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The High Court decision in NSW v Commonwealth (“the Work Choices Case”)1

would have come as little surprise to followers of Australian constitutional


jurisprudence. In a majority decision of five to two with Justices Kirby and Callinan
in dissent, the Court upheld the validity of the Federal Government’s Work Choices
legislation.2 Quoting Justice Gaudron in Re Pacific Coal3 the majority held that “laws
prescribing the industrial rights and obligations of [constitutional] corporations and
their employees and the means by which they are to conduct their industrial relations
are laws with respect to constitutional corporations.”4 Justice Kirby in dissent stated

This court and the Australian Commonwealth need to rediscover the federal character
of the Constitution. It is a feature that tends to protect liberty and restrain the over-
concentration of power which modern government, global forces, technology, and
now the modern corporation, tend to encourage. 5

The majority construction of the Corporations power found in s 51(xx) of the


Australian Constitution is the broadest yet seen and is consistent with the method of
constitutional interpretation adopted by the Court in Amalgamated Society of
Engineers v Adelaide Steamship Co Ltd (“the Engineers Case”).6 From the time of
that decision, in which the ‘heresy’ of the Reserved Powers doctrine was overturned,
the High Court has steadfastly refused to entertain notions of federal balance when
interpreting the Constitution.

This article will address the development of constitutional interpretation in Australia


over the past century with reference to the consequent reduction in the residual
powers of the States. The Work Choices decision affirms the High Court’s adherence
to the literalist method of interpretation of the Australian Constitution despite the
Mason Court’s flirtation with progressivist interpretations in the implied rights cases.7
1
(2006) HCA 52.
2
The proceedings challenged the validity of the Workplace Relations Amendment (Work Choices) Act
2005 (Cth).
3
(2000) 203 CLR 346.
4
NSW v Commonwealth (the Work Choices Case) (2006) HCA 52 at 198.
5
ibid at 612.
6
(1920) 28 CLR 129.
7
see for example Nationwide News Pty Ltd v Wills (1992) 177 CLR 1; Australian Capital Television
Pty Ltd v Commonwealth (1992) 177 CLR 106; CB 671-691; in Lange v Australian Broadcasting
Corporation (1997) 189 CLR 520 the High Court reverted to an interpretation of the implied freedom
that relied more heavily on the text of the constitution.
The trend of centralising power in the Commonwealth at the expense of the States,
although arguably undesirable, will likely continue apace for the foreseeable future.
The prospects for the development of a doctrine resting on the decision in Melbourne
Corporation8, though limited, may afford some protection to the States, from further
encroachment by the Commonwealth into areas of state responsibility. Finally, the
Court’s commitment to a common law, case by case approach to constitutional cases
suggests that the limits of this construction of Corporations power have not yet been
fully explored, but also provide an opportunity for a future High Court to forge a
different path.

Australia is a vast and sparsely inhabited continent with concentrated centres of


population separated by large distances. Thus, a federal structure was on obvious
choice. “[D]evolving decision making to the local level as much as possible” had two
principle benefits. Conferring increased input and leverage upon those affected by
decisions and enhancing the value of each individuals vote.9 Competitive federalism
also has the capacity to produce enhanced outcomes and act as a break on radical
change.10 While there is no universal model of federalism, Geoffrey Sawyer identified
three key features. First, several governmental units existing in one area, with “one
having competence over the whole area, the others over defined parts of it, and
sharing between them the power to govern.” Second, each unit has a “reasonable
degree of autonomy” and thirdly “one unit cannot destroy the autonomy of other
units.”11 In his comparison of Australian and Canadian constitutional development,
Canada and Australia: A Federal Parting of the Ways, Richard Cullen observed that
“a fundamental reason for creating a federation is to allow for regional differences
whilst obtaining the benefits of a measure of economic and political integration.”12

It seems fairly clear that the design of the Australian Constitution was intended to
protect the role of the States as the founders conceived of it. James Warden asserts
that “[t]he protection of state’s rights was foremost in the minds of the majority of
8
(1947) 74 CLR 31.
9
R Wilkins, ‘A new era in Commonwealth-State relations?’ (2006) 7 Public Administration Today 8, 8
10
ibid 9.
11
G Sawer in G Winterton et. al., Australian Federal Constitutional Law: Commentary and Materials
(Pyrmont, Lawbook Co., 2007) 4.
12
R Cullen, ‘Canada and Australia: A Federal Parting of the ways’ (1988) 18 Federal Law Review 53,
54.
delegates to the [constitutional] conventions and that majority won most of the crucial
divisions in the committees against the liberal nationalists”.13 The framers had
“considered Canada’s constitutional structure too centralist and had deliberately
chosen the more decentralised distribution of powers used in the Constitution of the
United States.”14 A number of constitutional steps were taken to protect the States
from the encroachment of Commonwealth power. These were the grant to the
Commonwealth of specific, enumerated powers in s 51, the creation of the Senate as
the States’ house and finally, the creation of the High Court as the arbiter of
constitutional disputes. First, the grant of specific enumerated powers embodies a
theory of ‘coordinate federalism’, where the States and Commonwealth each have
different and distinct responsibilities.15 It was thought that Commonwealth would be
limited to its specified and “strictly defined”16 heads of power. But as Justice Stephen
observed in Actors and Announcers Equity Association v Fontana Films17

Unaffected by restraints imposed by the existence of mutually exclusive grants of


legislative power, this Court's process of characterization is free to recognize that
laws may in truth possess a number of characters.18

The result of such an approach to the s 51 powers is that “the Commonwealth and the
States have responsibilities in many areas together.”19 Secondly, the “almost
immediate breakdown of the neatly conceptualised role of the States house after
federation occurred because of the development of party politics.”20 Finally, Greg
Craven asserts that the role of High Court was to protect the States and send the
Commonwealth “whimpering back within the proper bounds of its authority”21 should
it attempt to exceed it. The failure of this safeguard can be attributed to the framers
suggests James Warden

13
J Warden, ‘Federalism and the Design of the Australian Constitution’ (No. 19, May 1992)
Federalism Research Centre Discussion Papers 1, 1.
14
G D Q Walker, ‘The Seven Pillars of Centralism: Engineers’ Case and Federalism’ (2002) 76
Australian Law Journal 678, 679.
15
R Wilkins, n 9 above, 9.
16
G D Q Walker, n 14 above, 682.
17
(1982) 150 CLR 169
18
ibid at 8
19
R Wilkins, n9 above, 9.
20
J Warden, above n 13, 13.
21
G Craven, ‘The High Court and the States’ (1996) 6 Upholding the Australian Constitution 44, 49.
…[t]he framers did not pay attention to the role and power of the [High] Court
because…the national issues were thought to be self evident. The Senate would
prevent legislation detrimental to the States from becoming law, the Court would
interpret the Constitution according to the intent of the framers…22

Warden goes on to say

…[t]he Australian framers neglect in appreciating the difficulty in establishing a


workable organisation for the division of powers was compounded by their failure to
assess the consequences of a policy of active judicial review which would necessarily
be adopted. 23

Federalism in Australia borrowed heavily from both the United States and the English
common law and constitutional jurisprudence. Federal judicial review “which
required a novel form of adjudication appeared to be contrary to common law
tradition.”24 The “conventional rules of interpretation asserted their dominance over
the innovation of federalism.”25

The early constitutional decisions of the High Court adopted an interpretation of the
constitution that embraced historical facts and circumstances in order to give meaning
to the text.26 Three of the original justices, Griffith, Barton and O’Connor had taken
part in the drafting of the Constitution and had developed the Reserved Powers
doctrine and Implied Immunities doctrine. Chief Justice Griffith said in Baxter v
Commissioner of Taxation27

If it is suggested that the Constitution is to be construed merely by the aid of


dictionary…and as a mere decree of the Imperial Parliament without reference to
history, we answer that that argument…is negatived by the preamble to the Act

22
J Warden, above n 13, 20.
23
ibid, 21.
24
H Patapan, Judging Democracy: The New Politics of the High Court of Australia ( Cambridge:
Cambridge University Press, 2000) 13.
25
ibid, 14.
26
ibid, 11
27
(1907) 4 CLR 1087.
itself.28

The Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (“the Engineers


Case”)29 succeeded in Justice Isaacs long held desire to overturn the Reserved Powers
doctrine and fostered a new method of constitutional interpretation. In overruling
Reserved Powers doctrine Isaacs J asserted that no clear principle had emerged from
the previous cases.30 The Engineers’ decision emphasised a literal reading of the
Constitution arguing that an interpretation that relies on “an implication which is
formed on a vague, individual conception of the spirit of the compact can only lead to
divergences and inconsistencies.”31 The Court said that it was returning to the ‘settled
rules of construction’ in giving the words of the Constitution their ‘natural
meaning’.32 In doing so the Court adopted Lord Haldane’s remarks regarding the
‘golden or universal rule’ which was to “exclude consideration of everything except
the state of the law as it was when the statute was passed, and the light to be got by
reading it as a whole”.33 In essence the Constitution was to be interpreted in the same
manner as any other British statute.

It was held in R v Barger34 that the enumerated powers of s 51 should be interpreted


independently of each other.35 The powers conferred on the Commonwealth were also
to be “construed with all the generality which the words used admit.”36 The combined
effect of a literal reading of the Constitution and the view that the powers should be
interpreted broadly and independently of each other “resulted in an expansive
interpretation of federal powers at the expense of the States residual powers.”37 The
majority in Engineers’ held that it was not the Court’s role to find limits in the
Constitution that weren’t explicitly stated and that “the extravagant use of the granted
powers in the actual working of the Constitution is a matter to be guarded against by
28
ibid at 1093.
29
(1920) 28 CLR 129.
30
H Patapan, n 24 above, 12.
31
Engineers’ Case (1920) 28 CLR 129 at 145 per Isaacs J.
32
H Patapan, n 24 above, 13.
33
Engineers’ Case (1920) 28 CLR 129 at 149 per Isaacs J.
34
(1908) 6 CLR 41
35
G Craven, ‘Industrial Relations, The Constitution and Federalism: Facing the Avalanche’ (2006) 29
UNSW Law Journal 203, 204.
36
R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd
(1964) 113 CLR 207 at 225-6.
37
H Patapan, n 24 above, 16.
constituencies and not the courts”.38 The approach adopted by the High Court in the
Engineers’ Case expressly excludes notions of federal balance in interpreting the
Constitution and represents a rejection of the American suspicion of government and
the triumph of the concepts of responsible government and supremacy of parliament.
This is despite the fact that “the nature of federalism is made express for us…[i]t is on
the combined effect of ss 107, 108 and 109…that the nature of the Constitution firmly
rests.”39

The enumerated powers in s 51, when interpreted independently of each other, have
the potential to interfere with one another. Thus it may be argued that a particular
head of power should be given a restricted meaning because of the existence of
another power.40 But as Leslie Zines observed

…[t]he court has not in any case since the Engineers’ Case taken the view that the
interpretation of a power should be restricted in order to prevent another power from
being rendered unnecessary, where the other power does not contain any express
exception or restriction41

In the Marriage Act Case42 the High Court refused to read down the marriage power
in s 51(xxi) to restrict it to solemnisation of marriage, thus rendering the divorce
power in s 51(xxii) almost an irrelevancy. In contrast, in Bank of NSW v The
Commonwealth (the Bank Nationalisation Case)43 the Court refused to allow the
Commonwealth to use s 51(xx) to invade the field of state banking from which it was
expressly excluded by s 51(xiii). The result is that the High Court will give a narrow
construction to limits on Commonwealth power and an expansive reading when
allowing the Commonwealth into power. Geoffrey Walker asserts that the courts
reluctance to “accept the use of implications from federalism” is erroneous as such
implications are “at least as obvious as those from responsible government.”44

38
Engineers’ Case (1920) 28 CLR 129 at 151-2 per Isaacs J.
39
R v Phillips (1970) 125 CLR 93 at 118 per Windeyer J.
40
L Zines, The High Court and the Constitution (3rd Ed, Sydney: Butterworths) 21.
41
ibid.
42
(1962) 107 CLR 529.
43
(1948) 76 CLR 1.
44
G D Q Walker, n 14 above, 691.
Literalism, according to Greg Craven, “clearly assumes that the words of the
Constitution considered in the textual context in which they appear will…have a
determinate meaning which may be ascertained with reasonable readiness.”45 That
constitutional language might be “profoundly ambiguus” was recognised in Bourke v
State Bank of New South Wales.46 To deny that the “Court’s continued adherence to
literalism has been [due to] its positivist desire to ensure that the federal balance of
power is titled firmly in favour of the Commonwealth” would be “profoundly naïve”
according to Craven.47 Certainly the balance of the constitutional decisions has been
in the Commonwealth’s favour. Geoffrey Walker observes that

…[s]ince the Engineers’ Case a notion seemed to have gained currency that in
interpreting the Constitution, no implications can be made. Such a method of
construction would defeat the intention of any instrument, but of all instruments, a
written constitution seems the last to which it could be applied. 48

Walker asserts that this method is “at odds with the modern purposive approach to
interpretation” and that “as a practical matter…[literalism] is unable to deal with
provisions that are ambiguous or can only be understood in light of the circumstances
surrounding their inception.”49 Former High Court Justice Heydon counters that
Engineers’ “did accept that the Constitution had to be interpreted against the
historical background and ‘in the light of the circumstances in which it was made,
with knowledge of the combined fabric of the common law, and the statute law which
preceded it…’.50

The principle of dual characterisation has been used to its full effect to allow the
Commonwealth to avoid restrictions or qualifications to one power by legislating
under a different head of power. Some members of the court have at points expressed
their disquiet regarding this development. In the Tasmanian Dam Case51 the
45
G Craven, ‘The Crisis of Constitutional Literalism in Australia’ in H P Lee & G Winterton (eds),
Australian Constitutional Perspectives (Sydney: Law Book Co Ltd, 1992) 1.
46
(1990) 170 CLR 276
47
G Craven, n 45 above, 7.
48
G D Q Walker, n 14 above 682.
49
ibid, 687.
50
J D Heydon, “Theories of Constitutional Interpretation: a Taxonomy” (2007 Sir Maurice Byers
Lecture) (2007) Bar News 12, 76.
51
The Commonwealth v Tasmania (“The Tasmanian Dam Case”) (1983) 158 CLR 1.
Commonwealth government used its power over corporations (xx) and external
affairs (xxix) to block construction of a Dam in Tasmania by purporting to give effect
to an international treaty. Justice Dawson stated in dissent that granting
Commonwealth powers

…the widest interpretation which the language bestowing them will bear, without
regard to the whole of the document in which they appear and the nature of the
compact which it contains, is a doctrine which finds no support in [Engineers’] and is
unprecedented as a legitimate method of construction of any instrument, let alone a
constitution.52

The High Court will not undertake an examination of the legislative intent of
parliament, preferring to look at the ‘direct legal operation’ of the law rather than the
purpose for which a piece of legislation was enacted.53 It is the principle of dual
characterisation that affords this flexibility. Justice Stephen stated in Actors and
Announcers Equity Association v Fontana Films that “to accept as constitutionally
permissible the fact that a law may bear several characters…disposes of the need to
rely upon a particular description only.”54 In Murphyores Incorporated Pty Ltd v
Commonwealth55 a challenge was brought to the Environmental Protection (Impact of
Proposals) Act (1974) which imported environmental considerations into the
minister’s decision regarding whether to grant an export licence. This was held to be a
valid law with regard to the power over trade and commerce with other countries in s
51(i). The “practical result [being]…that mining ceased on Fraser Island, even though
it was Queensland government policy that it should continue.”56 The
Commonwealth’s use of the grants power under s 92 has also been telling. The High
Court has held that there is virtually no restriction on what conditions could be placed
on payments to the states, allowing the Commonwealth to mandate policy in areas of
state responsibility.57 The High Court also refused to look past the direct legal
operation of the relevant legislation in South Australia v Commonwealth (the First

52
ibid at 360.
53
Actors and Announcers Equity Association v Fontana Film (1982) 150 CLR 169.
54
ibid at 192.
55
(1976) 136 CLR 1.
56
L Zines, n 40 above, 29.
57
R Wilkins, n 9 above, 10.
Uniform Tax Case)58.

The majority judgement in the Work Choices Case represents the widest construction
of s 51(xx) so far seen since the resurrection of the corporations power in Strickland v
Rocla Concrete Pipes Ltd (“the Concrete Pipes Case”)59. That the corporations power
would extend to cover industrial disputes within the borders of a state would not have
been envisaged by the framers. Darrell Barnett observed that

…it is apparent from sources such as the convention debates and Quick and Garran
that the corporations power was intended to serve a fairly limited role and that far
greater significance was attached to powers such as the trade and commerce power
and the conciliation and arbitration power. 60

This view was reflected in Huddart, Parker & Co Pty Ltd v Moorehead61 where is
was held that the corporations power would not “authorise a law which invaded the
exclusive state field of domestic or intra-state trade.”62 This decision was heavily
influenced by the Reserved Powers doctrine but the issue was not revisited until the
Concrete Pipes Case where it was held that despite the fact that the relevant Act was
a law with respect to intra-state trade, it could also be characterised as a law with
respect to corporations and that s 51(xx) extended to “control of the particular trading
activities or the trading corporations involved in that case.”63 The court went further in
the Tasmanian Dam Case applying the reasoning in Murphyores that no purposive
considerations would be imported.64 It was held by five justices that the
Commonwealth could regulate trading and non trading activities done for the
purposes of trade, with Justices Mason, Murphy and Deane prepared to extend that
principle to all activities of constitutional corporations provided that the law created,
altered, removed or conferred some right or obligation.65

58
(1942) 65 CLR 373
59
(1971) 124 CLR 468
60
D Barnett, ‘The Corporations Power and Federalism: Key Aspects of the Constitutional Validity of
the Work Choices Act’ (2006) 29 UNSW Law Journal 91, 98.
61
(1909) 8 CLR 330.
62
ibid at 371-2
63
L Zines, n 40 above, 21.
64
(1976) 136 CLR 1.
65
L Zines, n 40 above, 81
It was argued by the plaintiffs in the Work Choices Case that the “fact that the
corporation is a foreign, trading or financial corporation should be significant in the
way in which the law relates to it.”66 This was rejected by the majority as creating a
specific test for characterisation of a law with respect to constitutional corporations
which invoked “notions of federal balance.”67 The limits placed upon the corporations
power in the Tasmanian Dam Case were explicit limitations “upon what was being
decided in the particular case” and did not restrict the Court in the present case. The
majority went on to affirm the statement in Grain Pool of Western Australia v
Commonwealth68 where it was said

…if a sufficient connection with the head of power does exist, the justice and wisdom
of the law, and the degree to which the means it adopts are necessary or desirable, are
matters of legislative choice. 69

It was also argued in the Work Choices Case that the scope of s 51(xx) should be
limited by the existence of s 51(xxxv), the power over industrial disputes extending
beyond the limit of a state. The majority rejected any comparisons to be drawn with s
51(xiii) and the Bank Nationalisation Case. As discussed above, the court was not
prepared to read a limit into s 51(xx) where there was nothing explicit in the text to
suggest such an exclusion or qualification. Barnett points out that “it is difficult to
read s 51(xxxv) as containing any restriction or safeguard” and that “more closely
resembles…a conferral of power upon a limited subject matter”.70 As in the Marriage
Act Case and the Surplus Revenue Case71 the Court was prepared to accept a reading
of a constitutional provision that renders another, in this case s 51(xxxv), irrelevant.72

Justice Kirby takes a starkly different approach to the majority. In elaborating on what
73
he terms ‘the unlikely hypothesis’ of oversight his honour points out that “for more
than a century…the substantial constitutional underpinning of the federal law on

