts in the private law sense. I think the

third Garnishee case in 46 CLR would provide some

relevant judgments in respect of the nature of moneys in governmental trust funds, so-called.

If one can spell out of the appropriation into

the trust fund also an implied authority to spend
it from the trust fund, we would not disagree with

that, with respect. It might be convenient if I did pass over to section 81 since we are on that

topic and then come back to what I had proposed to

say about section 54.

Cemetery	71	1/4/92
MASON CJ: Yes.

MR ROSE: Before I turn to section 33 of the Administration

Act, I will just mention the background against

which it was enacted and that, of course, was that

section 81 provides:

All revenues or moneys raised or received by the Executive Government of the Commonwealth

shall form one Consolidated Revenue Fund.

Despite the language there, the "shall form" rather

than "shall be paid into" does not mean that from

the moment of receipt they constitute a CRF, it at

least means that they shall be paid into a

consolidated revenue fund.

The original Audit Act in 1901 did not itself

in terms establish a CRF, rather it assumed that

there would be one, and the present Act is no

different, there has been no change in that

respect.

For loan and trust funds though, the original

Act provided that separate accounts should be kept

in the treasury called the loan fund and the trust

fund, and Your Honours will see the provisions

there in section 55 and section 60. I understand

that Your Honours do have copies of the Audit Act

already. If that is so I need not - but if they
are pamphlet reprint it is probably well out of

date by now.

MASON CJ:	We have it in the books that you have supplied.
MR ROSE:	Bound "Defendant's documents"?

MASON CJ:' Yes.

MR ROSE: Right. It will be convenient to use the document

then that we handed up. Section 55 establishes the

loan fund:

A separate account should be kept of all
moneys raised by way of loan -

and then the section 60 on the trust fund.

Originally, the Audit Act said that those separate

accounts should be kept in the treasury, and apart

from Justice Barton's view that I referred to, I

think it would be fair to say the orthodox view has

been that the treasury comprised all the places

where Commonwealth moneys might be held,

principally, into the three funds: the consolidated

revenue fund, the trust fund and the loan fund.

The words "in the Treasury" were deleted in 1978

because the Department of Finance was founded, I

Cemetery 72 1/4/92

think, in 1977 and it was, I think, thought that the reference to "the Treasury" in the Audit Act might be taken to refer to the Department of the

Treasury which was not appropriate after

administration had been transferred to the Minister

for Finance.

Be that as it may, the constitutional

reference to "the Treasury" which appears to

descend from United States context, unlike

section 81 which had its origins in the colonial

and United Kingdom legislation, "the Treasury" in

section 83 seems to be an all embracing concept,

not to be identified with the Department of the

Treasury.

References to the three funds will be found

throughout the Audit Act, for example, sections 2,

32, 34 and 50, with all the mechanism of the

accounting control of public moneys. In

section 21 - - -

BRENNAN J: Is there some difference between funds and

accounts?

MR ROSE:  If Your Honour pleases, my next point was going to

touch upon precisely that question. Section 21

provides for the establishment of bank accounts,
the main one being the Commonwealth public account,

but there are other accounts as well, as

Your Honours will see from section 2l(l)(a) and

(b). Under paragraph (a) there must be accounts

established with such banks as the Minister, that

is now the Minister for Finance:

determines ..... each bearing the designation

"Commonwealth Public Account" -

and then under paragraph (b) there will be other

accounts as well.

Now, it does appear, from some publications

that one sees, that there is a tendency to confuse

the funds with the bank accounts in which the

moneys are kept. There is no reason why a

particular fund should not be kept in any number of

bank accounts, and sometimes the equation of the

Commonwealth public account or the aggregate of the

three funds is seen. That is not strictly accurate
because public moneys can be taken out of the

Commonwealth public account, kept in drawing accounts. They are no longer part of the CRF, they are, nevertheless, still public moneys. It is

certainly not true that all public moneys are,

necessarily, in one or other of those three funds.

Cemetery 73 1/4/92

BRENNAN J: But 55(ii), for example, speaks of an account

which "shall be called the Loan Fund". What - - -

MR ROSE: That is not to be confused, in my submission,

Your Honour, with the bank accounts. It is an

account kept in the treasury for the purpose of

recording the balances in the loan fund and is not

the same as the various bank accounts in which the

moneys might be kept. So those accounts could be

anywhere around the world, for example, depending

on where the moneys are being borrowed and where

they are being kept pending crediting to the loan

fund.

BRENNAN J:  I confess not to have any understanding at all

as to the denotation of the term "consolidated

revenue fund". What does it mean?

MR ROSE: It is a concept that has its practical

manifestation in the treasury where the amounts

that have to be credited to the CRF in accordance

with section 81 or whatever other legislation

requires it and those accounts are kept in the

treasury as the accounts of a fund.

BRENNAN J:  Why is it that the term "Consolidated Revenue

Fund" in section 81 is not merely descriptive as a

global term of all revenues or moneys raised or

received by the executive government, however kept,

wherever kept?

MR ROSE:  And from the first moment of receipt, so that

cash, for example, the moment it is received is

part of the CRF?

BRENNAN J: .Yes.

MR ROSE:  That would be one possible reading of the section,

if Your Honour pleases. My own objection to it

could be that it lacks the characteristic of

consolidation, if that is all it refers to, a

notional aggregation of the moneys even if they

have not actually been brought to account in any

central fund.

BRENNAN J: But if you treat it as a global term it effects

its own consolidation, does it not?

MR ROSE:  Yes, it can be read in that way, with respect,

Your Honour, yes.

BRENNAN J:  It does not matter what fund you say that parts

of it are in.

MR ROSE:  And if one is prepared to accept that the separate

accounting of what I call the Audit Act, CRF, and

the Trust Fund and the Loan Fund, the separate

Cemetery 74 1/4/92

accounting is not inconsistent with the notion of

being consolidated, then that concept would be,

certainly, constitutionally viable and it would

give the protection of section 81 to any

expenditure of any of those moneys from the moment

of their receipt by the Commonwealth. There

certainly would be some advantage, in one sense, in

that, though I suppose the alternative reading of

it as a constitutional requirement that the moneys

be paid into - brought to account in a - I want to

get away from actual term "paid" because that

commits the error that I was trying to avoid of the

bank accounts and so on and the fund. But if it is

a requirement that the moneys be brought to account

in a central fund, there is still the

constitutional protection of the section if it is

read in that way.

DAWSON J:  Why is it conventionally thought that the loan

fund does not form part of the consolidated revenue

fund?

MR ROSE:  If Your Honour pleases, the history of it, as I

recall, is that in the conventions there was a

draft which talked of revenues or moneys. The word

"moneys" was deleted, I think in Adelaide, on the

basis that they did not want it to include loan

moneys, and that would be consistent with the

colonial practice in which loan funds were always

kept separate from the colonial revenue funds, in

particular of Victoria as the main model for the

Commonwealth structure, but it was a common

feature, I understand, of all the colonial
financial arrangements.

The word "moneys" was deleted, then there was a move, I think, in the Sydney convention, to

restore it, and that was negatived. Then it

eventually got back in the drafting committee,
without any further explanation. Quick and Garran

say that despite the fact that the word "moneys"

has got back in by that drafting process -

DAWSON J: And not only "moneys", "moneys raised".

MR ROSE: Well, Quick and Garran's argument, Your Honours,

in the expression "revenues or moneys", "moneys" must be read as being moneys of the same general nature as revenues and therefore did not include loan moneys, and so that was the origin of it and

that has been the practice ever since of regarding
the loan fund as separate from the consolidated

revenue fund.

DAWSON J: And the trust funds, I gather, are separate again

but nevertheless really are only a means of

Cemetery 75 1/-'

earmarking moneys by taking them notionally out of

the fund.

MR ROSE:  Yes, and the trust fund, of course, can - as in

the present case - consist to a very large measure

of moneys that have been raised as taxes and

therefore as revenues in the primary sense.

BRENNAN J:  I think I must be missing something. understand why it is that section 81 is not, as it I do not

were, self-executing. Be there a raising or a

receipt of revenues or moneys, by force of
section 81, those revenues or moneys are the

consolidated revenue fund and they are in the

treasury and nothing is to be taken out save under

section 83.

MR ROSE:  We would not, with respect, Your Honour, oppose

that reading at all. And if that not be correct,

then the alternative is that there is an obligation

to bring all those moneys to account in a

consolidated revenue fund and that, if they do not

form part of it immediately upon receipt, there is

an obligation to bring them to account forthwith.

BRENNAN J:  Does section 81 have any work to do save to

ensure that section 83 cannot be circumvented?

MR ROSE:  On the reading that Your Honour has indicated,

section 81 would mean that all the moneys are

forthwith, immediately upon receipt, part of the consolidated revenue fund in a global sense, and

then section 83 is simply saying that it -

section 81 says it has to be appropriated.

Section 83 makes it - I suppose one way of

reconciling the two would be to say that section 81

is simply saying that that CRF is to be

appropriated for those purposes, and then 83

bolsters it, perhaps takes it a bit further by

saying:

No money shall be drawn from the Treasury of

the Commonwealth except under appropriation

made by law.

DAWSON J: But section 83 now would cover loan funds and

trust funds, because they are all moneys in the
treasury, are they not, although the conventional
view is that those two do not form part of the

consolidated revenue fund.

MR ROSE: Exactly, Your Honour, with respect, yes.

DAWSON J: That is a view that you are saying is not a

necessary view.

Cemetery 76 1/4/92

MR ROSE:  Not a necessary view, no.

DAWSON J: But certainly the loan funds in the treasury and

the trust funds fall within section 83, even if

they do not fall within the consolidated revenue

fund.

MR ROSE:  That would be so, with respect, Your Honour, yes,

except for the remark by Justice Barton that I

referred to. I think he is the only dissenting

voice that I am aware of on that. Certainly the
loan fund and the trust fund are regarded as part

of the treasury.

McHUGH J:  Mr Rose, has the form of section 81 been

influenced by section 82? 81 talks about the money

"shall form one Consolidated Revenue Fund", and

then by section 82, "The costs" et cetera are a

charge on that fund, so that you only have one

fund. If it was not for 81, I do not know where it

might lead you.

MR ROSE:  The development of the language in 81, as I

indicated earlier, has its origins in the colonial

and British provisions which talk about all the taxes and duties and so on being carried to and forming a fund; whether one regards those

precedents as indicating the meaning of section 81

or whether one emphasizes the distinction between

the two and says that because of the distinction,

one can say that section 81 means that as soon as

the moneys are received, they are notionally part

of a consolidated revenue fund.

McHUGH J: That seems the natural reading of section 81 -

"shall form".

MR ROSE:  It certainly has the strength of according with

the language as one would read it.

DAWSON J:

Administration Act, that upon the moneys being How do you say this works with section 33 of the received, what happens?

MR ROSE:  In my submission, Your Honour, section 33 must be

read against the background of the constitutional

provisions in section 81.

DAWSON J: That being so, what steps take place?

MR ROSE: That being so, if section 81 is a requirement that

the amounts be brought to account in the CRF, then

section 33(a) is to be read as an appropriation

from that CRF into the training guarantee fund. It

is true it does not use the word "appropriate", but

then many appropriations do not, for example the

appropriation under section 34.

Cemetery 77 1/4/92

DAWSON J:	So the moneys in the first instance go into the consolidated revenue fund and then by section 33, and section 32, I take it, they are then paid out
into the trust account.
MR ROSE:	With respect, Your Honour, yes.

MASON CJ: Is that the standard form of appropriation now,

of standing appropriation?

MR ROSE:  I am not sure, with respect, Your Honour, that

there are any other models I can point to.

Certainly, it is true, as my learned friends have

said, that some decades ago the rather elaborate

formula of talking about an appropriation into a

trust fund of an amount equal to the amount of tax

raised, and something like that was used, I think, in the HECS legislation that has been referred to,

but the simplifying of drafting, and so on, is,

with respect, no cause for surprise that a simpler

formula is found and perhaps - - -

MASON CJ: This, apparently, is one area where drafting has

been simplified.

MR ROSE:	With respect, Your Honour, yes.
DEANE J:	I do not follow, Mr Rose, why you say it goes into

the CRF and is then paid out to the trust fund.

Why does it not just go in under appropriation to

the trust fund?

MR ROSE: Well, if one accepts the basic constitutional

obligation, or either a provision that it is from

the moment of receipt out of the CRF, as

Justice Brennan has indicated, or that it has an obligation to bring it to account in the CRF, then that obligation must be met and then section 33(a)

operates to authorize the transfer of it from the CRF into the trust fund unless one takes the view

CRF. that the trust fund is part of the constitutional

DEANE J:	Do you take that view or not?
MR ROSE:	My submission could be put in the alternative,

Your Honour. If we are not right in the way we

have put it in the outline, then the other bases
provide alternative means of constitutionally

supporting what is done.

DAWSON J: What view does the treasury take?

MR ROSE:  It takes the view, if Your Honour pleases, that

revenues must be brought into the CRF.

Cemetery 78 1/4/92

DEANE J:  So there would be a book entry for these amounts,

that they came into - is it called the CRF or is it

called the CPA?

MR ROSE:  The CPA is the set of bank accounts in which

Commonwealth moneys are kept.

DEANE J: Then, what would the records show?

MR ROSE:  I would have to get - - -

McHUGH J: In the national accounts.

DEANE J:  I mean, X Pty Ltd pays $1000 to the Commissioner

of Taxation, what do the Commonwealth records show,

so far as CRF and - - -

MR ROSE:  In the first instance they may be paid to a

temporary holding account, but in due course they

would be credited - - -

DEANE J: Except that would be a bank account, would it not?

MR ROSE:  Yes, Your Honour, and in due course they would be

credited to the CRF.

DEANE J:	Not a bank account?
MR ROSE:	Not a bank account, no.

DEANE J: And they would then be credited out of the CRF to

this particular trust?

MR ROSE:  Pursuant to an appropriation. The ordinary method

would be that tax revenues under the Income Tax

Act, for example, would go into - - -

DEANE J:, I am talking about this $1000.

MR ROSE:  This Act?

DEANE J:  I mean, X Pty Ltd has paid $1000. What are the

records of the Commonwealth? He pays it physically

to the Commissioner of Taxation who pays it, no

doubt, into a bank account controlled by him. But

that is not what we are talking about. What we are

talking about is accounting for CRF purposes.

MR ROSE: Well, in my submission, what the Constitution and

this Act require are that the amounts, if they are
not already in the CRF on the basis that has been

discussed, they must be brought to account in the

CRF. That is the constitutional requirement. And

then section 33 authorizes the transfer of the

amounts to the training guarantee fund.

Cemetery 79 1/4/92

DEANE J: Well now, could I ask you this: are they ever

treated as in a CPA, the $1000 that X Pty Ltd has

paid?

MASON CJ:  Mr Rose, it may be that you ought to secure

detailed instructions from Treasury about this, or

the Department of Finance, whoever can inform you

precisely as to what are the bookkeeping and money

keeping arrangements so far as 33(a) payments are

concerned.

MR ROSE:  We have some information on that, if Your Honour

pleases. The question would be whether whatever it

may be that is being done, the question is what

should be done so, in a sense, in my submission, it

is irrelevant what the detailed accounting

arrangements would be.

MASON CJ: That may be true, but we are, of course,

confronted with this question of interpretation of

section 33 and 34, and in order to fully understand

the import of the words, it may be necessary to
fully appreciate what are the mechanics of CRF and

the keeping of CRF and entries into it.

McHUGH J: Take cash held on 30 June in Commonwealth

departments all around Australia - they must be shown as part of the consolidated revenue fund.

MR ROSE:  They would be paid, as I understand it, into bank

accounts, very often - usually, perhaps that is

overstating it, but to bank accounts opened under

section 2l(l)(b) of the Audit Act and, in due

course, credited into the CRF.

McHUGH J:  I appreciate that, but there must be actual cash

held in offices after banking hours, for example,

received.

MR ROSE:  Yes, indeed, and there are the obligations, in

those early sections of the Audit Act, to pay the

money into a bank account; it must be paid into one

or other of those bank accounts and then, depending

upon what the nature of the receipt is, if it is

receipt of taxes it would in due course - or it

should, I do not know that I can say that it does -

it should find its way to a credit in the CRF or,

if it is receipt of trust moneys, receipt of

moneys, eg, the genuine trust moneys which were the

subject of section 55 of the original Audit Act,

that would be credited to the trust fund direct

because it is not revenues or moneys within

section 81. It is loan moneys, it is credited to

the loan fund having, perhaps, been held in an

interim bank account somewhere.

