R v Barger

6 C.L.R.]

OF AUSTRALIA.

APPI

Cameron y

D F c r r

m -

[H IG H COU RT OF

A U ST R A L IA .]

THE KING AND THE MINISTER OF

STATE FOR THE COMMONWEALTH

P l a i n t i f f s ;

ADM INISTERING THE CUSTOMS . .

AND

BARGER D e f e n d a n t .

THE COMMONWEALTH a n d A. W. SMART,

P l a i n t i f f s ;

C o l l e c t o r o f C u s t o m s . .

McKAY

D e f e n d a n t .

Commonwealth legislation, validity o f—Form o f A ct—Substance o f A ct— Motive and

j j

qj.

object o f legislation—Direct and indirect efect— Power o f taxation—Method o f

1908.

discrim iwtion—Interference with domestic affairs o f State—Implied prohibition

__-

— Regidation o f conditions o f labour— Excise Act dealing with other matters—

Melbourne,

Discrimination—Preference—Excise T ariff 1906 (No. 16 o f 1906)— The Con- March

5, 6,

9, 10, 11, 12,

stitution (63 cfe 61 Viet. c. 12), secs. 51, 55, 90, 99.

13, 14 ; June

26.

In determ ining w hether a particu lar law is or is not w ith in th e power of th e Commonwealth Parliam en t to enact, regard m ust be had to its substance

Griffith C.J., Barton,

ra th e r than to its lite ra l form.

O’Connor, Isaacs and

Hijiuins JJ.

The circum stance th a t an ind irect effect may be produced by the exercise of an adm itted pow er of legislation is irre levan t to the question w hether the legislature is com petent to prescribe the same effect by d irec t law. So are the m otive w hich ac tua ted the legislature and the u ltim ate end desired to be a tta ined .

VOL. VI.

HIGH COURT

[1908.

H. C. OF A. So long as tlie lim its of tlie pon er of taxation are no t transgressed, P arlia

m ent m ay select the persons or th e th ings in respect of w hich the exercise of

190S.

power is to operate.

I f the control of the dom estic affairs of tlie S ta tes is in any particular forbidden by th e C onstitu tion , e ith e r expressly or by necessary im plication,

T h e Comth e pow er of taxa tion cannot be exercised so as to operate as a direct

monwealth

interference w ith those affairs in th a t particu lar.

McK ay.

The selection of a p a rticu la r class of goods produced in --Vustralia for taxa tion by a m ethod which m akes th e liab ility to tax a tio n dependent upon conditions to be observed in the in dustry in w hich they are produced is as much an a tte m p t to regulate those conditions as if the regulation were made by d is tin c t enactm ent.

The Excise T ariff 19(10 (No. 10) is no t an A ct im posing du ties of Excise, b u t is an A ct to regulate th e conditions of m anufacture of ag ricu ltu ra l imple m ents, and is therefore not an exercise of the power of taxation conferreii by

the

C onstitu tion .

Even if it were otherw ise w ith in th e com petence of th e Commonwealth P arliam en t to deal w ith the conditions of labour, th e Excise T ariff \dQfi (No. 1(5), which, if invalid , would have the effect of regu la ting the conditions of m anufacture, would be invalid as dealing w ith m atte rs o th er than duties of Excise con trary to sec. 55 of the C onstitu tion .

Even if the term “ ta x a tio n ,” uncontrolled by any context, w ere capable of including th e ind irec t regulation of th e dom estic afi'airs of th e S tates by means of taxation , its m eaning in the C onstitu tion is lim ited by the implied prohibition against d irec t interference w ith m a tte rs reserved exclusively to

th e

S tates.

The Excise T ariff 1906 (No. 16), if o therw ise valid, is invalid on the ground th a t i t authorizes d iscrim ination , and therefore d iscrim inates, between S tates or p a rts of S ta tes w itliin the m eaning of sec. 51 (ii.) of the C onstitu tion , and authorizes th e giving, and therefore gives, preference to one S ta te or a p a rt

thereof over ano ther S ta te or a p a r t thereof w ith in the

m eaning of sec. 99

of th e

C onstitu tion .

Held, therefore (Isaacs and Hujfjins .Y5. d issenting), th a t th e Excise TariJ 1906 (No. 16) is invalid.

Per Isaacs and Hiijffms J J . : — 1.

The powers substan tive ly g ran ted to the

Com m onwealth by the C onstitu tion m ay be exercised to th e ir u tm ost ex ten t and in as plenary a m anner as if the Com m onwealth were a u n ita ry S ta te , sub jec t only to th e express lim itations found in the C onstitu tion itself and [per Isaacs J . ] to th e necessary freedom of the S ta tes to exercise w ithou t interference th e powers reserved to them .

G C.L.U.]

OF AUSTRALIA.

Comm onwealth powers are not to be lim ited by first assuming the ex ten t of S ta te powers.

H. C. OF A.

The reserved powers of the S ta tes are those which rem ain

1908.

a fte r full effect is giv'en to the powers g ran ted to the Comm onwealth, and

cannot control tlie ex ten t of those constitu tional grants.

T he K ing

B arger.

3. I f a legislative power is once gran ted , neither its abuse, nor its conse quences, nor any purpose, motive, or object of the legislature can render its

T he Com-

exercise illegal ; any rem edy for abuse, so long as the lim its of the power are

M OX W E AL TH

no t exceeded, m ust res t w ith the electors and no t w ith the Court.

McK av.

4. The objections raised to the valid ity of the ExcUe Tarijff 1906 (No. 16) on the ground alleged th a t it in substance regulates conditions of rem unera tion of labour, are in rea lity objections based on abuse of power, conse quences, and the purpose, m otive, and object of Parliam ent, and are th e re fore beyond the competency of the C ourt to entertain .

5. Compulsory contribution to the consolidated revenue, dem anded ir re spective of any legality or illegality in the circum stances upon which the liability depends, is taxation .

C. Peouniary penalty , imposed as a punishm ent for an unlaw ful ac t or omission, is regulation.

7. The Excite I'arijj 1906 (No. 16) should bo construed according to the n a tu ra l meaning of th e language used by the legislature, and should no t be tu rned by an argum ent of equivalence of effect into an enactm ent of a to tally different character.

8. Properly construed the A ct imposes taxation upon im plem ents which are not in fact m anufactured under described conditions to be ascertained iu prescribed modes, b u t does not render any conditions unlawful. I t is conse quently not a regulative A ct w hich a S ta te could pass in the same term s, bu t an exercise of the pow er of Excise taxation , and, if passed by a S ta te legislature, would be invalid.

9. As the A ct merely imposes Excise taxation , sec. 53 of the C onstitu tion is no t contravened.

The proviso does not discrim inate between localities a t all, b u t describes standards applicable to A ustralia generally, irrespective of its division into S ta tes or p a rts of S tates, and does not offend against the prohibition con tained in sec. 51 (ii.) of th e C onstitu tion .

10.

Per Isaacs J . .-—The discrim ination forbidden by sec. 51 (ii.) of the C onstitu tion is betw een localities considered and trea ted as S ta tes and p a rts of S tates, and no t as mere A ustralian localities or parts of the Comm onwealth considered as a single country .

D e m u r r e r s .

HIGH COURT

[1908.

H.C. OF A.An action was brought by His Majesty the King and tlie

1908.Minister of State for the Coininonwealtli administering the

T he K inoCustoms against William Gabriel Barger wherein the statement

B arger .of claim alleged that the defendant, a manufacturer of agricul

tural implements, on the 8th, 9th and 10th Januaiy 1908, manu

T he Com

factured in Melbourne certain specified implements, being “ stump

monwealth McK ay.jump ploughs,” and “ cultivators other than disc cultivators ” ;

that such implements were dutiable goods specified in the Schedule to t\\Q Excisie 1906 (No. 10), and were not manufac tured under any of the conditions as to the remuneration of labour .specified in the proviso to sec. 2 of that A ct; that the imple ments were not manufactured pursuant to the provisions of the Excise Act 1901 ; and that the defendant manufactured the implements specified without having obtained a licence to manu facture from the Collector of Customs pursuant to the Excise Act 1901, and without having a licence to manufacture in force in any State on the days mentioned, or at all. The plaintiffs jointly and severally claimed a penalty in respect of each of the implements specified.

The defendant demurred to the whole of the statement of claim, and the demurrer was set down for hearing before the Full Court, the question being whether the Excise Tariff 1906 (No. 16) was valid.

Another action was brought by the Commonwealth and Ai’chibald William Smart, Collector of Customs for the State of Victoria, for and on behalf of the Commonwealth, against H. V. McKay and in the statement of claim it was alleged that the defendant, a manufacturer of agricultural implements, had on and between l.st January 1907 and 8th November 1907 manufactured certain stripper harvesters of which the defendant was the owner; that all the implements were dutiable goods specified in the Schedule to the Excise Tariff 1906 (No. 16), and were not manu factured under any of the conditions as to the remuneration of labour specified in the proviso to sec. 2 of that Act; and that the defendant had not paid the duties of Excise imposed in respect of such implements by the Excise Tariff 1906 (No. 16), and still refused to do so.

6 C.L.R.]

OF AUSTRALIA.

The plaintiffs jointly and severally claimed £20,000, the H- C. or A.

amount of the Excise duties payable in respect of such imple

1908.

ments. The defendant demurred to the whole of the statement of

T he K ing

Barger .

claim, and the demurrer was set down for hearing before the

Full Court, the question being the same as that in tlie first monweaeth

mentioned action.

M cK ay .

Both the demurrers were heard together.

The State of Victoria obtained leave to intervene in both

case.s.

Mitchell K.C. and Glynn, for the defendant Barger. The question whether these goods are exci.seable or not depends upon whether the Excise Tariff 190G (No. 16) is valid or not. Although the Act on its face purports to be an exercise of the power of taxation, it is not so. The real substance and effect of the Act must be looked at in order to determine what is the nature of the Act: Tucker’s Constitution of the United States vol. I., p. 46.5 ; Lefroy’s Legislative Power in Canada, p. 416; Attorney-General for Ontario v. Attorney-General for the Dominion (1); Russell v. The Queen (2).

[Lsaac.s j . referred to Attorney-General for Manitoba v.

Manitoba Licence Holders’ Associcdion (3).]

Regard must be had to the “ substance and not the form” ; Deakin v. Webb (4); Pollock v. Farmers’ Loan and Trust Co. (5); Fail-bank v. United States (6). That this principle only applies to the case of State Acts, as seems to be stated in McCray v. United States (7), is not borne out by the other American cases.

[Griffith C.J. — That case is perfectly consi.stent with

Attorney-General for Ontario v. Attorney-General for the

Dominion (1).]

The object sought to be obtained by this Act is not to impose taxation, but to compel observance of the conditions under which exemption from taxation is purported to be given, that is to say, it is legislation with respect to the conditions and remuneration

(1) (1896) A.C., .348.(5) 157 U .S ., 429, a t p. 581.

(2) 7 App. Cas., 829., a t p. 839.(6) 181 U .S ., 283, a t p. 296.

(3) (1902) A .C ., 73, a t p. 77.(7) 195 U .S., 27, a t p. 59.

(4) 1 C. L .K ., -385, a t p. 611.

HIGH COUUT

[1908.

H.C. OF A.of labour. Tlie Coiniiiomvealth Parliament has no power to

1908.

legislate diroctl}’ witli respect to the conditions and remuneration

T}ie K in(;of labour—except .so far as limited power i.s o-iven under the

Barcer .conciliation and arbitration clause of sec. 51 of the Constitution,

and this Act is an attempt to legislate indirectly in that respect,

T h e

C om

monwealth

it is established in Federated Amalgamated Government Fad

McK ay.way and Traniicay Service Association v. Few Su'ath W(des

Failway Tragic Emjdoyes Association (1) that, even as regards inter-state traffic, the power of the Parliament does not extend to regulating the terms and conditions of employment.

[ H i g g i x s j .— I do not think that case bears on the present

case.]

Tliis case is much stronger because this Act does not even relate to inter-state trade and commerce. The exclusive jiower of the Commonwealth Parliament to impose duties of Excise does not cover the imposing of a licence fee on the carrying on of a certain business : Peterswald v. Baiiley (2). That case is also an authority for the proposition that, for the purpose of determining whether an Act is invalid, the real substance and effect of tlie Act must be looked at. This Act may be paraplirased so as to make it a prohibition against carrying on a certain business without paying certain wages under a jienalty of paying certain duties.

[ H i g g i n s J.—It is admitted that Commonwealtli legislation may interfere with State action, and convmr.sely. At what point is such interference a trespass ? Would you go the length of saying that no conditions can be imposed upon the payment of Excise ? ]

It may be that conditions as to something in respect of which the Commonwealth Parliament has power to legislate may be imposed. But the que.stion can only be answered satisfactorily in a concrete case. In Attorney-General for Quebec v. Queen Insurance Co. (3), it was held that an Act which purported to be a licen.sing Act was not in substance a licensing Act but was a stamp Act, and was therefore ultra vires the provincial legis lature.

(1) 4 C .L .R ., 488, a t pp. 5.39, 544.

(2) 1 C .L .R ., 497, a t p. 507.

(.3) 3 App. C as., 1090.

6 C.L.K.]

OF AUSTRALIA.

