Re Australian Teachers' Union and 14 Other Matters; Ex parte The State of Victoria & Ors (M8-93 &

~ ' -·· ii t:i.i#',,.

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M8 of 1993
In the matter of -
An application for a Writ of
Prohibition, a Writ of
Mandamus and a Writ of
Certiorari against THE
HONOURABLE JUSTICE MUNRO,
THE HONOURABLE DEPUTY
PRESIDENT WILLIAMS and
COMMISSIONER McDONALD
members of the Australian
Industrial Relations
Commission

First Respondents

THE AUSTRALIAN INDUSTRIAL
RELATIONS COMMISSION

Second Respondent

AUSTRALIAN TEACHERS' UNION

Third Respondent

Unions(4)

7/6/94

Ex parte -
THE STATE OF VICTORIA and
THE HONOURABLE MINISTER FOR
EDUCATION FOR THE STATE OF
VICTORIA

Prosecutors

Office of the Registry

Melbourne No Ml0 of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against .TI:m,
HONOURABLE JOHN WILLIAM
MacBEAN, A Deputy President
of the Australian Industrial
Relations Commission

First Respondent

KENNETH TURBET, A former
Commissioner of the
Australian Industrial
Relations Commission

Second Respondent

AUSTRALIAN NURSING
FEDERATION

Third Respondent

Ex parte -

THE STATE OF VICTORIA and
THE HONOURABLE MINISTER FOR
HEALTH FOR THE STATE OF

VICTORIA

Prosecutors

Office of the Registry

Melbourne No Mll of 1993
In the matter of -

An application for a Writ of
Prohibition and a Writ of
Certiorari against THE
HONOURABLE JOHN WILLIAM
MacBEAN, A Deputy President
of the Australian Industrial
Relations Commission

First Respondent

KENNETH TURBET, A former
Commissioner of the
Australian Industrial
Relations Commission

Second Respondent

Unions(4)

7/6/94

HEALTH SERVICES UNION OF
AUSTRALIA

Third Respondent

Ex parte -
THE STATE OF VICTORIA and
THE HONOURABLE MINISTER FOR
HEALTH FOR THE STATE OF
VICTORIA

Prosecutors

Office of the Registry

Melbourne No M156 of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against THE
HONOURABLE JOHN WILLIAM
MacBEAN, A Deputy President
of the Australian Industrial
Relations Commission

First Respondent

HEALTH SERVICES UNION OF
AUSTRALIA

Second Respondent
Ex parte -

THE STATE OF VICTORIA and
THE MINISTER FOR HEALTH FOR

THE STATE OF VICTORIA

Prosecutors

Unions(4)	3	7/6/94
Office of the Registry

Melbourne No Ml2 of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against
COMMISSIONER BEVAN JOHNSON
and SENIOR DEPUTY PRESIDENT
JOSEPH RIORDAN, Members of
the Australian Industrial
Relations Commission

First Respondent

KENNETH TURBET, A former
Commissioner of the
Australian Industrial
Relations Commission

Second Respondent

AUSTRALIAN NURSING
FEDERATION and HEALTH
SERVICES UNION OF AUSTRALIA

Third Respondents

Ex parte -

THE STATE OF VICTORIA and
THE MINISTER FOR HEALTH FOR

THE STATE OF VICTORIA

Prosecutors

Office of the Registry

Melbourne No MlS of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against THE
AUSTRALIAN INDUSTRIAL
RELATIONS COMMISSION

First Respondent

Unions(4)

7/6/94

KENNETH TURBET, A former
Commissioner of the
Australian Industrial
Relations Commission

Second Respondent

HEALTH SERVICES UNION OF
AUSTRALIA

Third Respondent

Ex parte -

THE STATE OF VICTORIA and
THE MINISTER FOR HEALTH FOR

THE STATE OF VICTORIA

Prosecutors

Office of the Registry

Melbourne No Ml7 of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against THE
HONOURABLE JOSEPH MARTIN
RIORDAN, A Senior Deputy
President of the Australian
Industrial Relations
Commission

First Respondent

HEALTH SERVICES UNION OF

AUSTRALIA

Second Respondent

Ex parte -

THE STATE OF VICTORIA and
THE MINISTER FOR HEALTH FOR

THE STATE OF VICTORIA

Prosecutors

Unions(4)	7/6/94
Office of the Registry

Melbourne No M20 of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against THE
HONOURABLE MICHAEL FRANCIS
MOORE, Vice President of the
Australian Industrial
Relations Commission

First Respondent

DAVID ROSS HALL, A former
Deputy President of the
Australian Industrial
Relations Commission

Second Respondent

AUSTRALIAN LIQUOR,
HOSPITALITY AND
MISCELLANEOUS WORKERS UNION

Third Respondent

Ex parte -

THE STATE OF VICTORIA and
THE MINISTER FOR EDUCATION

FOR THE STATE OF VICTORIA

Prosecutors

Office of the Registry

Melbourne No M21 of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against THE
HONOURABLE MICHAEL MOORE,
Vice President of the
Australian Industrial
Relations Commission

First Respondent

Unions(4)

7/6/94

AUSTRALIAN LIQUOR,
HOSPITALITY AND
MISCELLANEOUS WORKERS UNION

Second Respondent

Ex parte -
THE STATE OF VICTORIA and
THE MINISTER FOR EDUCATION
FOR THE STATE OF VICTORIA

Prosecutors

Office of the Registry

Melbourne No M22 of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against
COMMISSIONER BERNARD FRAWLEY
of the Australian Industrial
Relations Commission

First Respondent

THE AUSTRALIAN INDUSTRIAL
RELATIONS COMMISSION

Second Respondent

AUSTRALIAN LIQUOR,
HOSPITALITY AND
MISCELLANEOUS WORKERS UNION

Third Respondent
Ex parte -

THE STATE OF VICTORIA and
THE MINISTER FOR EDUCATION

FOR THE STATE OF VICTORIA

Prosecutors

Unions(4)	7	7/6/94
Office of the Registry

Melbourne No M23 of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against THE
HONOURABLE PAUL ROBERT
MUNRO, THE HONOURABLE COLIN
GEORGE POLITIES and KENNETH
JOHN McDONALD of the
Australian Industrial
Relations Commission

First Respondents

DAVID ROSS HALL, A former
Deputy President of the
Australian Industrial
Relations Commission

Second Respondent

AUSTRALIAN LIQUOR,
HOSPITALITY AND
MISCELLANEOUS WORKERS UNION

Third Respondent

Ex parte -

THE STATE OF VICTORIA and
THE MINISTER FOR EDUCATION

FOR THE STATE OF VICTORIA

Prosecutors

Office of the Registry

Melbourne

No M24 of 1993

In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against THE
AUSTRALIAN INDUSTRIAL
RELATIONS COMMISSION

First Respondent

Unions(4)

7/6/94

STATE PUBLIC SERVICES
FEDERATION

Second Respondent

Ex parte -
THE STATE OF VICTORIA,
THE MINISTER FOR EDUCATION
FOR THE STATE OF VICTORIA,
DOCKLANDS AUTHORITY and THE
GREYHOUND RACING CONTROL
BOARD

Prosecutors

Office of the Registry

Melbourne No M25 of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against THE
HONOURABLE JOSEPH MARTIN
RIORDAN, A Senior Deputy
President of the Australian
Industrial Relations
Commission

First Respondent

STATE PUBLIC SERVICES
FEDERATION

Second Respondent

AUSTRALIAN MUNICIPAL,
TRANSPORT, ENERGY, WATER,
PORTS, COMMUNITY AND
INFORMATION SERVICES UNION

Third Respondent

Ex parte -
THE STATE OF VICTORIA and
THE MINISTER FOR POLICE AND
EMERGENCY SERVICES FOR THE
STATE OF VICTORIA

Prosecutors

Unions(4)	9	7/6/94
Office of the Registry

Melbourne No M26 of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against
COMMISSIONER ROBERT
MERRIMAN, A Member of the
Australian Industrial
Relations Commission

First Respondent

THE PRINTING AND KINDRED
INDUSTRIES UNION OF
AUSTRALIA

Second Respondent

Ex parte -

THE STATE OF VICTORIA and
THE MINISTER FOR FINANCE FOR

THE STATE OF VICTORIA

Prosecutors

Office of the Registry

Melbourne No M30 of 1994
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against THE
AUSTRALIAN INDUSTRIAL
RELATIONS COMMISSION

First Respondent
AUSTRALIAN FEDERAL POLICE
ASSOCIATION

Second Respondent

Ex parte -
THE STATE OF VICTORIA, THE
HONOURABLE MINISTER FOR
POLICE AND EMERGENCY
SERVICES and THE CHIEF
COMMISSIONER OF POLICE

Prosecutors

Unions(4)	10	7/6/94
MASON CJ
BRENNAN J
DEANE J DAWSON J
TOOHEY J
GAUDRON McHUGH J
TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 7 JUNE 1994, AT 10.16 AM

MR D. GRAHAM, OC, Solicitor-General for the State of

Victoria: May it please the Court, I appear with
my learned friends, MR A.G. UREN, QC,

MR N.J. YOUNG, OC and MR L. KAUFMAN, for the prosecutors in those matters where orders nisi have
been granted, and for the applicants in those
matters which have been referred for hearing by
this Court. (instructed by the Victorian
Government Solicitor)

MR R.C. KENZIE, OC:

May it please the Court, I appear in

matters Ml0 and M12 with my learned friends,
MR L.S. KATZ and MR R.W. HINKLEY, for the
Australian Nursing Federation. (instructed by Ryan
Carlisle Thomas)
In matter M24, I appear with my learned

friends, MR L.S. KATZ and MR S.R. MARSHALL, for the
State Public Services Federation, the second
respondent. (instructed by Gill Kane & Brophy)
In matter M25 I appear for the second respondent with MR L.S. KATZ and MR S.R. MARSHALL.
(instructed by Gill Kane & Brophy) In that matter
I appear for the Australian Municipal
Administrative and Clerical Services Union, an organization forme~ly being identified as the third respondent, it being the subject of an amalgamation

during the course of the proceedings. (instructed
by Ryan Carlisle Thomas)

MR A.M. NORTH, OC: If the Court pleases, I appear in

matter MS with my learned friends, MR L.S. KATZ and

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MR R.W. HINKLEY, for the Australian Education
Union, as it is now called; on the record
identified as the Australian Teachers' Union.
(instructed by Holding Redlich)

I appear with my learned friend,

MR R.W. HINKLEY, in matters Mll, MlS, Ml? and Ml56
on behalf of the Health Services Union of

Australia.

(instructed by Maurice Blackburn & Co) I appear with my learned friend,
MR R.W. HINKLEY, in matter M26 on behalf of The
Printing and Kindred Industries Union of Australia.
(instructed by Maurice Blackburn & Co)

MR J.W. SHAW. QC: If the Court pleases, I appear with my

learned friend, MR M.J. WALTON, for the second
respondent in matter M30 of 1994. (instructed by
Taylor & Scott)

MR K.H. BELL:	If the Court pleases, I appear on behalf of the Australian Liquor, Hospitality and
Miscellaneous Workers Union in matters M20 to M23. (instructed by Steve Masselos & Co)

MR D.J. ROSE. OC, Acting Solicitor-General for the

Commonwealth of Australia: If the Court pleases, in all matters I appear with my learned friends,
MS S.C, KENNY and MR G.M. AITKEN, for the
Commonwealth Attorney-General intervening in

support of the respondents. (instructed by the
Australian Government Solicitor)

MR W.C.R. BALE. OC, Solicitor-General for the State of

Tasmania: May it please the Court, I appear with
my learned friend, MR M.M.G. MILLER, on behalf of
the Attorney-General for Tasmania intervening in
the interests of the prosecutor. (instructed by
the Crown Solicitor for the State of Tasmania)

MR J.J. DOYLE, OC, Solicitor-General for the State of South

Australia: If the Court pleases, I appear with
MR E, BROOKS for the Attorney-General for the State

of South Australia. (instructed by the Crown
Solicitor for the State of South Australia)
I appear with MR R.E. COCK for the

Attorney-General for the State of Western Australia
to intervene in these matters in support of the

prosecutor and applicant. (instructed by the Crown
Solicitor for the State of Western Australia)

MR K. MASON. QC, Solicitor-General for the State of New	South Wales: If the Court pleases, I appear with
my learned friend, MR S.J. GAGELER, for the
Attorney-General for New South Wales intervening in
support of the prosecutor in each matter.

Unions(4)

7/6/94

(instructed by the Crown Solicitor for the State of
New South Wales)

MR P.A. KEANE, OC, Solicitor-General for the State of

Queensland: If the Court pleases, I appear with my
learned friends, MR J.S. DOUGLAS, OC,
MR G.C. MARTIN and MR R.W. CAMPBELL, for the
Attorney-General for Queensland intervening in each
matter in support of the prosecutor. (instructed
by the Crown Solicitor for the State of Queensland)

MASON CJ:	Mr Solicitor for Victoria.
MR GRAHAM:	May it please the Court, we have prepared in

addition to the materials which the Court already has, an outline of argument in the ordinary form, together with a document entitled, "Booklet of
Appendices". If I may ask the Court not to peruse
the outline of argument just at this stage, I will
be coming to it and seeking to develop it in a very
little while. But before coming to it I would seek
to raise some preliminary matters and make some
preliminary observations about the present
proceedings and to identify the material that has
already been placed before the Court.
As the Court is aware, some of the issues

raised in the several matters before the Court were
canvassed in argument in the State Public Services
Federation; Ex parte the Attorney-General for

Western Australia, (1978) CLR 249. I will refer to
that as the SPSF case. In formulating our oral
submissions we have had regard to that
circumstance, and also to the fact that in
accordance with the Chief Justice's direction, we
and the other parties have provided comprehensive
written submissions to the Court in advance of oral
argument.
However, we would emphasize that the context

in which the issues concerning the constitutional

our submission, different from that in which those implications that arise in the present case is, in issues arose in the SPSF case. Your Honours will
recall that there the logs of claim which had been
served on three of the States, though extravagant,
were limited, very limited, so far as the topics
with which they dealt, seeking simply a minimum
weekly wage, a minimum additional weekly allowance
and automatic CPI adjustments. The range of
occupations of those who would take the benefit of
the award or awards sought was not readily
classifiable but appeared only to have been
limited by reference to the eligibility rules of
the unions serving the logs of claims.

Unions(4)

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As will appear, the circumstances from which
the several proceedings now before the Court arise
differ from those in the SPSF case and vary as
between themselves. Without seeking to summarize
or categorize the various proceedings, we would
simply emphasize these points. In several of the
present proceedings the relevant logs of claim seek
awards which would not be confined merely to wages
and allowances, but would be so comprehensive as to
regulate all or almost all aspects of the relevant
employer/employee relationship and the control,
management and deployment of the relevant
workforces.
Second, the proceedings presently before the

Court are, in many case, concerned with particular
identifiable classes of employees in the public
sector, including not only what we will call,
somewhat loosely at this point, the public service
but also the education sector, the Hospital and
Community Health Centre, the Victorian Government
Printer and the Victorian Police. Thirdly, two of the proceedings here are
concerned with certain award which were peculiar to
the Victorian public sector and involve no other
State, namely awards concerning voluntary
separation or voluntary redundancy agreements made
or to be made with persons employed in the
Victorian State school system and the public health
sector and concerning non-termination of employment
in those sectors.
There are two further differences between the

SPSF case and the present proceedings, as we would

seek to present them to this Court. Not only are
some of the separate awards as sought very
comprehensive when viewed separately, the proposed
awards, when considered as a whole, clearly will
have what may be described as a global or

incremental effect upon the State of Victoria and
the other States and the agencies of the States.
That provides one answer to which we will seek

to return to the view that one award, dealing with
one area of the State public sector, would not
cause impairment or curtailment of State functions
or not do so to a significant extent. But the
totality of an array of awards, as now sought,
would do so.

McHUGH J: Is not the general approach of the Commission

that when an award is made for the first time there
is no change in the existing conditions?

MR GRAHAM:

I do not think that I am well enough informed to

be able to answer that as a general proposition.

Unions(4)

7/6/94

It may well be so, but I am not able to confirm it
in response to Your Honour's question. Perhaps
that can be checked by one of those with me who is
more familiar with the jurisdiction than I am. What we would seek to do in order to exemplify
the point just made is to quote a few sentences
from the judgment of Your Honour Justice Dawson in
the SPSF case, a passage that appears at page 279.
Your Honour said:
Nevertheless, there is an argument, to say the
least, that an award or awards of the
Commission made with the purpose of covering
all -

and Your Honour emphasized the word "all" -

the public servants of a State would so hamper
the State in the exercise of its
constitutional functions that it would be
beyond the power of the Commonwealth
Parliament to authorize or give legislative

force to such an award or awards. No
government can function effectively otherwise
than through its public servants, and if
another agency can impose upon a State
government the terms and conditions of
employment of its public servants (who may or may not find their counterparts in employment outside the public service), including
restrictions upon engagement and dismissal,
that government's capacity to exercise for
itself its constitutional functions may be
impaired.
In the material which we have provided to the Court relating to the process of management of the finances of the State, we seek to show not merely
that increases in costs of providing wages,
salaries, allowances and leave entitlements have a

operations, but also to show that the whole ability significant economic impact upon the State and its
of the State to perform its functions, to
administer its own internal affairs, to plan its
budget strategies, to provide services to the
public and to manage the affairs of the State, are
fundamentally affected by the increases in costs
entailed by the matters sought under the awards
claimed.
If I can briefly then go to the material which

is before the Court for the purposes of these

proceedings. We have been acutely conscious of the
fact that the material before the Court is
extensive and, to an extent, unwieldy, but we have
endeavoured in a number of summaries to make it, we

Unions(4)

7/6/94

hope, more manageable. There are, in total, 15

proceedings before the Court of which 10 are by way
of order nisi for prerogative relief and the
remainder by way of motion, all returnable before
this Court.
We have provided in the booklet that was handed to Your Honours a moment ago, a booklet of
appendices, under tab 1, a brief summary in respect
of each of the proceedings before the Court.
Copies of the documents in the book of appendices
have already been provided to all of the parties and, I believe, to all of the interveners and as
far as we are aware there is no quarrel with the
factual matters which are set out in the summaries
under tab 1.
Perhaps if I can arrange for an oversight to

be remedied. I think, however, my statement that
was in under tab 1 was distributed last week,
although the booklet itself containing further
material is only being distributed to the
respondents at the present moment.

MASON CJ:

But as you understand it there is no quarrel with

what is contained under tab 1.

MR GRAHAM:

Under tab 1, we believe not, Your Honour. was that document which was circulated in advance

of the booklet being compiled. Appendix 1 sets out
a brief summary of each proceedings. The summaries
set out the departments and agencies of the State
that are parties to the alleged dispute. The
categories and functions of the relevant employees,
where it is available from the affidavit material,
the number of employees, or the order of numbers of
employees, to be affected by the proposed award,
the topics dealt with by the logs of claim and
proposed awards, the employer parties to the
disputes in other States and the procedural steps·
in the Industrial Relations Commission which have
led to the applications being made to this Court.
I need to correct, in the light of something

said to me by my learned friend, that there may be
questions of accuracy to be raised about what is in
tab 1. That was foreshadowed last week, but we
have heard no more about it. Perhaps the matter can be sorted out otherwise than during the time
that the Court is sitting.
The first of the summaries which relates to

matter MS of 1993 goes further than the other
summaries in one respect; it is designed, in
effect, to enable the summary to catch up with
events which have occurred since proceedings began

in this Court and the document was prepared. If

Unions(4)

7/6/94

the Court looks at the first page of the document
MS of 1993, about point 8, reference is made to
comprehensive logs being served in all States and
Territories and the topics dealt with by the
comprehensive logs appear at the bottom of the
first page and over on the second page.
Proceedings in the Industrial Relations

Commission, making a finding of dispute, brought
about an application to this Court, which came
before Your Honour Justice Dawson the week before
last, and an order was made remitting the whole of
the application for prerogative relief to the

Industrial Relations Court. We refer to that in
the summary simply for the purposes of
completeness.

DAWSON J: So that the dispute upon which these proceedings

are founded is the one constituted by service on
the minister administering the Tasmanian State
Service Act?

MR GRAHAM:

And the Victorian counterpart.

DAWSON J: Yes.

MR GRAHAM: That, with respect, is correct, Your Honour.

Perhaps getting ahead of myself: what is immediately before the Court are the interim awards
that were made in that matter and in the next
matter, but one, Mll, relating to voluntary
separations and termination of employment.
Now, as the brief summaries under tab 1

indicate, some of the proceedings relate to matters
before the Industrial Relations Commission where
comprehensive logs of claims have been served which
cover, all or almost all, aspects of the
employer/employee relationship and the management
of the workforce. Those we would identify as the claims made in Ml0, M24 and M25. In other cases,

the logs cover a number of topics but the claims

are less extensive. I do not think it is necessary
to take up the Court's time in identifying those.
The matter M30 of 1993 stands in a different position from the others because no log of claims
has there been served: it is a question of
obtaining consent to the approval of the rules of
the Police Federation, as the Court no doubt is
aware.
What we have done, still looking at the booklet of appendices under tab 2, is to set out a
list, and it is a comprehensive list, of the topics
to which the logs of claims that are before the
Court in these several proceedings are directed.
It is, we believe, complete. As it already

Unions(4)

7/6/94

indicated, we do not seek to suggest that all those
matters are covered in all the cases where a
comprehensive log of claims has been served and, at
the end of the document, we have added some more
matters which might have been, but are not, the
subject of claims, as we identify them in the logs
of claims in respect of which claims could be made.
The point of that will appear in perhaps a greater
detail later when we come to seek to indicate the
extent of the impact of a comprehensive award as it
would have in relation to public sector employment.
If I can then say something about the way in

which have sought to organize the material which is
before the Court. As Your Honours are aware there
are not only the application books containing the
usual proceedings, there are a number of exhibits
which have not been reproduced, they are bulky and,
as I have indicated, somewhat unwieldy. They are,
of course, available if the Court felt that there
was need to have direct reference to them, but in
the hope that we can spare the Court that task we
also prepared last week, and provided to the Court
yesterday, three documents which we hope will have
the result that the Court does not need to embark
upon a detailed reading of all of the affidavit and
exhibit material.
Those three documents consist, firstly, of a document entitled Factual Material. Its heading is
State Industrial Cases - Factual Material, and that
has also been supplied, I think yesterday or it may
have been on Friday, to our opponents with a view
to their indicating whether they dissent from the
accuracy of the summary of the factual material
which is contained in the multiplicity of documents
forming part of the material before the Court.
Unless the Court indicated otherwise I did not wish
to take up time now in going through it.