66
Work Choices Case (2006) HCA 52 at 140.
67
ibid at 141.
68
(1996) 187 CLR 579
69
ibid at 602
70
D Barnett, n 60 above, 114.
71
New South Wales v Commonwealth (“the Surplus Revenue Case”) (1908) 7 CLR 179.
72
Work Choices Case (2006) HCA 52 at 517 per Kirby J.
73
ibid at 442.
industrial disputes…has been provided by s 51(xxxv) of the Constitution.”74 The
majority argue that any notion of federal balance begins from a starting point beyond
the text of the constitution whereas the starting point should be the text of the
constitution.75 But as former Justice Heydon points out, “[t]here is no express
provision in the Constitution mandating the principles on which it is to be
interpreted.”76 He goes onto quote Justice McHugh who said that “[a]ny theory of
constitutional interpretation must be a matter of conviction based on some theory
external to the Constitution itself.”77 The High Court’s approach to constitutional
construction appears to be one which regards federalism as a “transitional form of
government which is designed to ease the transition from independent polities to full
nationhood.”78 Where the majority argue that “s 51(xx) should not be given a meaning
narrowed an apprehension of extreme examples”79 Justice Kirby counters that “it is
always valid to test a legal proposition by reference to the consequences that would
flow from its acceptance.”80 Justice Kirby’s view is preferable as it seeks “to secure
an interpretation of the constitutional provisions that gives harmonious effect to the
entire document.”81

Greg Craven observed that “the proposition that because a law clearly evinces an
intention to operate upon matters excluded from Commonwealth competence by some
other constitutional provision, this does not affect its validity82, is the ultimate
vindication of R v Barger.83 The Work Choices case shows us that the High Court will
not abandon its adherence to Engineers’ literalism any time soon. While recognising
the States continued existence as being “predicated by the Constitution” the majority
judgement states “that this last observation does not identify the content of any of
those functions.”84 Barnett argues that “by approaching decisions on a case by case
basis in accordance with the common law method, the High Court has permitted too
74
ibid at 428.
75
ibid at 191 per Gleeson J.
76
JD Heydon, n 50 above, 1-2.
77
McGinty v Western Australia (1996) 186 CLR 140 at 230.
78
D Barnett, n 60 above, 122.
79
Work Choices Case (2006) HCA 52 at 188.
80
ibid at 540.
81
ibid at 472.
82
G Craven, n 35 above, 208.
83
(1908) 6 CLR 41.
84
Work Choices Case (2006) HCA 52 at 114.
significant a departure from the principles of federalism required by the
constitution”.85 Though a case by case approach also allows room for the High Court
to distinguish future cases from the present authorities. On any new fact situation the
court will be able to create new limits applicable to those facts, without jeopardising
the core of what it has decided in previous cases. It has also been suggested that a new
limit on the construction of Commonwealth powers could be developed from the
principle in the Melbourne Corporation.86 It is accepted that the Commonwealth
cannot legislate for the States in such a manner as it would impair their ability to
function as independent entities and it is argued that the doctrine ought to be
“engaged at a point in time when the sum effect of all federal action…is that the
practical ability of the States to perform their constitutional role is substantially
impaired or curtailed.”87 Unfortunately no single case is likely to sound the alarm
bells for the High Court and for the States and it will likely be a death by a thousand
cuts.

Following the developments in Work Choices there is significant scope for the
Commonwealth to intrude into areas that were formally considered the province of
the States. The effect on this States could be so large because “of the enormous
expansion in Australia in the number and variety of activities of foreign and trading
corporations.”88 There are a number of different models of federalism that could
develop depending on the approach taken by the Commonwealth to its apparently
very broad powers. Roger Wilkins suggests a number of different scenarios. The first
sees the Commonwealth deciding policy and using its financial power to require the
States to implement it. Second is a partnership scenario where policy is decided
collectively and then implemented by the States. Third and fourth see the
Commonwealth deciding policy and then bypassing state governments altogether by
engaging the private sector or directly funding users of public services. Finally, the
unlikely scenario of a Commonwealth withdrawal from certain areas and a coordinate
withdrawal of the States from areas of Commonwealth responsibility is canvassed by
Wilkins.89 It is desirable that the High Court forge a new path as federalism promotes
85
D Barnett, n 60 above, 122.
86
(1947) 74 CLR 31.
87
D Barnett, n 60 above, 124.
88
Work Choices Case (2006) HCA 52 at 451 per Kirby J
89
R Wilkins, n 9 above, 11.
“diversity and experimentation in law making”, intergovernmental cooperation and
protection of individual rights90 and it is not in our interests that the States be reduced
to mere service providers.

90
Work Choices Case (2006) HCA 52 at 446 per Kirby J