Queensland Nickel Pty Limited v. Commonwealth of Australia

[2015] HCATrans 8

[2015] HCATrans 008

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B25 of 2013

B e t w e e n -

QUEENSLAND NICKEL PTY LIMITED

Plaintiff

and

COMMONWEALTH OF AUSTRALIA

Defendant

FRENCH CJ
HAYNE J
KIEFEL J
BELL J
GAGELER J
KEANE J
NETTLE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 5 FEBRUARY 2015, AT 10.15 AM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR L.T. LIVINGSTON, for the plaintiff.  (instructed by Kilmurray Legal)

MR J.T. GLEESON, SC, Solicitor‑General of the Commonwealth of Australia:   May it please the Court, I appear with MR D.F.C. THOMAS.  (instructed by Australian Government Solicitor)

FRENCH CJ:   Yes, Mr Jackson.

MR JACKSON:   The Court will have our outline of submissions and may I indicate in short form the course which we seek to take in our oral argument. Your Honours, first I would seek to go to the central provisions of the legislation in question. Secondly, to refer to the tests applicable to determine whether the provisions give a preference to which section 99 of the Constitution refers and in doing so to seek to apply those tests to the relevant provisions, and thirdly, to deal with the appropriate answers to the questions in the special case.

Your Honours, in that regard, may I put, again in a very abbreviated form, what we say, and that is that Division 48, that is clause 348 of Schedule 1 to the Clean Energy Regulations, amounts to giving preference to Western Australia over Queensland in terms of section 99 in the sense that it lumps together different products, different processes and different inputs. The effect of that, if we were successful, is that clause 348 would be outside power. There would thus be, and our learned friends put this darkly at the conclusion of their outline, that there would then be no entitlement to free carbon units in respect of nickel production but the provision of free carbon units, your Honours, is an essential element of the manner of calculation and the provisions made for the charge which ultimately is provided for by the charging Acts.

Your Honours, could I come now to the terms of the legislation?  There are three statutes which impose the unit shortfall charge.  They are the Clean Energy (Charges – Customs) Act 2011, the similarly titled Excise Act 2011, and the one of particular relevance for present purposes, the Clean Energy (Unit Shortfall Charge – General) Act 2011.  Your Honours, they are, as one might expect, in rather similar terms and may I refer to the (Unit Shortfall – General) Act.  Your Honours, there is no difference between us, I think, as to the fact that that is the enactment which is relevant for present purposes.  Your Honours, by section 8(1) of that Act:

If a person has a unit shortfall for a financial year, charge is imposed on the unit shortfall.

The term “unit shortfall” is defined and I will come to that in just a moment, if I may, and your Honours will see the relationship between this Act and the other two enactments to which I referred in subsection (5) of section 8 in the sense that it imposes a charge only so far as neither a duty of customs nor a duty of excise.

Now, your Honours will see that the charge referred to in section 8(1) is quantified in the manner referred to in section 8(3) and that is namely by the multiplication of two elements, namely the number of units in the unit shortfall – again, that is a term to which I will come – and secondly, the prescribed amount for the financial year, the latter term is defined relevantly by section 8(3)(a), and your Honours will see the prescribed amount for the financial year is:

130 % of the per unit charge [provided for by] subsection 100(1) of the Clean Energy Act2011 for the issue of a carbon unit –

to put it shortly, for that year. Now, the per unit charge provided for by section 100(1) of the Clean Energy Act in respect of each of the years in question was $23 – I do not think I need to take your Honours to the provision, but it was $23 for each of the two years.  Your Honours will appreciate, as the written submissions on both sides make clear, the charge payable was originally payable in the indefinite future, but the Repeal Act meant it was payable only in respect of the two years, 2012, 2013.

Your Honours, if I could come back then to the question of unit shortfall, the other integer in the calculation of the amount of the charge, that is determined in accordance with the Clean Energy Act. In that regard, there are two important provisions, namely, sections 125 and 128. They deal with two aspects of it, your Honours. Section 125 is provisional unit shortfalls. Section 128 is the final unit shortfall.

If I could go first to section 125 of the Clean Energy Act, your Honours will see that section 125(2) provides for the use of the formula in subsection (5) and then it provides when one does or does not have a unit shortfall. If one goes to subsection (5) of section 125, the formula is there set out and the total interim emissions numbers, less the number of units surrendered by 15 June. The former matter referred to there – I am sorry, your Honours. The former item, that is, the total interim emissions numbers is 75 per cent of the previous year’s numbers, or else, a reasonable estimate of what the position will be. You will see that set out in sections 126(2) and (3), on the one hand, and section 126(4) on the other.

Your Honours, the final unit shortfall is calculated, rather similarly, pursuant to section 128. Your Honours will see that, again, there is a reference in subsection (2) to the formula in subsection (5) and the formula in subsection (5) takes an emissions number – which is the person’s emissions number for the year – and from that deducts the:

number of units surrendered after 15 June and before 1 February –

and adds up the other items that are there referred to and defined.  Now, your Honours, the mechanism for surrender of units is set out in section 122.  I do not think I need to your Honours to the detail of that, but could I just say that the sources of units that might be surrendered are summarised conveniently by our learned friends in their written submissions in paragraphs 23 to 25 - if I could take your Honours to that for just a moment.  You will see in paragraph 24 that the:

Carbon units are issued by the Clean Energy Regulator (Regulator) on behalf of the Commonwealth.  Each has a unique identification number and a “vintage year”.  A carbon unit is personal property and, subject to certain restrictions, is transferable.

Carbon units may be issued by the Regulator in several circumstances ‑

Your Honours will see in paragraph 26, they can be surrendered during an eligible financial year.  Your Honours will see, if I could just refer to the last sentence of their paragraph 26, it refers to ‑

a carbon unit issued in accordance with the JCP –

The JCP is the Jobs and Competitiveness Program, to which I shall come in a few moments.  Your Honours, the Clean Energy Act in Part 7, sections 143 and following recognise that not every other nation had the then prevailing enthusiasm for reducing emissions of carbon dioxide.  The objects of Part 7, your Honours will see set out in section 143 and particularly subsection (2).  Your Honours will see that the objects were”

(a)to enable the identification of activities as emissions‑intensive trade‑exposed activities; and

(b)to reduce the incentives for such an activity to be located in, or relocated to, foreign countries as a result of different climate change policies applying in Australia compared to foreign countries; and

(c)to provide transitional assistance in respect of such an activity –

that is an emissions‑intensive trade‑exposed activity and –

(d)to provide such assistance in a manner that is economically and environmentally efficient;

until such assistance is no longer warranted, having regard to –

a number of matters, including (b), whether foreign countries that are responsible for the substantial majority of the world’s emissions of carbon dioxide and other greenhouse gases have implemented measures to reduce those emissions that have an impact that is comparable, your Honours will see, et cetera.  Could I refer back for a moment to section 143(2)(e):

have been implemented in respect of markets –

and your Honours will see the types of markets to which reference is there made.  That is a statement of objects.  Section 145 of the Act provided that the regulations might formulate a program, as they are described, for the issue of free carbon units in respect of activities that have the two characteristics set out in subparagraphs (a) and (b).  Your Honours will see that those regulations were to be in place, so far as possible, at the timing referred to in section 145(4), that is:

The Minister must take all reasonable steps to ensure that regulations are made for the purposes of subsection (1) before 1 March 2012.

In fact, the charging Act, your Honours, I think, came into force a month later.  Your Honours, the program, if I could just refer your Honours to 145(5) was to operate for a number of years in the sense that you will see in subsection (5) that it contemplates the possibility of regulations amending the regulations made pursuant to subsection (1) but says that - and this is 145(5)(c):

the principle that changes that will have a negative effect on recipients of assistance under the Jobs and Competitiveness Program should not take effect before the later of the following:

(i)1 July 2017;

(ii)the end of the 3‑year period that begins when the reduction is announced -

Now, your Honours, the program contemplated by 145(1) is found in Schedule 1 to the Clean Energy Regulations 2011. Your Honours will see the title “Schedule 1”. You will see the note immediately under the title, “section 7.1”. It appears to be a reference to actually regulation 7.1, which in effect says that this is the program. Your Honours will see that clause 102(1) says that:

This program deals with the issue of free carbon units in respect of activities that, under the program, are taken to be emissions‑intensive trade‑exposed activities.

Your Honours, I do not think I need to refer elsewhere to that.  Eligibility is dealt with by clause 501 – I do not think I need to take your Honours to the detail of that.  From that, one goes to clauses 901 and 902.  Your Honours will see in clause 901, it explains:

how many free carbon units are to be issued to an applicant whose application is approved –

Clause 902(1) says that in effect –

The Regulator must issue the number of units determined in accordance with this Part –

It refers then in 902(2) to –

applications made in relation to a financial year that is a fixed charge year –

The two years in question here fall within that category.  Then, your Honours, one goes from clause 901 to 902 to 906(1).  That sets out the formula for arriving at the number of free carbon units in any instance.  Your Honours will see that – could I just say, looking at the fifth line of 906(1), it refers to “NGP^a allocations” with a letter immediately following it, and then there is a definition of that term in the same provision.  Could I say that refers to natural gas, and it does not play any part for present purposes.

You will see then a reference to E1, and your Honours will forgive me if it is a little bit hard to read some of the small letters above and below, but could I just say that there is a reference to E1^a allocations – E1 involves several elements - k^a is simply a percentage which you will see set out at 907(4).  It is either:

66.0% for a moderately emissions‑intensive activity and 94.5% for a highly emissions‑intensive activity –

You will see the expression E1^a.  That is referred to in the table in clause 401 as item 214, if I could just take your Honours to that for a moment.

HAYNE J:   Sorry, what page?

MR JACKSON:   I am sorry, your Honour, it is page 188 of the regulations.  You will see item 2.14.  It is one of a large number of items reflecting earlier parts, that I will come to in a moment, but you will see in item 2.14 at page 188 a heading “Baselines” and one of the baselines is that E1^a and that gives figures of 13.2 and 6.8 which are to be used in the calculation of the figures in 906.  That is at pages 230 and 231.

The item described at AP^ia_t, your Honours, is dealt with by section 906(7) and your Honours will see the way in which that is worked out - it is bailing together two things and the amount or volume of the product produced in the previous financial year and the expected additional production for, in effect, the year.  The second element of the calculation referred in clause 906(1) is EP^a allocations.  That is again the figure “k^a_t X EP^a_t” to which I have taken your Honours already and the additional figure, your Honours, is EAFⁱ_t and your Honours will see that that is a number which is defined by clauses 907(9) and 907(10).

HAYNE J:   Relevantly, each of the integers that you have referred to is an integer applicable to the particular – dare I introduce the word “taxpayer” – the particular producer.

MR JACKSON:   Well, your Honour, some of the figures are figures that are applicable to anyone who is engaged in the activity as defined.  Those are the ‑ ‑ ‑

FRENCH CJ:   Where there is the letter “I”, that is a designation to the particular applicant.

HAYNE J:   The individual.

MR JACKSON:   Yes, I think your Honour, that is ‑ ‑ ‑

FRENCH CJ:   It is just an identifier, as “A” is as well, an identifier of the particular activities.

MR JACKSON:   Yes.  Your Honour, in reality, most of the figures are ones that are generally applicable but, of course, one takes into account the circumstances of the particular person by some of these figures.  Your Honours, one of the numbers – you will see, if I could go back to page 188, and the second baseline which is provided is the figure “EP^a”, and that provides those numbers.

Now, your Honours, remaining if I may then with page 188 and item 2.14, you will see that refers to the activity of production of nickel.  You will see that if one looks at the preceding four or five pages that various types of activity are referred to – production of bulk flat glass and so on, and so they go on.  Each of those is referable to a Division, which immediately is preceding – to Divisions, which immediately precede that table.  Now, your Honours, so far as production of nickel is concerned, that term is one which is defined by clause 348 at page 175.  You will see, your Honours, that it provides in clause 348(4):

the basis for the issue of free carbon units is that the nickel is:

(a)       measured, on a dry weight basis, by a tonne of:

(i)100% equivalent nickel, contained in the ‑

various classes of primary nickel, primary or intermediate nickel products, et cetera.  Those terms are themselves defined in 348.  Primary nickel product is referred to in 348(5), at the bottom of page 176.  Intermediate nickel product is defined in the same provision, at the same page.

FRENCH CJ:   Ultimately, your complaint is directed to an overbroad definition of the relevant emissions‑intensive trade‑exposed activity; that is, the production of nickel.

MR JACKSON:   It is directed to the fact, your Honour, that clause 348 lumps all nickel production together.

FRENCH CJ:   Yes.

MR JACKSON:   We say – and I will come on to this in a moment, your Honour – what we say is that in doing that it puts together activities that are not relevantly similar and in fact have a State basis, to which I will come, involving a preference. Could I say, your Honours, that you will see in a number of the areas referred to in the various divisions leading up to the table that there is separation of the kind that, our contention is, needed to happen here for there to be valid legislation.  Could I just give your Honours an example in passing? 

You will see at page 107 in Division 1 that it refers to the various activities and then when one goes to the actual activities, the first of them is in Division 2, page 108, “Production of glass containers” and Division 3 is “Production of bulk flat glass” – glass is divided up. You can see if one goes to Division 17, Division 18 and Division 19 that the manufacture of paper is divided up into various categories. You can see also in Division 20 and Division 21 that the manufacture of iron and steel is divided up into quite a number of different categories. Your Honours, may I move then to section 99. Section 99 provides relevantly that:

The Commonwealth shall not by any law –

of revenue – if I could select that aspect of it, your Honours -

give preference to one State, or any part thereof over another State or any part thereof.

We would accept immediately that the provisions in question do not in terms – that is, in their actual words, language, whatever expression one likes to use – make different provision in respect of liable entities because of their location in different States.  May we also say something, your Honours, about the summary of our learned friend’s contentions which you will see in the respondent’s submissions in paragraph 92.

Our learned friends, your Honours will see, make various submissions that are set out there.  We accept that the provisions do not speak of a transfer of funds from the Commonwealth to a State.  Again, nothing is to be paid to a State, nor is the number of free units expressed to be based on the State in which the facility is located, nor is the unit shortfall charge expressed to be calculated:

in different amounts depending on the State in which the entity or its facility is located.

But, in our submission, that is not the end of the matter. What we would submit, your Honours, is this, that as has been recognised in decisions of the Court relating to the limitations in the Constitution, such as limitations on legislative powers such as section 99, the issue is not decided solely by reference to the form which the impugned law takes.

Your Honours, could I in that regard give your Honours two references?  The first is to the Court’s decision in Fortescue Metals Group Ltd v The Commonwealth (2013) 250 CLR 548 in the reasons for judgment of three members of the Court, your Honours.

HAYNE J:   Is this simply to demonstrate that it is substance, not form?

MR JACKSON:   Yes, it is, your Honour.

HAYNE J:   I would not have thought that was controversial, Mr Jackson, is it?

MR JACKSON:   Well, I do not know, your Honour, it rather seems so if one looks at the respondent’s submissions because the argument seems to be it is good enough – good enough if you have a law which in terms does not discriminate against or prefer a State which in terms.

HAYNE J:   For myself, I would have thought that the burden of 92 of their submissions was no tangible advantage is given to a State or part of a State by reason of the Act and regs, and that is the central proposition to which your riposte is?

MR JACKSON:   To which our riposte is – yes, it is.  Your Honour, I am going to come on to that, of course, but given to a State, we say, given to those who carry on business in the State by reason of their presence in the State and the resources available to them.

FRENCH CJ:   So, just in terms of this case, and looking at paragraph 5 of the oral outline, you talk about nickel producers, is the category of activity impermissibly differentially affected that carried on by one particular producer, namely, your client?

MR JACKSON:   Well, because I think there are not any other relevant producers, your Honour, yes.

FRENCH CJ:   But does that define a category of activity or just a consequence of decisions of a particular producer?

MR JACKSON:   Well, your Honour, I was going to say about that that you have a situation where decisions were made and undoubtedly by the persons who then established the refinery at where it is in Queensland.  Those decisions were based, as the special case indicates, on the basis that there was at that point a deposit which could deposit – which could be used and the method of dealing with it was something that was determined in the light of the presence of that material as that being the most appropriate way of dealing with it. 

But it was recognised at the time that that was done, that the deposit would work itself out, and having worked itself out the refinery was built ‑ again this is the material from the special case ‑ not immediately adjacent to it but in a coastal area where it would be able to receive, once that had occurred, base material from other sources and the base material that it obtains has the characteristics and it was designed for that, your Honour, to put it shortly.  That is the position.  So, it is not as if it was something that was designed in a particular way and that it just happens that way.  It was designed in a particular way for particular purposes and it is the refinery which does not have the access to – does not now have the access to any ore material itself.

FRENCH CJ:   If the refinery were to close down – I know the law has been repealed so we are talking academically in a sense, but if the refinery were to close down, what happens to the validity of the provision?

MR JACKSON:   Well, if the refinery were to close down, then, your Honour, there would not be a charge imposed under the Act.

FRENCH CJ:   There would be no category of activity differentially affected ‑ ‑ ‑

MR JACKSON:   No, there would not, your Honour.

FRENCH CJ:   ‑ ‑ ‑ because it depends very much upon the existence of this particular refinery doing this particular kind of processing, does it not?

MR JACKSON: Well, of course, your Honour. I accept that, but one is talking in relation to section 99, not in the abstract, but talking about the imposition of charges, charges related to emissions, et cetera, activities. Their very nature is that they are produced by facilities. Now, the facilities exist and you will see that Parliament makes or intends to have made provisions dealing with those facilities. Now, Parliament can do that but if I could say two things about it. The first is that it is not dealing with a theoretical question, it is dealing with activities, and it is dealing with activities so far as the present matter is concerned in the two years which were to be fixed years. In relation to those, your Honour, Parliament – no matter how inventive its views might be, no matter how appropriate they might think as a general proposition, Parliament is constrained by the terms of section 99.

FRENCH CJ:   And that requires some kind of factual enquiry by the Parliament before it enacts a law of this character.

MR JACKSON:   Well, not necessarily by the Parliament because what you will see, of course, is this was to be done by regulation and no doubt the regulations had to not be ‑ ‑ ‑

FRENCH CJ:   That is an accident of how it is done.  I mean, it could have been put into the legislation.

MR JACKSON:   Yes, your Honour.  No doubt some consideration had to be given to the issue.  Now, the views of those making the regulations are ultimately seen by looking at the regulation and the question is what is the effect of the regulation?

HAYNE J:   But does it follow from the proposition you advance that if this tax would have had a differential impact if there had been – though there was not – a nickel refinery in New South Wales, invalidity would follow?  It seems to be that that is the consequence of your argument and it cannot be right, can it?

MR JACKSON:   Well, it would not necessarily follow, your Honour.  I mean, if it were the position that a nickel refinery in New South Wales was in a situation similar to the Western Australian ones, then it may well be that preference was being given to the Western Australian ones and to the New South Wales ones, as compared to the Queensland one.  Now, if it be that the New South Wales one was operated in a manner similar to the facility of the plaintiffs, then it may be that the same result would obtain.

Now, your Honour, when your Honour says it could not be right the question is, in a sense, what could not be right? One does start from the position that there is a limitation on Commonwealth legislative power provided for by section 99. It applies to any law of revenue, which one is speaking about here, and this is a law of revenue and the result is in relation to a program which is intended to provide relief. One has a situation where the ones, to put it shortly, who most need the relief are the ones who get the least of it.

KEANE J:   But, Mr Jackson, is that not simply to say that the level of subvention afforded a producer by reason of this general law, a law cast in general terms, simply depends upon the geology of a particular place, and is that not the sort of natural discrimination that Chief Justice Griffiths spoke about in Barger?  That it is not the Commonwealth discriminating, it is nature has already discriminated?

MR JACKSON:   Well, your Honour, in one sense it is possible to say that nature has discriminated to a degree.  It is possible also to say that the events of history have provided some discrimination but, your Honour, could we just seek to make this point.  What you do have is legislation which, of its nature, divides up various activities into particular classes which obtain various results in consequence of that.

In dealing with that question, one of the reasons why there is the difference is because, on the one hand, the products are different, the processes are different, and so on, and the inputs are different. What we would seek to say is that even if it is one of the reasons for the law, it still has the effect that it should be treated as contravening section 99. Could I say or use, your Honours, perhaps imperfectly, an analogy with multiple characterisation of which I think your Honours heard something in the case yesterday?

Your Honours, it is perfectly possible, of course, to have laws that have a number of characterisations. All that is necessary is that they be able to be characterised as within one head, say, of Commonwealth power. Equally, if one is looking at section 99, then we would submit that if you have a situation where one aspect of the law is to contravene section 99, it does not really save it from that consequence because there may be other causes one can point to as lying behind the legislation. Your Honour, I do not know if I can take it beyond that, but that is the proposition we would seek to put.

KIEFEL J:   Mr Jackson, if the regulations differentiated between the different processes and the costs of the different processes, would that overcome the effect complained of?

MR JACKSON:   Yes, it would, your Honour, it would.  Your Honours will see in, I think, paragraph 72 of our submissions, we gave an illustration of the way it might be done to avoid invalidity.  Your Honours, the ‑ ‑ ‑

FRENCH CJ:   Incidentally, you do not say that the particular processing technology adopted by your client is mandated by the geological character of the deposits it was dealing with.  They were a relevant factor, I think, were they not?

MR JACKSON:   Yes, your Honour, the deposits that were being dealt with originally were deposits for which the process we use was regarded as the most efficient at that time.  Now, of course, those we now need to have ‑ ‑ ‑

FRENCH CJ:   You export ‑ you import ‑ ‑ ‑

MR JACKSON:   ‑ ‑ ‑deposits which we import to be able to use.  Your Honours, I think I was going to refer to three passages in Fortescue Metals Group, and they are at paragraph 117, page 605.  Could I just give your Honours the references to them?  Page 618, paragraph 156, and page 630, paragraph 202.  Of course, there is the discussion of this issue – the ability to look at, indeed, the need to look at effect, in the decision of four members of the Court in relation to excise, and more generally in Ha v New South Wales (1997) 189 CLR 465.

I think we have given your Honours a copy of the relevant page of that report.  The passage I want to refer to is the reference by Justice Isaacs to the COR Case, and then the first eight or 10 lines after that.  Your Honours, we have referred to this aspect rather more fully in our written submissions in paragraph 53 in‑chief.

Could I turn then to the aspects which, in our submission, do involve giving of preference, and may I speak a little more generally first and then more specifically?  Could I go, your Honours, to clause 348 at page 175 of the regulations?  Your Honours will see that clause 348(1) defines the activity of the production of nickel in terms which do not distinguish between the activities in fact undertaken between nickel producers in Western Australia and Queensland in circumstances where those differences are accounted for to a significant degree by the location of the facilities at which the activity is undertaken, and I will come back to that. 

We would submit that clause 348(1) imposes a definition of the activity of the production of nickel which treats as alike activities that are not alike, namely the production of nickel in Western Australia and Queensland.  The definition, your Honours, in clause 348(1) is then the subject matter upon which clause 906 operates by reference to the integers which are defined in item 2.14 of the table in clause 401 – I have taken your Honours to that already; I do not think I need to go back to it – for the purpose of working out the number of free carbon units to be issued to each of the Western Australian producers and to us. 

The practical effect, your Honours, of the operation of the formula upon the activity of the production of nickel is that fewer free carbon units are issued to us and we thus have a higher unit shortfall under 125 and 128, and thus ultimately a higher liability for unit shortfall charge than the Western Australian producers.  The practical result, your Honours, is that the plaintiff has a higher taxation liability than the Western Australian producers because 348(1) treats as alike or as equal the different or unequal activities undertaken in Queensland and Western Australia. 

Could I refer, your Honours, to our written submissions in‑chief, paragraphs 46 to 60, and also to our submissions in reply, paragraph 2?  Your Honours, I referred earlier to the fact that there are several instances where there is recognition in the regulations of differing products, differing processes ‑ ‑ ‑

FRENCH CJ:   Sorry, can I just understand, when you say “higher taxation liability”, how do you use it?  What was the comparator?

MR JACKSON:   I am sorry, your Honour, I just did not catch the last thing your Honour said?

FRENCH CJ:   What is the comparator?  When you say it is higher than the others, there are all different circumstances and volumes and so forth.

MR JACKSON:   Of course, your Honour.  The result is, by the operation of the provisions to which I have referred, we end up – all things being otherwise equal – we would end up getting fewer free carbon credits than ‑ ‑ ‑

FRENCH CJ:   Per tonne of nickel produced?

MR JACKSON:   Yes.

KEANE J:   How does that come about by reference to these formulae?

MR JACKSON:   I will check on it, your Honour.  Perhaps I put it badly.

HAYNE J:   They get less for the business as a whole.  I am not sure it is less per unit produced, perhaps it is.

MR JACKSON:   Your Honour, it comes about by – if one looks at clause 348(4), the basis for the issue of free carbon units is there - it is 100 per cent equivalent weight of nickel.  That is measured by reference to the amount produced by carrying on the emissions‑intensive trade‑ exposed activity and of saleable quantity.  In working that out, one then has to calculate the actual number of them and that takes one to item 2.14.  One goes then to clause 906.  Your Honours will see, if I go to the case stated for a moment – I am sorry, the special case in paragraph 40, you will see that one of the facts is that we had:

in the fixed charge year commencing on 1 July 2012 and per unit of production, a higher liability for unit shortfall charge, after the surrender of available free carbon units –

I am sorry, your Honour, for not going into the detail of it but that is the ‑ ‑ ‑

FRENCH CJ:   That is the basis on which you use the term “hire”.

MR JACKSON:   Yes – per unit of production it is there referred to.  Your Honours will see that the position, I think, had not – at the time of the special case, the order for special case – I do not think it was possible to put the position in respect of the year commencing on 1 July 2013 in the special case.  But that is the way in which we have put it.  I am sorry if I have put it unclearly before.

Your Honours, I mention in passing that there were several instances where there was recognition of differing products and differing processes and in relation to glass that is Divisions 2 and 3; paper, Divisions 17, 18 and 19 and iron and steel, Divisions 20 and 21.  Your Honours, the differences between the activities carried on by the plaintiff on the one hand, and the West Australian producers on the other hand, can be seen in the special case.  Could I go particularly to paragraphs 24 and following?

If one goes to paragraph 24, you will see that there are similar business activities to the extent that each engages in an activity which your Honours will see - see nickel bearing inputs being subjected to a transformation.  I do not think I need to read b and c.  The differences are referred to in 25 and following.  The first of them – importantly, your Honours, if one goes to paragraph 27, you will see there are differing inputs.  If one goes to paragraphs 28 to 30 they make different products.  You will see in 28a to d there is a reference to the outputs and then you will see in paragraph 29 that the other three companies:

have never produced the nickel and cobalt products . . .  which are produced by the plaintiff.

30The plaintiff does not produce, and has never produced, (i) the LME grade nickel briquette products or nickel powder of the kind made by Nickel West and Murrin Murrin –

You will see also, your Honours, that the plaintiff has never produced –

(ii) the nickel‑cobalt hydroxide intermediate product made by First Quantum or (iii) the cobalt briquettes and powder of the kind made by Murrin Murrin.

Your Honours that, I think, for practical purposes, takes out all the products.

FRENCH CJ:   Am I right in understanding that your technology does not involve any process that takes advantage of the energy that can be fed back into the system by oxidising the sulphite?

MR JACKSON:   Your Honour, I am sorry to not be able to answer that immediately.  Might I just check that.

FRENCH CJ:   I thought there was a reference to that somewhere.

MR JACKSON:   Yes, 32b, I think it is, your Honour.  Is that what your Honour was referring to?

FRENCH CJ:   Yes, thank you.

GAGELER J:   Mr Jackson, is the effect of what you have just taken to us that when you compare your client with the Western Australian producers that your client is using a different technology to produce a different product to be sold into different markets?

MR JACKSON:   Yes.  Well, your Honour, all those things are – and one would not produce the product if there was not a market for it, one would think.  Your Honours, there are the different production processes which are referred to in paragraphs 31 to 33 of the special case.  If I could go back then to paragraph 35 of the special case, your Honours will see that it is accepted that:

The geographic location of a nickel refinery affects its input costs . . . the design of its production processes; and its ability to store, treat and dispose of wastes.

Paragraphs 36 and 37 typically, as they say -

The geographic location of a nickel refinery is typically within reasonable proximity to the nickel ore deposit(s) –

and that is the case in respect of the three Western Australian producers.  Your Honours, if one goes back a few pages to paragraph 17c of the special case, you will see that:

Western Australia retained the largest nickel resources, comprising 96% of the total EDR of nickel in Australia;

Your Honours, could we refer a little more generally to our submissions in‑chief in paragraphs 14 to 22.  Your Honours, that says, in effect, what I have said rather more briefly in the last few moments.  Could I turn or, perhaps, return ‑ ‑ ‑

KIEFEL J: Does it follow, Mr Jackson, from what you have just taken us to that, on your argument, to comply with section 99 the law has to even out the effects of the formula which produces the impost on a producer wherever they are?

MR JACKSON:   In a sense, that is an effect of it, your Honour, in a particular case.  We would accept ‑ ‑ ‑

KEANE J: Why would that not itself be a contravention of section 99?

MR JACKSON:   Could I try to answer both those questions, your Honours? What I would seek to say would be this. First of all, there is no doubt that there is an ability in the Commonwealth by legislation dealing with revenue to impose taxes in a variety of ways and the restriction that is provided for – the limitation provided for by section 99 is a limitation which relates only to the question of preference of one State over another.

Now, inevitably, a law imposing a tax is going to be a law imposing a tax on someone. There has to be some entity to pay it or some property taken in order to pay it. There does not have to be – if the law operates unequally but the inequality is not due to either section 51(ii) limitation or section 99 preference then that is tough luck, in effect, for the people who are affected by it.

Sometimes, of course, taxes are imposed in a way to prevent or discourage the carrying on of activities, but the limitations that are imposed are those by sections 99, 51(ii), relevantly. Having said that, your Honours, it is not, in our submission, giving a preference, if I could refer to what your Honour Justice Keane asked me. It is not, in our submission, giving a preference in terms of section 99 if what is being done is to equalise, in effect, the imposition of the taxation.

Now, equalisation does not necessarily involve – does not involve giving a preference. Some cases, of course, perhaps it might, but, in our submission, it would not in a case such as this. It does not follow if you treat people differently that you have necessarily given a preference which would affect section 99.

GAGELER J:   Mr Jackson, factually you rely on the preference as arising from the fact that is recounted in paragraph 40 of the special case, as I understand it, from the simple fact that there is a higher liability per unit of production.

MR JACKSON:   Yes.

GAGELER J:   Therein lies the preference?

MR JACKSON:   Your Honour, that is in summary, yes.  I think I endeavoured to put it when I was commencing our submissions by saying that it lumped together different products, different processes and different inputs.

GAGELER J:   But the difficulty I have with that is that the final product produced by each of these geographically distinct producers is not in the same market.  It is hard to see that one producer is being in any sense materially advantaged when compared with the other producer if they are producing different products by different processes for sale in different markets.

MR JACKSON: Well, your Honour, if they are producing different products by different processes and so on and, of course, if the differences do have a geographic relationship in terms that would attract section 99, then the result, in our submission, is that to treat them together – and if I could use the term “lumped together” if I may for the moment – but if one treats them together then what one is doing is treating equally the unequal and the consequence of that is to give a preference to the one that obtains the advantage, that being the Western Australian producers in the present case. Your Honour, that is the essence of the matter.

Your Honours, could I say these things? A Commonwealth law which accords similar treatment to things which are dissimilar or treats as alike those which are not alike may amount, in our submission, to giving preference under section 99 and whether or not a law bears that character will often require attention to practical effect and not merely legal form and, of course, a law which in form appears to give equal treatment may, in practical effect, apply equally to conduct or things which are not equivalent. If the Court were to look only at legal form, then a large category of what, in our submission, would be impermissible preferential treatment of one State or another would fall - would be placed beyond section 99.

Your Honours, we would submit that once it is recognised, as we submit it should be, that constitutionally impermissible discrimination may be indirect as well as direct there is a vice in looking only at legal form. The classification for a Commonwealth revenue law as a singular activity of activities which in fact are materially different in different parts of the Federation may be just as preferential as a law which discriminates on its face. The purpose of section 99, we would submit, would be substantially defeated if it were interpreted in a way which did not impugn the equal treatment of those who are not equal.

Your Honours, could I deal with a number of submissions made by the Commonwealth against us? First, in paragraphs 18 to 52 of the defendant’s submissions, your Honours will see great emphasis placed on the fact that the core architecture, as it is put, of the Act does not offend section 99 because it operates without regard to geographical criteria. That, in our submission, fails to address the complaint which we make, because the effect of Division 48 and clause 348 is to insert into an otherwise inoffensive regime of general application a definition of an activity which decisively affects the relative size of the tax imposed on the plaintiff as a producer located in Queensland. That definition is the source of the differential treatment, and the differential treatment occurs on account of, in our submission, a geographic location.

NETTLE J:   But if someone set up a refinery in Western Australia and imported wet laterite ore from whence you do and processed it by the same process, they would be subject to exactly the same amount of taxation, would they not?

MR JACKSON:   They would, your Honour, yes.  That would be a situation which would make the case for us more difficult.  It would make the case much more difficult, of course, because you would then have a situation where the distinctions that one could draw between Western Australia and Queensland would be not so acute.

NETTLE J:   So it all depends on the facts, then, whether the Act discriminates?

MR JACKSON:   Well, it does, your Honour. That is, in a sense, the point we would seek to make, that one has laws – if I can put it generically for the moment, you have a law which has on the face of it an application which is uniform throughout Australia or does not in terms discriminate between one part of Australia or another. But at the same time, you have a limitation in section 99 expressed in the terms in which one sees it. If one is only to look at the terms in which the law is expressed, then the answer would be that there could not be a contravention of section 99. The question, however, is whether one goes beyond the mere terms in which they are expressed, but looks also at the effect of it.

FRENCH CJ:   If your argument as to discrimination between Western Australia and Queensland is good, would it not also be good for discrimination in relation to the part of the State in which Justice Nettle’s new refinery is located?

MR JACKSON:   Your Honour, there is a possibility of that. I was going to come to the part of the State part, if I can put it that way - the conclusion of what I was seeking to say and that is why in a sense I said that it would weaken the case. If I could go back to what I was saying just a moment ago to your Honour Justice Nettle, if the position is that one looks only at the terms in which is law is expressed, then there will not or will hardly ever be, unless there was some lack of care in the drafting, a contravention of section 99.

But the approach to constitutional limitations on power, be they sections 99, 51(ii), section 90 and so on, is that to which we have referred in the passage from Ha v New South Wales and also the passages from Fortescue which say that one is to look at the practical effect or the effect of the law.  If one looks at the effect of the law, then that does involve something that is fundamentally a factual consideration.

If I could go back to what his Honour the Chief Justice said, there would be a question if another refinery was established which did it the same way that we do it, in effect.  It would undoubtedly weaken the contention that there was a preference given to Western Australia.  It might be possible to fashion an argument that on the part – if I could put it that way ‑ ‑ ‑

FRENCH CJ:   North Kwinana versus south Kwinana, for example.

MR JACKSON:   Your Honour, I come from Queensland originally.

NETTLE J:   Mr Jackson, could I just ask one more question?  If there were no refinery in Queensland as there is at the moment, only the West Australian ones, but then subsequently you set up your Queensland refinery and imported wet laterite ore as you do from Asia and processed it by the leaching process that you use, would then the Act eo instanti become unconstitutional?

MR JACKSON:   The answer, your Honour, is probably yes.  One is speaking only now, of course, about a two‑year period.

NETTLE J:   Yes.

MR JACKSON:   But, if that happened, the answer may well be yes, your Honour, yes.  A lot of legislation has a validity which can disappear or be revived.  One takes the simple case of something that does not operate – State law that does not operate because of section 109 ‑ if the Commonwealth law is repealed, then the State law will revivify.  Also, of course, things that are contraventions of section 92 may – because of changes of underlying circumstances – cease to be contraventions or vice versa.  So, your Honours, it is not an unusual thing to have validity which has temporal limitations.  It may not happen very often but is not constitutionally unusual, in our submission.

NETTLE J:   Thank you.

KIEFEL J:   But does not the hypothetical that Justice Nettle put to you about putting the plaintiff’s production in Western Australia but with the same imported materials point out the fact that it is not the location that is important in determining whether it is ‑ the effect that the law has is upon the particular materials and the production which are the matters of choice by the producer.

MR JACKSON:   Well, your Honour, it is – what one has ‑ ‑ ‑

KIEFEL J:   I mean, the differential effect of legislation without more is not discrimination.

MR JACKSON:   Could I just say this, your Honour?  The legislation – the matters at the heart of the legislation of which one is speaking at the moment are matters which relate to the provision of forms of assistance for a limited period and forms of assistance to bodies that – primarily, at least – are bodies that when the legislation came into effect were bodies that were in existence.  The bodies that were in existence had particular categories and particular ways of doing things and particular type emissions that came from them.  But they were not – and if I could use the expression again, with respect, one does not look at them really in the abstract.  There they were.  There they were to be, in effect, for the next couple of years.  In relation to that, one sees in one of the statements in the special case to which I have referred, that these were activities which – I should go back to it, your Honours – if one looks at paragraph 35 of the special case, it refers to:

The geographic location of a nickel refinery affects its input costs

. . . 

The geographic location of a nickel refinery is typically within reasonable proximity to the nickel ore deposit(s) –

and there is a reference to that in paragraph 36, so that the situation that was being contemplated – the situation where you have nickel producers in Western Australia who had access to their ore in Western Australia and a nickel producer in Queensland which did not have that.  That was the ‑ and a central feature of the nickel producers in Western Australia is that they are producing nickel from ore in the vast – relatively speaking – quantity that exists there.

NETTLE J:   That is right, it would equally follow that if the only par producer is one in Queensland burning natural gas, and then a Victorian sets up and starts burning brown coal – and thus would attract a higher rate of tax just as you do because the plant is dirtier – the Act would become, again, eo instanti unconstitutional.

MR JACKSON:   Well, the difficulty may well be that in cases of that kind there needs to be adjustment of the provisions in the various divisions, such as Division 48, for the manner of calculation of the – rebate is the wrong word – of the free units that are provided.  I mean, your Honour, changes in events sometimes require there to be changes in the delegated legislation.

NETTLE J:   I see.

MR JACKSON:   Your Honour, one is dealing with a body – and I am speaking of Parliament – of wide powers, but with some limitations that need to be observed.  The limitations are there to be observed, your Honour, because of underlying considerations of equality – equality of the various States, large and small – and the relativity varies over a long period of time.  Your Honour, one is, of course, speaking of legislation in the present case that is effective for two years.  Whilst greater hopes might have been held for it by those initially responsible for it, Parliament then took a different view.

Your Honours, could I come to the second point we would make in relation to the submissions on behalf of the Commonwealth?  I am referring to the Commonwealth submissions in paragraph 64 to 66, where it is contended that Division 48 does not create differential treatment.  That is premised, in our submission, on reading Division 48 as a matter of form rather than substance.  We would submit that is an error.  The Court should look at the practical operation as well as the form of the law, and the practical operation is to classify as alike activities which are not alike for the purpose of calculating a tax liability.

Your Honours, the third feature – and I am referring now to the Commonwealth submissions at paragraphs 91 to 92 ‑ is that the Commonwealth disputes that Division 48 confers any tangible revenue advantage upon entities resident or operating in Western Australia.  I did mention 92 in passing a little earlier.  Your Honours, we would submit that that fails to appreciate the interaction between Division 48 and the formula in clause 906 and the all‑encompassing definition of the production of nickel in 348 has the consequence that ‑ to which I have referred earlier, I think – the West Australian producers are given a higher number of free carbon units while the plaintiff obtains fewer relatively speaking.  We have fewer units to surrender under 122, we are left with higher unit shortfalls under 125 and 128.  Now, your Honours, that is a tangible revenue advantage for the producers of nickel who have the good fortune to be located in Western Australia. 

Your Honours, could I go to paragraph 72 of our submissions in‑chief and we set out there one way ‑ I do not suggest it is necessarily the only way ‑ in which the aims of section 143 of the Clean Energy Act could have been satisfied without offending section 92.  There could have been adopted two activity definitions and we give as an example adopting the one for London Metal Exchange nickel briquettes, and the second, the production of lower grade nickel compacts and other products that were there referred to.  Your Honours will see the development of the consequence of that in paragraphs 72, 73 and 74.

Now, your Honours, may I say immediately, we do not suggest that is necessarily the only way in which it might have been done but we do it by way of example to indicate a way in which it might have been done, indicating the actual activities carried on by the – activity being the expression used in the legislation ‑ the activities carried on by the various parties – by the various producers.  Your Honours, the – could I refer also, your Honours, to submissions in reply in paragraph 11 in that regard?

Your Honours, the fourth matter we wanted to say in relation to the Commonwealth’s submissions – and I am referring here to paragraphs 68 to 74 – is that the Commonwealth asserts that the difference in the amount of tax ultimately payable is not relevantly a matter of geographical location. We would submit that involves a rather selective reading of the special case and an incorrect characterisation of the causal test under section 99.

We would submit, if one looks at – and I will just give your Honours the numbers – paragraphs 34 to 37 of the special case and paragraphs 42 to 47 and paragraphs 49 to 50 they establish that a significant contributor to the production methods of each producer is the geographic location at which production occurs. 

Your Honours, we would submit – this is something I mentioned earlier in response to a question from one of your Honours – that it is not an answer under section 99 to say that other factors unrelated to geography also play a part. We would submit that the prohibition under section 99 should not be able to be avoided by having a legislative measure which in form or effect imposes a liability which varies according to a number of factors where at least one significant factor is location in a particular State or part of a State. Section 99 should not be defeated by being treated as turning on the selection of a single or predominant cause of the differential treatment.

Could I refer your Honours to paragraph 8 of our reply?  I mentioned earlier, your Honours, there is as an analogy, no doubt imperfect in some respects, with multiple characterisation.  Your Honours, the fifth matter I wanted to refer to ‑ ‑ ‑

BELL J:   Perhaps just before you do, can I just inquire – you took us in broad terms to the provisions of the special case that you say support the contention, having regard to the practical effect of geographic location, and I see there paragraph 35.  Just looking at the practical effect in the facts of this special case, given that all of the wet laterite ore is imported what relevance is 35?

MR JACKSON:   It is relevant in this way, your Honour.  One is comparing – if I can use that expression for the moment – on the one hand, refineries that are located in Western Australia which are located near their supply of ore.  In the case of our refinery, you are looking at a refinery which is not located near to its source of ore.  So there is a difference between the two and without seeking to elaborate upon the – I am sorry, I will put it this way – a difference between the two.  So far as that difference is elaborated upon in paragraphs 36 and 37 – your Honour, what that means is that you then have a comparison between, on the one hand, Western Australian producers which have those characteristics, and a Queensland producer which does not have those characteristics.

BELL J:   Yes.

MR JACKSON:   Yet, in the calculation of the amount that is to be the solatium, as it were, they are treated the same way. Your Honours, the next matter to which I wish to refer – and, your Honours, I am getting towards the end of these, may I say – the next matter to which I wish to refer in the Commonwealth’s submissions relates to paragraphs 78 to 80. That seeks to defend the importation into section 99 of the test of reasonably appropriate and adapted to a proper objective.

Your Honours, in our submission, although I am conscious that your Honour the Chief Justice in Fortescue was inclined towards that test we would submit it does not find support in the words of section 99 and we would adopt what was said in the joint reasons in Fortescue 250 CLR 548 at paragraphs 114 and 115 with respect to it.

Your Honours will see that we developed that submission in our submissions in‑chief in paragraphs 61 to 68 and we would rely on what was said in the joint reasons in Fortescue against the adoption of that notion.  We also in those paragraphs submit that the reasoning, as paragraphs 61 to 68 of our submissions in‑chief, submit that the reasoning of the majority in Permanent Trustees 220 CLR 388 at paragraphs 88 to 95 should not be followed and could I refer also to our reply at paragraph 12. Your Honours, I do not think I wish to add anything to these written submissions we have in that regard.

Your Honours, the next point to which I wish to refer is the Commonwealth’s submission at paragraphs 87 to 89.  It is to the effect that the activity definition in Division 48 was exclusively a matter of legislative choice.  We would submit that should be treated with some caution.  At the time of the enactment of the legislation, the Parliament was well aware that some industries, including industries affected by differences in factual circumstances between the States, would be disadvantaged unless transitional assistance was provided.  You can see that in section 143.

In passing the Act, the Parliament should be regarded as taking the industry as it finds it and, your Honours, section 145(5) of the Act reflected that reality by seeking to prevent changes that would have a negative effect on recipients of assistance for a period of three years. 

Now, your Honours, in our submission, where the practical effect of the Jobs and Competitiveness Program is to cause financial disadvantage to recipients of assistance, in particular States or regions, the scope for legislative choice is narrowed by section 99 and Parliament, in our submission, is restrained in designing that program in a manner which in practical effect gives preference to one State or part of the State over another.

Could I come then, your Honours, to the answers to questions in the special case?  The questions in the special case are at page 95 of the special case book, and they are in paragraphs 59 and following of the special case.  In our submission, question 1 should be answered “Yes” – your Honours, may I indicate first the answers and then the reasons for the answers I am seeking to give, particularly to questions 2 and 3.

First of all, question 1, in our submission, should be answered “Yes”.  Question 2 should be answered “On their proper construction, the provisions in question 2 do not apply to the production of nickel”; question 3 should be answered “Yes” and question 4 should be answered “By the defendant”.  Your Honours, it is right to say in our written submissions we posed answers to questions 2 and 3 in the alternative.  We adopt the alternative rather than the first answer we have given.

Your Honours, could I indicate the reasons for the answers we propose to questions 2 and 3? As I have taken your Honours to earlier, the charge imposed by section 8 of the Charge Act is calculated by reference to the number of units in the unit shortfall. Unit shortfall is calculated by reference to the calculations in sections 125 and 128 of the Clean Energy Act and it depends on the number of units surrendered.