MASON CJ:

No.

MR GRAHAM:

Also, what is in the nature of an attachment to

that document is a document right towards the end,
commencing on the fifth last page, entitled
State Industrial Cases - TABLE A - Outlays and
Wages Compared. It is designed to indicate the
total annual outlays of the principal government
departments of the State of Victoria, and the
amount of such annual outlays which consists of
wages of salaries, but excluding on-costs such as
work care levies, superannuation expenses and other
non-salary or wages items. The final document in
that collection of documents is headed State
Industrial Cases - TABLE B - 1993-94 Figures from
Affidavits. That is designed to show staff numbers
and costs in the four major public sector areas

Unions(4)

7/6/94

with which the present proceedings are connected,
namely the State Public Service itself, which is a
budget sector area, health and community services,
education and police, over on the last page. That is, in addition to the comprehensive
written submissions already provided, the material
which is before the Court for the purposes of these
proceedings. In the course of our submissions we
will not, of course, seek to cover the ground
already covered in our written submissions but will
seek to supplement them in a few respects.
We have prepared, as I have indicated, an

outline of argument in the normal way and, in
addition, to facilitate the presentation of one
aspect of our oral submissions we have reduced the
substance of it to writing and I will hand that to
the Court at an appropriate moment.
In addition, we would seek to respond to some

of the written submissions of the respondents and
of the Commonwealth, although we would seek to
defer our response upon some aspects of those
submissions until after their oral submissions have
been heard. That much said, may I invite the
Court's attention to the outline of argument.
If the Court pleases, whilst this logistical

problem is sorted out, perhaps I can go on to
develop one aspect of the first paragraph of the
outline where we endeavour to formulate the
constitutional implication or principle upon which
we say so much turns in the present case.
Your Honours will have noticed in the first

sentence of paragraph 1, it is expressed that in
the exercise of its powers under the Constitution
the Commonwealth cannot use or allow its powers to
be used for the purpose of controlling a State.

In our comprehensive written submissions, we

did not draw particular attention to a passage that
appears in Your Honour Justice Deane's judgment in
the Queensland Electricity Commission case,
159 CLR 192. The passage in Your Honour's judgment
is to be found at pages 246 to 247. At point 4,
Your Honour said:
The content of the restriction was

expressed by Dixon Jin the form of three
"reservations" upon the "prima-facie rule -

I will not finish the sentence, but I will go down
to point 9 where Your Honour then spoke of the
third reservation five lines from the bottom:

Unions(4)

7/6/94

It is that third reservation which was in
point in Melbourne Corporation and which
should, in my view, be accepted as established
by the decision in that case. Dixon J's broad
enunciation of it must, as Walsh J indicated
in the Pay-roll Tax case, be understood in the
context of his Honour's subsequent comments in
the Bank Nationalization case. So understood,
it comprises a restraint upon the exercise or
use of power or authority. Its central
operation is to preclude the exercise of
Commonwealth legislative or executive powers
"to control the States" or in a manner which
would be inconsistent with the continued
existence of the States as independent
entities and their capacity to function as
such. It is not suggested that that central
operation of the reservation applies here.
What is relevant to the present case is that
the reservation also extends to preclude
discriminatory treatment of the States in the
sense of the use or exercise by the
Commonwealth of such powers to single out the
States to place upon them "special burdens or
disabilities".
Then reference was made to the Builders Federation
case - that quoted from Mr Justice Walsh - and then
Your Honour went on:
That formulation, which was accepted by
Brennan Jin the Tasmanian Dam case is in
terms apposite to what was in issue in
Melbourne Corporation, namely, discriminatory
treatment of the States generally. It should
not, however, be read as intended to confine
the operation of the restraint to such
discrimination.
What we have done - and this is the point of

development that we wish to make - is to trace as

best we could Your Honour's choice of the phrase
"to control the States". It would seem, with
respect, that it flows back first - going backwards

Mr Justice Walsh in the Pay-roll Tax case, (1971) in point of time - first to the judgment of

122 CLR 353, at pages 410 to 411. In that
passage His Honour quoted from a passage from the
judgment of Mr Justice Dixon in the Melbourne

Corporation case, starting at about point 4 on page 410 and going over to about point 6 on page 411.
I will not take up the Court's time in reading

the whole passage, but it provides a convenient point at which the passage from the judgment of
Mr Justice Dixon in the Banking case can be found.

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His Honour quoted it at about point 6. The passage
reads:
"No doubt without discrimination laws applying
to States may operate against them in such a
way that it must be beyond Federal power to
enact them. "

DAWSON J:

Do you rely on discrimination here at all?

have in mind that, of course, discrimination can

take two forms. One is to treat like things
differently, but it also embraces treating unalike
things in the same way, and the States in so far as
they differ from ordinary employers, if they are
merely equated with ordinary employers may in fact
be discriminated against. Is an argument of that
sort going to be put?

MR GRAHAM:	So far as the matters concerning the provisions of section lll(l)(a) of the Industrial Relations Act are concerned, yes; in so far as those
proceedings relating to the redundancy awards, yes;
but so far as the more general submission, then the
specific formulation of it, particularly in the
QEC case, the answer is no.

DAWSON J: Except that it is part and parcel of your

argument that the effect of an award on a State is
very different from the effect of the award on an
ordinary employer.

MR GRAHAM: Yes, Your Honour, that, with respect, is so

and - - -

DAWSON J: And in that sense it is discriminatory.

MR GRAHAM:

And it is really for that reason that we picked

up this concept of controlling the States because
it contains within it a concept of discrimination.
Because a law which controls the States or operates
upon them in a fashion different from another

employer can be said to control the State, and it
can be said to discriminate against them because
the State is inherently different.
Perhaps if we may say this. There are, in the judgments, many passages which would say that there
are two very distinct branches of the
constitutional implication and they can be
segregated and one can be applied and the other can
be discarded. But when one looks through the
authorities, particularly Melbourne Corporation, it
may be that there really is just one principle
which has different applications and which may be
chosen to be formulated to deal with different
situations.

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We do not, for the purposes of our argument,
really need to split the principle up into two

distinct limbs. We could say that the proper view
may be that the legislation here in question
discriminates because it operates in a fashion
different upon the States from other employers, or
we could say it infringes the principle because of
what can be loosely called the "impairment

argument". We can put it either way.

BRENNAN J:

Do you put the principle on the basis of the

effect of operation of the law on the State; that
is, to control the State?

MR GRAHAM:	Yes, that is right, Your Honour, with respect.
BRENNAN J:	So you will be developing the concept of what is

meant by control of the State?

MR GRAHAM:	Yes, Your Honour.
BRENNAN J:	I see.
MR GRAHAM:	And we propose to do that when we turn, as an

example, to the award sought in matter M24, which
embraces the entire Public Service of Victoria, and
we would be seeking to show how, in that context,
and by analogy, other contexts arising in other
proceedings, there is to be exercised control of
the State.
Could I then, having gone to the Pay-roll Tax

case, just go back to what might be perceived as
the logical starting point of all this, which is
the Melbourne Corporation case, and give
Your Honours some references and read one or two
short passages. It is reported in 74 CLR 31. The
first passage to which we would direct attention is
to be found in the judgment of Sir John Latham,
Chief Justice, at page 52. Your Honours will
recall that there was in substance three arguments

advanced on behalf of the plaintiff and the
interveners in that case and at page 52 point 7,
His Honour said:
The third argument of the plaintiff is that section 48 introduces a degree of control
of State banking activities which is forbidden

by the Federal Constitution. The proposition
upon which the plaintiff relies is that the
Commonwealth Parliament cannot, even under a legislative power expressly conferred upon it, make a "discriminatory" as distinct from a general, law, which is aimed at or directed
against an essential governmental power or
function of a State.

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It may be difficult to determine in some
cases whether a function in fact undertaken by
a Government is a governmental function which,
under a federal constitution, cannot be
controlled by another Government established
under the constitution. But there can be no
doubt that not only the raising of money by
taxation, but also provision for the custody,
management and disposition of public revenue
moneys are activities which are essential to
the very existence of a Government.

At page 54 - and these are really just short
extracts that I desire to quote - His Honour at
point 3 said:
But section 48 is specially directed to and
limited to States as customers of banks. It
has the effect of submitting their banking
operations to the control of the Commonwealth
Bank, which is in turn subject to the control

of the Commonwealth - And at point 5, he again referred to activities of
the State as being -

subject to Commonwealth control.

At page 60 at point 8, he referred to:
Laws "discriminate" against the States if they
single out the States for taxation or some
other form of control and they will also be
invalid if they "unduly interfere" with the
performance of what are clearly State
functions of government.

At page 61 point 5, he said:
In my opinion the reason why such

legislation is invalid is that what is called

"discrimination" shows that the legislation is
really legislation by the Commonwealth with
respect to a State or State functions as such
and not with respect to the subject in respect
of which it is sought to bind the State - or,
in the case of a State law specifically

Commonwealth functions, that the State
dealing with and seeking to control with respect to the Commonwealth or
Commonwealth functions as such.

The whole of what follows on page 61 and down to
point 3 on page 62 is important, but I will not
take up the Court's time apart from reading from
line 3 on page 62:

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7/6/94

In my opinion the invalidity of a federal law
whic_h seeks to control a State governmental
function is brought about by the fact that it
is in substance a law with respect to a
subject as to which the Commonwealth
Parliament has no power to make laws.

McHUGH J: That proposition is now discredited, is it not?

MR GRAHAM:

As a characterization argument, Your Honour,

yes. I would perhaps have hesitated to say
"discredited", but - - -

MCHUGH J: Well, rejected.

MR GRAHAM:

- - - not commonly adopted. There are further

passages, which I will not read, to be found in the
at 67 point 5 and also in the judgment of judgment of Mr Justice Rich at pages 66 point 7 and
Mr Justice Starke at pages 74 point 4 and 75

points 2 to 5. I wish, however, to read some
passages from the judgment of Mr Justice Dixon
commencing with a passage that starts at page 78
point 8. Perhaps it really can be started a little
lower down. His Honour said:
It is subject, however, to certain reservations and this also I have repeatedly said -

speaking of the Engineers' case doctrine -

Two reservations, that relating to the
prerogative and that relating to the taxation power, do not enter into the determination of this case and nothing need be said about them.
It is, however, upon the third that, in my
opinion, this case turns. The reservation
relates to the use of federal legislative
power to make, not a general law which governs

operation whether they are subjects of the
all alike who come within the area of its
Crown or the agents of the Crown in right of a
State, but a law which discriminates against
States, or a law which places a particular disability or burden upon an operation or
activity of a State, and more especially upon
the execution of its constitutional powers.
In support of such a use of power the
Engineers' Case has nothing to say.
Legislation of that nature discloses an immediate object of controlling the State in
the course which otherwise the Executive
Government of the State might adopt, if that
Government were left free to exercise its
authority. The control may be attempted in
connection with a matter falling within the

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enumerated subjects of federal legislative
power. But it does not follow that the
connection with the matter brings a law aimed
at controlling in some particular the State's
exercise of its executive power within the
true ambit of the Commonwealth legislative
power. Such a law wears two aspects. In one
aspect the matter with respect to which it is
enacted is the restriction of State action,
the prescribing of the course which the
Executive Government of the State must take or
the limiting of the courses available to it. As the operation of such a law is to place a
particular burden or disability upon the State
in that aspect it may correctly be described
as a law for the restriction of State action
in the field chosen. That is a direction
operation of the law.
There is a further passage in His Honour's
judgment commencing further down that page at about
point 8, which goes over to page 80 at the end of

the first paragraph. I will just read the last
sentence:
The other brings into question the
independence from federal control of the State
in the discharge of its functions.

As I am reminded, in that passage that I did not
read from His Honour Mr Justice Dixon's judgment at
pages 79 to 80, we would submit it is clear that
His Honour there was not putting forward a

characterization argument. He was being careful
~ot to put such an argument.
At page 83, in speaking of the operation of the federal scheme, at point 4 His Honour said:
But, to my mind, the efficacy of the system
logically demands that, unless a given

legislative power appears from its content,
context or subject matter so to intend, it
should not be understood as authorizing the
commonwealth to make a law aimed at the
restriction or control of a State in the
exercise of its executive authority. In
whatever way it may be expressed an intention
of this sort is, in my opinion, to be plainly
seen in the very frame of the Constitution.

Finally, if I could refer the Court without
reading, to the judgment of the remaining member of
the majority, Mr Justice Williams, at pages 99
starting at point 7 over to page 100 at point 2.
Again, we would say, not formulating a
characterization argument.

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We would say that Your Honour Justice Deane's
formulation of the principle in the passage which
we read from the QEC case is particularly
appropriate in the context of section Sl(xxxv).
Discrimination in the sense of singling out the
States will rarely be a sufficient test because in,
the great bulk of cases, an award would not
naturally single them out because the States will
be parties to the award as made. But we would
submit that an award will be beyond power if it not
only singles out a State as a party, but has the
purpose or the effect of controlling the State in
the exercise of its constitutional powers or

functions. And, of course, the next step up the
ladder is that if the award is bad for that reason,
the Act, which authorizes or purports to authorize
the making of an award in such terms would be
pro tanto invalid.
The redundancy awards, which I mentioned twice

earlier this morning, we would put as prime
examples of infringement of the principle which
prohibits the exercise of Commonwealth power for
the purpose of having the effect of controlling a
State. In those awards, as Your Honours may well
be aware, the State was effectively prohibited from
continuing the process of negotiating for
redundancy agreements with employees in the
teaching and health sectors and prohibited, by the
interim award, from terminating employment of
teachers and persons employed by the State in those
two sectors.
If I could move on through the outline to

paragraph 7 where we say that the nature and extent
of the control over State governmental functions
that would flow from the proposed awards can
readily be seen from a comparison of the
legislative and regulatory provisions that now
govern the public service of Victoria and the
provisions which would have overriding effect that

the proposed awards were made in proceedings M24
and M30.
The relevant Victorian statutes are the Public Sector Management Act of 1992, the Public Sector
Management Regulations of 1993 and the Employee

Relations Act of 1992. We have provided copies in
booklet form of those Acts. What I thought would
be of assistance of the Court would be to reduce
this part of the argument to written form because
it contains a considerable series of reference to
sections and regulations which might be difficult
to note. If I could ask that this document be
handed to the members of the Court.

MASON CJ: Thank you.

Unions(4)

7/6/94

MR GRAHAM: Also, I see on the associates' table the

booklets of legislation. Your Honours, I hope,
have a document headed State Industrial Cases,
Victorian Legislation. If I could then ask the
Court to have available, as well as those statutory
provisions, the application book in matter M24. If
I could take the Court through the written
submission.
Under this heading it is proposed to undertake

some brief consideration of the legislative and
regulatory provisions which presently apply in
relation to the public service in Victoria and to
compare those provisions with those which would
take effect if an award was made as contemplated by
the log of claims in proceeding M24 in which the
State Public Service Federation is a respondent.
It is not intended to embark upon this analysis in any of the other cases although it may be necessary
to make some observations in relation to proceeding
M30 of 1994 in which the Australian Federal Police
Association is a respondent.
The starting point of this consideration is

the proposition that one fundamentally important
functions of a State is to provide for the
mechanisms whereby it performs the operations of
government. Those operations concern the
administration of the affairs of the State, the
provision of services internally in order to enable
the government to function and the provision by
government of services to the public. The
performance of that function involves the enactment
of legislation relating to all aspects of
employment in which may be called the public sector
and the implementation of such legislation by
executive action. The Commonwealth has no power to
legislate in that area nor to take executive action

in that area. Its power is confined to the
enactment of laws relating to the particular topic
specified in section Sl(xxxv), being laws with

respect to conciliation and arbitration, and its
power is further confined by the absence of any
ability to legislate in cases which lack an
interstate element. Its powers are, of course,
further confined by the principle which has already
been considered.
The Public Service of Victoria is established

pursuant to Part 2 of the Public Sector Management Act - which is in the booklet. The public service
comprises the department heads, the senior
executive officers, the other officers and
temporary employees - and the references to the Act
are given. Department heads are appointed by the
Governor in Council. The department heads and
certain other persons are described for certain

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7/6/94

purposes as chief executive officers and they and
the senior executive officers are together
described for some purposes as executive officers.
Senior executive officers, other officers and
temporary employees are appointed by the
appropriate department head. All appointments made
by a department head are required to be made solely
on the basis of merit.
The remuneration of executive officers is

required to be governed by a contract of employment
and certain limits upon that remuneration are
imposed. Such contracts may provide for monetary
remuneration and employment benefits.
The provisions of the Employee Relations Act

1992, with certain very significant exceptions,
apply to all officers and temporary employees in
the public service. Broadly stated, this means
that the conditions of employment of officers and
temporary employees are governed by employment
agreements made or deemed to have been made under
Part 2 of the Employment Relations Act. Under the
provisions of the Employment Relations Act certain
minimum entitlements must be provided for in an
employment agreement. These relate to annual
leave, sick leave, maternity, paternity and
adoption leave and the entitlements of persons
engaged in part-time employment. However, none of
those provisions apply in relation to agreements
with executive officers made under the provisions
of the Public Sector Management Act referred to
above. Further questions relating to appointments,
entitlements to appointments, dismissals,
termination of appointments and in any other way
concerning the employment of an officer are
excluded from the operation of the Employee
Relations Act. All matters relating to public holidays, leave of absence and long service leave of officers in the public service are governed by

the Public Sector Management Act.
Procedures relating to reviews, appeals, redress of grievances and disciplinary matters are
dealt with by the regulations. The relevant
regulations are the Public Sector Management
regulations. These deal, amongst other things,
with the following topics: selection procedures
and appointments, entitlements to allowances on
promotion, long service leave, leave of absence, redeployment and redundancy, personal grievances
and discipline. The topics dealt with under the
provisions concerning personal grievances extend to
all matters in respect of action taken within a
department which directly affects a staff member,
and thus would include appointments, promotions,
transfers and so on. There are detailed provisions

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concerning resolution of personal grievances,
review of the grievance review procedure, and above
this structure provision is made for a system of
grievance review tribunals. There are also
detailed provisions relating to disciplinary
matters.
The log of claims lodged by the State Public

Service Federation which has given rise to
proceeding M24 is a comprehensive log covering all
or almost all of the employer/employee
relationships between members of the SPSF and the

State of Victoria and its agencies. It is to be
found in application book at pages 17 to 40. May I
invite the Court's attention to that log of claims.
I do not propose to go through it in any detail. I
will endeavour, in the ensuing part of the document
significant aspects of it. just placed before the Court, to summarize the more
Before doing that, however, I also invite the Court's attention to the document which appears at
page 42 of that application book which is an order
for a variation of dispute finding made by Deputy
President MacBean on 16 June 1992, revoking an
earlier finding in paragraph 1 -
that an industrial dispute exists between the
State Public Services Federation and the Clerk of the Legislative Assembly and others (as set out in Attachment A).

Attachment A is a document which indicates the enormous range of the persons, entities,
organizations and others which are parties to the dispute as found by Deputy President MacBean. On
page 43, without going through the document in
detail, it is interesting to see at line 18 -
Chief Hansard Reporter
Chief Parliamentary Counsel's office

Clerk of Parliaments
Clerk of the Legislative Assembly.

At line 34 we find the County Court; over the page
at line 7 the Director of Public Prosecutions; at

line 10 the Electoral Commission. I am somewhat
disturbed to find on page 45 at line 23 -
Office of the Ombudsman of Victoria
Office of the Governor
Office of the Solicitor General

and so it goes on.

DAWSON J: The employees of these entities are not all

public servants, not all public servants?

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MR GRAHAM:

If Your Honour is using "public servants" in the popular sense that would be correct, but they are

all said to be - I have taken it to be within the

eligibility rules of the SPSF.

I am open to

correction on that, but - - -

DAWSON J: Some of the bodies are independent corporations.

MR GRAHAM:

Yes.

MASON CJ: The supreme court has been omitted.

MR GRAHAM:

Yes, we were puzzled about that, Your Honour,

perhaps that was a matter of good discretion on the
part of the draftsman. The magistrates' courts
were left out too but, nevertheless, the Public
Service Board of Victoria, and at line 31 actually
Parliament House is mentioned.

TOOHEY J:

But are you relying upon the singling out of

particular offices such as you have taken us to, or
upon the sheer comprehensiveness of the demand, or
is. it something else?

MR GRAHAM:

It is the latter of Your Honour's two

propositions. Now, it may be necessary, and this
will probably emerge in the course of the
submissions of my learned friend, the Solicitor for
South Australia, whose submissions have been developed in conjunction with ours and will be
adopted by us in order to avoid repetition, that
Your Honour Justice Toohey's point may emerge with
greater distinction, but the point of view of our
argument it is the second of the ways that
Your Honour put it to me that we rely on.
It perhaps, also, should be noted that if one

goes to page 47, one sees a very limited group of
respondents in the State of South Australia, and an
equally limited group on page 48 of the State of

Tasmania. Queensland was brought in by a further
finding in the list of bodies in respect of which a
dispute finding was sought, and I believe has been
made, and I will stand corrected on that. That is
to be found at page 169.
Now, if I can go back to the written

submission. The topics dealt with by the log of
claims cover all of the matters which are set out

on page 4 of the written submission. I will not
take up the Court's time in reading them. They
largely correspond with the list which was under
tab 2 in the book of appendices. But what is
perhaps of particular importance is what we say on
pages. In addition, the log of claims proposes
the establishment of several dispute resolutions
bodies, and these are bodies called industrial

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relations committees, classifications committees,
boards of reference, and committees to hear appeals
against certain administrative decisions relating
to eligibility entitlements. The person
constituting a board of reference is to be
appointed by the president or a presidential member
of the Commission and there is to be a right of
appeal from such a board to the Commission.
I do not wish to take the Court's time up

either in inviting study of the paragraphs of the
log of claims referred to in that section of the
submission, but what we would say is that it is
reasonable to conclude that any award of the
Commission in terms as comprehensive as the log of
claims would, in the relevant sense, cover the
field and leave little or no scope for the scheme
and system embodied in the Public Service
Management Act and the Public Service Management
Regulations to apply to.
The entire process of appointment, promotion,

termination, discipline, all those characteristic
features of the organization and management of
employment in the public sector, would be
transferred, in our submission, if the award was
made as claimed into the federal domain.

TOOHEY J:	Mr Solicitor, is the common thread that links the various authorities and departments and so on that
have been identified in the log of claims referable
to some Victorian statutory provision, or is
there - and I know you have used the term "public
service", but I am not sure with what precision you are using it.

MR GRAHAM:

Yes, I was using it imprecisely.

I think I said

"somewhat loosely". But there is no common thread
that could be identified by reference to any
particular statutes, indeed group of statutes.
Some of the entities referred to have no statute

that would lie behind them, although persons
employed in some of the entities might fall under

the Public Service Act or they might not. It is
not possible to say that there is a genus to be
identified by reference to statutory provisions, or
indeed an order.

DAWSON J: For example, are teachers members of the public

service, or is the teaching service something
different from that?

MR GRAHAM:

The teaching service, Your Honour, is something

different. It is established as a body of that
name by the Teaching Service Act, although the
persons employed in the teaching service are
employees of the State of Victoria.

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TOOHEY J: Is there a clue in the eligibility provisions of

the Union itself?

MR GRAHAM:

Your Honour, I am not sure of the answer to

that. I believe not, because one finds entities
referred to which I believe are not in those
eligibility rules, but perhaps that could be

checked. It is difficult to see that the rules
would extend to the county court judges, but they
may. Perhaps if I could come back to the answer to
Your Honour's question rather than speculate.
Finally, we simply say that in the case of

persons engaged in teaching in the public education
sector in the case of members of the Victoria
police, there are provisions broadly parallel to
those already referred to. In the Teaching Service Act 1981 elaborate provision is made in relation to appeals in respect of appointments and promotions
and in respect of disciplinary matters, the
relevant bodies being called merit protection
boards. Likewise by the Police Regulation Act 1958
there are broadly similar provisions, and we refer
to them, the relevant body there being called the

Police Review Commission. I do not wish to take up
the Court's time in detailed examination of those
additional provisions.

BRENNAN J: Would the terms of the log of claims cover

control of the superannuation funds of State
employees?

MR GRAHAM:

The claim is made - I am sorry I am not able to

answer this, Your Honour, without consulting the

log again - in the log of claims for superannuation
to be provided. That is to be found at page 37
clause 48.

BRENNAN J: Well then, I suppose, clause 29 would give a

supervisory power over the administration of the

State Superannuation Fund, would it?

MR GRAHAM:

Did Your Honour mention clause 29?

BRENNAN J: Clause 29 - the appeals from administrative

decisions.

MR GRAHAM:

Yes.

That would presumably include, if the

award was appropriately worded, decisions by the
members of the State Superannuation Board, and that
board, under present legislation, covers not only public servants in the popular sense but teachers
and, I think, police officers and, of course,
persons directly employed in the health sector,
particularly the psychiatric sector and, indeed, in
public hospitals.

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7/6/94

My learned friend, Mr Uren, has drawn
attention to a reference to the eligibility rules
of the SPSF, which is quoted in the Anti-Cancer
Council case. Whether this is still its terms, I
do not know, but as in the relevant time in that
case, it read:
"Persons employed in the Public Service of
Victoria or employed in any State instrumentality or other undertaking carried
on by public authorities, commissions, or
corporations under any State charter, statute,
enactment, or proclamation of the State of
Victoria".

It seemed appropriate deal next, before moving
to the topic of interstateness, which commences
with paragraph 14 of the outline of argument, to
say something about earlier decisions of this Court
in so far as they bear upon the arguments which we
have sought to advance in our written submissions

and today. It has been submitted by the Union
respondents and by the Commonwealth - by the
Commonwealth, I think, three times - that the
submissions that we advance would require the Court
to reconsider its decisions in several earlier
cases. The cases that are nominated are
The Australian Railways Union v The Victorian
Railways Commissioners, 44 CLR 319; Ex parte
The Professional Engineers' Association,
107 CLR 207; Reg v Coldham; Ex parte Australian
Harper, 160 CLR 430. Welfare Union, 153 CLR 297 and Re Lee; Ex parte

McHUGH J: But they are specific applications of Sl(xxxv).

If your argument was successful the Pay-roll Tax
case would have to be overruled, would it not?

MR GRAHAM:

We would respectfully submit not, Your Honour,

for reasons which I will come to, because we would

seek to distinguish it. We will be submitting that

there is a clear ground of distinction available.
So we would invite the Court to distinguish it but

not to say that it was wrong. We would be saying
the same thing about the second Fringe Benefits Tax
case.
If I could turn first to the Australian

Railways Union case. That arose against a
background of a course of decisions which included
the Railway Service case, (1906) 4 CLR 488, where
it had been held that State railways were State
instrumentalities and therefore within the scope of
the doctrine of immunity of instrumentalities.
Also, against the background of the Engineers' case
in which that doctrine was exploded, indeed, fully
exploded. It follows from the latter case - the

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Engineers' case - that State railways fell within
the scope of Commonwealth industrial power, and the
Court so held in the Australian Railways Union
case.
We do not submit that a different result

should have been reached in the Australian Railway

Unions case. We have advanced reasons for that
view in our written submissions. Just to summarize
them, we would say that it could not be said in
respect of railways conducted by States that the
application to them of the Industrial Relations Act
and awards made thereunder would involve
discrimination against the States, or control of
the States, or an impairment of the functioning of
the States as such, or an impairment of the States
in the performance of their functions as
governments.
We would, as a second branch of that argument,

refer to what we said in our comprehensive
submissions at paragraph B20 concerning what we
described as the trading activities of the States.

McHUGH J: But what do you mean by trading activities? What

is the difference between providing railways and
providing hospitals, where people have to pay for
services?

MR GRAHAM: Without wishing to take a pedantic point, as we

perceive the system, one does not pay for the
services in the hospital. At least not directly by
means of an exaction from the patient - at least in
most cases. Hospitals in no sense operate at a
profit. They are paid for, at least in Victoria,
wholly by - - -

McHUGH J: Neither do railways, at least in New South Wales.

MR GRAHAM:

Yes, Your Honour, but it was not always so and,

with respect, it is not intended to be so, although

it seemed inevitable. I would accept that there is
a point at which the concept of what is a trading
activity for the purpose of our submission, and
what is not, is going to be a matter of difficulty
in working out the application of the propositions
for which we contend. But we do not concede that
the need to make a distinction is fatal to the
submissions which we put.
One could say, of course, of hospitals as well

as of schools, "Well, of course, the private
hospitals and private schools and those schools might be said, in a sense, to engage in trading
activities because they may compete for custom."
But the point that we make here is that where the government is providing the service and it is

Unions(4)

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providing it out of the public resources and it is
self-employing the staff either through itself or
through its wholly controlled entities, then the
position is different.

McHUGH J:

Once you get into areas such as nursing,

transport and so on, do you not have a problem with
the very purpose of Sl(xxxv), that it was to
prevent and dispose of disputes extending beyond
the States? If the nurses in all the States come
out or if the railway workers come out or the bus
drivers come out, is it not the very purpose for
which Sl(xxxv) was put into the Constitution?

MR GRAHAM:

I could agree readily with Your Honour in

relation to the railways and the buses, but there you are dealing with organizations which are of a
character which we say are different and where we
say the operation of the principle or implication
could not be called in aid because it simply is not
concerned with activities of that kind. But where
one is - - -

McHUGH J: What about people like cleaners?

Your

submissions would take the cleaners in State
schools or in hospitals outside the scope of the
arbitration power, would they not? And not only
that, but almost any form of manual worker.

MR GRAHAM:

Pushed to their limits, Your Honour, that is

true although one might be forced to concede that
there may be a lack of impairment of State function
if the cleaners are banded together in a Union
representing a common calling and they go out; not
only in schools but in every office building in a
city. It may be difficult to say that an award

which dealt with that dispute impaired the
functioning of a State in the same way as an award
which fixed the salaries of senior public servants

or judges.

McHUGH J: But you contend for an all-or-nothing situation,

do you not? I mean, perhaps there is a distinction
between setting wages for public servants and
forcing the reinstatement of them, or controlling
promotions and disciplinary matters. But you do
not seem to distinguish between different aspects
of industrial regulation.

MR GRAHAM:	Your Honour, when one looks at the proposition for which we contend, if one starts making
concessions of that kind, the foundation of the
argument starts to be undermined because the logic
of it is to say that there is an implication which
is concerned with impairment of functions. Unless
one modifies that proposition or moulds it with
some fairly high degrees of refinement in some

Unions(4)

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areas then it is difficult to support it, as a
matter of logic.
It may be, however, Your Honour, that one

could move back a step and say it all comes back to
the question of what does the award purport to do.
If the award merely purported to fix wages and
nothing else and said nothing about disciplinary
matters it would, indeed, be harder to argue that
there was an impairment or a control of the State
in the relevant sense than if there was control
over discipline, promotion, appointment and
termination.
It may be a matter of the content of an award

rather than an overall global application of the
principle but our starting point is where
Your Honour has identified it to be but we can
perceive that there may be opportunities to reduce
the scope of the submission so as to allow for a
consideration of degree of impairment rather than
impairment spoken of globally.

DAWSON J: When you speak of the global impairment, is it a

matter of degree, in the sense that, for instance,
railway workers by themselves may not matter; their
wages and conditions are governed by a federal
award, that will not affect the State very much,
but when you add them to the totality of State
employees then you get a very different situation?
I know it might be difficult to draw the line but do you rely on that?

MR GRAHAM:

I would accept that, Your Honour, although we

have been reluctant to bring people like railway
workers into the scope of the submission simply
because it seems to run against such a long course
of history that there is a resistance to it.

DAWSON J: But they were considered in isolation.

MR GRAHAM:

And not in the total context.

It is not

necessary for me, for the purposes of this
argument, to make a concession in respect of
railways or trading activities. It just seemed
difficult to see how, in a separate context, there
could be an impairment by an award relating to
railways commissioners. But if one had a totality
of awards the position might well be different.

McHUGH J: But does that mean that the first 20 might be all

right but the 21st and following run into trouble?

MR GRAHAM:

Your Honour, we had reflected upon the

possibility that that issue might arise, and it is
very difficult to know what the proper way to

respond to it is. If one simply had a sequence of

Unions(4)

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awards coming forward over a period of years, then
the argument might be at the end of the day, "Well,
it's too late. You can't suddenly now start adding

them all together." On the other hand, it might be
said of us - and I have no doubt it will be - that
it is too early because the full content of the
awards and the scope of the activities covered by
them is not known.

McHUGH J: That is why I asked you earlier about the

principle about the first award made in the federal
jurisdiction. If my recollection is right, the
practice used to be that, speaking generally, the
Commission simply adopted the State conditions for
its first award.

MR GRAHAM:

From our point of view, Your Honour, that would

not provide any answer to our submissions because
it is the fact that the source of the award is the
federal industrial power and it is the fact that
the award is made by a federal authority which
provides the relevant impairment~ it is not the

content of the award which does so. It is perhaps
worth observing that in the Melbourne Corporation
case, section 48 was held to be invalid on its face
even though it had not become operative in any way.

McHUGH J: But that is because section 48(3) singled out the

States and local government authorities, and it said that no State or local authority could bank -
or that no bank should accept payments from a State

government, so they were singled out. No doubt
that is what Justice Dixon had in mind when he

spoke about a particular disability. When he spoke
about controlling a State, does his judgment not
indicate that that was what he had in mind when you
denied the State something that was available in
society generally or which imposed some particular
disability on - - -

MR GRAHAM:

Your Honour, I may not have made myself clear in

responding to Your Honour a moment ago but, in
Melbourne Corporation, in order for section 48 to become effective, there had to be a direction given
by the treasurer in the Government Gazette which
had not been given and there was provision made for
the consent of the treasurer to provide for an
exclusion of the operation of section 48 and no
such consent had been either sought or granted or

refused. It was the capacity of the section itself
to impair and to impinge upon the States which was
held to make it bad, even though it was not, as I
say, fully operative.

McHUGH J: But not because it was - - -

MR GRAHAM:

Because it was a Commonwealth law.

Unions(4)

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McHUGH J:	No, it was because of its content, was it not?
MR GRAHAM:	I think we are saying the same thing,

Your Honour. We would say that in the case of an
award by the Commission, an interim award which did
not change the status quo, that would be in the

same case. The fact that it is there operating as
an effective piece of Commonwealth legislation,
backed by effective Commonwealth legislation,
provides the impairment.

McHUGH J:

It might be the next step but if you are paying

$500 under a State award and the next day you are
paying $500 a week under the federal award, how
does that impair the State?

MR GRAHAM:

As a matter of direct application of course it

does not because it is, as I think I am repeating
myself, the source of the award, the fact that it
has now become the law which governs that
relationship and, I suppose, the potential for it
to cover other matters and make larger provision in
respect of wages and other matters.

DAWSON J: Well, it has lost control in the terms and

conditions.

MR GRAHAM: That is what I am saying, Your Honour, yes. It

is no longer open to the State, either through its
own arbitral authorities or by regulation, if that
is -

DAWSON J:	Or by legislation.
MR GRAHAM:	Or by legislation, to do anything about that

topic once the award is in place because, of
course, section 109 and section 152 of the Act take
over.

BRENNAN J:

Mr Solicitor, I am endeavouring, still, to come

as the criterion. Is it that one looks at the to terms with your notion of control of the State function that is performed by the employer State,
and says that there are some core functions that
cannot be reached? Or, does one look at the
functions that might be performed by employees of
the State, and says that there are some of their
functions that cannot be reached? Or, is it a
combination of both?

MR GRAHAM:

Your Honour, I believe I would have to say it is

a combination of both because it would be
difficult, case by case, to see exactly what one
was focusing on if one did not say that the
appropriate focus would be on what the State was
doing by providing a service or undertaking an

Unions(4) 38 7/6/94
activity itself, and sometimes the focus might be
to see what the employee was doing.

BRENNAN J: So, there is an untouchable core which conslsts

of particular functions performed by the State;
those functions being performed by officers
presumably at a higher level or relatively higher
level?

MR GRAHAM: For the purposes of our argument, we were

reluctant to endeavour to formulate a core function
concept, and the submission goes broader than that,
as Your Honour would appreciate.

BRENNAN J: Well, if not core, unreachable area of function?

MR GRAHAM: There is, Your Honour, certainly having regard

to, I think, some things that Your Honour said in,
I think it was Re Lee; Ex parte Harper, that there are such core functions, but we contend from a
wider area of exemption than whatever might fall
within the concept of core functions.

BRENNAN J:	Can you articulate that wider area?
MR GRAHAM:	In our written submissions, Your Honour, we put

it on the basis that those functions, the exercise
of which would be impaired by the Commonwealth
legislation and an award thereunder, are the
functions which are performed by the State through
its own employees, paid for out of its own
resources, either by way of managing the State,
managing its internal affairs or providing services
to the public as a government, and we would
probably have to add there, and other functions
which governments historically have performed by
way of the provision of services to the public as a
State.

BRENNAN J:	Why then do you exclude railways?
MR GRAHAM: Perhaps we should not, but there is a

reluctance, given a course of decision going back
90 years, to not seek a formulation which would not
cover the railways, but the logic - - -

DAWSON J:

It must be a matter of degree.

You may in this

case be able to see that you reached that point
where a government is affected in a way that no
other employer is in its ability to perform the
functions which it has to perform which are not
functions which any other employer h~s to perform.

MR GRAHAM:

Your Honour, with respect, we would adopt that.

It is really the point that I think I indicated earlier, and I am reluctant to repeat myself, but
it comes back to a question of asking what is the

Unions(4)

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nature of the activity that is involved and what
will be the impact of the award if made, having
regard to the presence of the implication?

DAWSON J:

And in that exercise you are not really looking

at what the employee does at all, or that is not
the prime thing; you are looking at what the
employer does.

MR GRAHAM: That is the primary question: what is the

activity, what is the function?

McHUGH J: Take prisons - in Queensland, for example, there

are private prisons now authorized by State

legislation. Why should you distinguish between
the employers of - wardens in private prisons and
employers in State prisons? That is an area that
one might have thought was traditionally the area
of government.

MR GRAHAM:

Yet it has been put outside the area of

government as a matter of fact and as a matter of
management, and we would have to say that the
position of a private prison was no different from

a private school. We do not seek to - - -

DAWSON J:

This is the old dichotomy. Why do you not say,

"Look, a government is entitled to do what it is
entitled to do", and if it chooses to do it, then
it must be able to do it as a government.

MR GRAHAM:

Your Honour, with respect, yes. That is the

further part of my answer to His Honour
Justice Brennan's question. There is, of course, a
risk of circularity in that argument to say that
the functions of government are what governments
happen to do because ridiculous examples could be
conjured up. Leaving those aside then, with
respect, what Your Honour puts to me is correct,
and that is where one finds the way in which one

draws the boundaries of the operation of the
implication in respect of governmental functions.

TOOHEY J:	I understand your reluctance to get caught up in particular occupations, but is it the position that in order to sustain your argument you point not
only to the range of departments, authorities and the like to which the dispute relates, but also to
the comprehensiveness of the conditions of
employment sought to be brought within the aegis of
the Commission?

MR GRAHAM: Yes, we do, Your Honour.

TOOHEY J: And it is a cumulative argument in a sense, is it

not?

Union(4)

7/6/94

MR GRAHAM:

It is, Your Honour, and it is cumulative in two

respects. I think I mentioned them earlier. One
is because of the array of awards that is being

sought. The other is because of the
comprehensiveness of some of those awards in terms
of what they seek to control.

TOOHEY J: The difficulty with the comprehensiveness of

awards is that we are really in a hypothetical
area, are we not? We know the range of terms and
conditions that the union would seek to have
determined by the Commission, we do not know what
the Commission might do in the circumstances.

MR GRAHAM:

Your Honour, that we must accept and perhaps it

is a reflection of a point I made earlier, that
there must be an appropriate time when the issue
falls for decision and, in our submission, it is
not a satisfactory approach to say, "Well, let's

see what the Commission does. It may not make an
award at all or it may make an award which is very
simple and would be hard to point to as involving
an impairment.", but in the end we come back to the
proposition which I was putting to His Honour
Justice McHugh that it is the very existence of the
federal control over the topic of State employment,
the employer/employee relationship in the State
sector, which involves the impairment rather than
the manner in which it is exercised. Although
perhaps the analogy is somewhat remote, it was for
that reason that I referred to the situation that
has prevailed in Melbourne Corporation at the time
when it was actually decided.
It is important for us to stress that the

difficulty that we say will arise is best
illustrated in matter M24 because there we are
dealing with the very means by which the States
govern without control over the size of the public
service to matters of termination, redeployment, et
cetera. The State loses the means of control over

over the contents of its budgets. Effectively, the execution of its policies, it loses control
taken to its extreme, the awards can direct how the

State is going to govern the State in many significant respects.
I had gone to the ARU case and perhaps if I

can return to it. I think I had indicated how we
seek to distinguish it although, in the light of
particularly what Your Honour Justice Dawson said,
it may well be that looking at the picture on an
incremental or global basis that the ARU case, in a
proper context, would have to be reconsidered. But
as we put our case before the Court today we do not
say that it does have to be distinctly overruled

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although it might be said to require
reconsideration hereafter.
As to the Professional Engineers' case, it

stands in a special position so far as the present

proceedings are concerned. The Court will recall
that the principal issue in that case was whether a
dispute involving professional engineers employed
in State government instrumentalities and
elsewhere, gave rise to an industrial dispute for
the purposes of section Sl(xxxv) and for the
purposes of the relevant provisions of the
Conciliation and Arbitration Act. The argument had
been advanced that - in substance, and putting the
matter very briefly - that services which were
being provided were of a governmental character
rather than of an industrial character, and that it
could not be said that the dispute, so far as
engineers employed in the government sector, were

involved in an industrial dispute. Now that
approach, of course, would no longer be adopted by
the Court, following the Australian Social Welfare
Union case and Lee and Harper, although it would be
said against us that the actual decision in that
case, allowing the arbitration commission to deal
with the dispute, could not stand in the face of
our submissions.
It is important to note the manner in which

the argument appears to have proceeded in the

Professional Engineer' case. One notices, going
through the argument of counsel, that there are
references to the Melbourne Corporation case, but
there is no indication that any argument of the
kind upon which we presently rely was advanced to
the Court in that case. Indeed, if one goes to the
judgment of Sir Owen Dixon at page 232 over to 233,
one is certainly left with the very clear
impression that an argument based upon an
implication of the kind which was articulated in

bottom of page 232, Sir Owen said: Melbourne Corporation, was not advanced. At the In terms none of the learned counsel
representing the interests of the States
attempted to contest or to qualify the
principles laid down in the Amalgamated
Society of Engineers v Adelaide Steamship Co
Ltd as explained in Australian Railways Union
v Victorian Railways Commissioners. In other
words there was no denial of the general rule to operations of the States so far as
that apart from certain qualifications not
presently material, unless the contrary
intention appears a legislative power of the
otherwise they fall within the subject matter

Unions(4)

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of the power. And there was no denial of the
specific application of the rule to
section Sl(xxxv) of the Constitution which had
been made in the Engineers' case.
A little further down the page at point 5,
His Honour said:
But while in terms all this was left
uncontested by the learned counsel for the
States the condition that the dispute must be industrial was insisted upon and the character
of the State and the agencies of a State was
used as showing that in the case before us the
condition could not be fulfilled.

Now, with respect to Sir Owen Dixon, it is not absolutely clear that he was saying that no one was
relying upon a Melbourne Corporation argument, but
that is the way in which we would read the passage,
and certainly the arguments of counsel bear that
out.
So far as the way in which the case was

presented to the Court and the reasons for judgment are concerned then it does not stand as an obstacle in our path but we would concede that the result in
so far as jurisdiction of the Commission in
relation to State employed professional engineers
does.

DAWSON J: But has not that decision - maybe it was based

upon the question in everyone's minds that the
distinction between what was industrial and what
was not industrial was a sufficient protection for
the States of their constitutional position. But
the ground has changed.

MR GRAHAM:

And indeed that was emphasized by some of

Your Honours in the Australian Social Welfare case
and Lee and Harper.

DAWSON J: And if there is to be any protection it must be

found elsewhere, and that is why the division
between administrative and other services of the
State is probably just too old fashioned to be of
any use any longer.

MR GRAHAM:	That is how we have appreciated the course of decisions, Your Honour, and we have framed our
argument accordingly. But it still can be said
against us that the Professional Engineers' result was contrary to our submissions. But in the light of the subsequent decisions we would submit that it
should not be regarded as being a decision, in the
strict sense, standing in our way.

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DAWSON J: In the sense that had there been no distinction

between - had any employment been industrial, you
would have been fairly certain that those who were
seen to argue the Professional Engineers' case
would have been looking for something else.

MR GRAHAM:

Yes, indeed. And indeed when the point arose,

in a somewhat different way, in Lee and Harper, an
attempt was made to put that argument but it was
found to be unnecessary to do so.
Now, the Australian Social Welfare Union case

is said to stand in our way. The Court was there,
of course, concerned with the ambit of the concept
of "industrial dispute". It is difficult to
discern, from a reading of the report, the precise
status of the committees who employed the claimant
employees but, as far as one can tell, they were
bodies established by the Federal Government and it
would seem that their employees were, if not
employees of the Federal Government, then in some
sense federal employees. There seems to have been
no involvement by State Governments in the scheme
pursuant to which the committees were established
and, of course, there was no occasion to invoke the
principle which we presently rely on.
So far as Lee and Harper is concerned, the

Court held that the power conferred by
section Sl(xxxv) extended to an interstate dispute to which an organization representing State school
teachers was a party and that such teachers were
not part of the administrative services of the
State, as that expression had been used in earlier
cases, in formulating an exception to Commonwealth
industrial power.
The origin of the concept of administrative

services of the State has been traced both in our comprehensive written submissions and in those of

the respondent Unions, and I will not take the
Court back to it. But we would note that the
exception in relation to administrative services
appears to have its origins in the process of
analysing the meaning of the expression "industrial
disputes" rather than in considering the
application of the principle, which we invoke in
the present cases. As our submissions indicate, we
do not seek to rely upon an exception in respect of
the administrative services of the State so far as
the broad part of our submissions are concerned.
We would accept that there are statements in the observations of Your Honour the Chief Justice
and Justices Brennan and Deane concerning the
possibile applicability of the principle upon which
we now rely. What we say in response to those

Unions(4)

7/6/94

observations appears at paragraph B19 of our
comprehensive submissions, and I do not seek to
repeat what there appears.
I should add finally that there are dicta in

the SPSF case itself which bear upon this topic,
the applicability of the implied limitation or

principle upon which we rely but, having regard to
the way in which that case was decided on what
seems to be called the fancifulness point, once
again we do not perceive those dicta as standing as
decisions of this Court in the way of the
acceptance of the argument which we put.
If I can turn to the topic of interstateness

which - - -

BRENNAN J: Before you get to that, I am still not able to

articulate myself what your argument is in terms of
the criterion of control of a State. Are you able
to develop that any further?

MR GRAHAM:

I endeavoured to answer Your Honour before, I

think, by way of an example or examples rather than
to endeavour to formulate the principle, as it
were, in globo.

BRENNAN J: Take M24, for example. With the broad scope of personnel who are to be covered by the application and with a variety of functions being performed

both by those personnel and by the State that
employs them, where is the cut-off point and why?

MR GRAHAM:

Your Honour, we say that the cut-off point is at

the threshold where the award is made which seeks
to deal with any of the topics that are

comprehended by the log of claims. If that is not
right, then we say that rather than seeking a
cut-off point, one considers the overall impact of
the award as claimed to see whether an award in

those terms would control the State. So there can
be controlled by the mere existence of the award or
there can be control by virtue of its all-embracing
terms.

BRENNAN J: Pardon me interrupting you, but that is not

quite my problem. My problem is: let it be
assumed that the whole of the State public service is covered by M24 and let it be assumed that every aspect of the work done by any person will be

covered by the award in those terms. Do you
contend for the incapacity of the Commonwealth
Parliament to authorize the making of an award
having that scope?

MR GRAHAM:

Yes, we do, Your Honour.

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BRENNAN J: Irrespective of how peripheral the function may

be, and irrespective of the rneniality of the task
that is being performed?

MR GRAHAM:	I would put it in the alternative, Your Honour, and I think that we are bound to because we contend
first for the proposition that impairment may be
slight or great, but it is prohibited in any form.

BRENNAN J: Yes.

MR GRAHAM:

And the support for that view is to be found in

Sir Owen Dixon's judgment in Melbourne Corporation and, I think, in other judgments. But we put it as
an alternative that if that is not correct, if that
is going too far, then the control arises in the
other way by virtue of the degree of the intrusion.
But we put it both ways and there is authority in
Melbourne Corporation and, indeed in QEC, for both such propositions. But, yes, we do put it both
ways.

McHUGH J:

But I do not know how you can put it both ways,

unless you have some principle which escapes me at
the moment. Take the case of a manual worker who,
under a federal award, is required to have three
weeks annual leave. Surely that controls the
State's capacity to deal with its manual workers.

MR GRAHAM:

Yes, it does.

McHUGH J: Then there can be no intermediate situation, can

there? It is either all of nothing, for everybody.

MR GRAHAM:

What I was endeavouring to say to His Honour

Justice Brennan is that when one is speaking in
terms of impairment or curtailment or control, one
can take the position that anything that impinges
upon the State's capacity to decide upon the terms
of employment of those whom it employs is an

impairment. Or if that is not acceptable because
it is too extreme, then we go to the other step,
which is perhaps not an intermediate step, to say
that where you have a code of control through a
Commonwealth award then you have the relevant kind
of impairment or control. It is very difficult to
find any sensible intermediate ground between those
two positions.

McHUGH J:	How do you define "code of control"?
MR GRAHAM:	Perhaps it is an ill-chosen word, but I was

thinking in terms of a comprehensive award which
governed all aspects of the employer/employee
relationship.

Unions(4)

7/6/94

McHUGH J: But in this area, of all areas, if this Court is

to change what was called, in Lee's case, the
settled interpretation of Sl(xxxv), then we ought
to give some concrete guidance to the Commission,
should we not?

MR GRAHAM:

We would, certainly, Your Honour, invite the

Court to do so regardless of whether the Court
considers that the relief is premature at this
stage, having regard to the arguments being

advanced. I think I am really repeating myself
that the sort of impairments that we are concerned with may be, as I have said, merely arising by the existence of a federal award which displaces State control over the public sector employment.

McHUGH J:

I understand, I have no problem about this, but

it is this other elusive concept that I have
trouble following.

MR GRAHAM:

It always gets difficult, Your Honour, when one

starts to talk about the cleaners and the lift
drivers but, in the end, the logic of the
proposition says that they are excluded as well
because it is the State that has got to decide what
happens with its entire workforce, not just dealing
with the workforce on a piecemeal basis having
regard to those of them who happen to be under a
federal award and those who happen not to be.

McHUGH J: But, instinctively, I have some difficulty with

the Arbitration Commission controlling the right of
the premier to have his advisers work more than
ten hours a day, for example, but on what principle
would you distinguish that class of employee?

MR GRAHAM:

It is then, Your Honour, that one is required to

formulate some kind of a category of core function,
or essentially governmental function as performed
by individuals rather than looking to see what it
is that the employer does. That, perhaps, takes

one back to the way in which I answered
Justice Brennan's question because it may be
necessary in some cases to look to see what the
employee does rather than what the premier does. and my learned friend Mr Doyle will be developing
this part of the argument, it becomes difficult to
say where does one draw the line between the
premier's advisers or, indeed, how long the
Solicitor-General works per week, on the one hand,
and the cleaner on the other. That is why we argue
for the way we do because there does not seem to
be, on this argument, there is no clear cut
stopping point or half-way house.

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DEANE J: If your argument is not going to have an internal

weakness do you not have to go so far as to say it
is beyond Commonwealth legislative power to provide
for the registration of a union under the
Commonwealth Act whose conditions of eligibility treat membership of a State public service as a
qualification? Because once you go beyond the
stage of having such a union as a registered
organization it is very hard to draw a line of the
type that you are being required to draw by
questions from the Bench.

MR GRAHAM: With respect, I believe Your Honour is correct

because when one -

DEANE J:

I am not trying to lead you into an argument.

has just been at the back of my mind as I have been
listening to you.

MR GRAHAM:

Yes.

Your Honour, the logic of the submission

does require that, and when one looks to the source
of the power to provide for the registration of
organizations, then that power is the same power as
we are talking about in a different context and it
must be logically subject to the same limitations.
So I would have to answer Your Honour's question in
the affirmative.

DEANE J: But that would really divert the argument, would

it not, into a question whether it is within
Commonwealth legislative power to single out
membership of a State public service as the basis for controlling the activities of an organization representing people with that qualification? I
think I have somehow got the sentence mixed up.

MR GRAHAM:

I followed Your Honour.

It is probably like a

allowing registration through the registrar or
lot of my sentences. That would follow,

appropriate official would be inhibited or
prohibited by the principle which we invoke, but we
would be bound to say that. There could be
difficulties arising if one had a union which was
not purely made up of State public servants, but
Your Honour's example, I think, left out that
possible complication.
If the Court pleases, if I can turn to the question of interstateness. The outline of
argument on this point starts at paragraph 14, and

if I could just quickly take the Court to that. We
submit that the disputes identified in each of the
proceedings are incapable of giving rise to
industrial disputes extending beyond the limits of
any one State; or alternatively those in M24, MS,
Mll and M30 are incapable of extending beyond the

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limits of one State, M24 being the State Public

Service; MS and Mll the redundancy awards, and M30

being the police. We say there must be a real
dispute and it must be the same dispute existing
within Victoria as exists beyond its limits. Then

we refer to the framework of laws within which the
dispute has arisen and make the point there may be
no dispute at all or no interstate dispute because
the particular matters in dispute are foreclosed to
the employer and employee by law, and we give
examples.
We submit that there is no industry that

provides a unifying connection so as to raise an
interstate dispute. There is no such thing, we
submit, as the industry of government or the
business of government, either generally or in
respect of State governments. Mere community of
interest between categories of employers is not
sufficient where the other party is a State
government or State government authority, or at
least that it is the case where the State
government or agency is not engaged in trading
activities and there is no unifying industry.

DAWSON J: But there is an industry of being a clerk, of

being a ministerial adviser, as the word "industry"
is used. There is an industry whenever you get an
employer/employee.

MR GRAHAM: But, with respect, Your Honour, in that sense,

of course, Your Honour is right, but it is
difficult to say that the State government and the
clerk are engaged in an industry.

DAWSON J: If you look at Coldham, they are; the employee is

engaged in an industrial relationship as
employer/employer.

MR GRAHAM:

Perhaps we are on a sounder ground then,

Your Honour, in saying that one is not able to see

a common industry as between the several States for
the Commonwealth on the one hand and the clerks,
whom they employ, on the other.

DAWSON J: But that is different.

MR GRAHAM: Yes, and that is - we would perhaps prefer to

emphasize that way of putting the point. What one
has, in substance, having regard to the different
regimes which prevail in each State in relation to
the, what I will again loosely call, public sector,
that there is no single dispute created, albeit
that a single log of claims was served upon several
State governments. All that was created, in our
submission, and, inevitably, all that could be
created in the circumstances, was a sequence of

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disputes, each of them discrete or localized in
relation to the individual States. There is
nothing here as between the States, such as
occurred, for example, in the Aberdeen Beef case,
where one had the meat processing industry.
Whereas, one has commonly seen in other
circumstances, disputes arising in the petroleum
refinery industry; there, one can find a community
of interest amongst the respondents upon whom the
claims are made.

McHUGH J: But is not the community of interests in a case

concerning State public servants, namely that they
are in disagreement with their employers in
relation to the terms and conditions of their
employment? It is the dispute, not the industry,
which must extend beyond the limits of a State.

MR GRAHAM:

But if one is looking for the element of

interstateness in relation to that dispute, one is
looking for a community of interest somewhere and
as existed in relation to the parties to the
dispute in Aberdeen Beef - - -

McHUGH J: One would have thought there would be a flow-on

effect, would there not?

MR GRAHAM:	I am sorry, Your Honour.
McHUGH J:	One would have thought that the flow-on effect

would provide sufficient community of interests.

MR GRAHAM: But, with respect, Your Honour, that put the

cart before the horse because you have still got to
have the starting point at which an award can be
made before there is to be flow-on effect. If
there is only an individual dispute to start with,
between the employees of a State and a State then
the foundation for the award is not there. There
might be a concern for a flow on if an award were

made but that would not provide the relevant
unifying factor at the outset to enable the finding
of an interstate dispute to be made.
Can I turn now to make some brief observations

in relation to the topic dealt with under the
heading Discrimination Terms of Awards in MS and
Mll. I do not wish to expand upon what we have
said in relation to section lll(l)(a), which is
dealt with earlier in the outline.
I wonder if I might ask the Court to go to the

application books in matters MS and Mll, just so I
can draw attention to the terms of the awards which
were made and which are presently under challenge.
If I can ask Your Honours to go to the application book in matter MS, firstly at page 27.

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Your Honours will see, at page 27, the terms of the
award by Senior Deputy President Riordan,
1 December 1992. Clause 2:
This award is binding on the Australian
Teachers' Union, its officers and its members
and on the Minister for Education of Victoria in respect of all of his employees engaged as teachers in the State of Victoria.

Redundancy:
That pending determination of this matter by the Australian Industrial Relations Commission
or further order:
(i) the employer take no further step to
process the voluntary separation packages
offered to government school teachers on
Friday 20 November 1992;
(ii) the employer not dismiss any teacher
otherwise than in accordance with the
disciplinary or efficiency provisions
contained in the Teaching Service Act 1981
(Victoria); and
(iii) the employer apply the conditions set
out in Annexure 1 to 'the application.
I do not think that I need trouble

Your Honours with the terms of annexure 1. That
was superseded by a further award which is to be

found at page 99 of the same application book. The
application of the award in clause 2:
This award is binding on the Australian Teacher's Union, its officers and its members
and on Her Majesty The Queen in the right of
the State of Victoria in respect of all its
employees engaged as teachers.

Under the heading "Redundancy", there is a
definition of a redundancy separation package
defined by reference to an exhibit which was a
circular. Over the page, subparagraph (b):
Where an employee has, between
20 November 1992 and 24 December 1992,
accepted a Voluntary Separation Package, that
employee may, by notice in writing given on or
before 31 December 1992 to the Director of
School Education, withdraw such acceptance.
(c) Where an acceptance is withdrawn in
accordance with sub-clause (b) above, the
employment of such employee shall not be

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terminated by virtue of his or her earlier
acceptance of the voluntary separation
package.
(d) Except in the case of an employee whose
employment is terminated by virtue of
acceptance of a voluntary separation package
in relation to the termination of employment
of any employee covered by this award, it
shall be the duty of the employer not to
terminate that employment and it shall be the
right of an employee not to have that
employment terminated, otherwise than in
accordance with the disciplinary, dispensation
with services or efficiency provisions
contained in the Teaching Service Act 1981
(Victoria).
There is a further award which is at page 220 of
the application book which simply continued the
interim award previously in force for a period of
three months.
If I could then go to the relevant award in

No Mll relating to the Health Services Union, at
page 103 in the appeal book which covers both Mll
and Ml56, the application of the award was to the:
Health Services Union of Australia, its
officers and its members and on the State of
Victoria in respect of all employees engaged
in the classes and grades set out in
Schedule 5 of the Public Service
Determinations Salary Schedules made under the
Public Service Act 1974 (Vic) -

an Act which has been repealed and I think had been
repealed at the date of the making of the award.
Redundancy:

(i) That the employer take no further step
whatsoever to process the Voluntary Departure
Package in the terms of or to the effect of the document attached here to and marked "A" and without limiting the generality of the
foregoing the employer shall not make any
further offer pursuant to the Voluntary
Departure Package.

(ii) No employee be dismissed except on the
grounds set out in Section 57 or
Section 59(b), (c) and (d) of the Public
Service Act 1974 -

those being provisions relating to dismissal on
grounds of inefficiency or matters relating to
discipline.

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The award was made or overtaken by a further
award which appears at page 115 of the application
book. I think it is unnecessary to read that whole
award. It has features similar to that to be found
in the teaching award in matter MS, and in clause 4
repeated what I have read from the earlier award in
Mll.
What we say in relation to that appears in our

written submissions, but the substance of what we
say appears in a summary way in the outline of

argument. The effect of the award in each case, in
our submission, is to control, or restrict, or
burden, the States and the effect of the award
furthermore is to impose a discriminatory burden
upon the State. It denies to the State the ability to terminate the employment of any of those covered
by the award on what might be called ordinary
redundancy grounds.

DEANE J:

Mr Solicitor, what you referred us to has now

lapsed. As I looked at them the time seemed to
have run out.

MR GRAHAM:

I need to check that, but I am told that is not

so because there has been further extensions.

DEANE J: That is what I was going to ask.

MR GRAHAM:	I am assisted by being told that they are automatically extended by section 145 of the Act.
I apologize for my lack of familiarity.

The State is denied the capacity which any
employer, including any government employer, would
normally have to reorganize its workforce, to
terminate, on due notice, of course, the employment
of any employee, subject to the qualifications in
relation to matters of efficiency and discipline.
The effect of the awards is to provide, in effect,

permanent employment to those who enjoy the benefit
That state of affairs is brought about by the
of the award.
direct effect of an award made by the Commonwealth
Commission, and we would say that the power
pursuant to which awards are made does not extend.
so far as to make an award in such terms. And in
so far as the empowering sections of the Act
purport to do so, they are pro tanto invalid
because they conflict with the Melbourne
Corporation principle.
They conflict both because they impair the capacity of the Government of Victoria to function
as a government; they impair the capacity of the
Victorian Government to exercise its governmental

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7/6/94

functions; they control the State Government
directly because of their terms and limited ambit;
they discriminate, in the relevant sense, against
the State of Victoria. If I can turn - - -

GAUDRON J:

Mr Solicitor, those awards are somewhat

different from the redundancy awards we have
considered in this Court, or claims we have seen in
this Court from time to time. Are there other
awards to similar effect in other industries at the
behest of other unions?

MR GRAHAM J:

I believe not, Your Honour. There is evidence

in one of the affidavits to suggest that these
awards are unique. That is in our affidavit
material, and no one has contradicted that.

GAUDRON J: Yes, thank you.

MR GRAHAM:

Not in terms, although it has been suggested

that the statement in the affidavit may be - - -

GAUDRON J: Well, they are not the normal redundancy award

at all, are they?

MR GRAHAM:

Not as we understand it, Your Honour.

DAWSON J: What is the background? That the State was

attempting to shed employees in these two areas
anyway by a system of voluntary departure packages?

MR GRAHAM:

They were offered to the entire primary and

secondary teaching workforces in terms of the
ordinary severance conditions as to accumulated
leave entitlements plus an additional sum of money;
an ex gratia inducement as it were to take up the
package, and the acknowledged purpose was to reduce
the size of the workforce and the evidence, I
believe, indicates that several thousand eventually

took up these packages.

BRENNAN J: Are there findings of dispute in settlement or

partial settlement of which these awards were made?

MR GRAHAM:

Yes, arising out of a wider log of claims that

had been served upon the State of Victoria and the
State of Tasmania in the case of the teachers. The
same, I believe, is true in the case of the health
workers.
I am reminded - I will give the Court the reference to the passage in the application book in
MS - of the demand that was made on the Education
Ministers of Victoria and Tasmania was, "No teacher
employed by you shall be termin~ted from his or her
employment; whether by way of voluntary redundancy
or otherwise, except with the consent of the

Unions(4)

7/6/94

Australian Teachers Union". I will give the Court
the reference to the page where that letter of
demand appears.
Turning finally, so far as the outline of

argument is concerned, touching upon the Victoria
Police Force - before I do that, I am now able to
say that in the case of Mll it was not a narrow and discrete claim as made in the case of the teachers.
There was a comprehensive log of claims covering
many matters served on 22 July 1992. That is to be
found in the application book at pages 8 to 9 and

on to page 20. So it was within the context of the
dispute created by the wider log of claims that
this narrow, intra-Victorian award was made.
So far as the Victoria Police Force matter is

concerned, we have dealt in our written submissions
with the questions that arise having regard to the timing of this application in the sense that it is not a matter arising in the context of a log of
claims but rather an application for the consent to
a variation of eligibility rules which, if granted,
would include within the Federation's rules the

Victoria Police Force. We simply make the point in
paragragh 33, which is a summary of the force of
our whole argument, that it is an essential aspect
of the capacity of the Government of Victoria to
discharge its constitutional functions and that it
maintained an organized and disciplined police
force.
Of course, it could be said against us that up

until, I suppose, about 1833 governments in the
English speaking world were not possessed of police forces of the kind now commonly known, but one also
knows that the existence of law enforcement persons

in the form of constables and others goes back to
the very earliest times. What came about in the
early 19th century was the organization of a police
force into a form which is the origins of what we are familiar with today. It is difficult, we would submit, to conceive of how a State Government could
operate without a police force to enforce its laws,
to protect its citizens and their property, to
investigate crime, notwithstanding the fact that
there are security forces provided by private
organizations whose services supplement the work of
the police force.

McHUGH J: But in England, even today, the police force is

not really under the control of the government, is
it, or, if it is, it is only in comparative recent
times. Is it not the boroughs who control the
police force?

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7/6/94

MR GRAHAM:

Your Honour, my understanding is that through

the chief constable of each county, the police
force is controlled, and the county may be treated
perhaps as the analogue of a State government for
these purposes, but of course, the functions of the
police force of each county will extend beyond the
boundaries of a county, just as police forces co-
operate in Australia, but we submit it is not fatal
to our view of a police force as a fundamental
element of an organized government to say that it
may be established at a level lower than that of

the central government in the United Kingdom. We
are familiar with the police forces of the State as
being the primary law enforcement agencies in this
country, mainly because, I suppose, the laws which they enforce are mainly laws enacted by the States or the common law, criminal law, which is part of
the laws of the States.
Could I then deal with a few miscellaneous matters relating to the submissions that are
advanced against us, without seeking to provide an
exhaustive reply to those submissions at this
stage. In the written submissions of the Union
respondents under heading F, in paragraphs 52
to 60, there is developed an argument that, as we
understand it - we hope we do not do it a
disservice - that there is no relevant impairment
of the functions of the State governments or the exercise of those functions by State governments
through the operation of Commonwealth awards,
because it seems to be submitted that awards cannot
be enforced as a matter of law against State
governments in the absence of provision being made
by appropriations or by means of the introduction
of a standing appropriation in the relevant
Victorian Act, which is the Crown Proceedings
Act 1958.

We would say, with great respect to the author of that part of the submissions, that it is a
somewhat unattractive argument to submit that the
award may be made by the Commonwealth Commission
but it may be ignored by the State if the State so
wishes. Without wishing to speculate upon what
would happen if the position arose in reality, the
point that we would make is that that submission
fails to take into account the extraordinary
problems which would arise by virtue of section 109
of the Constitution and section 152 of the
Industrial Relations Act 1958 if there were a
Commonwealth award operating in the same field as
State industrial legislation.
The Commonwealth award would cover the field.

The State legislation would be inoperative. This
argument leads to the conclusion that for practical

Unions(4)

7/6/94

purposes there would be a legal vacuum in the area
covered by the award because the award would be
unenforceable and the State law would be

inoperative. We have posed the question; we do not
know what the answer to it is. But that seems to
be the logical conclusion that flows from this part
of the union respondents' arguments.
The next point of a miscellaneous character we

wish to make in response concerns the -

BRENNAN J:

I suppose one implication of that is that

section 109 cannot operate so as to impose upon a
State an obligation under Commonwealth law which is

unenforceable. If that is so, it must be for want
of Commonwealth power.

MR GRAHAM:

So that the Commonwealth power is in that

respect imperfect or incomplete, yes. It may be
the solution, Your Honour.

BRENNAN J: It is a solution I am sure which you would

embrace but I am not sure that it is accurate.

MR GRAHAM:

I would prefer to take time to reflect on it,

Your Honour. It certainly suggests, at least, with
respect, a gloss on the operation of section 109
that has not previously been considered. The next
matter upon which we desire to touch concerns the
arguments raised against us by the respondent
Unions concerning the so-called category of administrative services of a State. They deal with
that topic at length in paragraphs 3 to 17 of their

submissions. We simply say that we have, in our

submissions, not sought to rely upon that supposed
exception having regard to the course of decision
in recent times.

If I can turn now to Your Honour

Justice McHugh's question to me about the Pay-roll
Tax case and, coupled with that, the second Fringe

Benefits Tax case. The Pay-roll Tax case,
122 CLR 353, and the second Fringe Benefits Tax
case, 163 CLR 329.
It has been submitted by the respondent Unions

in paragraphs 24 to 26 of the written submissions
that our submissions concerning the principle as we
would seek to invoke it and apply it, would not,
and I quote, "explain the decisions of the Court in
the Pay-roll Tax case and the second Fringe

Benefits Tax case". It is quite clear that the
taxes imposed in each case impose a financial
burden upon the States and did so in their capacity
as employers of labour. Those two taxes, of
course, imposed financial burdens upon all other
employers as well. But the point we would stress

Unions(4)

7/6/94

is that the taxing Acts did no more than that, they
did no more than impose a financial or fiscal

burden. The legislation did not contain any
provision which directly controlled or regulated
the activities of the States, or which interfered
with them, or which impeded the performance of
their functions. There was no regime of control
imposed which impinged upon the operations of the
public service or others employed in the public
sector, or upon the relationship between the State
and its employees. In other words, the taxes were
mere impositions.
Your Honours will recall that in the Pay-

roll Tax case the Court was not unanimous in its

reasoning. The reasoning adopted by Sir Garfield
Barwick, Sir Edward McTiernan and Sir William Owen,
for upholding the validity of the pay-roll tax upon
the States is regarded, as we understand, Your

Honours, as no longer supportable. The majority
view, as I will call it, which has prevailed, was
that of Justices Menzies, Windeyer, Walsh and
Gibbs. That was explained by Chief Justice Gibbs
in the QEC case, at pages 205 to 206; by Your
Honour the present Chief Justice at page 216 in the
same case and by Your Honour Justice Dawson at
pages 260 to 261 in the QEC case.
The matter was put neatly in a sentence by

Mr Justice Menzies in the Pay-roll Tax case at page 393, and he said, in effect, despite the
imposition of the payroll tax:
Crown servants may still be employed at the
will of a State -
It is perhaps significant to notice that the

absence of any indication of impairment of the
functions of the States during the many years in
which the tax had been imposed was regarded by

Sir Victor Windeyer and Sir Harry Gibbs as being
significant, the relevant passages being at
page 398 for Sir Victor Windeyer, and pages 424 to

425 by Sir Harry Gibbs. Mr Justice Walsh at
page 412 expressed disagreement with a proposition:
that any law by which a tax is imposed
directly upon the States in consequence of
acts done by them in the exercise of those
functions is a law which prevents or controls
the exercise of those functions.

That was page 412. His Honour rejected that
proposition. The proposition which His Honour
rejected was very widely framed and, indeed, it had
to be widely framed to sustain the plaintiff's case
in that proceeding. But here we do not need to

Unions(4)

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formulate our proposition in terms of that kind.
We submit that the impact of awards of the kind
proposed upon the exercise by the States of their
functions is obviously quite different from the
impact of a mere impost.
I was going to turn briefly to the second

Fringe Benefits Tax case. Would it be convenient
if I finished that before the adjournment?

MASON CJ: Yes.

MR GRAHAM:

It is noteworthy that in the second Fringe

Benefits Tax case it was not contended that the

Pay-roll Tax case had been wrongly decided. The
majority of Your Honours, having stressed that the
tax applied indifferently to States and private
employers, and having stressed that it applied in
the case of benefits supplied also otherwise than
pursuant to a master/servant relationship,
concluded that the taxing legislation did not
single out the States for special treatment in the
form of a special burden or disability. That
appears at page 356.

As to the principle presently under

consideration, Your Honours in the majority simply
said that the States are subject to the
Commonwealth's taxation power, that it is accepted
that the Commonwealth may validly impose income tax
on the salaries of State officers and went on to
say, at page 356:
it must follow that the imposition of a tax on
the States in respect of fringe benefits
provided by the States to such persons as part
of a general fringe benefits tax on those who
pay salaries and wages is not an infringement
of the implied prohibition.

We would say, with respect, that that proposition

is well removed from the operation of a
Commonwealth industrial law and an award made
thereunder as sought which would, in its own terms,
apply specifically to the State and to the
relationship of a State with its officers and which
would regulate that relationship in a comprehensive
and detailed manner. Accordingly, for those
reasons we submit that the two cases, Pay-roll Tax
and Fringe Benefits Tax, are distinguishable and we
do not ask the Court that they be reconsidered. Is
that a convenient moment, Your Honour?

Unions(4)	59	7/6/94
MASON CJ:	Yes, Mr Solicitor.	The Court will adjourn now

and resume at 2.15.

MR GRAHAM: If the Court pleases.

AT 12.48 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.17 PM:

MASON CJ: Yes, Mr Solicitor?

MR GRAHAM:

If the Court pleases, shortly before lunch I had

read to the Court the text of a letter of demand
that had been sent to the Minister of Education in
Victoria that precipitated the dispute which is the
subject of proceedings M8/92. If I may give the
Court the reference to where that letter is to be

found. It is in the application book in M8 at
page 190.
Just before resuming the balance of our submissions, may I return to a matter which
Your Honour Justice McHugh raised with me this
morning relating to initial awards, and Your Honour
asked me whether the terms of initial awards
normally simply set conditions as they had stood
before the award was made. I think Your Honour
used in that context the expression "the status
quo". If I can just elaborate the answer that I
gave to Your Honour a little.
In the merely factual sense the new award

would maintain the status quo, but a consideration
of what lies behind the new award indicates that it

is anything but the status quo. There is a new

legislative regime lying behind the award which has
been made; the pre-existing State regime is

rendered inoperative. The status, newly
established by the award, cannot be changed by the
State, either by legislation or by award of a State
arbitral body and the point is perhaps most vividly
illustrated in the redundancy cases where the award
can operate to deprive the State of its ordinary
rights as an employer at common law to terminate a
contract upon notice, and it can even operate to
preserve the effect of a repealed State statute.
So Your Honour is correct in saying "status quo" but we would qualify what Your Honour says
respectfully to that extent.

Unions(4)

7/6/94

There is one other matter that Your Honour
Justice McHugh raised this morning which we would
like to return to briefly. As we understood a
question from Your Honour, Your Honour indicated
that the passages from the judgment of
Mr Justice Dixon in Melbourne Corporation when
His Honour spoke of control were directed to
control by the imposition of particular

disabilities and burdens. We would respectfully
submit that His Honour's reasons for judgment are

not to be read in that way. The passage at
pages 79 to 80 of the report to which I referred
but did not read in full, and I shall not do so at
this stage either, but if I could just direct
Your Honours' attention if I may, with respect, to
what appears at page 79 at about point 8, where
His Honour said:
Speaking generally, once it appears that a
federal law has an actual and immediate
operation within a field assigned to the
Commonwealth as a subject of legislative
power, that is enough. It will be held to
fall within the power unless some further
reason appears for excluding it. That it
discloses another purpose and that the purpose
lies outside the area of federal power are
considerations which will not in such a case
suffice to invalidate the law.

His Honour then referred to United States
experience, particularly in relation to the postal
power, and on page 80 at about point 3, he said:
It is altogether another thing to apply the
same doctrine to a use of federal power for a
purpose of restricting or burdening the State
in the exercise of its constitutional powers.
The one involves no more than a distinction
between the subject of a power and the policy

which causes its exercise. The other brings

into question the independence from federal
control of the State in the discharge of its
functions.

We would read His Honour as speaking quite
generally about the application in that case.

McHUGH J: While you have that judgment before you, what do

you say His Honour meant at page 84 when he
discussed the principle by which the States become
subject to Commonwealth laws, when he said:
when a State avails itself of any part of the
established organization of the Australian
community it must take it as it finds it.

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Now does that apply to a situation where the State
seeks to employ people?

MR GRAHAM:

We would say His Honour certainly was not

directing his mind to such a situation nor of the
implication upon those circumstances. His Honour,
as I think we all know, was considering the
situation of a monopoly Commonwealth bank, when
there was nothing else to go to by way of a
facility, no other place through which or by which
the State could perform its functions or can
exercise its constitutional powers, but a perfect
analogy to - a monopoly Commonwealth bank cannot be
postulated in the present context, so we would
answer Your Honour in that way.
If I can go one step further in answering

Your Honour's point of this morning. What
His Honour Mr Justice Dixon later said in the
Bank Nationalization case lends support to the view
for which we contend as to what Sir Owen Dixon
meant by his reasons for judgment in

Melbourne Corporation. The relevant passage in the
Banking case, 76 CLR 1, the passage being at pages
337 to 338, if I can just read a couple of
sentences starting at the very bottom of page 337,
His Honour said:
Section 48 of the Act of 1945 discriminated
against States and in that way singled out the
States in order to curtail their freedom in
using the general banking system. No doubt
without discrimination laws applying to States
may operate against them in such a way that it
must be beyond Federal power to enact them.
That is perhaps shown by the discussion in
New York v United States.

So, we would say that that lends some support to
the view that His Honour should be understood in

the wider context in the earlier case. Perhaps I

should add -

MASON CJ: Why do you use the word "control"? I know

control is a word that conjures up all sorts of
mischiefs that should be eliminated or avoided, but
basically control was only an extenuation in
Sir Owen Dixon's thinking of burdening and
restricting.

MR GRAHAM:

There is certainly a good deal of similarity in

meaning to all those words, Your Honour, yes; each
is not a synonym of the other. Control does seem
to carry with it the concept of something slightly
more than burdening; perhaps it may be a matter of
no more than emphasis - - -

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MASON CJ: Yes, I only raised it because there may be a

question as to whether you have to bring it within
control rather than burdening or restricting?

MR GRAHAM:

Each of those words has been used, Your Honour,

of course, and sometimes sentences in judgments
contain two or all three of them - - -

MASON CJ: Yes.

MR GRAHAM:

- - - almost as though they were synonyms or

different ways -

MASON CJ: Which they are not.

MR GRAHAM:

Which they are not, but describing the same kind

of mischief, or perhaps even the same mischief as
it arises with indifferent degrees, but absent a
concrete example, which is perhaps difficult to say
which is the most - - -

MASON CJ:

You can understand it in the context of language

which is directed to purpose rather than effect.

MR GRAHAM:

Yes.

MASON CJ: In other words, if purpose is a relevant

criterion then one may not be much concerned with
any distinctions between restricting, burdening, or
controlling.

MR GRAHAM:

It follows from what Your Honour is putting to

me that it may make a difference if one is merely
looking to effect. But of course, once again, one
is forced to the position that purpose is to be
discerned objectively, and again it may be a matter
of words.
Within the reasons for judgment, to which we

have taken the Court and I think are to be found at
length in our written submissions, there are

passages which refer to purpose and passages which

refer to effect. It is difficult in the light of
the language that is being used to argue with real
support from the authorities for one or the other

as being the test. It may be the better view is
that either would suffice or that each is embraced
by the principle if the purpose is there or if the

effect is to be found. We would, obviously, put it
that way in the alternative.

I perhaps should add for the sake of

completeness in saying what I was saying to
Your Honour Justice McHugh, that what we extracted
from the Pay-roll Tax case, and particularly the judgment of Mr Justice Walsh and the judgment of Your Honour Justice Deane in the QEC case, would

Unions(4)

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seem to bear out our contentions in relation to the
basis upon which Sir Owen Dixon was reasoning.
If I can return to the remaining matters to
which we wish to address submissions. It is put
against us in some of the submissions that these
proceedings are premature and not timely. Our
response to that is that the relevant principle
which we seek to invoke is concerned with the
control or impairment or burdening by the
Commonwealth of the States by Commonwealth
legislative action and awards made under it. It can be said against us that we should wait

until the awards are made. On the other hand, a
jurisdiction has been invoked as against the State
which we say is not available to be invoked in the
circumstances, and accordingly relief should be

granted at this stage. The mere fact that we are
subjected to a jurisdiction of the Commission which
we say is not available could itself be said to
amount to an impairment.
We have already indicated this morning,

although in a somewhat different context, that in
the Melbourne Corporation case the impact, the
bite, of the legislation had not occurred. It was
the presence of the legislation in its capacity to
impair or curtail which was held to be sufficient to grant relief even before section 48 had become
operative.
If I can refer finally to a point that is made

against us by the Union respondents in paragraph 20

attention to the Merchant Service Guild of

of their written submissions, there they draw say that we have failed to take into account that decision in putting forward the proposition as we do that our submissions do not run counter to the Engineers' case. The citation of the Merchant

Service Guild case is 28 CLR 436 and, as is pointed
out in the respondent Unions' submissions, the
judgment was given on the same day as the
Engineers' case.
It is submitted by our opponents that the

activities that were sought to be brought under
federal jurisdiction were not trading activities but were of some different character. The short
answer to all of that is that, according to the
judgment of the majority at pages 449 to 450, two
of the respondents, namely the Sydney Harbour Trust
and the Melbourne Harbour Trust, were described by
the members of the majority as "carrying on a
'concern'" and their undertakings were said to be
"essentially an industrial concern".

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It was said of the pilot boats operated in
Sydney Harbour and I think in other ports in New
South Wales that the pilot boats were operated by
the treasurer as an adjunct to "the business of
piloting ships", as was the steam tug in that case.
It was said that the dockyard conducted by the
Minister of Public Works was a trading concern, and
it was said that the trawlers operated by the chief
secretary were engaged in the trawling industry.
Now, without taking up time, in the face of observations of that kind it would have been
difficult to have suggested that those activities
were in some sense activities covered by federal industrial jurisdiction and federal awards would have impinged upon the capacity of a State to
function, then that mission would have been
difficult indeed to sustain, and we do not seek to
make that submission as this part of the case.
Although, if one takes the case a further step, as
I think was suggested by Your Honour Justice Dawson
in argument, then the answer might be different.

DAWSON J: Well, no longer do you have that distinction

really.

MR GRAHAM: That is so, Your Honour.

DAWSON J: But, the distinction was there as a protection to

the States. Now, that having gone, you really have
to suggest something else.

MR GRAHAM:

Yes.

DAWSON J: And, as I understand it, what you are saying now,

instead of looking at that dichotomy you have got
to look at the whole picture.

MR GRAHAM:

Yes, indeed, Your Honour, and that is the point

we make. I think I would be repeating myself if I
said any more. All I desire to say in conclusion

is that in the book of appendices there is to be
found under tab 3 a listing of the amendments which
we seek to have made to the proceedings, both the
orders nisi and the notices of motion, in order to
bring in what is popularly referred to as the
interstateness ground, and to correct a
typographical error, and under tab 4 we set out the
minutes of the orders which we seek in each of
these matters. If the Court pleases, those are our
submissions.

McHUGH J: Before you sit down, if your general submission

is accepted, what is your explanation for the
specific exclusion of State banking, State
insurance and, in section 51, taxation of State

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property in section 114 from the range of
Commonwealth powers?

MR GRAHAM:

Your Honour, we had not given thought to that

before. My immediate answer is that it may well
have been inserted as a matter of abundant caution.
It may well have been that the Constitution was
drafted without an eye to matters being left to
implication.

McHUGH J:

But the very fact that in both of those powers

the Commonwealth can regulate State banking and
State insurance extending beyond the limits of the

State, does that not say something about the scope
of paragraph (xxxv)?

MR GRAHAM:

By which Your Honour would be suggesting, for

example, regulating State banking beyond the limits
of a State they might set the terms and conditions of the staff of the State bank employed elsewhere?

McHUGH J: It may be, but the fact that a section is so

framed that even State banking and State insurance
extending beyond the limits of the State would be
the subject of Commonwealth power, notwithstanding
the specific exception for State banking and State
insurance, suggests that the power in Sl(xxxv) is
unchecked.

MR GRAHAM:

The answer, Your Honour, may be that in

legislating for State banking extending beyond the
limits of the State, the Commonwealth could not
then make a passe law which singled out a State
bank for special burdens, although it would be open
to the Commonwealth to regulate State banking
beyond the home State along with all other banking
activities.

McHUGH J: But surely the very nature of the subject-matter,

State banking, by definition, would require a law

which singled it out - well, not necessarily.

MR GRAHAM:

Not necessarily, Your Honour, with respect.

could be and, indeed - - -

McHUGH J: It could be a general law.

MR GRAHAM:

I think the Trade Practices Act is cast in a

fashion which does otherwise. But if the form of
the Commonwealth law was such either to
discriminate or to single out for control or to
impair the actual functioning of State banking
outside the State, then the implication might
operate to limit the exception to the banking
power.

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7/6/94

As to taxation of State property, Your Honour,
I think the only answer that I can give is the one that I have already given, that the power to tax
was given in unlimited terms, as has been held, but
then an exception was grafted on and my difficulty
there is not so great, having regard to what I have
already said in relation to the Pay-roll Tax case
and the Fringe Benefits Tax case, absent a tax that
is specifically imposed upon a State and nobody
else, you do not have any infringement of the
constitutional implication.

BRENNAN J:

Mr Solicitor, could I just ask you one further

question? It takes me back to something that I

have asked you before in relation to M24. The
relief which you seek there, I understand you seek
it of course in terms of what you have in tab 4.
But if that should be thought to be too far or too
wide-ranging, having regard to the criteria that
you have been adumbrating, have you any suggestions
as to how a dissection might be made?

MR GRAHAM:

Would Your Honour permit me to deal with that

otherwise that on my feet. I am not very good at
drafting the circumstances in which I find myself.
I certainly will give that consideration and

perhaps if it could be dealt with in reply. May it
please the Court.

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

Tasmania?

MR BALE:

May it please the court, if I might hand up a very

brief outline of the oral submissions, which I
hope, Your Honours, will also be brief, in view of
the detail that has been contained in the written
submissions which are already before you.

MASON CJ: Yes, thank you.

MR BALE:

May it please the Court, I think the starting off

point for our submission should be that the
Attorney-General of Tasmania adopts generally and
supports the submissions which have been put by the
learned Solicitor-General for Victoria.
The additional submissions that we would wish

to put are in the first place limited t~ the scope
of the operation of that part of the implied
limitation on Commonwealth power which relates to the preservation of the capacity of the States to
continue to function as separate entities.
Secondly, it is put in common, I think, with

the submissions which will be put by each of the
interveners, as an alternative to Victoria's
submissions and, we would contend of the

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alternative which we will propound that it offers
the only alternative which is consistent with the preservation of the constitutional balance which,
in our contention, is the rationale for the very
existence of the implied limitations on
Commonwealth legislative power.

McHUGH J: Is the constitutional balance the same as the

federal balance?

MR BALE: Yes, Your Honour. The essential difference - - -

BRENNAN J:

You are going back behind Engineers?

MR BALE:

No, Your Honour.

I am going to indicate to

Your Honour that the essential difference between
our submission and that advanced on behalf of
Victoria is that our alternative would apply the limitation only to Commonwealth legislation which
so substantially impaired the exercise of a State
governmental function that it effectively prevented
a State from undertaking that function in the

manner in which it chose. In other words, we are
saying that there, in principle at least, is no
limit to the reach of the Industrial Commission
under Sl(xxxv). In theory at least, all its awards
can apply to States, but the safety valve, the protection valve, so far as the constitutional position of the States is concerned is at the level
of substantial impairment, and that the reach of
any award which is made by the federal Commission
must stop when that award operates to prevent a
State from discharging one of its governmental
functions in the manner in which it chooses.

McHUGH J:

That sounds very much as though you are on the

side of the respondents.

MR BALE:

I think not, Your Honour, or I hope not as the

submission develops, because it is a matter of what
constitutes substantial interference, and that is

To get to that, Your Honours, Victoria has argued, the centre-piece, if you like, of our submission.
correctly we would submit, that the constitutional
limitation relates not to capacity to function, but
to the capacity of a government to perform its
functions, and paragraphs 10 and following of the
Victorian major submission - written submission -
deals with those issues and I do not want to go
back to that.
Our argument, however, develops on the same

premise which, in our contention, is clearly and we
would respectfully say correctly enunciated by
Your Honour the Chief Justice and Justices Dawson
and McHugh in Leeth v The Commono/ealth, 174 CLR,
and the passage to which I refer, but which I am

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not going to take Your Honours to, appears at
page 467 and is set out in full in paragraph 9 of
our written argument. I would seek to address only
a few sentences to what has been said there in that
regard.
It is our submission that that statement of

principle in Leeth is consonant with other
contemporary statements of the principle, and they
are also referred to in paragraph 9 on pages 5 to 6
of our written submission to which, for the sake of completeness, I might be permitted to add a passage
from the judgment of Your Honour Justice Toohey in

SPSF (No 1). The report that I have is 113 ALR
385, at 410 point 6. But, of course, that decision
is now reported in 178 CLR as well.
It is our contention that that passage from

Leeth correctly identifies curtailment of the
capacity to exercise a function as the criterion
for the application of the implied limitation. If
there is any meaningful practical difference
between capacity to function and capacity to
exercise a function, it can perhaps be seen in this
example: as a practitioner on the roll of this
Court I have the capacity to represent parties in matters heard by the Court. However, my capacity to exercise that function depends entirely upon my
obtaining a brief without the capacity to exercise
the function is rendered, effectively, worthless.
For the reasons advanced in our written

submission we would contend that if the capacity to
exercise a function is impaired so, necessarily, is
the capacity to function itself in the sense, at
least, that from the practical viewpoint the
capacity to function is worthless where there is no
capacity to exercise it. Of course, the converse
is equally true. That is to say, if the capacity
to function is destroyed then clearly there can be
no capacity to exercise the function.

But whatever the case as to that, we would

contend that the modern and, we respectfully say,
the correct formulation of the test is expressed in
Leeth and the other passages referred to in the
judgments referred to in paragraph 9 of our written
argument and that interpretation disposes of the
need to make distinctions between the capacity to
function and the capacity to exercise a function.
What that does is bring us to the, I suppose,

trite proposition that the class of functions of a
State which are subject to the implied limitations
has been the subject of much debate and, indeed,
has proved elusive ever since Melbourne
Corporation. Those functions, or those classes of

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function, have been variously referred to as
constitutional, as governmental, and as
administrative. Perhaps some other categories, but
those are the principal ones, I think.
We respectfully accept their description in

Leeth as constitutional, but of course that leaves
the task of giving content to the expression
"constitutional". Before going to deal with that,
can I just attempt to dispose of administrative

functions as a relevant class. The exclusion of
the so-called administrative functions of a State
from the legislative jurisdiction of the
Commonwealth appears to have been borne, at least
in its Australian context, in a decision of
Justice Starke as acting President of the
Arbitration Court in Commonwealth Public Service
Commission v Government Service Women's Federation,
(1920) 14 CAR 794. Having been thus borne, it was
adopted by Chief Justice Dixon in Professional
Engineers and raised to apparent respectability
through a number of subsequent cases.
Our submission is that it should now be

pronounced well and truly dead, at least in so far
as it suggests that the implied limitation applies
only to governmental functions which are
administrative in any strict or narrow sense,
because the life blood for such an interpretation
has, in our submission, long since drained away.
The description "administrative services" was
accepted in its original formulation as a
description of employment which was not industrial
and could not therefore be the subject of an
exercise of Commonwealth industrial power.
Since the unequivocal rejection by this Court

in Coldham of the proposition that the phrase
"industrial dispute" in the context of Sl(xxxv) of
the Constitution was confined to productive
industry or business for profit and since the

Court's acceptance in Coldham that the phrase applies to disputes arising out of any form of
employment, the basis upon which "administrative
services" came to be seen as going beyond the reach
of section Sl(xxxv) has, in our submission, gone.

The question of the place of administrative services of a State in the context of the
application of the implied limitations was of
course expressly left open in Coldham, and I refer
to the passage at page 313 point 2 of that
decision, although even that passage seems to be
looking at such services merely as a possible
subject of the implied limitations. It would be
our submission that the subsequent decisions,
certainly as we understand them, have accepted that

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the administrative services of a State fall outside

the reach of constitutional power. Can I restate
that: that subsequent cases have not accepted that
as a proposition. Rather, what they have done is
simply acknowledge that since Coldham, they have
been regarded as falling outside the constitutional
power.
If I can simply, again without taking

Your Honours to them, indicate a number of passages
in subsequent cases from which that proposition
appears. Firstly, the passage from the judgment of
Chief Justice Gibbs in Lee, 160 CLR 444; a passage
in the joint judgment of Your Honour the present
Chief Justice and Justices Brennan and Deane in the
same case at 450 point 6; Your Honour
Justice Dawson in the same case at 472 point 7; and
in SPS (No lJ, referring again to the Australian
Law Report report of that, in the joint judgment of
Your Honour the Chief Justice and Justices Deane
and Gaudron at 391 point 5, Your Honour
Justice Brennan at 394 point 5, Your Honour
Justice Dawson at 397 point 5 and Your Honour
Justice Toohey at 412 point 3.
In our submission, if the administrative services of the State are excluded from the
operation of section 51(xxxv), it is either because
they, in the constitutional context, equate to
constitutional functions or because they are a
subset of the constitutional functions of a State.
Quite clearly, in our submission, constitutional
functions, in this context, involves much more than
is encompassed in any narrow interpretation of the
phrase "administrative functions". As Your Honour
Justice Dawson pointed out in SPSF (No 1) at 396
point 8, they include legislative and judicial
functions, as well as executive functions, and even
some executive functions are not administrative in
any narrow sense.

In short therefore, if the expression
"administrative services of a State" is to have any
relevance today in the present context, in our
submission it should be read in the sense secondly
referred to in paragraphs 13 and 14 of our written
reasons; those paragraphs appear on page 8 of
those reasons and the short meaning given there to
"administrative services" is the function of a
State in exercising its constitutional powers.
Still seeking the relevant meaning of

"constitutional", we would submit that the
constitutional functions of a State clearly cannot
be taken in the current context to mean the
functions given to a State by its own Constitution.
In the first place, of course, the constitutions of

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the several States involve significant differences,
not only in relation to the work that they do, but
also in relation to the manner in which they can be
amended. Because of the differences in the work
that they do, were constitutional functions to be
equated to the constitutional functions derived by
each State from its own Constitution, those
functions would necessarily then differ from State
to State and the consequence would be that the
application of the implied limitations to those
functions would of necessity be discriminatory as
between States.
The second point to make in this regard is

that whilst all States can amend their
constitutions, some can do so very much more
readily than others. In Tasmania, for example, the
only amendment which requires more than a simple
majority of both houses is an amendment which deals
with the maximum life of the lower house, which
must be carried by a two-thirds majority of the
membership of that house, otherwise State
constitutions are entrenched to varying degrees.
But, if the State Constitutions were to be

regarded as providing the source of their
constitutional power in the present context, the
functions given to each State by its own
Constitution could, at least, theoretically, be
expanded by each State virtually at will,
although, at the same time, variably from State to
State. Those factors combined with the earlier
factory, in my submission, make the content of a State's own Constitution a wholly, inappropriate
and unacceptable basis for the application of the
implied limitations.
It is equally appropriate, in our contention,

to confine constitutional to certain types of
governmental functions to the exclusion of others,
and that is so, we would submit, whether the

distinction be between core functions, on the one
hand, and non-essential functions on the other, or
any other basis. In that context, we would
respectfully adopt what was said in the joint
judgment of Your Honour the Chief Justice and
Justices Brennan and Deane in Lee, at page 452 point 6, which was restated in similar but not identical terms by Your Honour Justice Brennan in
the second Fringe Benefits Tax case, at page 360.
For the sake of completeness, there is quite a
useful discussion of the same principle in the
judgment of Justice Windeyer in Professional
Engineers, starting at page 274 point 6 of that

report, and occupying something over a page. So
what does that leave us with?

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McHUGH J: Would you equate governmental employees then in

this context with what are more popularly known as
public servants?

MR BALE:

It would extend beyond that, Your Honour,

certainly if I can again take the example of
Tasmania. Whilst most public servants in Tasmania
are appointed pursuant to the provisions of the
Tasmanian State Service Act 1984 - and it certainly
governs the appointment of heads of agency, senior
members of the executive service, and a wide range
of state service - there is, nevertheless, a power
either by use of the prerogative or to be found in
a variety of other statutes which gives a power to
the Crown to appoint servants of the Crown which
are State servants and, in that sense, public
servants although they are not subject to the
provisions of the principal Act which controls the
public service.
The best I can say, Your Honour, is the public

service in Tasmania would certainly extend to
persons employed otherwise than under the Act which
is generally regarded as establishing a State

service. I cannot speak for the position in other
States, but certainly from what I heard fall from
the Solicitor-General from Victoria this morning it
would seem, as if in Victoria as well, there are a
number of pieces of legislation which might bear on
the appointment of employees of the Crown. When I
am looking at the constitutional functions of the
State I am intending to refer to the activity of
the Crown in right of the State and not just - - -

McHUGH J:

It seems a misuse of term just to take one

illustration from Victoria to see the activities of
the Harness Racing Board as part of the
constitutional functions of the Victorian
Government.

MR BALE:

If that is an activity of the Crown, Your Honour.

The Crown gets itself involved in all sorts of

curious things, if I may say. I think in Tasmania,
we are probably at the moment involved in fish
farming, as a rescue operation for a company that
was not very successful at it. That probably is an

equally curious activity. It may be that the
difference between those sorts of activities and
the sorts of activities that I am about to refer to
as falling within constitutional functions is that
they are non-governmental in the proper sense of
the meaning "governmental", in that they do not
involve any activity by the government in
governing. They essentially involve activity by
the government in participating in a commercial
field, as a commercial player, on the same basis as
any other player in that commercial field and that

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would be the basis upon which I would submit they
could be properly distinguished.
That brings me, Your Honour, to the point of

indicating that in our contention the only viable

interpretation left for constitutional functions
are those governmental functions, that is, all those functions left to a State by the federal Constitution undertaken as part of the process of
governing irrespective, if I may say, of the means
adopted to undertake them. It may be, for example,
that the government chose to contract the
performance of some of its functions out. It would
be no less a government function if the government
chose to maintain control.
If, on the other hand, instead of contracting

them out the government divests itself of those
functions - and it may be that the example of
Queensland prisons, to which Your Honour
Justice McHugh adverted this morning - may be an
example of the government divesting itself of those
functions, then of course they are no longer a
governmental function because the government has
chosen, in that instance, not to perform.

BRENNAN J: What is the difference between contracting out

and divesting?

MR BALE: In contracting out, Your Honour, I am assuming

that the government retains control of the
performance of the function whereas by divesting
itself of the function I am assuming that it
relinquishes control. Our test, in relation to
what is a governmental function in the context that
I have given would be that it is a function that
involves control by the government of what it does.
If it divests itself of that control then it is no
longer a function which would attract the
protection that would otherwise be offered by the
implied limitations.

BRENNAN J:

So independent contractors would be outside the

control ergo it would be divesting?

MR BALE: Yes, Your Honour.

McHUGH J: What if the State contracts out court reporting

to some private service, is that a governmental
function?

MR BALE:

In the sense that the court relinquishes control.

It is one thing, Your Honour, to contract to employ, of course, but if you relinquish control entirely over the manner in which it is done I
would say the government has divested itself of
that activity.

Unions(4)

McHUGH J: But if the government merely has the transcript -

enters into some contractual arrangement with some
private body for it to supply court reporters, that
still is a government function?

MR BALE:

As long as the government controls the activity,

yes, Your Honour. If I can put that in another
way, not that particular answer, but the general
proposition: the implied limitations, we would
say, thus apply to Commonwealth legislation bearing
upon the exercise by a State of its governmental
functions unless the operation of the implied
limitation is clearly excluded by the terms in
which the legislative power is granted. There is
no such exclusion, we would submit, in relation to
5l(xxxv) as this Court held in Queensland
Electricity Commission. Referring to QEC, may I
draw attention, again without taking Your Honours
to it, to a passage at page 260 point 4 of that
report, in the judgment of Your Honour
Justice Dawson where Your Honour there appears to
equate constitutional and governmental functions in
this particular context.

To summarize then, we contend that a

constitutional function in the sense in which that
expression is used in Leeth is to be taken to be
any function undertaken by a State as part of the
process of governing.
That brings us to the nub of our submission,

and it is that the further factor which is
necessary to call the constitutional limitation
into play is that a consequence of the
Commonwealth's legislative action must be an
impairment of the States' constitutional powers.
What is more, we would say, modern authority
establishes that such impairment must be
substantial.
The first expression of that as a proposition,

at least so far as my research takes me, appears in
the judgment of Justice Starke in Melbourne
Corporation at page 74; Justice Starke again in the
Banking case at page 305. Chief Justice Latham in
Melbourne Corporation did not refer to it in quite
the same terms, but instead of "substantial" he
used the word "unduly" at page 60, and then in
Wenn, 77 CLR, at page 113 he adopted the word
"substantial". Your Honour the Chief Justice in
the Tasmanian Dam case at page 139, used the word
"substantial"; Your Honour Justice Dawson in
Queensland Electricity Commission, likewise at
page 260; I think Your Honour Justice Brennan in
the second Fringe Benefits Tax case, perhaps used
the word "unduly" rather than "substantial", but in
our submission, essentially the same; they are

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essentially synonymous in this context, we would
contend; and Your Honour Justice Toohey in SPSF,
113 CLR, at page 412 point 3. In our submission,
the identification of what is substantial is the
key to the proper and effective application of the
constitutional limitation.
Returning, if I may, to the example I gave of

the brief in the High Court that I would like to
get, let us assume that I obtained that brief in a

complex and contentious matter, I then have the
capacity to exercise the function of representing
the client. What would constitute substantial
interference by the Commonwealth with the exercise
of that function?
Certainly, in our contention, the function

would be substantially and significantly interfered
with by any requirement that dictated, for example,
what assistance might be engaged to help me in the
preparation and presentation of the case. Having
determined the amount of assistance that I might have, who those people might be. Thirdly, as to
how, when, and on what terms they were to work.
Fourthly, the circumstances in which I could
terminate their engagement.
That impact, in my submission, would be just

as significant as a requirement that dictated what
instructions I was entitled to receive and how I
should put the argument to the Court. It is our
contention that for the Commonwealth, by
legislation, to be able to effectively control or
empower others to control any of those things,
would enable it to control the proper exercise by
me of my function as counsel.
But, on the other hand, there would prima

facie be no substantial interference with my
exercise of my functions by another series of
requirements that the Commonwealth might impose and

that my assistants were to wear, what annual leave in that series I would put such things as the dress
they were to be entitled to, what continuing
education or training they might receive, what
occupational health or safety measures were to be
in place where they worked, and other things such
as meal breaks and the like.
When one looks at those two separate

categories, categories of activity which we say on
the one hand would significantly interfere with our
function, and those on the other hand which in all
probability would not, there emerges, we would
contend, a clear difference in principle between
the two types. That difference is this, that the
first type directly impacts upon the ability - upon

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my ability in the example that I have given - to
perform in the way that I may choose the function
which I have been given.
The second type, whilst I might not like them,

only marginally and incidentally interfere with my
performance of my function. That second type
essentially relates not to my performance of my
function but to the performance of their function
by my assistants and certainly does not
substantially prevent me from doing what I have to
do. Your Honour Justice Brennan, in the second Fringe Benefits Tax case at page 364, suggested that, at least so far as a tax on employment of a
public service was concerned, a test of practical
impossibility of continuing the employment may be
an appropriate criterion of liability.
In our respectful submission, that would be

too strict a general test, but it points to the
sort of approach which we say is appropriate.
Working from the above example, we would suggest
that, at least in relation to interference based
upon the exercise of the section Sl(xxxv) power,
any curtailment which prevented a State from
undertaking a particular governmental function in
the manner in which it chose would amount to a
substantial impairment of the State's
constitutional function so as to infringe the
implied limitations.
Thus, if the Commonwealth were to purport to

exercise control over the essential terms upon
which a State employs its servants, be they in the
public service or not - and in that I include terms
of engagement - the essential terms upon which
service is to be registered and the circumstances
in which termination of employment can be brought
about, it effectively assumes control over the
performance by a State of its governmental
functions or, at the very least, so substantially

impairs the exercise by the State of its
governmental functions that it brings into play the
limitation on the Commonwealth legislative power
which was recognized to exist in Melbourne
Corporation.
In this particular context, I particularly

refer Your Honours to the judgment of
Justice Starke in Melbourne Corporation at page 74
and to a passage in the judgment of Your Honour

Justice Dawson in SPSF at page 397. If there is a
problem with this test, we would see it as
involving that it forces one to consider each award
separately to identify whether it exceeds the
limitations or involves the limitations or whether
it does not.

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Perhaps in closing I might very quickly just indicate to Your Honours in relation to two or
three of the logs which are before you how we would
see this test as applying to those logs, because I
think it gives a helpful indication of how far we
say the Commonwealth Commission would under this
test be authorized to go.

BRENNAN J:

Mr Bale, let us assume that the State government

has some vessels which it uses for fisheries

inspections. I take it that on your argument it
might be open to a Commonwealth award to regulate
the wages of the deck-hands?

MR BALE:

Yes.

BRENNAN J: Would it be open to a Commonwealth award to

regulate the crewing of the vessel?

MR BALE:

The crewing, apart from the deck-hands.

It may be

open to the Commonwealth to govern the deck-hands.

That would really depend, Your Honour. On the face
of it, it is still a governmental function but it
may be that simply controlling the deck-hands does
not put in place an award - - -

BRENNAN J:

No, I was suggesting only the wages of the

deck-hands, as distinct from whether you should
have a master and so many other officers and so
many deck-hands.

MR BALE:

Your Honour, I think I was too quick.

I would say

that any attempt to control wages of State
employees would be a significant interference with
the ability of the State to function in whatever field of activity that control was exercised, as

long as it is governmental activity. So I would,
of necessity, pick up deck-hands in the same way as
I would the master and other superior crew.
Your Honours, I just wanted to take the Court

to just two or three of the logs of claim which
appear in tab 1 of the document that was handed up
this morning, because they provide a useful summary
of the principal provisions which are sought by the
applicant Unions to have included in an award.
If one looks, for a start, at MB, which is the

first of them, you will see that amongst the things
that are sought there in the award are provisions
relating to mandatory permanent employment,
classifications, salaries and allowances and
especially, on the second page, hours of
attendance, the teaching load - ie the number of
hours that are to be worked per week - class size -
is it to be a one for one or one.for five or one
for 15 or one for 20? - staffing levels and school

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management in which it seeks to dictate that school
management shall not be in the sole control of the
schools.
It would be our submission that to make an

award governing any of those matters - and
certainly to make an award which governed them

altogether - would be to equate to effective
control of the manner of delivery by a State of

State education. Even to attempt to deal with them
singly, in our submission, would involve a
significant impairment of the State's ability to
function in these areas.
There are, you will see, a number of other

provisions which, on the examples we have given, we
would find to be unexceptional, and they would

include such things as working conditions at the
school, safety and health conditions, provisions as
to leave and so on.
In MlO you will see reference at pages 16 and

18 and 19 of the appeal book, that the provisions
relating to appointment and promotion,
determination, to salaries, to staffing levels as
approved by the Union and to hours of duty, we
would submit that control of any of those things

would significantly impair State function. And
just to take another one perhaps, both Mll of 1993
and M156 involve or seek awards fixing conditions
which would involve firstly a requirement for
permanent full time employment - that is, no
ability to appoint people to work part time or
casually - to fix wages, hours of duty, conditions
of termination and so on. We would say again that
those are the sorts of provisions which, if they
were to be found in a federal award, would
significantly impair the right of a State to
function and therefore fall foul of the criterion
which our alternative submission proposes as

appropriate for the application of the implied

limitation. May it please the Court.

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

Australia.

MR DOYLE:	If the Court pleases, Your Honours should have from us a written submission, provided some time
ago, and then I think Your Honours would also have
an outline in the traditional form of three or four pages from us - - -

MASON CJ: Yes, we have that.

MR DOYLE:

- - - with some attached sheets, which I propose

to use a little later in the submissions to

illustrate the application of our argument. They

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relate to the South Australian setting but are used
simply to illustrate how our argument applies to
government and, hopefully, may be of some
assistance to the Court.
If the Court pleases, our submission is an

alternative submission to that put by Victoria and,
in brief, the submission is that certain employees
of the State and certain public officers of the
State cannot be the subject of legislation or regulation in their employment by an award made, in

either case, under section Sl(xxxv). The
submission differs from that advanced by Victoria
in that it relates to a limited category of
employee or a limited category of persons, which I
will have to identify in due course. On the other
hand, the submission appears to be wider than that
put by Victoria in the sense that it denies that
Commonwealth power under section Sl(xxxv) can be
exercised at all in relation to the relevant
people. So it has those two differences. And the
submission we put is that contained in our written
submission.
Could I just say, Your Honours, on reading the

Commonwealth submissions I noted, and it was
probably due to poor expression, that paragraph 21
of our written submission had been read by the
Commonwealth as advancing a wider submission, and
then later paragraphs as intended to put a
fall-back position. That is not the position for
better or worse in terms of the skill with which we
prepared the written submission. The intention was
that throughout it be this limited submission; a
limited range of people but autonomy, or

independence. The only qualification, in our
submission, is the one in relation to the
regulation of wages, which we accept may be in a
different position, that is paragraph 25 and I will
come to that.

In the oral submission we propose to deal with four aspects of the written submission: the basis
upon which the submission rests and is developed -
that is, what underpins it; the limit to the
exercise of Commonwealth power under
section Sl(xxxv); why it requires autonomy and the
area of autonomy, and then some illustrations of
the application of that limit; and then some brief
submissions on the application of our submission to
this case.
The fact that in most of the cases the

Melbourne Corporation principle has been stated in
relatively general terms reflects, in our
submission, the difficulty of stating it in an

abstract way. As Your Honour Justice Dawson

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observed in Queensland Electricity Commission at
page 260, there has been a preference to speak in
terms of the aspects of legislation which may
evidence breach of the doctrine, rather than to
generalize in terms of the doctrine itself. That
point reflects the point we make in paragraphs 7, 8
and 9 of our written submission.
In paragraph 7 we make the point that the

principle is not really a precise one, but directs
attention to a fundamental aspect of our
constitutional system. In paragraph 8 we make the
point that the principle should not be allowed to
become something formal which, in the end, never
actually operates apart from cases of
discrimination. Then in paragraph 9 we make the
point that nevertheless, it is unnecessary and
probably unwise to state the principle in a
comprehensive form.
But having said all that, Your Honours, could

I, as a preliminary point - and I will come back to
this - make this general submission about the
Melbourne Corporation principle. In our submission it needs to be seen and understood as one aspect of
a broader principal of federalism or one aspect, or
one of several implications, which flow from
federalism or, perhaps more precisely, from the
framework of our Constitution.
In our respectful submission what the

Constitution is premised on is separate and
distinct levels of government between which powers
are shared. Their existence as separate and
distinct levels of government leads to certain
limits on the exercise of powers in relation to
each other. In our submission, these limits
operate both as between State and State, then as
between the State and a State and the Commonwealth,
and then as between the Commonwealth and the State.
Whether one calls it a single principle with·

different aspects, or a number of related principles, in our submission, we have there a group of related principles which flow from the
structure of the Constitution.
section 106, in our submission, can be seen as

one aspect of that, the preservation of State

Constitutions or the continuation of them. So can
the requirement for a territorial nexus in the case
of State legislation. That would be an aspect
bearing on the relationship between State and
State. Likewise, the limits on State legislative power in relation to the Commonwealth, in other
words, the Cigamatic principle, in our submission,
also has to be fitted in there somewhere, whatever
may be the true limits of that proposition. Again,

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another instance might be the limit on the ability
of the Commonwealth Parliament to impose federal
duties on a State constituted non-judicial
tribunal, a matter to which the Court has adverted.

So, our respectful submission is that whatever may be the full ambit of the relevant principle, it
has to be fitted into a context and it has to be
seen as an implication from federalism. Here,
Your Honours, it is necessary to be more specific
in relation to the application of the principle to
the exercise of power under section Sl(xxxv).
Could I also indicate that while, in our
submission, the principle relates to the State, the
particular focus here has to be on the executive
because that is the main area of impact of the logs
of claim.
Furthermore, our submission, if the Court

pleases, proceeds on the premise that there has
been an unimpeachable finding of an industrial
dispute for the purposes of argument, and that the
only issue remaining is a limit which would prevent
the Commonwealth from doing what it would otherwise

be capable of doing. To some extent, in our
respectful submission, the submissions for the
respondents and the Commonwealth miss that point,
and there is a tendency, we would submit, in those
submissions to focus on the scope and amplitude of
section Sl(xxxv) the width of the Commonwealth
power in the respect but, in our submission, the
issue here is, assuming the full amplitude of
section Sl(xxxv), is there some limit as to what
the Commonwealth can do in relation to the States
which would not apply were the States not
involved.As an example of a paragraph which, we
would submit, somewhat misses the point in the
Commonwealth submissions.
sense we have suggested, we would invite the of the

Your Honours, in arriving, we would submit, at

a proper understanding of the Melbourne Corporation
principle, the first thing to be recognized and to
be reconciled is the tension between the principle
that Commonwealth legislative powers can be
exercised to bind the States but, on the other
hand, there is a limit to the exercise of such
power in relation to the States which does not
arise when the power is exercised in relation to
other persons, and the origin of that limit is the
premise, which is identified in paragraph 1 of the
written submission. The difficulty, we submit, is
to reconcile the tension when one gets down to
specifics.

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Could I ask Your Honours just to look briefly
Melbourne page 82. I go to that, Your Honours on the basis
at the judgment of Mr Justice Dixon in
that while there has been considerable development
of the Melbourne Corporation principle since that
case, it is worthwhile recalling the basics of the
principle identified by His Honour at page 82. At
the top of the page what His Honour says is this:
The foundation of the Constitution is the
conception of a central government and a
number of State governments separately
organized.

That is just the first point.
The Constitution predicates their continued
existence as independent entities.

In that second point we would stress the reference
to "independent entities".
Among them it distributes powers of governing
the country. The framers of the Constitution
do not appear to have considered that power
itself forms part of the conception of a
government.

That is the third point we would stress, that while
they are to exist as independent entities, on the
other hand power itself was not seen as forming

part of the conception of government. He goes on
to say:
They appear rather to have conceived the
States as bodies politic whose existence and
nature are independent of the powers allocated
to them.

In the first part of our submission, I want to in a

sense work away at that aspect, namely the
continued existence as independent entities and
what is implicit in continued existence as
independent entities and then the antithesis or
tension, if you like, between the point he makes
that power itself was not seen as part of the
conception of a government, that the existence of
the States as bodies politic was independent of the
powers allocated to them. In our submission, in
that brief passage he highlights what are really
the key problems in this area. What do we really
mean by "existence as independent entities" and
what flows from that tension or antithesis between
the States as bodies politic seen as something
independent of the powers allocated to them?

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The other point he makes just down the page,
Your Honours, which is relevant but not so
important is that the Constitution distributes
legislative powers between States and Commonwealth,
allocates them between one and the other and uses
the concept of exclusive powers and concurrent
powers, but while the Constitution to some extent
grapples with the interrelationship between
powers - and one can refer in particular to
section 109 - it does not grapple in any detail
with the implication flowing from the existence of,
on the one hand, the central government and then,
on the other hand, the separately organized
regional governments. It might be said the only
time the Constitution grapples with that in any
sense is section 106.
So, Your Honours, in our submission, what

His Honour has identified there is that the distinction between the States as bodies politic,
whose existence is independent of the powers
allocated to them, naturally leads to this
antithesis that we have to face up to, the fact
that on the one hand an interference with the
exercise, and I would notionally underline
"exercise", of governmental functions, or a
diminution of the powers of the executive
government or an interference with the exercise of
legislative powers, that can be expected under our
Constitution, because that is interference with
powers and that is not what the principle is all
about.
On the other hand, something which intrudes on

the capacity of the State to function as an
independent government, or perhaps I should say, to
exist as an independent government or as an
independent entity, or something which is an
impairment of the structural integrity of the State
components of the Federation, or something which
impairs the capacity to govern, or something which

powers are exercised, in our submission, that is interferes with processes by which governmental the sort of thing which the Constitution did not
envisage.
Now, I do not suggest by just stating that I

have, as it were, covered the ground and solved the
problem, but, in our submission, that is a way in
which the antithesis or problem can be expressed
and, as Your Honours will have realized, in the
second part of it there, I have used expressions
drawn both from Mr Justice Dixon's judgment in
Melbourne Corporation; from what Your Honour
the Chief Justice said in Tasmanian Dams at
pages 139 to 140; what Justice Brennan said in the
same case at page 214 to 215, and I have also used

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some language very similar to that which
Your Honour Justice Deane used in
Queensland Electricity Commission at page 247.
And, in our respectful submission, that is what we

are grappling with: how does one, in practical
terms when you get down to it, distinguish
meaningfully between interferences with the
exercise of powers and then, on the other hand,
going back to Mr Justice Dixon's language,
something which is inconsistent with the continued
existence of the State as an independent entity.
And, in our submission, the problem is, and always
will be, to draw the line between those two things.
Could I make this further preliminary point,

Your Honours, that - - -

DAWSON J:

What does that mean, "as an independent entity"?

I mean, a State can be an independent entity if it
exists really only in name.

MR DOYLE:

Your Honour, what it means, in our submission,

and like a number of the things His Honour said at
times, it has a Delphic quality to it which, of
course, could be said enables counsel to work what
they like into it, but in our submission, what it
means is -

DAWSON J: Not only counsel.

MR DOYLE:

Far be it for me to say that, Your Honour. What

it means is the existence of the States is not
dependent upon the exercise of Commonwealth power,
nor is their continued existence in any sense
contingent upon the exercise of Commonwealth power
or how it is exercised; and moreover, in our
submission, existence as an independent entity
means that the manner in which the State organizes
itself as a State must be for it to decide. One
could not say the State exists as an independent
entity if the manner in which it organizes itself,

the manner in which it structures itself, is in any
sense subject to Commonwealth control. In our
submission -

DAWSON J:

How do you fit that into this case? For

instance, you have a State who wishes to shed
itself of a number of employees because its budget
will not extend to them, some thousands, as we are
told, and a Commonwealth award says it cannot. Is
the State then in that circumstance deciding how it
goes about things in its own way?

MR DOYLE:

Yes, Your Honour.

In our respectful submission,

what we have to focus on is what the State is

rather than what it does. One can say the State,
as we understand it, and our understanding of a

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State will be shaped by history, is a legislature,
an executive and a judiciary, and when we focus on
the executive and you say, "What is the
executive?", the executive in our system comprises

ministers answerable to Parliament. So far I
probably have not gone outside the realm of
section 106. Those things are continued by the
Commonwealth Constitution. But in our respectful
submission - and this is where Melbourne
Corporation comes into play and is in a sense in
the same territory as section 106 - for those parts
of the State to have the capacity to function, to
continue to operate as a State, then they require
certain assistance, and so the courts require
people to enable them to function; Parliament
requires people to enable it to function, and the
executive requires people.
But we have to remember that antithesis

between powers and the existence of the State and,
in our respectful submission, if one said, "Who are
the people focusing on the executive who are
protected by this principle which we propound?",

there are two ways of corning at it. First of all,
one would say those people who are employed by the
State to enable ministers to discharge their functions, and to take a single example to
illustrate what I mean, the Minister of Education

has certain people to assist him. The teaching
staff are simply the State performing a particular
function and, on this submission of ours, can be
regulated by the Commonwealth. But those people
whom the State employs to enable the minister to
perform his functions of being a minister in
Parliament, formulating policies, reporting to
Parliament on the expenditure of public revenue,
they are part of the State, and in one State there

may be quite a few of them; in another State there
may be a very small number of them. That is a
matter for the particular State how it organizes
itself.

So first of all you focus on the ministers,

and then also, in our submission, you focus on
functions and you also say, "In our system, what
must a State do to function in a meaningful sense?"
and one would say, "It must have a Treasury; it
must have an Attorney-General" - there are probably
one or two others that I have noted down which I
will come back to in a moment. Then there are
certain functions, and again in our
submission - - -

DAWSON J:

It sounds like all dressed up but nowhere to go.

I mean what is the use of formulating policy if you
cannot carry it out?

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MR DOYLE: But, Your Honour, that no doubt is what the

Attorney might say to me in relation to this
limited submission, "Where does it get you?" but
the point is we have to come back to what
Sir Owen Dixon said on this fall-back submission,
the distinction between the governments as
independent entities, the State, and on the other
hand, the fact which we have to accept that when
the States exercise their powers by enacting
legislation, doing other things, it is quite clear
from the Constitution that generally they will be
subject to Commonwealth law.

DAWSON J: Like everyone else; to laws which operate

indifferently upon them, as they operate on other
people.

MR DOYLE:

Yes.

DAWSON J: But, of course, the peculiar nature of the State

means that there are some laws which do not operate
that way but operate in a restrictive way upon
States, which is a way in which they do not operate
on other people. It is the reverse sort of
discrimination I was talking about earlier.

MR DOYLE:

Yes.

Your Honour, I do not want to be thought by

this, as attacking the Victorian submission. Ours
is put as an alternative - - -

DAWSON J:

As an alternative, I realize that, but one has to

investigate it.

MR DOYLE:	Yes, I accept that.
DAWSON J:	It is very hard to say how a State is operating

independently, which is what Sir Owen Dixon says,

when it is put in the way in which you put it. It
is operating independently in the sense that it has
a set-up which enables it to operate, but the

set-up may be prevented from operating.

MR DOYLE:

Yes.

To maintain the integrity of our

submission, Your Honour, perhaps could I give this
illustration: let us assume the Commonwealth
enters into a convention relating to education and
by legislation then implementing that convention it
takes control of education in all States and
thereafter education is provided by the

Commonwealth. Now, in this submission the
Commonwealth can, assuming the relevant treaty, do
that and section 109 enables the
Commonwealth Education Act to prevail over the
State Education Act.
However, in our respectful submission, whatever the treaty says, the Commonwealth could

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not stop the State having a Minister of Education
in Parliament who formulated policies, reported to
Parliament; who, to the extent that section 109 permitted and the Commonwealth legislation permitted, found spaces to legislate on matters of
interest to the State in a manner not inconsistent
with the Commonwealth Education Act.

So there is an illustration of the

Commonwealth using its powers in a manner which
significantly detracts from what the State can do
but it would seem on current doctrine the
Commonwealth can do that. On the other hand, we
would submit, the Commonwealth cannot, as I said
whatever the treaty had in it, say to the State,

"You are not to have a Minister of Education. He
educational matters."
is not to interest himself in educational policies.

DAWSON J:	But it can do whatever it wants to prevent the Minister for Education from having anything to do.
MR DOYLE:	I just did not catch the first part of that,

Your Honour.

DAWSON J:

On the hypothesis you have just laid down, it can

legislate in any way it wants to to prevent the
minister, the State minister, having anything to
do?

MR DOYLE:

Yes, Your Honour, on this submission that would

follow from the fact - I know I have chosen what
some may see as an awkward example - - -

DAWSON J:

So the result is, as I said, that the independent

existence of the State, really, in the end, only
means existence in name, not in function.

MR DOYLE:

Your Honour, I accept that in an extreme

situation our submission may lead to that. If the

Commonwealth could find a basis for legislating in
all sorts of areas in which the States have
traditionally acted one may then find that the
scope for the State in any meaningful sense to
function has shrivelled and I accept that,
Your Honour.
That is a problem with our submission, if the

Commonwealth could find the bases for the

legislation. On the other hand, on our submission,
it still cannot prevent, as I have put to
Your Honour, the State having an education minister
who interests himself in matters of education.
Whether, Your Honour, some other implication from
our Constitution would prevent the sort of
situation Your Honour envisages, who knows, and

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obviously in choosing as my example a use of the
external affairs power, I am sensitive of the fact
the States might seek to resist such a use of the

power. I simply chose it as a convenient way of
illustrating my point. But if Mr Justice Dixon is
right, that the notion of the existence of the
State is separate from the concept of powers
actually allocated to them then one seems to be
driven to the position which we have adopted.

BRENNAN J: There is no doubt about that in conventional

constitutional terms. Nor is there any doubt, I
would have thought, that in this case we are not in notion of State instrumentality immunity from the operation of Commonwealth laws.
the least concerned about the powers of the State.

MR DOYLE:	Yes.
BRENNAN J:	So we are back to the old and familiar

territory. Here you have a Commonwealth law which,

on its face, extends quite generally. To what
extent is that generality of power to be resected in order to provide for the necessary immunity of
State instrumentalities critical to the maintenance
of the existence or functioning of the State? Have
you any solution?

MR DOYLE:

I am discouraged, Your Honour, I thought I had

indicated to some extent what it was.

BRENNAN J:

I think you have.

You have said those who

assist the ministers, for example, and I presume
those who assist the judges, and those who assist
the legislators.

MR DOYLE:

That is our point. We look at it from two

angles. First of all, what is the executive? It
might be convenient if Your Honours looked at one
of the documents I provided with our outline, which

B, C, down to Fon the left hand side. This was is a single typed sheet of paper headed - it has A,
one attempt to spell out in practical terms the

reach of our submission. So section A we focus on
the minister because the State in our
constitutional system comprises an executive which,
in turn, comprises the governor and ministers.
Again, as I said earlier, section 106,

perhaps, preserves the very core: the minister
himself as constituting the executive. But then
for the minister to be able to function as a
minister, in our respectful submission, he is
entitled to have certain staff in the sense that
without them he could legitimately say he cannot
properly function, while in the end it is going to

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be a matter of drawing a line, in much the same
manner as was envisaged in the Professional
Engineers' case would have to be done, although in
the context of a different test, what was
industrial and what was not.
But first of all, around each minister there

will be an area where one can say that the function
of these people, or their predominant function, is
simply to enable this person to function as a
minister of the State, and people whose function it
is or who are predominantly so engaged, they are
part of what it means for the State to exist as an
independent entity.
One would say that if the Commonwealth were

able to regulate who the minister could choose, who
he could dismiss, the terms upon which he could engage such people, then the State would not be

permitted to organize itself as it saw fit. It
would not be permitted to exist as an independent
entity because its existence would be subject in
that respect to Commonwealth control.
So, first of all we focus on the minister,

then we submit there are certain functions which
one can say are also part of the existence of the
State, or one can say without the ability to carry
out these functions, the State as we know it would
not exist. And so police force, that is the
enforcement of the general criminal law, prison
officers, that is punishment of people who offend
the general law, and then certain key functions.
The Department of Premier and Cabinet, an
Attorney-General's Department, a Treasury and a
Crown Solicitor to provide advice to the
government. As to Attorney-General's and Treasury,
we have said most functions because from State to
State one may find that activities are attached to
those departments which in no sense one would say

are an aspect of the existence of the State. When I come a little later to the chart
relating to the Attorney-General's Department in
South Australia, Your Honours will see, for
instance, that consumer affairs is in that

department. We do not suggest it is whatever
happens to be happening in the department, but we
submit that in our governmental system as we know
it, they are functions without which one would say
you would not have the State existing and
functioning as we know it.
Section D, people provided by the executive to

enable the judiciary and the legislature again to
function effectively. Section E, the
Auditor-General and parliamentary council servicing

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both the executive and Parliament, but again part
of the capacity of Parliament to function

effectively. Then section F, certain public office
holders, again depending on their function and
their association with what are traditional aspects
of the State as we know it.
So, in answer to Your Honour Justice Brennan,

that, poor as it may be, is at least a description

of our solution. The rationale of it is that if
one reasons forward then from the State existing as an independent entity, one can say the very core is
the legislature, the executive and the judiciary.
But if that is all our Constitution provides for
and if section 106 is all we have, then presumably
anything beyond that very core is subject to
Commonwealth regulation. In our respectful
submission, if it is, then one cannot really say
that the State government is separately organized
as an independent entity.
I suppose one can say it is in a sense

separately organized but, if the people who enable that very core to function effectively are subject
to Commonwealth regulation, then, in our
submission, in a real or practical sense one would
say that the State no longer exists as a fully
independent entity; it exists as an entity subject
to Commonwealth regulation and control in matters

which reach right to its very heart. So that is
the rationale of our argument.
Your Honours, it needs to be understood that,

in our submission, we are not looking for some
residue of State powers or functions which is
beyond Commonwealth reach. What we are trying to
do is draw a line between something which
interferes with the State as a body politic
independent of Commonwealth control, on the one
hand, and then something which is an interference
with the exercise of powers by a State government,

being powers which are inherently subject to
interference by the exercise by the Commonwealth of
its powers.
Your Honours, in our respectful submission,

one's attention is therefore directed towards the
meaning of the State in our constitutional system.
What do we mean by the State, and what does it mean
for the State to exist as an independent entity
with the capacity to exercise governmental
functions? And, that is the point which we make in
paragraph 5 of our written submission. But, the
first important point and the one on which I have
already spent some time is, in our submission, that
what is required is autonomy or·complete freedom

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from direct control, and I will deal in a moment
with what we mean by indirect control.
So, in our respectful submission, sufficient

attention has not been given so far to the
importance of, and the implications of what Justice

Dixon said in Melbourne Corporation, and as I said
in answer to Your Honour Justice Dawson, in our
submission, one concludes from what he said that
is not contingent in any sense
the States do not owe their existence to the continued existence
upon the exercise of Commonwealth power and, in our
submission, the independent existence of the body
politic or the State means that the body politic or
State is not subject to Commonwealth regulation in
the sense of how the body politic works or how it
organizes itself or how it structures itself.
So, just reverting briefly to the point I made

earlier, in our submission, the submissions we are
putting flow from the same source, as does
section 106. Section 106 preserves "the
Constitution", whatever that may be precisely, and
we do not need to concern ourselves here; the
implication with which we deal here deals with what is required to make meaningful that preservation of the Constitution, and we would respectfully submit
that if it is not accepted that something further
is required then, in a very real sense, the
preservation of the Constitution can be made
sterile and meaningless, because of the
Commonwealth ability to regulate significant
aspects of what is required for that Constitution
to work effectively.
So we do submit that Federation requires that

both the centre and the regions each have complete
governing institutions of their own, with the right
to organize and operate those institutions
unilaterally, within limits, set by the

Constitution. In our submission - this is another
aspect of the same point - that principle of
autonomy is vital and we would argue that once one
accepts it can be qualified, the only limit to the
qualification can be the Court's assessment of the
degree of control, which is acceptable or
consistent with independence. But, in our
respectful submission, the Court is not really in a
position to decide that. When one really gets down
to it, if you reject our proposition, how does the
Court decide, in fact, what degree of control over
the body politic is consistent with independent existence, whatever may be the logical conflict
between the notion of external control and

independent existence? We submit that this is a
real problem which the Court has to face up to

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today and which it has not had to face up to in
previous cases.
In our submission, if our propositions are

rejected, one would appear to be driven to what we
would submit is one of two unacceptable positions.
The first, which is echoed in some of the judicial
statements in the cases, is that any control is
acceptable which is not so great as to prevent the

State actually functioning. Our respectful
submission is that when you really think about that
in the end and ask yourself how would you decide
when that point was reached, it is immediately
apparent that it is extremely difficult to
determine how the Court would decide, as a judicial
exercise, what degree of control there might be
which the State would find burdensome and yet one would say, "Well, that does not prevent the State
functioning as a State."
In our submission, that is an extremely

elusive criterion and likely to involve factors
which are not really appropriate for judicial
assessment anyhow because they inevitably start to
blend into issues of what the State, a particular
State, wants to do. For one State, things the
Court may find permissible regulation may be quite
acceptable; for another State, they may be quite
unacceptable. That does not simply reflect the
fact that views can differ on these things; it
reflects the fact that the judgment will,
necessarily, become quite a political one, we would
submit, in the end.
So, we would submit that is not really a

satisfactory position for the Court to be in of
saying, "The Court will determine when the degree
of control is not consistent with the State

actually functioning." We would submit that is an
unacceptable position.

The alternative approach, we submit, would be

for the Court to develop some concept - I almost
hesitate to use the expression - of reasonable
regulation. But again, in our submission, once you
think about that, you realize that either it means
regulation which other employers can be expected to
put up with - and one would have to say, "What does
that really mean" - or it drives you once again to
the Court, getting into the very same problems as
it did with section 92, the Court itself seeking
for some index or measure of what is reasonable
regulation. In our submission, in this area,
again, there are simply no fixed standards to which
one can resort.

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So in a negative sense we would argue that
when one focuses on the concept of the State
existing, and if one accepts that for the State to
exist in any meaningful sense more than the
preservation of the very core Constitution is
required, we would then submit that when one looks
at the tests which are contained in the general
statements of the doctrine and one endeavours to
apply them to that situation, one sees that there
are very real difficulties in those tests in
applying them in a practical case.
While it is a negative sort of argument, we

would submit that that supports our submission that
what in fact this principle protects in the area of
the States' own organization and structure is one

of complete autonomy. So we come at it, in one
sense, as a deduction from what "independent
existence" means and then, in the other sense, by
way of submitting that the tests that seem to be
foreshadowed in what the Court has said in other
cases do not work satisfactorily in this area.
So we argue that the whole point of Melbourne

Corporation is that in some respects the States are
not subject to Commonwealth power in the usual way.
And so the submission proceeds on the basis that
one is concerned with, first of all, the concept of
autonomy or independence from direct application of
Commonwealth law to the very structure or
organization of the State. Then the second thing
one is concerned with is the State is a body
politic, something having the capacity to exercise
governmental functions but a body politic as to
whom the Commonwealth may interfere with the actual
exercise of powers.
Your Honours, we acknowledge that there are

three important limitations to the principle which

we advance, and I need to identify them. The first
is, to use some language of Your Honour the

Chief Justice in Queensland Electricity Commission at 215 - and Your Honours do not need to go to the

case - that the States must take the established organization of the Australian community as they

find it. Our submission does not in any way deny

that. In other words, the use by a State of a bank
in the banking system could not be made subject to
the consent of the Commonwealth treasurer but, on
the other hand, if the Commonwealth establishes a
banking monopoly, then of course the States must
operate within that system, subject of course to
their ability to make use of a State bank.

That is the first limitation. The second

limitation which we acknowledge is that the
exercise of powers by the Commonwealth can

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indirectly or consequentially affect the ability of
the State to function in its chosen manner or
organize itself in its chosen manner, and that is
the point which we make in paragraphs 18 and 51 of
our written submission.
So to illustrate what I mean by that, the

Commonwealth might refuse a State permission to
import equipment which the State regards as
essential for the operation of its public service,
a computer system without which it says it really
cannot function properly. We would accept that the
Commonwealth could refuse permission to import that equipment. It might refuse a State permission to
import equipment or weapons needed for its police
force, or it might refuse a visa to a person whom
the State wishes to employ as an immediate adviser
to a minister. Those are examples, in our
submission, of Commonwealth laws which do not
operate directly on the organization of the State, but which may yet indirectly affect the ability of the State to organize itself as it sees fit or to

operate as it sees fit. We accept that the
Commonwealth can do that. Likewise the State might
impose a tax upon a State which makes it more
expensive to import goods or employ the staff it
needs, and in that way diminish its ability to
provide services.
In our submissions those examples point up the

fact that this principle which we advance here is
directed to laws which operate directly upon the
organizational structure of the State or, to use
the phrase of Mr Justice Stephen, "which directly
affect the structural integrity of the State". It
might be asked in the light of our emphasis on
autonomy what scope there is for the notion of
undue interference, which has been present in the
discourse on this topic from a very earlier stage,
and I think His Honour Mr Justice Rich used the
notion of undue interference in Melbourne

Corporation.
In our respectful submission, there is still
scope for that notion of undue interference because
it is conceivable that there will be exercises by
the Commonwealth of its power in a manner not
offensive to the submission we advance but which
might, nevertheless, in their actual exercise be
found to involve an undue interference and,
therefore, be offensive to what I might call that
aspect of the Melbourne Corporation case.

DAWSON J:

How do you deal with discrimination in this

context, such as in the Queensland Electricity
Commission case?

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MR DOYLE:

Your Honour, we do not deny that limb of the

test, perhaps I should have made it clear - - -

DAWSON J: But, what is the rationale for it, if really all

of the States are protected, and is there
structural integrity?

MR DOYLE:	Your Honour, we are not submitting that the discrimination principle stated in
Queensland Electricity Commission is not valid and
available. This submission is - - -
DAWSON J:	I realize that, but I am saying how do you

rationalize it because that goes directly to an
interference of the exercise of functions, not to
the structural integrity. What is its
constitutional justification, if what you say is
correct?

MR DOYLE:

Yes, Your Honour.

In our respectful submission

the justification - or one approaches it this way:
it has nothing to do with characterization of the
law, that has now been made clear; that clearly if
the relevant law cannot be characterized because of
its discriminatory aspects as a law on the head of

power, then it falls for that reason. So we have
to postulate a law which is, nevertheless, a law
clearly within a Commonwealth head of power.
When one looks closely at what has been said

in the cases, in our submission, it appears that
the principle is in fact a separate principle; that

it is inconsistent with the federal system for one
element of it, centre or regions, to exercise its
powers in a manner aimed directly at the control of
the other.

DAWSON J:	Why?
MR DOYLE:	Your Honour, because, in our submission, one is

there right at the very fundamentals, that if the powers can be exercised in that way once again it then - - -

DAWSON J:

Then one entity can control the way the other functions.

But you say that is perfectly all right

as long as its structural integrity remains.

MR DOYLE:

In broad terms, Your Honour, although as I put to

the Court at the outset, there are problems always
with sweeping propositions and encyclopaedic
statements. Situations may arise which would not

fit with what Your Honour put to me. But, in my
submission, one cannot say the rationale of the
discrimination aspect of Queensland Electricity
Commission is a principle of non-interference with
the exercise of powers, because we know that - - -

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DAWSON J: But it is said that that is just what it is. It

is the removal of a choice which the government
would otherwise have.

MR DOYLE:

I did not say that, with respect, Your Honour.

My answer to Your Honour was that a separate aspect of our constitutional structure is a principle that
limits either centre or regions from the use of
their powers aimed directly at the control of the
other.
In our submission, when one looks at the cases

that have spoken about this principle, that seems
to be what underlies the notion that even though if
the relevant thing were done pursuant to a general
law, it may be permissible when you find it done
pursuant to a Commonwealth law which is pointed at
the State, to use that example, then one finds

something which is impermissible. The conclusion
we would draw from that is that the relevant
principle is in fact one based on discrimination,
not - - -

DAWSON J:

When you say "pointed at the State", you mean,

pointed at the way the State functions?

MR DOYLE:

Yes, Your Honour.

DAWSON J: Yes.

MR DOYLE:

Yes, pointed at the State or the way it

functions.

DAWSON J:

As I was suggesting previously, you can have

discrimination which points at the way a State
functions when you have a general law which
operates in a discriminatory way against the
States.

MR DOYLE:

Yes, Your Honour, and we, with respect - - -

DAWSON J:

And you may say this is this sort of law that

because a State has certain functions, which the
law apart it can exercise and this law operates to
prevent it exercising those functions, which are
different from the functions that ordinary
employers have, then it discriminates and, in that
sense, it is within the same principle.

MR DOYLE:

Yes, and, with respect, Your Honour, we would not seek to deny that line of reasoning.

I do not want

to labour it, but our submission is very much a
fall-back submission; if the Victorian submission
fails, then we submit that there is still this
quite significant area, or aspect of the State,
which yet remains beyond Commonwealth control.

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DAWSON J:	I understand that. All I am saying is that you have to fit that in, in some consistent way, with
the prohibition against discrimination.
MR DOYLE:	Yes, Your Honour, although, with respect, it is

not necessary for each of those principles, as it
were, to - perhaps, Your Honours, they do not have
to mesh logically. What we have to understand is
here that we are dealing, we would submit, each
time with an implication properly to be drawn from
the federal structure and it can take a variety of
forms reflecting the fact that it may have to deal
with what I might call a variety of problems, in
the relationship between centre and regions,
because that is something which the Constitution
has not addressed. It has simply created the two

levels of government, it has given them their
powers, in section 109 it has made an important
statement about interaction between exercise of
powers, in section 106 it has made a very limited
statement about continued existence, and, in our
submission, has left it to the Court by the drawing
of implications then to, as it were, work it out
from there.
In our submission, one may find that, even in

a given situation, perhaps there may be a couple of
different ways of getting to the answer.
Your Honour is putting to me one way of getting to
the answer by focusing on discrimination either in the formulation of the law or in the effect of the law and I, with respect, accept that. We are here pointing at a narrower principle which deals with
general laws but which operate directly upon the

structure or the organization of the State. We
submit the link between them all is at least the
link of the preservation of the federal structure.

BRENNAN J:

Mr Solicitor, in the concept of the structure of

a State, you have addressed us with regard to the

personnel who are involved in it. What about the appropriation power of a State; does that enter into it at all?

MR DOYLE:	Is Your Honour there alluding to the ability of the State to raise money, and then spend it?
BRENNAN J:	No, in the context of the present case what I

have in mind is this: if one says the State must
take the situation in the community generally as it
finds it, here you have got an award which covers,

let us say, teachers. If you want to employ a
teacher then you must pay the teacher the award
rate, and be subject to the award conditions. But,
here there is another provision, and it says you
have a hundred teachers, it is not a question of
what you must pay them if you choose to employ

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them, you must pay them this and you must employ

them. In other words, you have no option over the control of your appropriation power.

Now, does
that have anything to say about the structure of
the State?

MR DOYLE: Well, in our respectful submission, it does,

Your Honour, and without wanting to in any sense duck away from Your Honour's question, that, I would, with respect, see as more an aspect of my
friend Mr Graham's submission, but what Your Honour
has identified there is that within his submission
is the point that in a number of respects what is
sought here does also go to the structure of the
State. His broader submission, no doubt, builds in

part on what we deploy in a more limited way. We
deploy it to preserve those who are essential to -
I should not really use the word essential - but, those who are an aspect of the existence and

functioning of the State. I do not say essential
because, in our submission, it is not for the Court
to say you do not need 10 people as policy
advisers, as you could get by with five; however
many policy advisers the minister has, that is it.
But, in answer to Your Honour's question, the preservation of the existence of the State as an
independent entity does also support, in some
respects, that broader proposition.

BRENNAN J: It seems to me that when one speaks of a State

one must be speaking about some ways in which the
State exercises its function, and it seems to me to
be impossible to contemplate a federal law under
whatever head of power which might tell a State
judge how to decide a case. You can say what the
law is which the State judge shall apply, but not

how to decide a case. Have we got the same sort of
problem here in the fiscal area?

MR DOYLE: In my respectful submission, we do. If I could

take two aspects: the point Your Honour makes goes
wider, in our respectful submission, and I think
some of Your Honours said this in it might have
been Re Cram, that there was at least a real doubt whether the Commonwealth could confer functions on
a State constituted non-judicial tribunal without
the consent of the State. In other words, another
aspect of this principle is, in our submission,
that the Commonwealth cannot direct a State
official in the manner in which he will perform his
State duties, nor can it require him to perform

Commonwealth functions. They are both broad
propositions, and I accept again one has to be a
bit careful because there may be valid Commonwealth
laws which will indirectly affect him, but as basic
principles those things are true.

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In our respectful submission, as Your Honour
Justice Brennan points out, when the Commonwealth
requires the State to maintain people as employees,
then it is, in effect, as Your Honour says,
affecting the State's control over appropriations
and its ability to appropriate its funds to such

things as it sees fit. So there is a relevant air
of intersection between the bases upon which we
found our narrower submission and, one might say,
the various bases upon which the broader submission
of Mr Graham is advanced.
But the point Your Honour identifies, I

suppose, might even produce an intermediate
position in which one would say the Victorian broad

submission is rejected. On the other hand certain
claims made in the log of claims would have the
result such as Your Honour has identified and
claims of that sort cannot be maintained, or cannot
be implemented by the making of an award. So there
may in fact be those three positions: , the broad
position, the position whereby one looks by
reference to the sort of things we raise, the
existence of the State, at the specific claims made
in the log, and then the other position which we
develop which is an area of autonomy and immunity

linked to the effective existence of the State. Is
that a convenient time, Your Honours?

MASON CJ:

We will adjourn now and resume at 10.15 tomorrow

morning.

AT 4.19 PM THE MATTER WAS ADJOURNED

UNTIL WEDNESDAY, 8 JUNE 1994

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100

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[1994] HCATrans 367

Key Legal Topics

Areas of Law

Administrative Law

Constitutional Law

Employment Law

Legal Concepts

Judicial Review

Jurisdiction

Standing

Procedural Fairness

Natural Justice

Melbourne	No Mll of 1993
In the matter of -
An application for a Writ of
Prohibition and a Writ of
Certiorari against THE
HONOURABLE JOHN WILLIAM
MacBEAN, A Deputy President
of the Australian Industrial Relations Commission

MR N.J. YOUNG, OC and MR L. KAUFMAN, for the	prosecutors in those matters where orders nisi have
been granted, and for the applicants in those matters which have been referred for hearing by
this Court. (instructed by the Victorian
Government Solicitor)

during the course of the proceedings.	(instructed
by Ryan Carlisle Thomas)

our submission, different from that in which those	implications that arise in the present case is, in	issues arose in the SPSF case. Your Honours will
recall that there the logs of claim which had been
served on three of the States, though extravagant,
were limited, very limited, so far as the topics
with which they dealt, seeking simply a minimum
weekly wage, a minimum additional weekly allowance
and automatic CPI adjustments. The range of
occupations of those who would take the benefit of
the award or awards sought was not readily
classifiable but appeared only to have been
limited by reference to the eligibility rules of
the unions serving the logs of claims.

operations, but also to show that the whole ability	significant economic impact upon the State and its
of the State to perform its functions, to administer its own internal affairs, to plan its
budget strategies, to provide services to the
public and to manage the affairs of the State, are
fundamentally affected by the increases in costs
entailed by the matters sought under the awards
claimed.

the logs cover a number of topics but the claims
are less extensive.	I do not think it is necessary

characterization argument.	He was being careful
~ot to put such an argument.

seek to distinguish it.	We will be submitting that
there is a clear ground of distinction available.

with respect, it is not intended to be so, although
it seemed inevitable.	I would accept that there is

submissions would take the cleaners	in State
schools or in hospitals outside the	scope of the
arbitration power, would they not?	And not only
that, but almost any form of manual	worker.

as the criterion. Is it that one looks at the to terms with your notion of control of the State	function that is performed by the employer State,
and says that there are some core functions that
cannot be reached? Or, does one look at the
functions that might be performed by employees of the State, and says that there are some of their
functions that cannot be reached? Or, is it a
combination of both?

over the contents of its budgets. Effectively,	the execution of its policies, it loses control
taken to its extreme, the awards can direct how the
State is going to govern the State in many significant respects.

Service;	MS and Mll the redundancy awards, and M30
being the police.	We say there must be a real

found at page 99 of the same application book.	The
application of the award in clause 2:

in the form of constables and others goes back to the very earliest times. What came about in the early 19th century was the organization of a police force into a form which is the origins of what we	are familiar with today. It is difficult, we would	submit, to conceive of how a State Government could
operate without a police force to enforce its laws,
to protect its citizens and their property, to investigate crime, notwithstanding the fact that there are security forces provided by private
organizations whose services supplement the work of the police force.

which causes its exercise.	The other brings
into question the independence from federal
control of the State in the discharge of its functions.

passages which refer to purpose and passages which
refer to effect.	It is difficult in the light of

perhaps if it could be dealt with in reply.	May it
please the Court.

To get to that, Your Honours, Victoria has argued,	the centre-piece, if you like, of our submission.
correctly we would submit, that the constitutional limitation relates not to capacity to function, but to the capacity of a government to perform its
functions, and paragraphs 10 and following of the
Victorian major submission - written submission -
deals with those issues and I do not want to go
back to that.

Court's acceptance in Coldham that the phrase	applies to disputes arising out of any form of
employment, the basis upon which "administrative
services" came to be seen as going beyond the reach of section Sl(xxxv) has, in our submission, gone.
The question of the place of administrative services of a State in the context of the
application of the implied limitations was of
course expressly left open in Coldham, and I refer
to the passage at page 313 point 2 of that decision, although even that passage seems to be
looking at such services merely as a possible
subject of the implied limitations. It would be
our submission that the subsequent decisions,
certainly as we understand them, have accepted that

report, and occupying something over a page.	So
what does that leave us with?

The Crown gets itself involved in all sorts of
curious things, if I may say.	I think in Tasmania,

that my assistants were to wear, what annual leave	in that series I would put such things as the dress
they were to be entitled to, what continuing education or training they might receive, what
occupational health or safety measures were to be
in place where they worked, and other things such
as meal breaks and the like.

appropriate for the application of the implied
limitation.	May it please the Court.

different aspects, or a number of related principles, in our submission, we have there a	group of related principles which flow from the
structure of the Constitution.

powers are exercised, in our submission, that is interferes with processes by which governmental	the sort of thing which the Constitution did not
envisage.

situation our submission may lead to that.	If the
Commonwealth could find a basis for legislating in

which reach right to its very heart.	So that is
the rationale of our argument.

actually functioning."	We would submit that is an
unacceptable position.

linked to the effective existence of the State.	Is
that a convenient time, Your Honours?