H. C. OF A

Tliis Act is not a taxing Act. This is quite a novel form of legislation, and, if held to be valid, will give to tlie Conimon-

1908.

wealtli Parliament complete control over everything which was

T he K ing

intended to be reserved to the States. Under the guise of a B arger .

taxing Act with exenqitions the Commonwealth Parliament could

T he Com

control the whole of the business and social relations of the people

monwealth

of the Commonwealth, and the provisions of the Constitution’

AIcK ay.

intended to reserve to the States the right of managing their internal affairs, would be worthless. It imposes a penalty on persons who do not comply with certain conditions. The words of the Act purport to give to certain designated persons the widest power of control over the conditions as to the remunera tion of labour, and even those powers are apparently not wide enougli to carry out the intention of the Parliament, for it has been found necessary to enact the Excise Procedure Act 1908. The latter Act indicates the intention of the Excise Tariff 1906 (No. 16).

[H iggins J.—Tlte Customs Tcm’'i ’̂1906, passed on the same day should also be looked at. The object of Parliament was that protection should not be given to certain industries unless the workers are benefited.]

That Act strengthens the argument that the Excise Tariff 1906 (No. 16) is not a taxing Act.

[Isaacs J.—SujDposing an Act purported to give a bounty on a condition that fair wages were paid, would it be valid ?]

Not if the condition were similar to that in this Act.

[Isaacs J.—If the Commonwealth Parliament cannot validly enact this Act, then could not a State Parliament enact it ?]

A State Parliament cannot by means of a penalty, viz., an Excise duty, as to which it has no power of legislation, attempt to enforce legislation which it has power to enact. In Helwig v. United States (1), what a federal Statute described as a “ further duty ” was held to be a penalty. See also Lefroy’s Legislative Power in Canada, p. 423, citing Tai Sing v. Maguire (2); Bentham’s Works, vol. i., p. 394.

[Higgins J. I’eferred to Bryce’s American Commonwecdth, 3rd ed., vol I., p. 331, citing Ho-Ah-Kow v. Nunan (3).

(1) 1 8 8 U .S .,6 0 5 . (3) 5 Saw yer (C ircuit C ourt

R ep.),

(2) I B.C. (Irving), 101.

552.

HIGH COURT

[1908.

H. C. OF A.

As to the validity of protective dutie.s legi.slation, see Cooley's

1908. Principles of Constitutional Laiv, drd ed., p. 58.

T he K ing

[H iggins J. referred to Story's Coninientaries, pars. 958 et seq.]

If this be a taxing Act, it is not within the power of taxation given to the Coniinonwealtli Farliainent. That power is not

B argek ,

T h e

Com

monwealth

unlimited, but it is limited to federal taxation for federal

McK ay.purposes;

Municipal Council of Sydney v. ComnionweaKh {1).

[Griffith C.J.—That statement was made alio intuitu.]

In the United States Congre.ss has not power to tax for those

purposes which are within the exclusive ĵ i’ovince of the States;

Gibbons v. Ogden (2); M'Culloch v. Maryland (8); Slaughter

House Cases (4); Civil Rights Cases (5); Peterswald v. Bartley

( 6).

The Commonwealth Parliament can only tax existing things, and cannot legislate so as to produce a class and then tax that class, at any rate when that class is produced by enacting some thing as to which the Parliament has no power. Congress cannot authorize a trade or business within a State in order to tax i t : Licence Tax Cases (7). Here the tax is upon something which is to be ascertained by machinery created by the Act. See Pollock V. Farmers' Loan and Trust Co. (8); ^[cCray v . United States (9).

[Isaacs J.—What is taxed is an implement solely.]

No. An implement which is not made in accordance with certain conditions to be fixed under the Act.

[H iggins J .—Primd facie, the implement is to be taxed, and the manufacturer must bring himself within the exemption in order to escape taxation.]

It must be shown that the person from whom the tax is sought to be recovered is liable. At the moment the thing is manu factured it is uncertain whether it will be liable to the tax. That can only be known when application is made for a certificate under the Act. If the thing i.s exci.seable the manufacturer requires under sec. 35 of the Excise Act 1902 a licence to

(1) 1 C .L .R ., 208, a t p. 232.(6) 1 C .L .R ., 497, a t p. .307.

(2) 9 W heat., I, a t p. 199.(7) 5 W all., 462, a t p. 470.

(3) 4 W heat., 316, a t p. 42.3.(8) 1.57 U..S., 429.

(4) 16 W all., .36, a t p. 78.(9) 195 U..S., 27, a t p. 43.

(5) 109 U .S., 3.

6 C.L.R.]

OF AUSTRALIA.

manufacture it, but if tlie manufacturer afterwards get a certifi

H. G. OF A.

cate, no licence i.s necessary.

1908.

Tlie Act either di.scriminates between State,s or parts of States, within the meaning of sec. 51 (ii.) of the Constitution, or it

T he K ish

B arger.

enables the Courts or persons designated by it so to discriminate,

T he Com

in either of which cases the Act is invalidated. The Courts or

monwealth

persons designated may make declarations as to what are

M cK ay.

reasonable wages, and these may vary in different States or in different parts of a State, and according as the declarations vary they will discriminate between States or parts of States.

[ H i g g i n s J.—If a power may be applied validly and may also be applied invalidly, the power is good.

Slark v. Dakyns (1).]

Under the conditions which naturally exist in the Common wealth it is impossible not to discriminate.

[ I s a a c s J.—As to the meaning of “ discriminate ” see Colonial

Sugar Refining Go. v. Irving (2),]

The giving to designated persons a power to discriminate is the same thing as if the Act itself discriminated, for the decisions of the designated persons might be considered to be set out in a Schedule to the Act.

[ H i g g i n s J.—The discrimination, if any, which is authorized

by the Act is not between States or parts of States but between

individuals.

G r i f f i t h C.J.—It is di.scrimination between localities, which is the same thing as between parts of States.

O ’C o n n o r J.—It is discrimination according to the circum stances under which each manufacturer carries on his business.] The tribunal might, in determining what are fair wages, take into consideration the cost of living, and that must vary in different parts of the Commonwealth.

[ I s a a c s J.—A tax of £1 per head on all horses in the Common

wealth would not be a discriminating tax. Would an ad valorem

tax on all horses in the Commonwealth be discriminating ?]

No. It is a tax on the value of horses. Here there is power to fix the remuneration of labour without any criterion being given as to how it is to be fixed. The Act is altogether uncertain. Sec. 55 of the Constitution invalidates the whole Act, for its

(1) L .R . 10 C h., 35 a t p. 39.

(2) (1906) A .C ., 360.

HIGH COUllT

[1908.

H.C. OF A,parts are not -severable. AltluniHli a taxin<; Act inay include

1908.

means of calculation, it cannot include a provi.sion for determining

T he K ing

what is the article to he taxeil.

B arger . The power of taxation Granted to the Commonwealth Parlia

ment does not authorize the impairment of the power re.served to

T he

Coji-

the States to regulate wage.s.

Any lu'esumption in this matter is

MONWEAI.TH

I'.

M cK ay.in favour of the States from which the Commonwealth was created,

and in which is the reserved power. To say that this Act is valid would he to defeat the object of federation. Other Acts that are invalid for the same reasons that this is are the Excise Tariff 190(j (No. 20) and the Australian Industries Freservation Act 190G. The object in giving powers to the Commonwealth was uniformity —to have one rule instead of several. But there cannot be uniformity as to wages and conditions of labour throughout the Commonwealth. Looking at .sec-s. 89-9.5 of the Con-stitution as well as at its spirit. Excise duties, equally with Customs duties, mu-st be uniform. This Act does not impose uniform duties of Exci.se because it discriminates between the manufacturers of the particular goods. A tax upon harvesters must be upon all harvesters of the same kind. See Miller on the Constitution of

the

United States, i>. 2 i0 T u c k e r’s Constitution of the United

States, vol. l., p. 463. The power of taxation of the Common wealth does not extend to de.stroy the effect of Acts of the Parlia ments of the States wjiich are within their exclu-sive powers. See D’Emden v. Fedder{l); Pollock v. Farmers’ Loan and Trust Co. (2); Loan Association v. Topeka (3).

[H iggins J. referred to State Tax on Railway Gross Receipts (4).] If powers are not expressly granted, or if they are not neces sary for the exercise of a power expressly granted to the Commonwealth, the presumption is that those powers remain in the States. “ Uniform” in reference to a duty means that there must be one rate ; to “ discriminate ” means to exempt persons in one part of the Commonwealth from a burden which is to be borne by those in another part.

[Griffith C.J. referred to Melhotirne, Mayor &c. ofv. Attorney-

General for Victoria (5).]

(I) I C .L .K ., 91, a t p.

I I I . (.5) 3 C .L .R ., 497 ; ».c. suh nom. At-

(2) 157 U .S ., 429, a t p. .599.

tormy-General fo r Victoria v. Mel

(3) 20 W all., 655.

bourne Corporation, (1907) A .C ., 469.

(4) 15 W all., 284, a t p. 293.

C.L.H.]

OF AUSTRALIA.

H. C. OF A.

[Counsel also referred to :—May's Parliamentary Practice, 11th ed., p. 545; Quick cfc Garram’s Australian Constitution,

190S.

p. 550; Cooley on Taxation, p. 260; Mugler v. Kansas (1);

T he K ing

Henderson v. Mayor New York (2); Minnesota v. Barber {S)\

IU rger .

Walling v. Michigan (4); Tiernan v. Pinker (5); Scott v.

The Com

Donald (6); Tucker’s Constitution of the United States, vol. i., p.

monwealth

465; Prentice’s Federal Poivers over Carriers and Corporations,

McK ay.

54; Cooley’s Constitutional Limitations, 6th ed., p. 206.]

Irvine K.C. (with him Coldham), for tlie defendant McKaj’. This Act, when its true nature and character are considered, is not within the power of the Commonwealth Parliament to make laws for the peace, order, and good government of tlie Common wealth. In dealing with the fundamental elements of a Consti tution the Court is entitled to look at the circumstances and history in which the federal compact has been brought about. Nothing could have been further from the minds of those who brought about this union, or of those who sanctioned it, than tliat the power of taxation would be used, or was capable of being used, for the purpose of enabling the Commonwealth Parliament to completely usurp the field of State function.s. Another principle that applies to the strict interpretation of such a CoiLstitution as this is that the Court will test any claim to legislative power by the logical conclusions to be drawn from its exercise if carried to an extreme point. If this legislation were valid, then legislation by a State Parliament to control bĵ taxation and exemption matters over which the Constitution gives exclusive power to the Commonwealtli would equally be valid. The Commonwealth Parliament might, by imposing a tax on fishermen, with an exemption of those who use nets having a mesh above a particular size, control hsheries within the terri torial limits of the States, though the power of the Common wealth is by sec. 51 (x.) of the Constitution limited to Australian waters beyond territorial limits. Or, bj'̂ putting a tax on gold won in mines with an exemption in favour of mines which used some specified machinery, the Commonwealth Parliament might

(1) 123 U.S., 623, a t p. 661.(4) 116 U .S., 4-16.

(2) 92 U .S ., 259, a t p. 268.(5) 102 U .S ., T23.

(3) 136 U .S ., 3)3, a t p. 319.

(6) 165 U .S ., 58, a t p. 92.

HIGH COUllT

[1908.

H.C. OF A.compel all mines to use that machinery or shut down. Or tlie

1908.

Commonwealth Parliament might impose an income tax or a

T he K ingpoll tax, with a proviso that the Act should not apply to those

B arijer.who proved that they had in a particular year attended so many

services of a particular cliurch, and might tliereby impose a

T he Com

monwealth

religious observance notwithstanding the prohibition contained

McK ay.in sec. IIG of the Constitution.

Does Parliament express and endeavour to enforce a desire that manufacturers shall pay good wages or a desire to induce them not to pay good wages ? In other words, does Parliament wish to make manufacturers pay good wages or to raise revenue from those who do not pay good wages ?

[ H i g g i n s J.—Hut the legi.slation for the prohibition of the

opium trade is valid: Black’s Gonstitiitional Law,\). IHl ; Kx

parte Rapier (1) ].

That class of legislation i.s to be justified only under the power as to external trade and commerce. There is no case in w'hich the mere prohibition of something, the regulation or control of which lies within the exclusive domain of State legislation, has been held to be intra vires. If it is a direction of this Act that the.se manufacturers shall pay certain wages, then it is a regu lation of tlie conditions of labour in the trade, and, if it be incon sistent with any regulation made by a State Parliament, the former, if valid, would prevail. In ascertaining the character of an Act its purpose and object may be looked at. Morgans Bteamslup Co. v. Louisiana Board of Health (2); but the face of the Act only can be looked at to see what i.s its jiurpose and object.

The Commonwealth Parliament can tax any person and any thing; and it can divide persons and things into cla.s.ses for the purpose of taxation. But the moment the particular discrimen for distingui.shing between one class and another in itself involves a regulation of conduct which is within the exclusive power of the State legislature, the Commonwealth legi.slation is invalid.

[ H i g g i n s J.—How i.s that principle reconcilable with the decisions as to legislation for the suppression of lotteries ? ]

(1) I4;i U .S .. n o . (2)

118 U .S., 4.05, a t p. 402.

6 C.L.R.]

OF AUSTRALIA.

The validity of that legislation rests exclusively and absolutely on the power of the Commonwealth Parliament to deal with

H- C. of a .

1908.

services performed by it, e.g., the post office service: The King v. T he

K ing

Arndel (1).

Barger.

Having arrived at what is the real thing the Commonwealth Parliament wishes to effect by this Act, it is not open to say that

T he Com

monwealth

one of its incidental effects is to benefit one class to the disadvant

McK ay.

age of another, and to create a protective system. The proposition on which the validity of protective legislation rests is that the motive which induces Parliament to exercise its legislative power cannot be inquired into. It is a fallacy, liowever, to argue that, because Parliament can enact protective legislation, that is therefore a new power upon the basis of which other new powers may be created. See Federated Amalgamated Govern ment Railway and Tramivay Service Association v. Kew Soidh Wales Raihvay Traffic Employes Association (2).

I B a r t o n J., referred to Ex parte Rapier (3) ]. two realms of legislative authority marked out by the United States Constitution, each exclusive of the other, and it was held that an Act of Congress, which in effect would tax or regulate intra-state commerce, would be invalid.

[ I s a a c s J.—In Grand Trunk Railway Co. of Canada v. Attorney-General of Canada (5) it was held that the Dominion Parliament had power to legislate to prohibit “ contracting out ” by railway companies from the liability to pay damages for per sonal injuries to their servants, though the Provincial legislatures liad exclusive power to legislate as to civil rights.]

The companies affected were those concerned in inter-state railway traffic, and it was held that the legislation in question was ancillary to railway legislation, which was within the power of the Dominion Parliament. The case depended also on the character of the demarcation between the powers of the Dominion and those of the Provinces. See British North America Act

1867, secs. 91, 92.

In the Lottery Case (6) it was held that the

{]) 3 C .L .R ., 557.(4) 7 H ow ., 283.

(2) 4 C .L .R ., 488.(5) (1907) A.C., 65.

(3) 143 U.S., no.

(6) ISS U .S ., .321, a t p. .345.

HIGH COURT

[1908.

H.C. OF A.fedei'iil legislation in (jnestion was good becanse the carrying of

1908.

lottery tickets was connnerce, and that the power to regulate conunerce included the power to prohibit any particular kind of

T he K inc;

connnerce.

The principle that the power to regidate involves the

B argek .

permitting the thing which may be regulated to continue does

T he

C om-

MONWEAI.TH

not apply to the Constitution.

McK ay.[ G r i f f i t h C.J.—The expre.ss power given to the Common

wealth Parliament to deal with foreign and inter-state trade and commerce implies a prohibition against interfering with inter state trade and connnerce, and that must be remeiidjered in dealing with the other powers given.]

A rule which may apply to the construction of powers as to trade and commerce may not, however, aj)ply to the construction of powers as to ta.xation. The Court must read the general descri])tion of power.s given to the Commonwealth .subject to sucli implied limitations as will prevent tho.se powers from interfering with powers given or re.served to the States.

[Lsaacs j . referred to the Tlte Queen v. Bnrah (1).]

Taxation is the taking of money for public purposes. See Miller on the Const it nt ion of the Un ited States, pp. 234, 242. Although the Court cannot inquire into the purpose for which taxation is imposed, yet, in order that the taxation may be valid, it must tir.st be a getting in of money.

[ I s a a c s J.—The difference between a pecuniary penalty and a

tax is that the former is a sum i-ecjuired in respect of an unlawful

act, and the latter is a sum required in re.spect of a lawful act.]

That would not be a sufficient definition of a tax so as to deter mine the scope of taxation under sec. 51 of the Constitution. If an Act according to its true nature involves the enforcement of the payment of money under certain circumstances, that may either be a tax or a penalty. If on the face of an Act the pay ment of money is merely intended as a sanction to an obligation no expression of a wish, then in effect it i.s a penalty. See Loan Association v. Topeka (2). The words “ for the peace, order, and good government of the Commonwealth ” in sec. 51 of the Con stitution do not enlarge the powers granted by that .section, but are only words of geographical limitation. See Illinois Central

( 1 ) 3 App. CiS., 889, a t p. 904.

(2) 20 W all., 65.">, a t p. 004.

6 C.L.U.]

OF AUSTRALIA.

Raihvay Go. v. DecafAir (1); Cooley on Taxation, pp. 9, 14;

H. C. OF A.

Ex parte Burnett (2).

1908.

[ I s a a c s J. referred to Cooley on Taxation, pj?. 188, 191.]

T he K ixo

It is the meaning of “ taxation ” at the time of the inception of the Commonwealth whicli is material here, and the decision.s in

Barger-

T he Com

the United States before that time are to a certain extent incor

monwealth

porated in the Constitution, while those decisions since that time

McK ay.

are only opinions of eminent persons. The implied limitations upon the constitutional powers are based upon principles whicli apply, not only to the instrumentalities of government, but also to the legislative and administrative functions of government: M’Culloch V. Maryland (3). There is great necessity for cutting down tlie meaning of taxation, for the wide meaning would prevent the States from legislating within their limits.

There may be some exercise of the power to grant bounties which would give rise to the same objections as exist in regard to the power of taxation. There is not, however, the same reason to limit the power to grant bounties as there is to limit the power of taxation. There is not the danger of abuse of the power to grant bounties which exists in the case of taxation, and therefore there is not the same necessity for implied restrictions. See M'Culloch V. Maryland (4). The expression by a law-giver of a wish for the observance of a certain course of conduct, coupled with a promise of reward if the wish is complied with, amounts to a command : Austinls Science of Jurisprudence, vol. i.,

89.

The Commonwealth Parliament, having no power to discrim

inate, cannot give to its delegate such a power.

Mitchell K.C. (with him Harrison Moore), for the State of Victoria. As to the meaning of taxation see Veazie Bank v. Fenno (5); T^ne County v. Oregon (6). The fact that an Act calls .something a tax does not make it a tax. Thus in the Head Money Case (7) it was held that what purported to be an exercise of the power of taxation could be validly done under the power

(1) 147 U .S ., 190, a t p. 197.(.5) 8 W all., 533.

(2) 30 Alabama, 461.(6) 7 W all., 71.

(3) 4 W heat., 316.(7) 112 U.S., 580.

14) 4 W heat., 316, a t p. 431.

HIGH COURT

[1908.

H.C. OF A. as to trade and commerce.As to tlie case of Slavk v. Dakynii

1908.

(1), no general rule was there laid down with regard to all

powers.

See Phipson v. Turner (2); /Ams v. xTackmn (8).

T he K ing

[ H i g g i n s J. referred to FarwelL on Potvein, 2nd ed., p. 115.]

B arger .

The rule has nothing to do with powers given by a Constitu

T he Com

monwealth

tion.

McK ay.

Groom A-G. and Puffy K.C. (with them McArthur and Starke), for the plaintiffs in each case. The validity of this Act is based on sec. 51 (i.) of the Constitution. The power of taxation is, within the limits prescribed by that section, plenary and abso lute. Within tho.se limits of subjects and area the Common wealth Parliament is supreme and has the .same authority as the Imperial Parliaments would have under like circumstances: Hodge V. The Queen (4). I’lie Parliament can select any person or any property for taxation, and any basis that it thinks tit for dis criminating between classes of persons or of property. It has unlimited power as to the amount of taxation and as to the rules of evidence for determining liability to taxation. The only limits on the power of taxation are those j^rescribed by the Con stitution either expressly or, to the extent which has been deter mined by this Court, by necessary implication. The limitation now sought to be placed upon the power of taxation would have the effect of preventing the Commonwealth from carrying out its purposes.

[ G r i f f i t h C.J.—Under the power to tax the power to .select any .subject for taxation, or, for that purpose, to differentiate between classes of subject matter by any means that the Common wealth Parliament thinks fit, must be limited by the proviso that the mode of differentiation must not be one which i.s forbidden either expressly or impliedly by the Constitution].

It lies on the other side to prove that there i.s an implied pro hibition against the mode of differentiation used in this Act. This mode is not forbidden by the Constitution, but is included in the power of taxation. The power of taxation being absolute in its terms, the burden is on the other side to cut it down.

(1) L .R . lO C li., 35.(3) 29 Ch. D., 521, a t p. 525.

(2) 9 Sim ., 227.

(4) 9 App. Caa , 117, a t p. 132.

6 C.L.R.]

OF AUSTRALIA.

H. C. OF A.

[ O ’C o n n o r J.—Tlie Coimnonwealth

Parliament can exercise

1908.

only powers which are given to it.

It must therefore be shown

that the particular power exercised here is given to it.]

T he K ing

The only attempt which has been make to cut down the the power of taxation is by extending the principle laid down in

B arger.

T he Com

Federated Amalgamated Government Railway and Tramway

monwealth

Service Association v. New South Wales Railway Traffic

McK ay.

Employes Association (1) to an invasion of the legislative power of the States. The Act upon which McCray v. United States (2) was decided is on the same lines as the Act now under considera tion. There oleomargarine was taxed, and its manufacture, importation and exportation were regulated by Congi'ess, and it was held that the Act was valid.

[G r i f f i t h C.J.—There the article sought to be taxed itself

ailbrded the evidence upon which its liability to taxation was to

be determined.]

The motive or purpose of an Act cannot be looked at for the purpose of determining its character. This Act is on its face an Excise Act, and the fact that its indirect affect is to interfere with the manufacture of harvesters no more affects the character of the Act than does the fact that any Excise Act, if large enough, may have the effect of prohibiting the manufacture of the article taxed affects the character of that Act.

[ G r i f f i t h C.J.—Sec. 51 (i.) of the Constitution confei-s on the Commonwealth Parliament power to regulate “ trade and com merce with other countries, and among the States.” That section does not give power to regulate domestic trade and commerce. That is reserved to The Parliaments of the States by sec. 107. The effect of sec. 51 (i.) and 107 together is that the regulation of domestic trade and commerce is forbidden to the Common wealth Parliament as effectively as if it had been so stated in express words, and those sections are a prohibition against any Commonwealth Statute which is substantially a Statute to regu late dome.stic trade and commerce. Further, sec. 51 (ii.) must be read subject to that prohibition.]

In McCray v. United States (2), the Act dealt with was obviously intended to discourage the manufacture of oleomar-

(1) 4 C .L .R ., 488. (2)

195 N .S ., 27.

VOL. VI.

HIGH COURT

[1<)08.

H.C. OF A.garine, but tlie Supreme Court of the United States made no

1908.

•such implication there. See also Foivell v. Petnisylvania (1);

ScJiollenherger v. Pennt^ylvania (2); Ex

Kollock (d).

T he K ino

1'.

[ H i g g i n s J. referred to United States v. Eaton (4).]

B arger .

The form and substance of an Act may be looked at to deter

T he Com

monwealth

mine what power is exercised by it, but 2)ri»id facie, its form

indicates the power wliich is exercised.

The form of tliis Act is

M cK ay.

that commonly used for an Exci.se Act, and jtrinid facie, that is what it is. The Constitution gives to the Commonwealth Parlia ment power to regulate domestic trade and commerce so far as it can be brought within, or is involved in, the enumerated powers. See Knoivlton v. Moore (5). As to Attorney-General for Quebec V. Queen Insurance Co. (6), although the Act there in (piestion u.sed the word licence, it was on its face not a licensing Act. The test was put that, if everything about licences was left out of the Act, its effect would still be the .same. This Act would be meaii- ingle.ss if the words imposing the Excise were left out. The words of this Act are precise and unambiguous, and in themselves alone best declare the intention of Parliament: Tasmu,nia v. Commonwealth (7). In order to say that this i.s not a taxing Act the Court would have to sa}’’ that no revenue would be raised by it. The power of taxation is intended to be exercis able to the furthest extent to which it can be exercised. Con ditions may be imposed which will induce persons to take one course rather than another ; United States v. De Witt (8). See also Story on the Constitution, vol. ii., p. 26 ; Buttfield v. Stran- ahan (9).

[ G r i f f i t h C.J.—In Attorney-General v. Mersey Railway Co. (10), the difference Vjetween the indirect effect of carrying out a power and dragging in other forbidden powers is pointed out.]

The Commonwealth Parliament could give a bounty making the same discrimination as exists in this Act, and bounties and exemption from taxation are the same thing. As to the argument based on the Licence Tax Cases (11) that the tax must be on

(1) 127 U .S ., 678.(7) 1 C .L .R ., 329, a t p. 3.39.

(2) 171 U..S., 1.(8) 9 W all., 41.

(3) 165 U .S ., 526.(9) 192 U .S ., 470, a t p. 49.3.

(4) 144 U .S ., 677.(10) (1907) A .C ., 415.

(5) 178 U .S ., 41.(11) 5 W all., 162, a t p. 471.

(6) 3 Ap)). Ca.s., 1090.

6 C.L.R.]

OF AUSTRALIA.

existing things, Parliament does not attempt here to impose the H. C. of a .

1908.

tax upon all persons who carry on a particular business.