One of the features of the Act – and if I could refer your Honours to the simplified outline first in section 4 of the Clean Energy Act - it is page 5 of the copy, I think, of the Clean Energy Act. Your Honours will see that one of the features of the Act in section 4 is that:

Free carbon units will be issued under the Jobs and Competitiveness Program –

Your Honours will see then – if I could just say this, your Honours, the only purpose of having free carbon units is in order to surrender them.  One could, I suppose, sell them, but otherwise they are units that are to be surrendered.  The program is then provided for by section 145 of that Act, and your Honours will see that whilst it is true that section 145(1) uses the word “may” in terms of the formulation of a program, section 145(4) makes it apparent, in our submission, that such regulations are to exist. 

Your Honours will see the date, 1 March 2012, and the Charge Act in relevant respects was to come into effect on 2 April 2012.

Your Honours, the provisions for the program and the issue of free carbon units under it form, in our submission, an essential part of the scheme of the Act in relation to emissions‑intensive trade‑exposed activities. The terms of section 143 – to which I took your Honours earlier – support that view. In our submission, if the position be that the relevant clause in the regulations is one which contravenes section 99, the result would be, first, of course, that there would be no entitlement to free carbon units which has, I suppose, an element of grimness about it on the one hand, but at the same time the existence of an entitlement to such units is a part of the Act and part of the enactment and, in our submission, there could not be the imposition of the charge upon persons who otherwise would fall within the relevant clause without there being provision for the units. Your Honours, those are our submissions.

You will see it, for example, in section 156(2)(b), that is page 243 of the Act, but in relation to that what your Honours will see is that 156(1) refers to inquiries which are “mentioned in section 155” and the inquiries are to be in respect of (a) – the first one, your Honours:

the 12‑month period ending at the end of 30 June 2015 –

and the remaining periods after that, all of them after the event so far as the present legislation is concerned.  So when one is talking about the two years in question here, the worthy object to which our learned friends referred is not one that one sees referred to in the provisions dealing with the Jobs and Competitiveness Program.  To treat that as a central matter in relation to that is, in our submission, erroneous. 

Your Honours, could I refer also to the question of the use that is relied on of historic industry averages? Your Honours, in our submission, that does not remove the preferential treatment under section 99. The use of industry averages presupposes that there is an industry in which producers are carrying on activities which are comparable or equivalent. But because of the matters to which we have referred earlier, outputs, inputs, processes, products and markets – the industry average used is not, in our submission, appropriate. It reflects the very definition of the activity, the production of nickel, which we submit breaches section 99.

Your Honours, if an alternative had been used, which we give an example in paragraph 72, 73 and 74, then that would have had the consequences we have referred to in 74.  Now, our learned friends say, well that might put you as the only person in an activity.  Well, so be it, your Honours.  If the activities are actually different, so be it.  Your Honours, there would have been, in those circumstances, two distinct industry averages.  Your Honours, that, in our submission, would be consistent with the objects of the program set out at section 143 because it would reduce the incentive for the plaintiff to relocate its activities to foreign countries with different climate change policies.

Could I turn to our learned friend’s second point, and that is what is put as the oversimplification of the facts.  It is referred to, in short, in paragraph 8 to 12 of their outline of submissions.  Your Honours, the first thing one does need to bear in mind is that the legislature was dealing with facilities in existence at the time when the legislation came into effect.  The facilities had processes of particular kinds entered into by reason of circumstances at particular times.  It is immaterial, in our submission, that as it is put in our learned friend’s outline, for example, at paragraphs 10 to 12, it is immaterial that the statement of claim – sorry, may I just go to their outline of submissions for a moment.

If one goes to paragraphs 10 to 12, but particularly paragraph 12 - and our learned friends said this orally - it is entirely immaterial, in our submission, that the special case does not demonstrate that nickel refining in Queensland can only be done by the Caron process or that nickel refining in Western Australia must be done by processes other than that.  In our submission, the fact of the matter is that nickel refining is being done in Queensland by the Caron process and is being done in Western Australia by the other processes, and could we refer your Honours to paragraph 37 of the special case?

Your Honours, our learned friends relied on the fact that some of our products can be used to make stainless steel, as can other products of the other producers be used to make stainless steel ‑ paragraphs 56 and 57 of the special case.  We would submit, your Honours, it is hardly surprising that in making stainless steel, more than one form of nickel product can be used.  It does not take the matter very far.

Could I go to the third point, and that is the reliance on the fact that whatever effects there are, are based on natural conditions and in the particular States and matters of that kind.  Your Honours, Division 48 imposes a method of classification which, in our submission, effects or creates unequal liability for unit shortfall charge as between nickel producers operating in the two States.  The unequal outcome is the product of the method of classification used in Division 48, not of differences, in our submission, in the factual circumstances existing, and we referred to those matters in our written submissions, paragraphs 46 to 50, and in reply, paragraphs 6 and 7.

Your Honours, in reality, in our submission, the challenge to the minerals resource rent tax legislation in Fortescue failed because the Court held that any discrimination or inequality between miners was not effected or created by the Commonwealth legislation, but rather by the operation of State laws.  In the present case it is created, in our submission, by the activity definition for the production of nickel contained in Division 48.  Your Honours, for the purpose of characterisation, in our submission, the Court has to examine not just the formal or legal operation of the law, but also its practical effect or practical operation, namely, the effect of the law in and upon the facts and circumstances to which it relates.

Your Honours, as we mentioned earlier, in Fortescue, five members of the Court accepted that characterising a law for the purposes of section 51(ii) and 99, requires consideration not only of the legal form but also of the practical effect or practical operation of the law.

Now, your Honours, could we just say the expressions used in earlier cases should not be substituted in the end for the constitutional language. Undoubtedly, one sees an exegesis in a particular case of what is meant by section 51(ii) or 99 but in the end it is a question of what the provision itself means.

Your Honours, any a priori rule which treats as fatal to the application of section 99, the characterisation or possible characterisation of differential treatment as a product of different factual circumstances, which does it in every case, would denude section 99 of its practical operation. We referred to that in paragraph 57 of our submissions.

Could I go finally to the answers to the questions that our learned friends were asked about?  Your Honours, in our submission, the Act does require that there be a Jobs and Competitiveness Program.  I will not go back to section 143.  I have taken your Honours to it.  It did require that there be such a program and the case is not one of just a flaw in the regulations.

What one sees is that in providing for that in relation to nickel there is not, in our submission, a valid provision for that to occur and that is something which it is not a matter of flowing up; it is a question of the Charging Act requiring that there be a calculation in a particular way.  It was contemplated that nickel be - nickel in various forms be provided for, but the provision made for it is constitutionally impermissible and the result is that the answers we propose are the answers which should be given.  Your Honours, those are our submissions.

FRENCH CJ:   Thank you, Mr Jackson.  The Court will reserve its decision.  The Court adjourns until 10.15 on Tuesday, 10 February.

AT 2.41 PM THE MATTER WAS ADJOURNED