Section 92 of the Constitution of Australia
Section 92 of the Constitution of Australia, as far as is still relevant today is:
This provision has been the cornerstone of significant Australian constitutional jurisprudence, which has also been quite complex. As the High Court of Australia observed in Cole v Whitfield:
20. The creation of a limitation where none was expressed and where no words of limitation were acceptable was a task which, having regard to the diverse and changing nature of inter-State trade, commerce and intercourse, was likely to produce a variety of propositions. And so it has. Sir Robert Garran contemplated that a student of the first fifty years of case law on s.92 might understandably "close his notebook, sellhis law books, and resolve to take up some easy study, like nuclear physics or higher mathematics."... Some thirty years on, the student who is confronted with the heightened confusion arising from the additional case law ending with Miller v. TCN Channel Nine would be even more encouraged to despair of identifying the effect of the constitutional guarantee.
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The full text of Section 92 is as follows:Background in the Constitutional Conventions
Before the beginning of the first Constitutional Convention in Sydney in 1891, Sir Henry Parkes originally proposed the following resolution:At the Convention itself, the wording of the resolution that was presented was altered to read:
As Parkes said at that Convention, in explaining the nature of his proposal:
I seek to define what seems to me an absolutely necessary condition of anything like perfect federation, that is, that Australia, as Australia, shall be free free on the borders, free everywhere in its trade and intercourse between its own people; that there shall be no impediment of any kind that there shall be no barrier of any kind between one section of the Australian people and another; but, that the trade and the general communication of these people shall flow on from one end of the continent to the other, with no one to stay its progress or call it to account.
While the resolution carried, no action was taken on the Convention's proposals because of political changes in New South Wales. The matter was revisited at the 18971898 Convention's first session in Adelaide, where it was promoted by Edmund Barton and adopted as one of the "principal conditions of federation" that "the trade and intercourse between the Federated Colonies, whether by land or sea, shall be absolutely free." In the debates, Alfred Deakin was concerned whether this, together with the proposed Commonwealth power to regulate interstate trade and commerce, would deprive the States of all power to regulate trade even within their own borders, while Isaac Isaacs maintained that the proposal only dealt with the question of border duties between the States.
At the Sydney session, Barton intended to amend the proposal, by declaring that "trade and intercourse throughout the Commonwealth is not to be restricted or interfered with by any taxes, charges or imposts" but no decision was taken at that time.
At the Melbourne session, Isaac Isaacs took issue with this amendment, declaring that such language would extend beyond interstate trade into intrastate trade, as it was both ambiguous and too general. Other speakers, such as John Downer, felt that such was not the case. An amendment was passed, substituting "between the States" for "throughout the Commonwealth." Towards the end of the session, that phrase was changed to read "among the States," but not without intense debate about the nature of the clause. Barton responded to the criticism thus:
The final wording that appeared as s. 92 was adopted towards the end of the Melbourne session. "It was typical of the situation that Sir George Reid, the New South Wales Premier famous for the equivocations on both federation and free trade, should have praised the section as 'a little bit of layman's language.' He was probably the last person to give it any praise."
The nature of "trade, commerce, and intercourse among the States"
"Trade and commerce" and "intercourse" are two separate concepts, as noted in Cole v Whitfield:In that regard:
and, as noted by Isaacs J. in Duncan v Queensland:
As well, "among the States" has been given a broad meaning, as Evatt J. observed in R v Vizzard, ex parte Hill:
Therefore, "interstate trade" can fall into three categories:
The first two categories are clearly completely interstate transactions, but only the delivery component in the third is interstate, as the High Court has resisted the idea that delivery alone would colour the entire transaction, except possibly where it can be shown that both parties had contemplated that the arrangement would entail interstate delivery.