Cemetery 80 1/4/92

DEANE J: But why, in relation to my $1000, would you not

say at the moment of receipt it forms part of the consolidated revenue fund by virtue of section 81 of the Constitution but it has been appropriated to

the trust under this Act and therefore it will be

immediately credited to that trust fund? Why is

there some in and out, as it were, of consolidated

revenue fund? Or why is it necessary?

MR ROSE: Well, it is only necessary if one does not accept,

and I certainly submit that, from the moment of

receipt they are part of the CRF. I am not - - -

McHUGH J: That is what the Constitution says. It does not

talk about bank accounts or bookkeeping entries.

It says it is raised or received.

MR ROSE:  With respect, Your Honour, we would

DEANE J: And it has been appropriated which means, why

could not the Commissioner of Taxation say, "My

office is in a mess; pay that straight into the

fund"?

MR ROSE:  I would go back to the way I first opened on this

topic of section 81. It was in the alternative

that if one cannot read section 81 as meaning that

from the outset the moneys form part of the CRF,
then if that were not so then one moved over to the

alternative. Perhaps I might have unfortunately given the impression that I have been submitting

the alternative, but in fact the first of the limbs
of my opening statement was that alternative and,

with respect, that would be the view that we would,

indeed, most strongly prefer.

DEANE J:  Arn I correct - and I will stop interrupting you

after this, but am I correct that the Audit Act

ignores the CRF?

MR ROSE:  With respect, Your Honour, no. The Audit Act very

much recognizes the CRF but it does not establish

it; it assumes that it exists.

DEANE J: Well, assumes or ignores it.

MR ROSE: There is no provision corresponding to -

DEANE J: It does not deal with the CRF in terms?

MR ROSE:  Not in terms of establishing it in the way that

sections 55 and 60 provide for a separate account

to be kept called the loan fund and the trust fund.

DEANE J: It directs itself to the CPA which, depending on

one's view, can be equated with the CRF or

Cemetery 81 1/4/92

represents the residue of the CRF.	I am asking
you.	I have trouble with it.

MR ROSE:  Indeed, the money having been taken into the

Commonwealth public account, then anything that is not then transferred into the trust fund or the loan fund would represent the CRF as a residual concept.

DEANE J:	Thank you.
DAWSON J:	So that the CRF is a constitutional concept, is

it? It really does not form any part of the

accounting processes under the Audit Act.

MR ROSE:  That would be so if one follows through from the

logic of the basic proposition that all the moneys

received immediately forthwith become part of the

CRF in the constitutional sense. The Audit Act

recognizes three funds but the Audit Act CRF is the

residue of the Commonwealth public account.	So
there are, in a sense, two CRFs, one the
constitutional concept, the global concept
following the first limb of the alternative -

DAWSON J: Is there no discussion of this somewhere in the

literature?

MR ROSE:  I am not aware of anything that has got into

these - certainly nothing published, if

Your Honours pleases.

DEANE J: Perhaps nobody understands it.

MR ROSE:  I am not aware of anything in the published

literature. If the Court pleases, the primary

basis on which we put it is that the moneys

immediately and automatically by force of

section 81 go into the CRF and that section 33

operates against that to authorize the payment into

the trust fund - into the training guarantee fund.

But if that be not right then section 81, at least,

has the other operation though it would be rather

more complicated in terms of operating the

accounting side of it and it may well be that the

accounting side is consistent with the primary

submission I am putting. But, in any case, what is

in fact done cannot control what ought to be done.

If the Court pleases, on that view of

section 33(a), paragraph (c) needs to be read as a

reference to "other moneys appropriated by law for

the purposes of the Fund". And, in my respectful

submission, there would be no difficulty in reading

it in that way.

Cemetery 82 1/4/92

If there is any doubt as to what section 33

meant, then extrinsic materials could be invoked

and, in the second reading speech - His Honour the

Chief Justice has already drawn attention to the

statement that the amount shall be paid into the

trust fund under a standing appropriation of the

CRF. And that standing appropriation is, in my

submission, to be found there in section 33(a).

I should draw the Court's attention though to

that provision in the explanatory memorandum which

is more consistent with the primary basis on which

I am putting the argument on section 81. In that

explanatory memorandum, at page 7, which is under

tab 5 in the red folder, there is as statement

that:.

Any revenue collected under the Training

Guarantee will be paid into the Training
Guarantee Fund, which will be a special trust

account within the Consolidated Revenue Fund.

MASON CJ: Where is this, Mr Rose?

MR ROSE: Sorry, Your Honour, page 7 of the explanatory

memorandum. There does seem to be some confusion.

I am simply obliged to draw Your Honours' attention

to that provision because it is inconsistent with

what is in the second reading speech. Page 57 of

the explanatory memorandum seems to get back on

track again in terms of the three separate funds

that make up the Commonwealth public account. It

is not strictly accurate because it does confuse

the bank accounts with the funds. They say:

The other two funds are the Consolidated

Revenue Fund and the Loan Fund.

So there is no suggestion there that the training

guarantee fund is part of the consolidated revenue

fund. The primary provision is in the second

reading speech and explains paragraph 33 for what it is: the authority to transfer it from the CRF

into the training guarantee fund.

Furthermore, if the Court pleases, even if

there was some invalidity in relation to

paragraph 33(a), that could not affect the

obligation of the taxpayers to pay the tax. In our

the Commonwealth under section 76 of the	submission, the provisions creating the debt due to for the transfer of moneys into the guarantee fund
is invalid, the only result is that the training
guarantee fund has not got much money in it, but on
any principles of severability, in my submission,

Cemetery 83 1/4/92

the obligation of the taxpayers to pay the tax

should not be affected.

If the Court pleases, I return to the

arguments put against the legislation based on

section 54 of the Constitution. Your Honours have

already been referred to the cases which we have

mentioned in our outline, the early cases of

Osborne and Buchanan, the PMA case and so on.	I
think it is unnecessary for me to go over those
again.	I have already referred the Court to Brown

v West, where the Court discussed the nature of

appropriating moneys for the ordinary annual
services of the government, and certainly on those
understandings, the provision in section 34 here is
not an appropriation for ordinary annual services.
We have also given the Court a reference to

Browning on House of Representatives Practice, which was referred to on a number of occasions in

Brown v West.

My learned friend Mr Walker suggests that there is no difference in substance between

sections 53, 54 and 55 and that a failure to comply

with 55 results in invalidity and so, therefore, he

suggests, should a failure to comply with

section 54. But section 55 does after all contain

within it a provision that if there is a failure to

comply, at least with the first paragraph, that any

other provisions other than those dealing with the

imposition of taxation shall be of no effect.

That is quite unlike section 54 which does not

have anything like that at all. In section 55, of

course, the second paragraph has no reference to

the. effect of a breach, but the Court, in the

various remarks that have been made about those

sections, has held in fact that a breach of the

second paragraph also is visited with the same

consequences as are explicitly stated in the first.

As to section 57, in my submission, there is a

very important difference, in terms of the

operation of those sections. Under sections 53 and

54 any failure to observe its requirements, or any

alleged failure, can be dealt with by the Senate.

It can refuse to pass and hold up bills and so on

until the dispute with the government, with the

House of Representatives, is worked out, and that

of course happened from time to time, and

eventually gave rise to the 1965 compact as an

attempt to resolve the main issues which had been

causing difficulties - the 1965 compact to which my

friend, Mr Walker, referred.

But under section 57, which is a provision in

which the Senate can be overborne, and a bill

Cemetery 84 1/4/92

passed into law, without the Senate passing it, is

very different indeed, and that factor was a very

important one in the decision of the Court in the

PMA case to treat section 57 as giving rise to invalidity, despite the fact that the word

"proposed law" is used and that there was,

therefore, a superficial resemblance with

section 53 and 54.

If the Court pleases, paragraph 2.3 of our

outline, I think having heard the argument from my

friend, Mr Walker, is probably not in point against

the arguments he was putting. As I understand it,

it was because section 34(l)(a) constitutes, on his

argument, an appropriation for the ordinary annual

services, therefore the entire Act and not just

section 34 would be invalid since, in my

submission, failure to comply with sections 53 and
54 does not have the result of invalidity, it is

simply a matter for resolution between the two

Houses, as has been stated in Quick v Garran and

through those early cases and in later references.

In my submission that position ought to be maintained by the Court.

I think, if the Court pleases, that concludes

the submission, but may I just follow up

Your Honour the Chief Justice's suggestion that we

provide the Court with detailed information on what

in fact happens under this, if we can provide that

to Your Honour.

MASON CJ:  Yes, that might be helpful. The other question I

was going to ask you is you are not presenting any

argument on locus standi - absence of locus standi?

MR ROSE:  No, if it please Your Honours. It would follow, I

think, from some of the arguments we have put that
the plaintiffs might not have standing but we do

not see that as necessary to canvass now.

MASON CJ: Yes. Thank you, Mr Rose.

MASON CJ: Thank you, Mr Rose. Yes, Mr Walker?

MR WALKER:  May it please Your Honours. Your Honours, on

the last two questions raised, which are a

severance argument if any invalidity be
demonstrated, the real question to be asked and
answered, in my submission, is whether it might be
supposed not that a rump could operate but whether

it could be supposed that a scheme, for example,

which did not include provision for reimbursement

of the Commonwealth of costs of administration

should be considered as one which would have been

enacted, and that, because it cannot be answered

and also because that provision comes at a critical

Cemetery 85 1/4/92

and central part of the scheme, namely, the

financial heart of it is one which, in my

submission, leads to the result I contended for in-

chief.

The same goes, with respect, to the question of how the fund is to be funded and whether it is

to be funded directly as we have submitted. It is

not to be supposed, in my submission, that the

Court could actually conclude that the statutes

would have been passed in the truncated form

required by any invalidity and, accordingly, there

can be no severance.

On the issues of the consolidated revenue fund and th~ way in which sections 81 and 83 operate in

any event, that is regardless of Parliament's or

the public service's practices, the notions are at

least implicit, and to some extent explicit, in the

Surplus Revenue case, of course, 7 CLR at 179,

where in order for sections 94, and even more so,

ability to balance between the revenues, which by

had it been relevant, section 89 of the

section 81 go into, or are, I should say, form the

CRF, and expenditures which 89 required to be

defined geographically, in 94 required to be

defined in some manner, so as to yield a surplus or

not. It was held in the Trust Fund case that

expenditure out of CRF manifestly, by reason of the

last two lines of section 81, was satisfied for the

purposes of striking surpluses or none by the
device, if it be a device, of appropriating moneys

out of CRF7 into trust funds.

The case could not have proceeded to that

conclusion, with respect, had it been supposed that
to move money from that which was understood to be

CRF to a trust fund of the Commonwealth did not move it out of the CRF, and so the entire

underpinning of an important early case on these

financial provisions presupposes that there are, to

use the language of the Audit Act, public accounts

of the Commonwealth other than CRF. In my

submission, that same pattern is shown by the kind

of legislation of which we have shown the Court
examples, by which there are standing

appropriations.

Otherwise we entirely accept, with respect,

what is said concerning the nature of section 81

and section 83 in their interrelationship.

Section 81 subject only to section 82 requires that

money be appropriated out of section 83 only by a

law under section 83. We accept, however, that so

far as the in and out is concerned, that where the

device of a trust fund is used the prescription of

Cemetery 86 1/4/92

the purpose of the fund, or more accurately the

purpose to which moneys in the fund may be devoted,

forms part of the section 83 appropriation, or to

put it another way, completes an appropriation

under section 83 in terms of the expenditure of

that money other than by transferring it out of CRF

to the trust fund.

One may analyse it as being two section 83

appropriations or as a two stage section 83
appropriation. In my submission, whichever way it

is analysed it is clear that a distinction is drawn

between the CRF and, by reason of the Surplus Funds
case, a trust fund out of which an appropriation

from the CRF is made.

On the support we found from a section 55

possibility for the imposition of charge not being

a tax, we would simply wish to make it clear we do

not for a moment say that the Appropriation Act
standing on its own falls foul of section 55; it
is when the two Acts are combined as Acts, as laws,

pursuant to the incorporation provision, that the

Court is faced with a law which both imposes

taxation, deals with the imposition of taxation and

does other things, and it is the other things which

the Administration Act does which, in our

submission, would fall foul of the express

provisions for invalidity in the first paragraph of

section 55.

GAUDRON J: But they would only fail to the extent of the

incorporation and not at all to the extent of the

separate enactment; would that not be so?

MR WALKER:  Your Honour, of the dicta I took the Court to on

that argument, it is clear that at least two of

them - I think I must concede on a fair reading -

seem to be saying something of that kind. In my

submission, Your Honour, that is not the only way

in which that argument can proceed, if it were to

proceed. The incorporation which, on the argument,

had been taken by this Court to have been

accomplished by the words of Parliament would be an

entirely notional matter and, in fact, have no

reality at all. In my submission, the

incorporation should be given its ordinary and

plain effect.

GAUDRON J: But that does not stop it being a separate

enactment notwithstanding? I mean, it is not

physically incorporated and the words "incorporated

as a document" do not really mean physical

incorporation at all.

MR WALKER:  They do not mean physical incorporation but they

mean incorporation so far as laws may ever be

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incorporated which is an intellectual melding or, more to the point, an operational melding. They

have an effect which, in my submission, is
indistinguishable from the effect of a later

amendment on a principal Act, an effect which, in

the context of section 55, of course, has been

considered in Air Caledonie and there is a special

consequence considered in Air Caledonie in terms of

what happens under section 55.

But where two Acts are incorporated, in my

submission, the word, plainly a metaphor when used

with respect to laws, has to be given its plain

metaphorical effect and it means read as one and

read and treated as one by this Court must mean

section 55 invalidity. One cannot then de-

incorporate, tear apart what Parliament has put

asunder in order to retain validity for the whole

of the Administration Act in this case.

But, with respect, Your Honour, it is clear that the dicta contain expressions - at least two

of them contain expressions which the effect that

Your Honour puts to me.

So far as concerns ordinary annual services,

we would respectfully remind the Court that the

epithet "annual" qualifies services and not

appropriation and that annual services presumably

does not mean something as odd as a service

rendered annually, that is once a year; it means,
as I put in chief, in the nature of recurrent.

The fact that certain appropriations for

ordinary annual services are made by standing
appropriations, in my submission, does not change
the nature of the services as being ordinary and

annual for which that appropriation is being made,

and nor could it. We accept that "treasury" in

section 83 includes the trust funds. That

strengthens what we say concerning the

appropriation argument, 34(l)(a).
Could I give Your Honours a few references. neglected to give Your Honours a page reference in	I
Cadbury-Fry-Pascall concerning the section 55
matters.	I simply give you the reference:
70 CLR 371 to 372.	I owe to my learned friend Mr

Katz a reference which Your Honours may find of

assistance. I do not think it is quite the page

Mr Rose has given you.

In Browning's House of Representatives

Practice, in the passage commencing at page 409 and

410 concerning appropriation matters and the

respective funds, there are in fact two references

which we have not researched, but in answer I think

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to one plaintive enquiry as to whether this has

been looked at, footnote 355 suggests that a more

detailed account of the funds and related matters

is to be found in a publication entitled Financial

Administration Handbook published by the Public Service Board in 1985, and that there is an analysis concerning the trust fund to be found in the 34th report of the joint committee of public

accounts, parliamentary papers 69 (1956-57) in

footnote 363.

BRENNAN J:	Am I right in thinking that the 1965 agreement has been subject to some revision?
MR WALKER:	I do not think so, Your Honour, no.
MASON CJ:	Do you know whether it has been subject to any

revision, Mr Rose?

MR ROSE:	I am not aware of it, Your Honour.
MR WALKER:	Your Honours, the entirely frank answer is that

all the sources which are themselves up to date

which refer to it that we have seen treat it as the

current compact concerning such matters.

BRENNAN J: Thank you.

MR WALKER: Whether it has been departed from in practice

which, I suppose, may be of relevance to political

compacts, we cannot say.

On the question of parliamentary privilege and

validity, I should have given Your Honours an

earlier reference, Queensland v The Commonwealth,

139 CLR at 596 to 597. My learned friend referred

to Harper v Victoria, 114 CLR at 377. At the end

.of Mr Justice McTiernan's reasoning there is a

reference to the same kind of matter which, with

respect, the learned Solicitor for New South Wales

developed, namely, that the fees were shown pretty

clearly not to be devoted to building up

consolidated revenue, a matter which was said to

cast light on the question whether it was a tax or

not. May it please Your Honours.

MASON CJ:  Thank you, Mr Walker. The Court will consider

its decision in this matter.

AT 4.09 PM THE MATTER WAS ADJOURNED SINE DIE

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