In reading an Act of the Commonwealth Parliament for the purpose of determining whether it does or does not carry out the

T he K ing

Barger .

powers of the Commonwealth Parliament, the power which it

purports to carry out should be looked at first, then, if the words monwealth

used in tlie Act are tit and apt to carry out the power, the Court ĵjcKay

will not investigate the motives, aims or intention of the Parlia-

-----

ment. It is enough to say; “ There is the power. The words aptly carry it out.” If in an Act of the Parliament there is a grant of what seem to be two inconsistent powers to two bodies, it may be the duty of the Court to give a limited meaning to one of them, but in the Constitution, if there is to be any limitation, it should be a limitation of the powers of the States rather than of those of the Commonwealth. Here the limitation should be on the reserved powers of the States. Sec. 51 of the Constitution rendered certain powers, which had until then been exclusively vested in the States, exercisable by the Commonwealth. Included in those powers is the power of taxation. Then by virtue of sec. 90 the power of taxation by means of Customs and Excise duties has become exclusively vested in the Commonwealth. If it is found that the power of taxation by means of Customs and Excise duties comes into conflict with those powers which are reserved to the States, why should that power, which is speciflc- ally given, be limited in order to keep whole that which is in general terms reserved ? So much of power over domestic trade and commerce is reserved to the States as is not specifically given to the Commonwealth. There is no need here for a conflict of powers. A taxing Act by its nature cannot come into conflict with any Act of a State which regulates domestic trade and com merce, for no taxing Act enacts anything as to conduct—^what a man must do or abstain from doing—beyond enacting that he shall pay money.

[G r i f f i t h C.J.—The grant of power by sec. 51 (i.) of the Constitution, taken with the reservation of powers to the States by sec. 107, is a denial of the power of the Commonwealth Par liament to interfere with domestic trade and commerce, except so

HIGH COUllT

[1908.

H, C. OF A. far as is necessary to cany into ett’ect the powers specifically

given to the Connnonwealth.]

The power given as to taxation is not expressly limited except as to discriminations.

T he K ing

Taxation means nothing more or less than

B aroek .

raising money which is to be applied to the public service.

The

T h e Commotive or expressed object of the taxation is immaterial.

There

monwealth

AIcK ay.is no distinction between the direct and the indirect results in

such a case. In the Canadian cases the language was examined for the purpose of seeing what f)ower had been exerci.sed. So here, the only question is, is the language used appropi-iate to impose taxation. In McCray v. United Staten (1) the fact that language appropriate to impose taxation was accompanied hy language appropriate to affect matters over which Congress had no power, was held not to render the Act any the less an exercise of the power of taxation.

[ G r i f f i t h C.J.—Has not a State the power to pass legislation

having precisely the same result, not only indirectly, but also

directly, as this Act ?]

Yes. Further, a State Parliament can directly prohibit a manufacture, but the Commonwealth Parliament cannot. It is further said that this tax is used as a penalty, but that can be said of every case where there is a general tax with exemptions. There is nothing in the Constitution suggesting that the par ticular dinerimen or diacritical mark used here cannot be used. The discrimen is only used by way of description, and the words of description do not exercise a power which interferes with a power reserved to the States. A taxing Act such as this does not command anything as to domestic trade and commerce, and therefore does not interfere with the reserved jjower of the State. Even if the power to tax is to be limited so as not directly to interfere with domestic trade and commerce, there is no inter ference unless there is a distinct usurpation of legislative power and that is not the case here. This Act is a strong inducement to manufacturers to take a certain course, but it is not a com mand. The States Parliaments might immediately prohibit that course being taken. The proper test as to an interference is, does the Act which is challenged give a command which i.s or

(1) 195 U..S., ‘27.

6 C.L.R.]

OF AUSTRALIA,

may be inconsistent with a command of the State as to some

H. C. OF A.

1908.

thing within the exclusive power of the State ?

That the Act

may have a tendency to prevent persons from following the com

T he K isg

mand of tlie State is immaterial. In

Peterswald v. Bartley (1)

B arger.

an Excise duty is defined as “ a duty analogous to a Customs

T he Com

duty imposed upon goods either in relation to quantity or value

monwealth

when produced or manufactured.” This Act imposes an Excise

McK ay.

duty within the meaning of that definition, and, even if it does not, the tax imposed is one which the Commonwealth Parliament has power to impose.

The discrimination referred to in sec. 51 (ii.)of the Constitution must be discrimination between two States or between part of one State and part of another State. The object is that one State shall not benefit at the expense of another, not uni formity. See sec. 51 (iii.) The discrimination which is pro hibited must be on the ground of locality, must be made by the Act which is challenged, and must appear on the face of the Act itself which is challenged. It is not sufficient that the

result of the Act is to discriminate.

There is no discrimination

if the .same rule is applied to the whole of the Commonwealth.

[Isaacs J. referred to the Head Money Case (2).]

The fact that the rule may operate differently in different localities does not create a discrimiuatioj). If there is any dis crimination in this Act, it is between persons and not between States and parts of States. If any one of the conditions under which exemption may be obtained is valid, or if none is valid, the Act will stand. The fact that one means of obtaining exemp tion from the tax is bad, or that all those means are bad, does not invalidate the Act. The conditions of exemption are severable from the rest of the Act.

Mitchell K.C. in reply. As to the last argument, the effect of altering the conditions of exemption is to alter the whole char acter of the legislation. The Act is not severable: Polloch v. Farmers’ Loan and Trust Co. (3). For the purpose of seeing whether tlie exercise of a power is valid the inquiry is, not what

(1) 1 C .L .R , 497, a t p. 509.

(2) 112 U.S., 580.

(3)

158 U .S ., 601, a t p. 635.

HIGH COUUT

[1908.

H.C. OF A. ijas been done nnder the exercise of tlie jimver, but wlmt imiy lie

1908. done under it :

Colonial Ihiildiixj and Inirsfinent Assocddion

T he K jnoV. Attorney-Genend of Quebec (1); Toronto Corporation v.

V .Bell Telep)hone Co.

(2).

As sliowing the true nature and cliar-

Barger .

acter of this Act, the use in sec. 2 (a) of the words “ lair and

T he Com

reasonable ” shows that the intention of the Parliament was to

monwealth McK ay.bring about fair and reasonable conditions of employment, and

not to raise revenue from taxation. That is also borne out b}’ the reference to the Common wealth Conediation (cnd Arbitration Act 1904.

The object and aim disclosed on the face of the Act is one of the materials to be considered in determining the true nature and character of the Act. The Act is not an exercise of the power of taxation given by sec. 51 (ii.) of the Constitution because, (a) what are termed duties of Excise in sec. 2 of the Act are really burdens imposed as a sanction to enforce the carrying out of what the Act really aims at, viz., the regulation of domestic industry so far as the remuneration of labour is concerned—see Story on the Constitution, 5th ed., p. G74; Bentham’s Works, vol. I., p. 3.94; Austin’s Jurisprudence, p. 89; Moo'yan’s Steamsldp Co. V. Louisiana (3); and (h) because the necessary and logical consequence of the principles laid down by this Court, viz., that the Commonwealth Parliament cannot tax State instrument alities, and that the Commonwealth Parliament has power to impose taxation for federal purposes only, is to e.stablish a fur ther limitation that the power of taxation cannot be used by the Commonwealth Parliament to usurp the legislative power re served by the Constitution to the States exclusively. See D’Emnden v. Pedder (4); Federated Amalgamated Government Railway & Tramway Service Association v. Eeiv South Wales Railway Traffic Envployh Association (5); McCray v. United States {6); Baxter v. Commissierners of Taxation (N.S.W.) (7). That further limitation is also to be inferred from the fact that otherwise the specific grant of the majority of the other powers enumerated in ,sec. 51 of the Con.stitution would be unnecessary.

(1) 9 App. Cas., 157, a t p. 165.(5) 4 C .L .R ., 488.

(2) (1905) A .C ., 52, a t p. 58.(6) 195 U .S ., 27.

(.8) 118 U .S ., 4.5.5, a t p. 461.(7) 4 C .L .R ., 1087, a t p. 1102.

(4) 1 C .L .R ., 91.

6 C.L.R.]

OF AUSTRALIA.

The CoiniJionwoaltl) Parliament cannot, by the exercise of powers H- C.

of a .

expressly or impliedly forbidden by the Constitution, create a

class for the purpose of taxing it.

Xhe ki.n-o

BaR(4EK.

Irvine K.C., in reply, adopted the arguments of Mitchell K.C.

The

Com

monwealth

Cur. adv. vult.

McK ay.

The judgment of G r i f f i t h C.J., B a r t o m J. and O ’C o n n o r

J.,

was read by

•

G r i f f i t h C.J. The question for decision in these two cases is, shortly, whether the Act No. 16 of 1906, intituled “ An Act relating to Duties of Excise,” and having for its short title the “Excise Tariff 1906 ” (No. 16), is a valid exercise of the legis lative powers of the Commonwealth Parliament.

The second section of the Act is as follows :—“ Duties of Excise shall on and from the first day of January one thousand nine hundred and seven be imposed on the dutiable goods specified in the Schedule at the rates specihed in the said Scluidule.

“ Provided that this Act shall not apply to goods manufactured by any per.son in any part of the Commonwealth under conditions as to remuneration of labour which—

{a) are declared by resolution of both Houses of Parliament

to be fair and reasonable ; or

(b) are in accordance with an industrial award under the Commonwecdth Conciliation and Arbitration Act 1901; or

(c) are in accordance with the terms of an industrial agreement filed under the Commonwealth Concilia tion and Arbitration Act 1904; or

(d) are, on an application made for the purpose to the President of the Commonwealth Court of Con ciliation and Arbitration, declared to be fair and j-easonable by him or bĵ a Judge of the Supreme Court of a State or any person or persons who compose a State Industrial Authority to whom he may refer the matter.”

The goods specified in the Schedule are agricultural implements

HIGH COURT

[1908.

H. C. OF A. of difievent sorts, and tlie duty imposed is iu some case.s at rixed

rates and iu others at ToZoi’em rates. Barger’s ca.se i.s an action

T h e K ing

for penalties for manufacturing exciseable goods, viz., agricultural

implements of the kind described iu the Schedule, without a licence as required by the Excise Act 1901, .sec. 85. The formal

B argek .

T h e

C om

(|uestion in this case is whether the goods are exciseable goods.

monwealth McK a y .McKay’s case is an action to recover the fixed duties in respect

of similar goods manufactured by him, and as to which he is not entitled to the benefit of the proviso. The defendants in botli cases object that, notwithstanding the title and phraseology of the Act, it is, in substance, not an exercise of the power of taxa tion conferred on the Parliament by the Constitution, but an attempt to regulate the internal trade and industry of the States, which, it is .said, is not within the powers of the Parliament but is reserved to the States. They also contend that, even if the Act is an exercise of the power of taxation, it i.s void because it authorizes discrimination between States and parts of State.s.

The ([uestion for decision is entirely one of construction. Whether it is in the best interests of the Commonwealth that the Federal Parliament should have the powers contended for, or whether tho.se intere.sts would be be.st furthered by the exercise of the powers reserved to the States, are matters with which this Court has no concern. Our duty is to declare the law as we find it, not to make new law.

The Act in question does not impose the tax upon all goods of the specified classe.s, but only upon .some of them. Goods which are indistinguishable by any physical attributes are never theless differentiated for the purpo.se of taxation according as certain prescribed conditions of the remuneration of labour have or have not been observed in their manufacture. Commenting upon this provision, the defendants contend that, if the Common wealth can by the exerci.se of the power of taxation make the liability or non-liability to taxation conditional upon the observ ance of rules of conduct defined in the taxing Act̂ a complete power to regulate such conduct is in effect conferred. Tlias, the Commonwealth Parliament might impo.se a tax, under the name of a licence fee, upon all persons carrying on any specified trade or occupation, with a remission of the tax to all persons who

6 C.L.U.]

OF AUSTRALIA.

carry it on in accordance with specified conditions, and the amount

H. C. OF A.

of the fee might be made so large as to be prohibitive except on

1908.

compliance with these conditions. The same result might be T h f K ing

achieved by a poll tax with similar remission.s.

Barger.

The defendants contend, in the first place, that, in determining whetlier a particular law is or is not within the power of the monwealth

-----

Parliament, regard must be had to the substance of the legislation

McK ay.

rather than to its literal form.

This proposition is supported by

high authority binding upon this Court. In the case of Attorney- General for Quebec v. Queen Insurance Co. (1), the validity of a Statute of the province of Quebec was tested on this principle, and it was held that, although the Statute in form purported to be an exercise of the power of direct taxation possessed by the provincial legislature, it wa.s in substance an attempted exercise of the power of indirect taxation, whicli was within the exclusive domain of the Dominion legislature. In the case of Russell v. The Queen (2), which raised a similar question, it was said by the Judicial Committee that the true nature and character of the legislation in the particular instance under discussion must always be determined in order to ascertain the class of subject to which it really belongs. In the case of Peterswald v. Bartley (3) this Court said :—“ In c o n s i d e r i n g the validity of laws of this kind we must look at the substance and not the form. If the Statute is good in substance, the Court will regard the substance, and hold the law to be valid, whatever the form may be.” The con verse proposition is equally true.

The same rule is applied in the United States. In Guy v. Baltimore (4), Harlan J., delivering the judgment of the Supreme Court, in a case in which the City of Baltimore, which had large powers of taxation, had attempted to impose certain taxation under the form of wharfage dues, said :—

“ The city of Baltimore, if it chooses, can permit the public wharves which it owns to be used without charge. Under the authority of the State, it may also exact wharfage fees, equally, from all who use its improved wharves, provided such charges do not exceed what is a fair remuneration for the use of its

(1) 3 App. Cas., 1090.(3)

1 C .L .R ., 497, a t p. 511.

(2) 7 App. Cas., 829, a t pp. 839-40.

(4) 100 U .S., 4.34, a t p. 442.

HIGH COURT

[1008.

H. C. OF A. property. . . . But it cannot cinpkn’- tlie property it tlurs ]90S.holds for public use so as to hinder, obstruct or burden inter-state

T hk K ixg

conunerce in the interest of conuuerce wholly internal to that

State. The fees which it exacts to that end, a lth o u o h denomin ated wharfiige dues, cannot be regarded, in the .sen.se of our former

B argkr.

T he Coji-

MONW EALTH

decisions, as compensation merely for the use of the City’s prop

McK ay.erty, but as a mere expedient or device to accomplish, by indirec

tion, what the State could not accomplish by a direct tax, viz., build up its domestic commerce by means of unecpial and oppres sive burdens upon industry and business of other States.”

The ([uestion for our consideration, then, is the nature of the power conferred upon the Commonwealth Parliament with re.spect to taxation, and whether the ambit of that power is circum.scribed b}' any, and what limits. For, within the ambit of its powers, the authority of the Commonwealth is plenary, supreme, and unchallengeable: The Queen w Bamh (1); Hochje v. The Queen

( 2 ).

In e x a m in in g tbe language of the Constitution it is nece.ssary to bear in mind the distinction, between means and ends—between the ends that can be attained by exercise of the legislative power and the means that can lawfully be adopted to attain those ends. It is not di.sputed that the effect of the Act now in que.stion, if valid, is to enable the Commonwealth to exercise a large though indirect influence upon the conditions of labour employed in the manufacture of agricultural implements in the several States.

The Attorney-!ieneral claimed that the Commonwealth should have this power, and very properly pointed out that in many cases the result of the exercise of the power of taxation is to bring about indirect consequences which are desired by the legis lature, and which could not practically, or could not so easily, be brought about by other means. The policy of protective tariffs

rests upon this basis.

The effect of a protective tariff may be to

raise or lower prices, or to raise or lower rates of wages. In a Federal State it may not be within the competence of the taxing authority to interfere directly with prices or wages, but the cir cumstance that a tax affects tho.se matters indirectly is irrelevant to the question of competence to impo.se the tax. In other words,

(1) .3 App. Cas., 889.

(2) 9 App. Cas., 117.

G C.L.R.]

OF AU8TKALTA.

tlie circumstance tiiat an indirect effect may be produced by the

H. C. OF A.

exercise of admitted power is irrelevant to the question whether

1908.

the legislature is competent to prescribe the same result by a direct T he K ing

law. An illustration of this doctrine is afforded by a comparison of the cases of United States v. De Witt (1), and McCray v.

Bargee .

T he Com

United States (2).

In the former case it was held that an Act of

monwealth

Congress, which made it a misdemeanour to mix for sale naptha

McK ay.

and illuminating oils, or to sell such a mixture or offer it for sale, or to sell or offer for sale petroleum containing certain inflam mable oils, was invalid, as relating exclusively to the internal trade of the States. In the latter case an Act imposing a duty of Excise upon goods adulterated in a specific manner was held valid, although the tax was so large a.s to be, in effect, prohibitive of the adulteration. In that case objection was also taken to various detailed provisions of the Act, as relating to matters of State concern. But they were all provisions of such a nature as are common in Acts relating to the collection of internal revenue, being incidental to the prevention of evasions of the tax itself, and the objection was overruled.

Again, the motive which actuates the legislature, and the ifltimate end desired to be attained, are equally irrelevant. A Statute is only a means to an end, and its validity depends upon whether the legislature is or is not authorized to enact the par ticular provisions in question, entirely without regard to their ultimate indirect consequences.

The scheme of the Australian Constitution, like that of the United States of America, is to confer certain definite powers upon the Commonwealth, and to reserve to the States, whose powers before the establishment of the Commonwealth were plenary, all powers not expressly conferred upon the Commonwealth.

This is expressed by sec. 107 of the Constitution, which provides th a t:—“ Every power of the Parliament of a Colony which has become or becomes a State, shall, unless it is by this Constitution exclusively vested in tlie Parliament of the Commonwealth or withdrawn from the Parliament of the State, continue as at the establishment of the Commonwealth, or as at the admission or establishment of the State, as the case may be.”

(1) 9 W all., 41.

(2) 195 U.S., 27, a t p. 59.

HIGH COURT

[1908.

H.C. OK A.The corresponding jjrovision of the American Constitution is :

1908.

—“ Tlie powers not delegated to tlie United States by the Con

T he K ingstitution, nor jirohibited by it to the States, are reserved to the

B argek.

States respectively, or to the people ” (Art. X.).

Sec. 51 provides that;—“ the Parliament shall, subject to this

T he

C om

monwealth

Constitution, have power to make laws for the peace, order, and

jMc K a y .

good government of the Commonwealth with respect to :—

“ ii. Taxation ; but so as not to di.scriminate between States

or parts of States.”

The corre.sponding provision of the Constitution of the United States is “ to lay and collect taxes, duties, imposts, and Excises ; but all duties, imposts, and Excises shall be uniform throughout the United States” (Art. 1, sec. 8, sub-sec. 1).

The first (juestion that arises at this point is :—What is the meaning of the word “ taxation ” as used in the Constitution, an instrument which became law in the year 1900 ?

It is po.ssible that since that time the word may have been used in Australia in a wider or more limited sense, but whatever it meant in 1900 it must mean so long as the Con.stitution exists, so far as regards the nature and extent of the power conferred on the Parliament with respect to it.

The jJi'iinary meaning of “ taxation ” is raising money for the purposes of government by means of contributions from indi

vidual persons.

Taxation differs from exaction in that the obligation to contri bute depends upon prescribed differentiations of the persons from whom, or the things in re.spect of which, the contribution is to be made. The power to tax necessarily involves the power to .select the subjects of taxation. In the case of things the differ entiation or selection is, in practice, usually made by reference to objective facts or attributes of the subject matter, so that all persons or things possessing those attributes are liable to the tax. The circumstance that goods come from abroad or from a par ticular foreign country, or that particular processes or persons have been employed in their production, or that they possess certain ingredients, are instances of attributes which have been cho.sen for the purpose of differentiation. In a State po.ssessing plenary powers of legislation any condition whatever may be

6 C.L.R.]

OF AUSTRALIA.

imposed as a basis of selection for taxation purposes, and it is H- C. o f A.

immaterial whether the differentiation should properly be re

1908,

garded as an exercise of the power of taxation or of some other

T he K ing

power.

B-4ROEK.

But where the competency of Parliament is limited, as in a Federal State, to specific matters, it is material, and indeed neces

T he Co.m-

M ON W EALTH

sary, to inquire whether an attempted exercise of the power of

M cK ay.

legifslation falls within some one or more of the enumerated powers. In the present case the only relevant power is that of taxation.

The grant of the power of taxation is a separate and indepen dent grant. This is the accepted law in the United States. In interpreting the grant it must be considered not only with refer ence to other separate and independent grants, such as the power to regulate external and inter-state trade and commerce, but also with reference to the powers reserved to the States.

It was not contested in argument that regulation of the con ditions of labour is a matter relating to the internal affairs of the States, and is therefore reserved to the States and denied to the Commonwealth, except so far as it can be brought within one of the thirty-nine powers enumerated in sec. 51.

In some instances, when it was intended to allow the Parlia ment to regulate the domestic affairs of tlie States, the power was conferred bĵ express words. See, for instance, paragi’aphs :—

xii. Currency, coinage, and legal tender :

xiii. . . . The incorporation of banks, and the issue of paper money;

XV. Weights and measures :

xvi. Bills of exchange and promissory notes :

xvii. Bankruptcy and insolvency;

XX. Foreign corporations, and trading or financial com

panies formed within the limits of the Commonwealth. We are thus led to the conclusion that the power of taxation, whatever it may include, was intended to be something entirely distinct from a power to directly regulate the domestic affairs of the States, which was denied to the Parliament.

The fact that taxation may produce indirect con.sequences was fully recognized by the framers of the Constitution. They

HIGH COURT

[I'JOS.

H. C. OF A. recognizocl, moreover, (hat tlio.se consecjuences would not, in the

nature ol' things, he uniform throughout the va.st area of the

T he K ing

Commonwealth, extending over B2 parallels of latitude and 40

B arger .degrees of longitude. The varying conditions of climate—

tropical, sub-tropical and temperate—and of locality—near or at

T he C om

monwealth

great distances from the seaboard—make an effectual di.scrimina-

tion for many purposes between the several portions of the Commonwealth. Le.st, however, the Parliament should desire to bring about ecpiality in the incidence of the burden of taxation, or what has been called an eijuality of sacrifice, by di.scriminating between such different portions, they were ex})ressly jirohibited from doing so. The words of placitum ii. “ Taxation; but so as not to discriminate between States or parts of States” recognize the fact that nature has already di.scriminated, and pre.scribe that no attempt shall be made to alter the effect of that natural discrimination. So in jdacitum iii. “ Bounties on the ])roduction or export of goods, but so that such bounties shall be uniform throughout the Commonwealth,” the I’arliament is pre cluded from attempting to equalize the conditions which nature has made unecpial; Again, by sec. 88 it is prescribed that “ uniform duties of Customs ” shall be imposed within two yeans. The inequality of the indirect effect of Customs duties in different parts of the Commonwealth is obvious to all persons acquainted with its conditions, but any attempt to correct this inequality is forbidden. This is well illustrated by the ca.se of the Colonial Sugar Company v. Irving (1), which related to the Exci.se duty imposed on all sugar in respect of which Customs duty had not been already paid. It was objected by the appellants that the Act offended against the prohibition of discrimination because in some States the rate of Cu.stoms duty on sugar had been higher than in others, from which it follow’cd that the actual burden of the new Excise duty was unequal in its incidence. This con tention was rejected by the Judicial Committee, who said that the discrimination, if any, was not effected by the Act imposing the Excise duty, but by the operation of the State laws previously existing. E converso, if the Excise duty had been made to vary in inverse proportion to the Customs duties in the .several States

McK av.

(1) (1900) A.C., .too.

6 C.L.R.] OF AUSTRALIA.

SO as to make the actual incidence of the burden practically H- C. of a

equal, that would have been a violation of the rule of uniformity.

Tlie object of the provision is further shown by sec. 92, which

T he K ing

provides that “ On the imposition of uniform duties of Customs, Bargee .

trade, commerce, and intercourse among the States . . .

The Com-

shall be absolutely free.”

51 ON WEALTH

It follows from what has been .said that the power of taxation

McK ay.

is subject to some limits. On the other hand, so long as the pre scribed limits are not transgressed, the Parliament may select the persons or the things in respect of which the exercise of the power is to operate. It is contended for the Commonwealth that this power of selection is only limited by the express words of placitum ii. and sec. 88, and that the discrimination or selection may be made to depend upon any other condition whatever, including conditions relating to personal conduct, or the regula tion of domestic industrial conditions. The defendants contend, on the other hand, that the limitation of the power of selection is to be found, not only in the express words of sec. 51, placitum ii., and sec. 88, but also in other parts of the Constitution, so that the grant of the power of taxation, which, as already said, is an independent power, must be so construed as to be not incon- si.stent with the other provisions of that instrument. If this latter contention be rejected, it would follow that the power of taxation is an overriding power, which would enable the Parlia ment to invade any region of legislation, although it is impliedly forbidden to enter it, and this by the simple process of making liability to the taxation depend upon matters within those regions. In this connection I will read a pas.sage from the judg ment of this Court in Petevswald v. Bartley (1):—“ In con.struing a Constitution like this it is necessary to have regard to its general provisions as well as to particular sections, and to ascer tain from its whole purview whether the power to deal with such matters was intended to be withdrawn from the States, and con ferred upon the Commonwealth. The Constitution contains no provisions for enabling the Commonwealth Parliament to inter fere with the private or internal affairs of the States, or to restrict the power of the States to regulate the carrying on of

(!) ] C .L .B ., 497, at p. 507.

HIGH COURT

[1908.

H. C. OF A.

any busines.ses or trades within their boundaries, or even, if they

1908.think tit, to prohibit them altogether. That is a very important matter to be borne in mind in considering whetlier this particular

T h e K ino

provision ought to be consti’uod so as to interfei-e witli the State>’ powers in tliat respect. If tlie majority of the Supi'cme Court

B aroer .

T he Com

monwealth

were right, the Constitution will have given to the Common

M cK ay.wealth, and withdrawn from the States, the jiower to regulate

their internal affairs in connection with nearl}'̂ all trades and businesses carried on in the States. Such a construction is alto gether contrary to the spirit of the Constitution, and will not be accepted by this Court unless the plain words of its provisions compel us to do so.”

Tlie defendants contend that the doctrine laid down by tin's Court in tlie case of D’Emden v. Pedder (1) and applied in tlie Federated Amalgamated Government Radtvay and I'ramtvay Service Association v. New South W(des Railway Tra,ffi.c Em ployes Association (2) to tlie case of attempted interference by the Commonwealth with functions reserved to the States, pro hibits any interference, by means of the e.xercise of tlie power of taxation, with matters as to which direct interference is ex- pre.ssl}' or impliedly prohibited. The rule, however, applicahle to the present case is different, but it is founded upon the same principles. The Constitution must be considered as a whole, and so as to give effect, as far as po.ssible, to all its provisions. If two provisions are in ajiparent conflict, a construction which will reconcile the conflict is to be preferred. If, then, it is found that to give a particular meaning to a word of indefinite, and possibly large, significance would be inconsistent with some definite and distinct prohibition to be found elsewhere, cither in . express words or by necessary implication, that meaning must be re jected. It follows that, if the control of the internal affairs of the States is in any particular forbidden, either expre.ssly or by necessary implication, the power of taxation cannot be exerci.sed so as to operate as a direct interference. Primd facie, the selec tion of a particular class of goods for taxation by a metfiod which makes the liability to taxation dependent upon conditions to be observed in the industry in wliich they are produced is as

(1) 1 C.L.K., 91.

(2) 4 C.B.H., 488.

6 C.L.ll.]

OF AUSTRALIA.

much an attempt to regulate those conditions as if the regulation

H. C. OF A.

were made by direct enactment.

1908.

The distinction has already been pointed out between the indirect effect of the imposition of taxes upon the importation or

T hf. K ing

B arger.

production of particular goods, which may, in effect, be prohibi

T h e Com

tive, and the direct regulation of the conditions of the production

monwealth

of goods.

McK ay.

We propose now to inquire what is the true nature and char acter of the Act before us, and in this connection it will be convenient to inquire whether it is such an Act as could be passed by a State legislature with regard to domestic matters. It is clear that the power to pass such an Act must be vested either in the Parliament or in the State legislatures. If the tax is an Excise duty within the meaning of sec. 90, the power of the Par liament is exclusive, and the State could not impose it.

The circumstance tliat the Act is called an Act relating to Excise, a subject matter within the exclusive powers of the Com monwealth, is no more material than the circumstance that in the Attorney-General for Quebec v. Queen Insurance Co. (1) the tax was called a licence tax.

It will be relevant at this point to consider the meaning of the term “ Excise ” as used in the Constitution. In the case of Feters- wald V. Bartley (2) the Court fully examined the question, and, after pointing out that in England the word had of late years come to have a widely extended interpretation, said ;—

“ With respect to the Australian use of the term, we are entitled to take notice of the sense in which it has been understood and used in the legislation of the various States. We know that in some of them there were in existence for many years ‘ duties of Excise,’ properly so called, imposed upon beer, spirits and tobacco. There were other charges which were never spoken of as Excise duties, such as fees for publicans’ licences, and for various other businesses, such as slaughtermen’s, auctioneers’, and so forth, but these were not commonly understood in Australia as included under the head of Excise duties. Bearing in mind that the Con stitution was framed in Australia by Australians, and for the use of the Australian people, and that the word ‘ Excise ’ had a distinct

( 1 ) 3 App. Cus., 1090. (2)

1 C .L .R ., 497, a t p. 509.

VOL. V I.

HIGH COURT

[1908,

H. C. OF A. uicaning in the popular mind, and that tliere were in tlie States

many laws in force dealing with the .subject, and that when u.sed in the Con.stitution it is u.sed in connection with the words ‘ on

T h e

K ing

B argek .goods produced or manufactured in tlie States,' the conclusion i.s

almost inevitable that, whenever it is used, it is intended to mean

T h e

Com-

M O N W E A I.T H

a duty analogous to a Customs duty imposed upon goods either in

relation to quality or value when produced or manufactured, and

McK ay.

not in the sense of a direct tax or personal tax.”

This is not conclusive of the ([uestion whether the tax impo.sed b}' the Act now in question is an Excise duty, but it is very relevant to the question of the real character of the Act.

Now, it is clearly within the competence of a State legislature to regulate the conditions of labour employed in the manufacture of agricultural implements. It is ef(ually clear that a State legislature, having prescribed such conditions, could impose a pecuniary burden upon everyone who did not conform to them, and that the payment might be made proportionate to the number of articles produced. Yet, if such payment were a duty of Excise, the State could not impose it, for the power of the Parliament to impo.se duties of Excise is exclu.sive. Such an Act might be framed in several dirterent ways. It might be pre.scribed that certain conditions as to the remuneration of labour should be ob.served in the manufacture, and that any manufacturer who failed to comply should be liable to a penalty of so much for every article manufactured. Or, without formally pre.scribing any such condition, it might provide that any manufac turer who did not observe certain conditions should be liable to a penalty of so much per article. Or it might, in,stead of using the word penalty, say that the manufacturer who did not comply with certain conditions should be bound to pay a licence fee, the amount of which should be computed at so much for every article manufactured. Or it might provide that every manufac turer should at his option either comply with certain pre,scribed conditions or pay to the State Treasurer a sum computed &c., and in default .should be liable to a penalty of &c. Or, finally, it might provide that any manufacturer who did not comply with certain .specified conditions should pay a tax at a specified rate. In all the cases supposed the substance would be the .same,

6 C.L.R.]

OF AUSTRALIA.

H. C. OF A.

though the form would differ.

And, in every case, the substance

1908.

would be a regulation of the conditions of labour in the industry

in question. Attention has already been drawn to the immateri

T he K ing

ality, as far as regards the validity of an Act, of the motives or Bakger-

indirect resiilts in contemplation of the legislature. The

T iie Com

jjrofessed purpose of an Act is generally stated in its Title. In

monwealth

any of the cases supposed the purpose of the Act, apparent on

McK ay.

its face, whatever attempt might be made to di.sguise it in the Title, would be, not to raise money for the purposes of government, but to regulate the conditions of labour. From this point of view an inquiry into the purpose of an Act is not an inquiry into the motives of the legislature, but into the substance of the legislation. And for the purpose of determining whether an attempted exercise of legislative power is warranted by the Constitution regard must be had to substance—to things, not to mere words.

In this connection reference may be made to the case of Rossi V. Edinhurgh Corporation (1 ) . In that case the question arose

upon a Local Act, by which it was provided that any person who should use a liouse, &c., other than an hotel, for the sale of ice cream without liaviug obtained a licence from the magistrates, who were “ hereby empowered to grant the same,” for the house, &c., should be liable to a penalty. The magistrates granted con ditional licences, the conditions of which related to daj^s and hours of trading, being embodied in the licences. It was held by the House of Lords that tliey had no power to do so. Lord Uulsbury L.C. said : —“ My Lords, tlie question here may be reduced to a very short point, namely, wliether the civic authorities have power to make these regulations which are complained of, because in substance they are regulations although tliey are contained in the form of a licence which they issue and whicli involves the power to make a regulation. Wliether it is called a regulation or a by-law, it is a legislative power which, in my view, the legis lature has not confided to them.

“ My Lords, it is idle to say that a great many of these things, as has been urged in the arguments which have been addressed to your Lordships, would be very desirable for the .sake, it is said,

(1) (1905) A . a , 21, a t p. 25.

HIGH COURT

[1908.

H . C. OF A. of public order. . . . I do not know wliat tlio CN'il aimed at was.

I can give, tlierefore, no general view of what is the intention and purpose of the Statute. I can onlj’ look at the Statute itself and

T h e K in (j

B akger.construe it, and when I construe the Statute I find there is in the

Statute itself a plain prohibition with respect to certain things.

T h e

C om

The magistrates, of cour.se, are not only empowered but bound to

monwealth M cK ay.give effect to legislation which has been passed; but when it is

argued that because they are given the power to restrict, within certain hours, the .sale of ice-creams therefore they have implied power to do all that might be desirable or expedient with refer ence to the times and circumstances under which ice-creams shall be .sold, it seems to me the argument entirely fails. What is sought to be done, whetber directly by by-laws, or indirectly by the language of the licence that i.s issued, is .something that can onlj’ be done by the legislature. It i.s a restraint of a common right which all His IMajesty’s .subjects have—the right to open their shoj^s and to sell what they please subject to legislative restriction—and, if there bo no legislative restriction which i.s appropriate to the particular thing in dispute, it .seems to me that it would be a very serious inroad upon the liberty of the subject if it could be supposed that a mere single restriction which the legislature has imposed could be enlarged and applied to things and circumstances other than that which the legi.slature has contemplated.”

So—to adapt the language of the learned Lord Chancellor— when it is argued that, becau.se the Commonwealth Parliament has had given to it the power to tax manufactures, therefore they have power to do all that might be desirable or expedient with regard to the times and circumstances under which a manu facture shall be carried on, it seems to us that the argument entirely fails. What is .sought to be done, whether directly hy the Statute or indirectly by the conditions attached to the taxa tion, is .something that can only be done by the competent legislature, that is, in this instance, the State legislature.

This case also supplies an answer to the argument that such conditions are not in substance a regulation of the manufacture.

It is, however, .suggested that, so regarded, the regulation is not in the nature of a law, since the concept of law imports that

6 C.L.R.]

OF AUSTRALIA.

certain wages, wliere is the provision for any trial for such an H- C. of A.

offence ? Suppose an information to be drawn up, “ For that

1908.

A.B. being a manufacturer did not pay,” &c. Such an offence is

T he K ino

not to be found in any federal Act. In the case of this Act, the

Bakger.

only offence to be found is non-payment of Excise duty ; and the

T he Com

manufacturer can be sued for the duty, and cannot escape an

monwealth

order unless his wages are approved in some one of four methods.McK ay .

But he cannot be sued, either civilly or criminally, for not paying

Higgins J.

the approved wages. No employe can sue him for the difference between the wages paid and the wages declared by the Concilia tion Court to be fair and reasonable. In this case the manufac turer is rewarded for not making use of his right to act in a manner perfectly lawful, but not favoured by the Federal Parlia ment ; and there is, after all said and done, a difference between using a stick to a beast and offering him a bundle of carrots. It may even be conceded that the suffering is the same in substance, whether we call it punishment or not. But if the municipal rates in Bathurst are higher than the municipal rates in Bendigo, it would be a mere rhetorical misuse of words to say that people are “ punished ” for living in Bathurst.

I understand that many of these harvesters are exported to the Argentine Republic. The Federal Parliament has at least as much power to affect wages in Australia as the Argentine legis lature. If the Argentine legislature pa.ssed an Act on the lines of this Act, and made it applicable to imported as well as to home made implements, it would operate precisely in the same way as this Act; and yet it could not be regarded as a law regulating or prescribing wages in Australia. It would be simply a law settling the conditions under which revenue will be collected in the Argentine, although it might vitally affect this Australian in dustry. The essential feature of the position is that this law makes no command as to wages, but does make a command as to payment of an Excise tax ; and that, therefore, it could not be enacted by the State legislature, but can be enacted by the Federal legislature. This Act, then, does not regulate wages in the .sense of imposing an obligation, of making a law, with regard to wages. But it undoubtedly has, or may have, an effect on wages. It holds out a strong inducement to manufacturers to come within

VOL. VI.

122

[1908,

HIGH COURT

H.C. OF A. the class of those exempted from Excise duty by paying wages

1908. under some one of the four standards mentioned in tlie proviso.

T he K ing

This does not make the law invalid.

It is impossible that the federal law should not affect people in their actions with regard to State subjects. We cannot partition a

Barger .

T he Com-

MONWEAhTH

man or a community into separate federal and State pieces, one

McK ay .to be touched by the Federal and the other by the State

Parliament. As has been said in the Supreme Court of the

Higgins J.

United States, in the converse case of a State Act which interfered with the operation of the federal law as to inter-state and foreign commerce; “ Legislation, in a great variety of ways, may affect commerce and persons engaged in it without constituting a regulation of it, within the meaning of the Constitution”: Sherlock v. Ailing (1); Hall v. De Cair (2). If the contrary doctilne is to be adopted in Australia, the State Governments, although one of them supports the defendant McKay in his attack on the Commonwealth law, will be griev ously crippled in their action. At present, under the United States doctrine, a State legislature is treated as having power to exclude, in the intere.sts of public health, goods coming from a diseased port. But, according to the defendants’ argument, this would be an invalid interference with the exclusive power of the Federal Parliament on the subject of foreign commerce—unless, indeed, the extreme view put for the defendants be accepted, that because the State has such a police power the Federal Parliament has no power at all to exclude such goods under its trade and commerce power. If the defendants are right, the State cannot, it seems—unless the same extreme view be accepted—enact a valid licence law, or local option law', or prohibit the sale or manufacture of intoxicating li(juors; for it w'ould discourage importation, diminish the profits of the importers, and lessen the federal revenue (see Licence Cases (3); Kidd v. Pearson (4)). If the defendants are right, the State cannot give that encouragement to industries which it often has given—say to the growth of hemp, of oil plants—for the home production di.stinctly interferes with foreign commerce and Customs revenue. If the defendants are

(1) 93 U .S ., 99, a t p. 103.(3) 5 H ow., 504.

(2) 95 U .S ., 485.

(4) 128 U .S ., 1.

6 C.L.R.] OF AUSTRALIA.

123

right, it is hard to .see how the State can exclude pestilence to body C- of

or mind, plague, cholera, or obscene pictures, lottery tickets, con-

^*9^

victs, opium (see Licence Cases (1)).

If the defendants are right, t h e K ing

the doctrine must be applied so as to make State laws invalid as Bargek.

well as to make federal laws invalid: and legislation of the State

T he Com

must be treated as void which affects people in their actions with

mon wealth

regard to federal subjects by encouraging or discouraging them

McK ay.

in a definite direction. If the defendants are right, how can a

Higgins J.

State Act for Sunday observance be supported, if it check inter state commerce? If the defendants are right, there lies before us the prospect—agreeable, perhaps, to a limited class—of perpetual struggles, in which attempts will be made to treat State laws as invalid because they affect (incidentally, as in this case) federal subjects, and federal laws as invalid because they affect similarly State subjects; and the State Governments will probably find that the doctrine will re-act with baneful pressure on their own activities.

There is certainly no support for the defendants’ doctrine in our Australian legislation since Federation ; and there is di.stinct authority against the defendants in the United States and in Canada. Comsider our first Excise Tariff 1902. There were many kanakas in Queensland; and, in order to induce planters to employ white labour. Parliament gave to the producers of sugar cane by white labour a rebate of 4s. per ton in the sugar Excise duty. That Act had nothing to do with immigration, or with foreign or inter-state commerce; it was based on the taxing power; and it was clearly meant to influence the action of planters with reference to a subject reserved to the States. Subsequently, with a view to the book-keeping clauses of the CoiLstitution, the same benefit was given under the name of a bounty (Sugar Bounty Act 1905). But, whether we call it a remission of duty, or a bounty, the principle is the same— discrimination between producers based on their system with regard to employes. Our Customs Tariff contains exemptions in favour of the Universities and Hospitals, in favour of the blind and physically helpless. Yet these are the concern of the State ; and if Parliament may, in its taxation, favour the physically

(1) 5 How., 504, at p. 628.

124 HIGH COURT

[1908.

H.	c. OF A. helpless, why may it not favour the economically helpless—the

1908.

day labourer ? If the defendants are right, I cannot see how much

T he K ino

of our “ White Australia ” legislation can be supported: or,

Bakger.

indeed, any protective duty.

— y If the defendants are right, they have di.scovered a constitutional MONWEALTH objectioii wliich the acutest minds in the United States have failed

M cK ay.to discover in 120 years—that Congress cannot use its admitted

powers with the object of affecting or influencing people in tlieir conduct M'ith regard to subjects reserved to the States. Congress imposes a far higher duty on opium prepared for smoking than on the crude opium. Defendants’ counsel, in answer to my question, admitted at first that such a law is invalid if designed for the suppression of opium smoking; but afterwards he withdrew the admission, and said he did not know. The dilemma wa.s obvious. Religious and charitable institutions, libraries, exhibitions (State concerns) enjoy many exemptions from duties. The Constitution does not give Congress any concern in agriculture. Yet, from 183!) onwards. Congress has been appropriating federal revenue in aid of State enterprise and institutions. It has collected statistics, distributed cuttings and seeds, promoted botanical and chemical investigations, endowed State colleges. One of the members of the President’s cabinet is Secretary of Agriculture. Congress has exempted from Excise duties distillers who use home grown materials. But the greatest instance of federal interference with a State subject is to be found in the levying of protective duties by Congress. ’The discussion on the subject was very prolonged and bitter, but the power of Congress is not now questioned. It is treated as resting, not only on the taxation power, but on the power to regulate foreign commerce. But why may the power to regulate foreign commerce be used so as to affect State subjects if the power of taxation may not ? How is protection of the employer by means of the commerce power right, if protection of the employe by means of the taxation power is wrong ?

Higgins J.

In the United States, the recognized position is that stated briefly by Mr. Black {Constitutional Law, 2nd ed., p. 341)— that an Act of Congress “ is not to he declared invalid merely because it has a purpose and design which ranks it as a

6 C.L.R.] OF AUSTRALIA.

125

police regulation.” Therefore, Congress has forbidden lottery-

H. C. OF A.

tickets to be carried by the United States mails. The object

1908.

was, admittedly, to discourage gambling; and the morals and

T he K ing

habits of the people are matter for the States, not for Congre.ss. B akger.

It was not pretended that the Act would make the postal service

T he Com

more profitable or more efficient. The same author also instances

monwealth

the federal Acts against trusts, adulterated foods, oleomargarine, M oK ay.

diseased persons, quarantine, opium imported by Chinese, as

Higgins J.

being valid Acts, though aimed at and actually affecting subjects reserved to the States. So far as I can find, in every instance in the United States, in which a federal Act has been attacked for interfering with a State subject, in a taxation Act otherwise within the powers of Congress, the Act has been held valid. The case of Veazie Bank v. Fenno (1) was followed in National Bank v. United States (2). In the Licence Tax Cases (3) Congress did not, as in our Excise Tariff, merely impose a tax, and exempt those who fulfil a certain condition. It enacted that no person should engage in selling lottery tickets, or in the retailing of liquors without a licence, and paying the licence fee to the revenue. It was urged that the internal trade of a State was not .subject to federal legislation; the object of the tax—to discourage the liquor traffic and gambling—was obvious; one of the States in question had actually prohibited lottery tickets; and yet the Act of Congress was held valid. But the latest oleomargarine ca.se is very instructive {McCray v. United States (4) ). There, a federal Act is treated as valid which goes further than this Act in the direction of controlling or influencing men’s actions with regard to a State subject. The purpose is boldly avowed in the title: “An Act to make oleo margarine and other imitation dairy products subject to the laws of any State . . . . into which they are transported, and to change the tax on oleomargarine, and to impose a tax to provide for the inspection and regulate the manufacture and sale of cer tain dairy products.” So the purpose is {inter alia) to regulate manufacture and sale. The Act then imposes a tax on oleomar garine of ten cents per pound ; but if the article is free from

(1) 8 W all., 533.(3) 5 W all., 402.

(2) 101 U .S ., 1.

(4) 195 U .S ., 27.

126 HIGH COURT

[1908.

H.C. OF A. artificial colouring designed to make it look like butter, t he tax

190S. is only cent per pound. An action was brought lor a penalty

T h e K ino

against a retail dealer who had purchased for resale oleomargarine

B arger .artificially coloured and not stamped at the rate of ten cents per

pound.

It was urged for him that the Act was an unwarranted

T he Com

interference with police powers, a usurpation of the State powers;

monwealth M cK ay.that the Act was not for the purpose of raising revenue at

all. The “ bogey ” argument was used as it has been used in this case—the awful possibilities of legislation if Congress were treated as having such a power. It was urged “ that if a lawful power may be exerted for an unlawful purpose, and thus by abusing the power it may be made to accomplish a I’osult not intended by the Constitution, all limitations of power must dis appear.” But the Court held that the exercise by Congress of the power of taxation was unfettered (save so far as expressly excepted in the Constitution); that the motive or purpose of Congre.ss was to be left out of consideration, and only the actual scope and effect of the Act were to be I’egarded ; that the conse quences alleged, the destruction of the industry, were nothing to thepurpo.se. “ Since . . . . the taxing j^ower conferred by the Constitution knotvs no limit except those expressly stated in that instrument, it must follow, if a tax be within the lawful power, the exertion of that pow'er may not be judicially restrained because of the results to ari.se from its exercise ” (1). “ The right of Congress to tax within its delegated power being unrestrained, except as limited by the Constitution, it was within the authority conferred on Congress to select the objects upon which an Exci.se should be laid” (2). “ The judiciary is without authority to avoid an Act of Congress exerting the taxing power, even in a case where, to the judicial mind, it seems that Congress had, in putting such power in motion, abused its lawful authority by levying a tax . . . . , the result of the enforcement of which might be to indirectly affect subjects not within the powers dele gated to Congress ” (3).

nisTgins J.

There is, indeed, one point in which the Oleomargarine Case differs from the present, and it has been pre.ssed on us for all

(1) 195 U .S ., 27, a t p. 59. (2)

195 U .S ., 27, a t p. 61.

(3)

195 U .S ., 27, a t p. 63.

G C.L.R.]

OF AUSTRALIA.

that it is worth. The clas.sification there was based on the

H. C. Of- A.

inherent character, quality or description of the subject matter.

1908.

This is, of course, the ino.st common basis of differentiation. But

T hk K ing

we have no right to import into the Constitution a qualification B arger .

of the plenary power to make laws “ with respect to . . . .

'1’h e C o .m -

taxation ” by laying down that every differentiation must be

M O N W EA LTIl

made on this basis. In the United States, as well as in Australia,

M cK ay.

there are frequent cases of Congress classifying by facts other

Hijfgins J.

than the character, quality, or description of the article. Take petroleum. A duty is imposed on any petroleum coming from a country which produces petroleum, if it imposes a duty on United States petroleum. Other examples are to be found in reciprocity duties, which depend on the foreign country’s fiscal attitude towards the United States. The prohibition of goods made by prison labour is another instance—it depends, not on the character of the goods, but on the character of the workers. Sometimes the tax depends on the machines used for making. I find a tax on lace window curtains if made on the Nottingham lace curtain machines. I find also an extra tax imposed on printing paper against countries which impose an export duty on pulpwood exported to the United States. Yet the manufacture of paper is a State subject; and the tax is not based on the character or quality of the printing paper. A duty is imposed on .sculpture if produced by professional sculptors, not if pro duced by others. Goods are often made free of duty if imported for this or that specific exhibition. But there is no need to multiply .such instances. It is abundantly manifest that the United States Congress, even though it is a Parliament of limited powers, differentiates in its taxation on the basis of any facts of any kind that it thinks fit; and that it actually differentiates on the basis of the labour employed in production, although it has not been given any authority to regulate labour. If the case of Peterswald v. Bartley (1) lays down a different principle— which is very doubtful—the expression of that principle was not necessary for the decision, and does not bind me; and I respect fully differ from it.

The rule in Canada is the same.

The Supreme Court says

(1) 1 G .L .R ., 497.

1-28 HIGH COURT

[1908.

H.C. OF A.“ This Court has, in various cases, held that tlie Federal Parlia

1908.ment, on the matters left under its control by sec. 91 of the

British

T he K ingNoi'th America Act, must have a free and unfettered exercise of

B arger .its powers, notwithstandwg that, by doing so, some of thepoivers left under provincial control by sec. 92 of the Act, might be inter

T he Com

monwealthfered tvith”: Citizens’ Insurance Co. v. Parsons (1); and .see

McK ay.Cushing v. Dupuy (2); Tennan t v. Union Bank of Canada (3); 'Toronto Corporation v. Canadian Pacific Railway (4).

Iligrsrins J.

In Canada, the Provincial Parliaments have power over local matters, and in particular have exclusive power to ^rant licences for the liquor business. The Dominion Parliament has exclusive ]iower over trade and commerce. The Dominion Parliament passed a temperance Act, reciting that “ it is very desirable to promote temperance in the Dominion ” ; and under its local option clauses one Burke could not get the licence which the State law allowed to him. He attacked the Dominion law as uncon.stitu- tional, and was unsucce.ssful. Ritchie C.J. said {City of Fredericton V. The Queen (5) );—“ If . . . Parliament, in its wisdom, deems it expedient . . . so to regulate trade and commerce as to restrict . . . the trade and traffic in, or dealing with, any

articles . . . it matters not,

. . . whether such

legislation is prompted by a desire . . . to encourage native industry, or local manufactures, or with a view to the diminution of crime or the promotion of temperance, . . . The effect of a regulation of trade may be to aid the temperance cau.se, . . but surely this cannot make the legislation ultra vires, if the enactment is, in truth and in fact, a regulation of trade and com merce, foreign or domestic. The power to make the law is all we can judge of . . . It may be, that all who voted for this Act may have thought it would promote temperance, and were influenced in their vote by that consideration alone. . . . Still, if the enacting clauses of the Act itself deal with the traffic in such a manner as to bring the legislation within the powers of the Dominion Parliament, no such declaration in the preamble . . . can so control the enacting clauses as to make the Act

(1) 4 Can Sup. Ct. R ep ., 216, a t

(4) (1908) A .C., 54.

p. .308.

(5) .3 Can. Sup. C t. R ep., .505, a t p.

(2) 5 App. Caa., 409.5.3.3.

(3) (1894) A .C ., 31, a t p. 47.

€ C.L.R.1 OF AUSTRALIA.

129

ulh’a vires.” Taschereau J. added (1), quoting Chief Justice C- A-

Taney in the Licence Cases (2):—“ Tlte object and motive of the

Btate are of no importance, and cannot influence the decision,

t h e K ing

It is a question of power.” A temperance Act is not the less Ba r ger .

a regulation of trade and commerce “ because it has been enacted

T he Com

in the view of promoting temperance.” This deci.sion was

monwealth

reviewed by the Privy Council in a later case (Russell v. The

McK ay.

Queen (3) ), and upheld under the power of the Dominion Parlia

Higgins J.

ment to legislate for public order and safety ; but the Privy Council expi’e.ssly declined to dissent from the view that it could be also upheld under the commerce power. “ Legislation of the kind referred to,” said the Judicial Committee (4), “ though it might interfere with the sale or use of an article included in a licence granted under sub-sec. 9, (the power to grant licences for the .sale of liquor), is not in itself legis lation upon or ivithin the subject of that sub-section.” Their Lordships pointed out the absurdity of the position if the Dom inion Parliament could not prohibit the sale of arms because the Provincial Parliament had made laws for making revenue from tlie sale of arms. Conversely, in Attorney-General of Manitoba V. Manitoba Licence Holders Association (5), a provincial pro hibition law was held valid, although it interfered with Dominion revenue, and with trade and commerce operations outside the Province.

These are merely a few out of the many precedents on this subject. But I shall only add that these cases are clearly dis tinguishable from those cited to us on behalf of the defendants in which there was a sham exercise of power. If it is an exercise of the Parliament’s power in fact, it makes no matter that it has been passed from motives or with objects outside the power. But if the Parliament pretend to exercise a power which belongs to it, and in fact exercise a power which does not belong to it, the Act is invalid. This is the explanation of the cases relating to State Acts which purported to regulate Chinese in the State, but which were in fact attempts to regulate commerce with foreign

(1) 3 Can. Sup. C t. K ep,, 505, a t p.

(3) 7 App. Cas., 829.

(4) 7 App. Cas., 829, a t p. 638.

559 (2) 5 H ow ., 583.

(5) (1902) A .C ., 73.

130 HIGH COURT

[1908.

H. c . (IF A.

nation.s and immigration : Cliy Limy Freeman { ! ) ; Tai Sing V. Maguire (2). So al.so in Atfaniey-General fiyr Quebec v. Queen

T he K ing

Insurance Co. (3), tlie Provincial Parliament having power to

B arger . impose a licence tax, and having no power to impo.se a stamp tax,

imposed a stamp tax on insurance policies, and called it a “ licence ”

T he Co.m-

MONWEALTH

tax. The Judicial Committee, having ascertained that the Act

was in truth a stamp tax, declared it void.

In all such cases, if

McK at .

the Act had been passed by the legislature of a unified State,

Higgins J.

such as the United Kingdom, or France, it could not have been described as an Act of the nature which it professed to be. That is a fair tes t: how should the Act be properly described in a country in which there is no limitation of powers ? The case of this Excise tariff is very different. Not only has the Federal Parliament not imposed any legal obligation whatever on the manufacturers with regard to the remuneration of labour, or given an}’ command, or anything in the nature of a command, on the subject; but the Act in question is one which, if it were pa.ssed in the United Kingdom, or in any other unified State, would be a tax ation Act, and taxation by way of Excise. Moreover, the very recent casQ,Employers Liability Gases (4), shows that the Supreme Court of the United States goes even further than is claimed in this case on behalf of the federal power. It shows that Congress caneven regulate—create obligationsas to—the conditionsof labour as between employers and employes, provided that it confine itself to foreign or inter-state trade and commerce. A fortiori, in this case, the F'ederal Parliament, confining itself to its power of tax ation, which is plenary, can impose labour conditions as a condition of the incidence of its taxation.

I come now to the objection that by this Act Parliament discriminates “ between States or parts of States.” It is to be observed that it is Parliament—that is to say, the Act of Parlia ment, that must not discriminate ; “ The Parliament shall . . . have power to make laws for the peace, order and good govern ment of the Commonwealth with respect to . . . taxation; but so as not to discriminate between States or parts of States.” Now, there is certainly nothing on the face of this Act which

(1) 92 U .S ., 275.(.S) .3 App. Cas., 1090.

(2) 1 B.C. (Irving), 101.

(4) 207 U .S ., 40.3.

6 C.L.ll.J OF AUSTRALIA.

131

H. C. OF A.

makes any such discrimination.

There is vot one rate of Excise

1908.

for Queensland and another for West Australia.

Nor is there

one set of conditions of exemption for Tasmania and another

T he K ing

for Victoi'ia. Each manufacturer is to be treated on his own B arger .

merits; and all the four bases for exemption are applicable to all

T he Com

manufacturers, wherever they are found in Australia. It is not

monwealth

prescribed in the Constitution that taxation must be uniform—

McK ay.

uniform in any of its numerous senses. Every manufacturer is

Higgins J.

exempted from duty if his goods are manufactured under wage conditions which {a) are declared fair and reasonable by both Houses of Parliament, or (h) are in accordance with an industrial award under the Commonwealth Conciliation and Arbitration Act 1904, or (c) are in accordance with an industrial agreement tiled under that Act; or (d) are declared to be fair and reason able by the President of the Arbitration Court (or his deputy). Tlicse altemiative means for getting exemption are open to all manufacturers everywhere. It is true that there may have been an industrial award extended by common rule over a definite area of New South Wales or Victoria, and that this award prob ably could not be used by manufacturers in Western Australia. But Parliament does not discriminate between States when it applies the same rule to all the States, even if some of the means of exemption are not for the time being in fact applicable in all the States. Parliament may not discriminate between States; but the facts may, and often must: Colonial Sugar Refining Co. V. Irving (1). In that case the Commonwealth Excise Tariff 1902 allowed an exemption in the case of goods on which Customs or Excise duty had been paid under State legislation before the imposition of the Commonwealth duties. In Queensland there had been no State Excise duty; and it was urged, on behalf of a sugar company manufacturing in Queensland, that the Excise discriminated against Queensland manufacturers by making them pay Excise duties while manufacturers in other States were exempted. But the argument was overruled. Lord Davey, in delivering the judgment of the Judicial Committee, said (2) :— “ The rule laid down by the Act is a general one, applicable to all the States alike, and the fact that it operates unequally in the

(1) (1906) A.C., .360.

(2) (1906) A .C ., 360, a t p. 367.

132 HIGH COURT

[1908.

C. OF A. several States arises not from anything done by the Parliament, 1908.

but from the inequality of the duties imposed by the States

T he K ino

themselves.”

“ But,” it is urged, “ this Act authorizes discrimination.”

I am

B arger .

inclined to think, with my brother Isaacs, that it does not in MONvvEALTH CASc autliorize discrimination “ between States or parts of

States” in the sense of the Constitution.

Tlie meaning of “ parts

McK ay.

Hi(r<rin8 J.of States ” is shown in sec. 99 (and see Pennsylvania v. WJteeling & Belmont Bridge Co. (1) ). But assume that it does authorize di.scrimination in the sense of leaving the con ditions as to wages to several delegates without any express direction that there must be no di.scrimination between States; that fact does not make the Act invalid. Di.scrimination be tween States &c. is not a necessary result of the Act. Even granting—what is by no means established—that clauses (a) {!>) (f) and (d) of the provi.so make such discrimination pos sible, it has not taken place ; and even if it had, it might be a ground for attacking any discriminating order or award or exemption, but not for treating the Act as void. When a power is created which, by its term.s, allows a thing to be done either in a lawful or in an unlawful way, the power is not unlawful; but the exercise of the power will be valid or invalid according as it follows the lawful or the unlawful course ; Griffith v. Poxvmdl (2); Slack v. Dakyns (3). No one contends that Parliament may, by delegation, confer power to discriminate. The point is, the Court is not to assume that the unlawful course ivill he taken ; and i f it should he taken, the Act is not tlierehy rendered invalid. This principle was fully recognized in the tM'O Canadian cases which were actually cited to us to prove the opposite. The Dominion Parliament, in pursuance of its powers, incorporated a company to carry on business in Canada or else where. The company confined its operations to Quebec, and the power to incoiporate companies for business in Quebec belonged to the Quebec legislature. Yet it was held that the fact of the company .so confining its operations did not affect its incorpora tion: Colonial Building and Investment Associatio'u v. Atto'cney- General of Quebec (4); Toronto Corporation v. Bell Telepho'oe

(1) 18 H ow ., 421, a t p. 435.

(.3) L .R . 10 C h., 35.

(2) 13 .Sim., :i6:l.

(4) 9 A pp. Cas., 157.

6 C.L.R.] OF AUSTRALIA.

133

Co. of Canada (1). Moreover, it is quite possible that there will

H. C. OF A.

be no industrial award, no industrial agreement, no resolution of

1908.

both Houses applicable to these manufacturers ; and, for aught

T he K ing

that appears oti this demuri’er, the President will apply the same

Barger .

rigid standard to all the manufacturers in all the States.

It is

T he Com

even possible for any industrial award, and any industrial agree

monwealth

ment, and any resolution of Parliament, and the President to adopt

McK ay.

precisely the same standard.

How, then, can it be said that Par

Higgins J.

liament, by this Act, makes any discrimination directly or by delegation between States or parts of States ? The truth is that all the four authorities will have to deal with each manufacturer on his merits, according to all the conditions of life and of busi ness in which he moves; and locality would be merely one of the facts influencing the conditions. It may be that in the back blocks food and freights are dearer than on the coast; but rent and other expenses may be cheaper. Locality must affect con ditions of life ; hat the discrimination is not based on loccdity. This is obvious as to the President; but it is true also as to awards which may be made a common rule as to certain districts by reason of similarity of conditions within the district. Tlie same basis—similarity of conditions—would have to be applied in the making of an industrial agreement, or in the passing of a resolution by Parliament. Even if (to take an extreme case, not alleged) exemption were allowed to A. B. and C. in South Australia, and refused to D. E. and F. in New South Wales, all six paying the same rate of wages, there would be no discrimination “ between States or parts of States,” but a lawful discrimination between persons on the basis of the totality of their conditions. As the case of the Colonial Sugar Refining Co. v. Irving (2) shows, it would not be a discrimination “ between States or parts of States ” if a graduated income tax were passed, and if it happened that the incomes in Western Australia were larger than in the other States. Finally, inasmuch as the same taxation, and the same rate of taxation, are applied to all those manufacturers who, in whatever State they reside, cannot bring themselves within any one of the same alternative conditions of exemption, I am of opinion that this Act creates no discrimina tion “ between States or parts of States.”

(1) (1905) A .C., 52.

(2) (1906) A .C ., 360.

HIGH COURT

11908.

H. C. OK A.

I liave not felt any difficulty with regard to sec. 55 of the Con

1908.stitution. It is the corollary of .secs. 53 and 54. The Senate has

T he K ing

not the same powers over ajipropriation bills or over taxation hills

B akger . as over other bills (sec. 53); therefore, by sec. 54 it is pre.scribed

that ordinary appropriation bills must deal only with ordinary

T h e

Co.m-

MONWEAT.TH

appropriations; and by sec. 55 it is prescribed that taxation bills

shall deal only with the imposition of taxation.

In my opinion,

M cK ay.

this Act deals only with the imposition of taxation; it taxes, and

Higgins J.

it defines the persons to be exempted from the tax. This is all it does. There is no “ provision therein dealing with any other matter.” There is no obligation laid on any one to do anything except to pay the tax.

No arguments have been addressed to us with regard to the severability of the proviso in this Act from the part impo.sing duties. I should not like, however, to be regarded as assenting to the defendants’ view. The test, according to American ca.ses, seems to be, is it clear that Parliament would not have imposed the duties even if it knew that it had not power to enact the proviso ? If we are at liberty to conjecture from what one sees in newspapers, one might be dispo.sed to say No to this question. But if we are confined, on this demurrer, to an examination of the Act within its four corners, I can find at present no g7-ound for saying No. According to Stevenson v. Colgan (1), in pa.ssing upon the constitutionality of a Statute, the Court mu.st confine itself to a consideration of those matters which appear upon the face of the law, and tho.se facts of which it can take judicial notice. If we are to look outside the Act at all, there is, on the other hand, very strong ground for thinking that the import duties on agricultural implements would not have been imposed by the Customs Tariff oi the same date if this Excise Tariff had not been enacted. But, if the Excise Tariff' be treated as void, the manufacturers get the benefit of the protective duty without fulfilling the conditions on which it was granted to them—a result certainly not intended by Parliament. The point will have to be reconsidered .some time. A condition annexed to a gift may be invalid {e.<j., on ground of public policy), and yet the gift be good and effectual, at all events, if it be a condition sub-

(1) 25 Am. St. R ep., 230.

e C.L.R.] OF AUSTRALIA.

136

sequent: In re Beard (1). The same principles are applied to

H. C. OF A.

the exercise of powers. But I do not like to pronounce defi

190S.

nitively on a question which has not been argued, and which T he K ing

will make no difference in the actual decision of this case.

Bargek.

My opinion is that the Excise Tariff

(No. 16) is not uncon

T he Com

stitutional, and that the demurrers ought to be overruled. I

monwealth

should express this opinion without doubt or hesitation, if I M cK ay.

were dealing with this case as a single Judge; and nothing but

Higgins J.

the fact tliat three of my learned colleagues hold a contrary opinion can moderate my confidence. Even in tlie case of doubt, however, it is my duty to bear in mind tlie words of Marshall C.J., in Dartmoutii College v. Woodward (2):—“that in no doubtful case would it (the Court) pronounce a legisla tive act to be contrary to the Constitution; ” and also the words of the same eminent Judge in Gibbons v. Ogden (3):— “ Powerful and ingenious minds, taking, as postulates, that the powers expressly granted to the government of the Union are to be contracted, by construction, into the narrowest possible com pass, and that the original powers of the States are retained, if any possible construction will retain them, may, by a course of well digested, but refined and metaphysical reasoning, founded on these premises, explain away the Constitution of our country, and leave it a magnificent structure indeed, to look at, but totally unfit for use. They may so entangle and perplex the under standing, as to obscure principles which were before thought quite plain, ancT induce doubts where, if the mind were to pursue its own course, none would be perceived. In such a ease, it is peculiarly necessary to recur to safe and fundamental principles.”

Judgment for the defendants in both cases,

ivith costs.

Solicitor, for the plaintiff, C. Powers, Commonwealth Crown Solicitor.

Solicitors, for the defendants, Derham & Derham; M. Cohen. .

B. L.

(1) (1908) 1 Ch., 383.

(2) 4 W heat., 518, a t p. 625.

(3)

9 W heat., 1, a t p. 222.

26 June 1908

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