Interpretation in the courts
Historical development
, seven years after his retirement from the Judicial Committee of the Privy Council, expressed the opinion that s. 92 ought to have been construed purely as a fiscal clause. That, however, has not found significant support in Australia's constitutional jurisprudence.Section 92 was first tested in the High Court of Australia in Fox v Robbins, in which a Western Australia law that assessed a lower rate of tax on liquor made from fruit produced within the State was held to be invalid. As Barton J. noted:
In the case of James v Commonwealth, which expanded on the previous ruling in James v. Cowan, the Judicial Committee of the Privy Council decided that s. 92 ought to be construed more in the nature of laisser passer than of laisser faire. It also ruled that it restricted the Commonwealth Parliament as well as State Parliaments, thus greatly affecting the Parliament's authority to regulate interstate trade and commerce under s. 51. In making this ruling, the Privy Council affirmed the observation of Evatt and McTiernan JJ in the High Court:
We are definitely of opinion that sec. 92 lays down a general rule of economic freedom, and necessarily binds all parties and authorities within the Commonwealth, including the Commonwealth itself, because, as was pointed out by the Privy Council itself, it establishes a "system based on the absolute freedom of trade among the States"
Since Fox, the decisions of the High Court have turned on different approaches, the most prominent of which have been:
"Individual rights" approach
The "individual rights" approach became the dominant view in Bank of New South Wales v Commonwealth, where any individual trader who was burdened in carrying on interstate trade could attract s.92 protection, but the freedom was not absolute:The most notable example of this approach came in Australian National Airways Pty Ltd v Commonwealth, where the High Court ruled that the Commonwealth could establish a state-owned airline, but could not grant it a monopoly on interstate air traffic. Latham C.J. summarised it thus:
The Act is a prohibition, with a single exception, of such services, and that prohibition is quite independent of any considerations relating to safety, efficiency, airworthiness, &c., which otherwise might have been relied upon as the basis of an argument that the statute regulated such services in the sense of introducing regular and orderly control into what otherwise might be unregulated, disorderly, possibly foolishly competitive, and therefore inefficient services. The exclusion of competition with the Commission is not a system of regulation and is, in my opinion, a violation of s. 92. If a provision of this character does not infringe s. 92 when applied to carriers, I can see no answer to the contention that a similar provision might be applied to all inter-State traders without any breach of s. 92. If that were the case, the Commonwealth Parliament could create a corporation and give it an exclusive right to engage in every form of inter-State trade and commerce, or, without creating a corporation, could give an exclusive licence to a particular person to engage in such trade and commerce. Such a result would reduce s. 92 to almost complete insignificance.
Some notable exclusions from the scope of s. 92 have included:
The reasoning for this approach was given by Barton J. in New South Wales v Commonwealth :
Here the Statute converts the dominion of the owner into the dominion of the State. It is no answer to the effect of that change of dominion to say that the sale is not voluntary. The protection given by sec. 92 to the dominion of the old owner is lost to him, and becomes a protection to the dominion of the new owner, whether State or ordinary citizen. It would be a strange thing to say that sec. 92 means that a protection given in respect of dominion is retained by him who lost that dominion under the law, or to say that liability instead of protection is the lot of him to whom the law gives the dominion.
Current approach for trade and commerce under ''Cole''
This approach would be supplanted in 1988 by the free trade approach in the pivotal case of Cole v Whitfield, where, in a unanimous decision, the High Court identified the full extent of s. 92:
18. The purpose of the section is clear enough: to create a free trade area throughout the Commonwealth and to deny to Commonwealth and States alike a power to prevent or obstruct the free movement of people, goods and communications across State boundaries....
22. The expression "free trade" commonly signified in the nineteenth century, as it does today, an absence of protectionism, that is, the protection of domestic industries against foreign competition....
Accordingly, s. 92 prohibits the Commonwealth and the States from imposing burdens on interstate trade and commerce which:
Because of the new approach in Cole, the High Court will be less concerned with issues of policy, and, therefore, will not be concerned with the following matters where there is no protectionist purpose or effect:
Accordingly, in Barley Marketing Board v Norman, it was held that the compulsory sale of barley to a State marketing board did not contravene s. 92, as the grain had not yet entered interstate trade.
The appropriate test in determining the issue of unlawful protectionism under s. 92 was subsequently formulated in Castlemaine Tooheys Ltd v South Australia, as follows:
In that regard, Gaudron J. and McHugh J. noted in Castlemaine that:
8....whether a law is appropriate and adapted to an objective and whether any burden imposed on interstate trade is incidental and not disproportionate to the achievement of that objective, will often sufficiently reveal that the law is discriminatory in a protectionist sense. However, the essence of the legal notion of discrimination lies in the unequal treatment of equals, and, conversely, in the equal treatment of unequals. Thus, if there is no inequality or relevant difference between the subject matter of interstate trade and the subject matter of intrastate trade, a law which is appropriate and adapted to an objective and burdens interstate trade only incidentally and not disproportionately to that objective will, in our view, offend against s.92 if its practical effect is protectionist – particularly if there exist alternative means involving no or a lesser burden on interstate trade.
The second step of the Castlemaine test was modified in 2008 in Betfair Pty Limited v Western Australia, to include the concept of reasonable necessity, which also depends on proportionality:
Betfair effectively allows the High Court to consider both the purpose and effect of any law essentially its pith and substance that will be contested in future s. 92 jurisprudence, as: