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While a Tasmanian proposal to introduce same-sex marriage was defeated in the Tasmanian Parliament, other States are considering introducing bills on the subject. In doing so, they will no doubt look to the Tasmanian Bill for some guidance. CRU intern, Sophie Maltabarow, has analysed the Tasmanian Bill and the constitutional and legal problems that would have potentially arisen from it, if it had passed, particularly in relation to jurisdictional issues. Here is Sophie Maltabarow’s analysis:
‘In September 2012, marriage equality supporters shifted their gaze from the Commonwealth parliament to Tasmania in the hope that it would become the first state to legalise same-sex marriage. These hopes were dashed when the Same-Sex Marriage Bill 2012 was defeated in the Tasmanian upper house.
The Tasmanian Bill was rushed through Parliament in an attempt to be first State to permit same-sex marriage and perhaps win the associated tourist dollars. Given that constitutional uncertainty was one of the main grounds cited for why the Tasmanian Bill failed, other States and Territories will need to look closely at the way in which any future legislation on same-sex marriage interacts with the federal legislation.
Same-sex marriage is more than a symbolic issue of equality. State and Territory legislation in this area will affect the legal rights of people in terms of their property upon divorce and custody of their children. The States and Territories that are currently considering same-sex marriage – South Australia, NSW and the ACT – would be wise to look closely at the Tasmanian Bill and see what gaps need addressing before introducing their own legislation. The following discussion looks at the now hypothetical issues raised by the Tasmanian Bill.
Legal recognition
The Tasmanian Bill creates a legislative scheme for a new legal category of ‘same-sex marriage,’ which includes dissolution and nullity (Part 3), proceedings for financial adjustment and maintenance (Part 4), financial agreements (Part 5), and authorised celebrants (Part 6).
No doubt the first question that the out-of-state same-sex marriage tourist would ask before heading to Tasmania would be: what happens when we get home?
State same-sex marriage legislation needs to be clear on what happens to legal rights and relationship recognition when a person married in that state resides in or moves to another state within Australia.
The Tasmanian Bill was drafted in the hope that other states would eventually follow suit with similar legislation that provides for reciprocal same-sex marriage recognition. Section 75 of the Tasmanian Bill recognises same-sex marriages registered under corresponding laws in other Australian jurisdictions.
Until these corresponding laws eventuate, it appears that out-of-state couples married in Tasmania would have to rely on their legal rights as same-sex de facto couples under the Family Law Act 1975 (Cth) and other federal or state legislation. If the Bill had been passed, Tasmanian same-sex marriage would have initially been recognised in Tasmania only.
While the majority of couples choosing to solemnize a same-sex marriage in Tasmania would probably be recognised as de factos under Commonwealth law, a small number of couples may fall through the gap. For these couples, despite their same-sex marriage, their relationship may not have been recognised at all outside of Tasmania.
Clarification within the Bill as to the legal effect of the same-sex marriage outside of Tasmania in States which do not recognise same-sex marriage would help remove legal uncertainty for future newlyweds.
Constitutional issues
Constitutional uncertainty was one of the reasons why the Tasmanian Bill was defeated. The uncertainty is created by potential inconsistency with federal laws. Where there is inconsistency between a federal and a state law, s 109 of the Constitution provides that the federal law prevails and the state law is invalid to the extent of that inconsistency.
Section 51(xxi) of the Constitution gives the Federal Parliament concurrent powers with the States to legislate with respect to marriage. Section 51(xxii) provides legislative power with respect to ‘divorce and matrimonial causes; and in relation thereto, parental rights, and the custody and guardianship of infants’. State Parliaments, in contrast to the Commonwealth, have plenary powers and historically marriage was dealt with under State and Territory law.
De facto relationships
Section 51(xxxvii) of the Constitution permits States to refer ‘matters’ to the Commonwealth so that the Commonwealth Parliament can enact laws with respect to these matters. This has been used to ‘plug’ some of the gaps in the Commonwealth’s powers. All states except Western Australia have referred to the Commonwealth the matter of ‘guardianship, custody, maintenance and access’ in relation to ex-nuptial children. In addition, all states have referred the matter of property and partner maintenance issues arising from the breakdown of a de facto relationship (see: Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth)).
In Tasmania, this matter was referred to the Commonwealth by the Commonwealth Powers (De Facto Relationships) Act 2006 (Tas). Section 4(1)(b) of this Act refers to the Commonwealth, among other things, ‘financial matters relating to de facto partners arising out of the breakdown (other than by reason of death) of de facto relationships between persons of the same sex’. An important question here is whether the referral gives the Commonwealth exclusive powers, or whether the power to make laws with respect to that matter can be exercised by the Commonwealth and Tasmania concurrently. Even if the referral allows for concurrent powers, section 109 of the Constitution continues to operate in respect of inconsistent State laws. The federal legislation for corporations provides an example of this problem. In 2003 Justice French, as he then was, noted that ‘the Corporations Law 2001 seeks to overcome the risks of inadvertent inconsistency by expressly denying any intention ‘to exclude or limit the concurrent operation of any law of a State’.” The only express mention of concurrent operation of State and Territory laws in the Commonwealth Family Law Act 1975 is section 114AB(1), which states that the provisions dealing with injunctions and powers of arrest ‘are not intended to exclude or limit the operation of a prescribed law of a State or Territory that is capable of operating concurrently with those sections.’ Does this suggest that the remaining provisions are intended to exclude or limit state laws? A couple who marry in Tasmania are likely to be recognised as de factos outside of Tasmania. This may give rise to an inadvertent inconsistency, although as discussed below the Tasmanian Bill largely adopts the same language as the relevant sections of the Family Law Act.
Marriage vs. ‘same-sex marriage’
The Marriage Act 1961 (Cth) introduced a national marriage code. Interestingly, there was no definition of marriage in the original Marriage Act. Senator Gordon, who introduced the Bill, was content to rely upon the common law definition which would have allowed some scope for the definition to evolve along with society’s changing conception of marriage. However, the Act was amended in 2004 under the Howard Government, and s 5(1) now provides a definition of marriage: ‘the union of a man and a woman to the exclusion of all others, voluntarily entered into for life’. This amendment was described by former Chief Justice of the Family Court of Australia, Alistair Nicholson, as ‘one of the most unfortunate pieces of legislation that has ever been passed by an Australian Parliament.’
Unlike the recently defeated federal marriage equality bills, the Tasmanian bill does not expand the current Commonwealth definition of marriage to include ‘the union of two people, regardless of their sex, sexual orientation or gender identity’ (see: Schedule 1, s 1 of the Marriage Equality Amendment Bill 2012 (Cth)). The Tasmanian Bill was drafted in an attempt to avoid any inconsistency with the current federal legislation on marriage. The Bill legalises ‘same-sex marriage’, defined in s 3 of the Bill as ‘the lawful union of two people of the same sex, to the exclusion of all others, voluntarily entered into for life’.
As the Bill avoids the use of the stand-alone word ‘marriage’, certain provisions of the federal Family Law Act that generally apply to married people across Australia would not apply to people married under the Tasmanian Bill. The Bill attempted to fill these gaps itself by adopting the relevant parts of the federal Marriage Act and Family Law Act and replacing ‘marriage’ with ‘same-sex marriage’. Couples married under the Tasmanian Same-Sex Marriage Bill may simultaneously be recognised as de facto couples under state and federal legislation.
Parallels with the Marriage Act
Part 2 of the Tasmanian Bill deals with the application of same-sex marriage and its solemnisation. Section 5(2) states that the Bill applies to ‘all same-sex marriages solemnised, or intended to be solemnised, in Tasmania’. Section 6 provides that the same-sex ‘marriageable age’ is 18 (this is the same as under the Marriage Act, although the Marriage Act also provides that persons who have attained 16 years of age may apply to a judge or magistrate for authorization with appropriate consent (s 12). This option is not available under the Tasmanian Bill, possibly because the age of consent in Tasmania is 17). The grounds on which same-sex marriages are void (s 7) are the same grounds as set out in s 22 of the Marriage Act.
Division 4 deals with the solemnisation of same-sex marriages. This division substantially replicates Part IV, Division 2 of the Marriage Act, ‘Marriages by authorised celebrants.’ It is interesting to note the difference between the words the authorised celebrants are required to use to explain the nature of the relationship about to be entered into by the couple. Under the Tasmanian Bill, the celebrant must state: “According to the Same-Sex Marriage Act 2012, this wedding recognizes that you are voluntarily entering into a lawful and binding union, for life, to the exclusion of all others” (s 13). In comparison, under the Marriage Act the celebrant must state: “Marriage, according to law in Australia, is the union of a man and a woman to the exclusion of all others, voluntarily entered into for life” (s 46(1)). The drafters of the Tasmanian Bill have clearly avoided the use of the word marriage in this explanation.
Another difference worth pointing out is that s 47 of the Marriage Act, which provides that there is no obligation on an authorised celebrant who is a minister of religion to solemnise any marriage, is not replicated in the Tasmanian Bill. However, as it is optional for ministers of religion to apply to become registered same-sex marriage celebrants in the first place under the Tasmanian Bill, this is unlikely to cause any problems in practice.
Division 5 sets out the offences under the Same-Sex Marriage Bill, which closely reflect the offences provided in Division VII of the Marriage Act. These include same-sex marriage by a person who is already married (s 19; bigamy in s 94 of the Marriage Act) and marrying a person under the marriageable age (s 20; s 95 of the Marriage Act).
Part 7 of the Tasmanian Bill establishes a register of authorised same-sex marriage celebrants. This text substantially duplicates the text of Part IV, Division 1 of the Marriage Act, ‘Authorised celebrants’. However, the Tasmanian Bill omits Subdivision A of the Marriage Act, which provides for the registration of ministers of religion who may then solemnise marriages at any place in Australia. The Tasmanian legislation does not preclude ministers of religion from registering as a same-sex marriage celebrant. Ministers of religion are mentioned only once in s 14(1), which provides that if a same-sex marriage is solemnised by a minister of religion, it may be solemnised according to any form and ceremony recognised as sufficient by their religious body or organisation. A person who is registered as a same-sex marriage celebrant is only entitled to solemnise same-sex marriage within Tasmania (s 82).
Another minor difference is that under s 39B(4) of the Marriage Act, all information contained in the register must be available on the internet. Perhaps with the possibility of harassment in mind, this provision has not been replicated in the Tasmanian same-sex marriage bill.
Parallels with the Family Law Act
As the Same-Sex Marriage Bill creates a new status of legal union beyond the scope of the Commonwealth’s definition of marriage, it must also be capable of dealing with the legal effect of a same-sex marriage break-down. Parts 3, 4 and 5 of the Tasmanian Bill go beyond the scope of the Marriage Act to territory covered for heterosexual marriages and de facto relationships under the Family Law Act 1975 (Cth).
Part 3 deals with the dissolution and nullity of same-sex marriage. Section 27 provides that the Supreme Court of Tasmania has jurisdiction and in order for proceedings to be initiated, one of the parties must be an Australian citizen and ordinarily a resident of Tasmania at the relevant date. On the basis of this provision, it is not clear how out-of-state same-sex marriage ‘tourists’ would go about dissolving their union. The requirement of Tasmanian residence seems to make this impossible, leaving them bound in an eternal Tasmanian same-sex wedlock. Section 29 provides for making an application for a dissolution order and the language is taken directly from the Family Law Act provision on divorce (s 48). The provisions which deal with nullity of the same-sex marriage are also the same as those in the Family Law Act.
The Tasmanian Bill does not provide additional considerations that need to be taken into account before a divorce will take effect if the couple have children. This is dealt with in s 55A of the Family Law Act. Indeed, no specific part of the Tasmanian Bill deals with children (see: Part VII, Family Law Act). This seems to be a glaring hole in the Bill, and presumably other state and federal legislation would serve to ‘gap-fill’ this area of same-sex marriage breakdown. The Tasmanian Bill refers directly to children just twice in Part 4: Proceedings for financial adjustment and maintenance (ss 45 and 51) and also twice in Part 5: Financial Agreements (ss 68 and 73).
Part 4 of the Bill provides that the Tasmanian Magistrates Court or Supreme Court have jurisdiction to address applications for financial adjustment and maintenance upon the break-down of a same-sex marriage (s 41). The Family Law Act, in contrast, confers jurisdiction upon the Family Court, the Federal Magistrates Court, the Supreme Court of NT, and each court of summary jurisdiction in each territory to hear de facto financial causes (s 39A). It appears that same-sex couples married in Tasmania can still apply to the Family Court if they satisfy the criteria of a de facto relationship under the Family Law Act. A same-sex marriage in Tasmania may in fact help a couple to qualify as de facto, as s 4AA(2)(g) of the Family Law Act provides that one of the relevant factors to consider is whether the relationship is or was registered under a prescribed law of a State or Territory.
Part 5 deals with financial agreements, and substantially mirrors Part VIIIA of the Family Law Act. Same-sex couples who choose to marry in Tasmania are likely to fall within the definition of a de facto relationship under the Family Law Act, which includes a relationship ‘between 2 persons of the same sex’ (s 4AA(5)(a)). Interestingly, s 90RC(2) of the Family Law Act states that the Parliament intends the Family Law Act’s de facto financial provisions – those dealing with the finances of a couple when the relationship breaks down – are to apply to the exclusion of any State or Territory Law. For example, the current Tasmanian Relationships Act 2003 provisions on financial maintenance and adjustment for de facto couples are now largely redundant.
The Tasmanian Bill’s property adjustment and financial provisions may be saved because the Bill does not refer specifically to de facto relationships, only to same-sex marriage. Section 90RC(2)(b) requires that the State or Territory Law deal with those matters ‘by referring expressly to de facto relationships (regardless of how the State or Territory law describes those relationships)’. It would be helpful for any future same-sex marriage legislation to explicitly deal with how it will operate with federal legislation concerning de factos.
Tasmania’s Relationships Act 2003
Under current Tasmanian legislation, same-sex couples can register a ‘deed of relationship’ if they are in a ‘significant relationship’. ‘Significant relationship’ is broadly defined in s 4 as a relationship between two adult persons who have a relationship as a couple and who are not married to one another or related by family. A couple cannot register their relationship unless they live or ordinarily reside in Tasmania. They also cannot register if they are currently married or a party to a deed of relationship (s 11). Section 15 provides that a deed of relationship is revoked by the marriage of either party to the deed. A same-sex marriage – either in Tasmania or in another State or Territory – would therefore likely revoke the deed of relationship. This revocation may affect a couple’s rights if, for example, certain pieces of Commonwealth or State legislation recognised the Tasmanian deed of relationship but not same-sex marriage.
Conclusion
The Tasmanian Bill creates a new category of legal union – the same-sex marriage – which is distinct from both marriage and de facto relationships. In this respect, the Tasmanian Bill perhaps does not provide the full equality sought by same-sex marriage supporters. However, Tasmanian gay rights activist Rodney Croome made the point that the States were first to recognise same-sex de facto relationships, legislating one-by-one. It wasn’t until 2008, when States referred this matter to the Commonwealth, that the federal government amended legislation to ensure same-sex de facto couples had the same rights as heterosexual de facto couples across several areas of law. As States and Territories are also likely to lead the way with same-sex marriage legislation, it is important that the legal rights of those wed under such legislation, both in the place of marriage and across Australia, are carefully considered, and that the interaction between State or Territory law and federal law is clarified.’

While most of the discussion of the impending royal birth falls into the category of fawning adulation, dismissive contempt or celebrity gossip, the one substantive issue that has arisen concerns the rules of succession to the throne and the attempt to change them. This blog post seeks to illuminate the legal and constitutional issues involved with respect to Australia.
The current rules
The rules concerning succession to the throne are a complex mix of common law and legislation. On the common law side, the rules are based on a form of primogeniture that favours males over females. Male heirs inherit, in order of birth, before any female heir, even if she was born first. A female heir may only inherit if she has no living brothers and no deceased brother who had children. This bias has long been removed from English laws concerning the inheritance of property, but remains fossilised in the rules concerning succession to the throne. One of the proposals agreed by the Realms in a side-meeting at CHOGM in 2011 was to remove the bias against females, but otherwise retain the system of primogeniture.
On the legislative side, the Bill of Rights 1688, the Act of Settlement 1701 and the Accession Declaration Act 1910 require that the monarch be ‘in communion’ with the Church of England and declare himself or herself to be a faithful protestant. This does not necessarily mean that the monarch must be a member of that Church, as George I and George II were both Lutherans. The Bill of Rights and the Act of Settlement also state that any person who is in communion with the Church of Rome or who shall profess a Popish religion or marry a Papist shall be excluded from inheriting the Crown or exercising any regal power, authority or jurisdiction and shall be treated as dead for the purposes of succession to the throne. This means that a person who marries a Catholic loses his or her place in the line of succession, although his or her children may still inherit the throne as long as they are Protestants who are in communion with the Church of England and are not married to a Catholic. The other proposal agreed by the Realms at CHOGM in 2011 was that a person would not lose his or her place in the line of succession if he or she marries a Catholic. However, to be monarch, a person must still be ‘in communion with the Church of England’ and not be a Catholic.
The British Government also proposes to repeal the Royal Marriages Act 1772 and replace it with more limited legislation. The Royal Marriages Act requires all descendants of George II to obtain the monarch’s consent ‘signified under the great seal and declared in council’ before marrying. If not, the marriage is void (except for princesses marrying into foreign families or persons over 25 who go through a formal process that permits the UK Parliament to disapprove of the proposed marriage). Given that the number of descendants of George II is now significant, and many would not know that they were descendants of George II, it is likely that there are many marriages that are technically void. The British Government intends to validate such marriages and to restrict the need for permission to marry to the first few (probably six) in line to the throne.
The application of the rules of succession to Australia
To what extent do these laws apply to Australia? The Bill of Rights 1688, the Act of Settlement 1701 and the Royal Marriages Act 1772 formed part of British law at the time Australia was settled. The common law arrived in Australia with its settlers. Doubts about the extent of reception of British statutes led to the enactment of the Australian Courts Act 1828. From then, at the latest, the Bill of Rights 1688, the Act of Settlement 1701 and the Royal Marriages Act 1772 applied as part of the law of the Australian colonies. In some States, these laws have been formally re-enacted as part of the State’s laws (see the Imperial Acts Application Acts in the ACT, NSW, Qld and Vic). For example, s 6 of the Imperial Acts Application Act 1969 (NSW) provides that these Acts are declared to have remained in force in NSW since 25 July 1828 and to continue in force. While there is debate about whether these laws applied by paramount force, it is generally accepted that the colonies and their successor States had no legislative power to change them.
The Statute of Westminster 1931 permitted the Commonwealth Parliament (and the Parliaments of the other Dominions) to enact laws that were inconsistent with laws of paramount force. Recognising that this could potentially affect the laws of succession, the preamble to the Statute provides that ‘it would be in accord with the established constitutional position of all the members of the Commonwealth in relation to one another that any alteration in the law touching the Succession to the Throne or the Royal style and titles shall hereafter require the assent as well of the Parliaments of all the Dominions as of the Parliament of the United Kingdom.’ The problem for the Commonwealth, however, is that it has limited heads of power. In 1936 the Commonwealth approved of the changes to succession resulting from the abdication, but did so by way of resolution rather than statute, because of doubts that it had any legislative power to enact a law about succession to the throne.
The States remained bound by laws of paramount force until the enactment of the Australia Acts 1986. Section 2 gives the States ‘all legislative powers that the Parliament of the United Kingdom might have exercised before the commencement of this Act for the peace, order and good government of that State’. Hence it arguably gives the States the legislative power to make laws concerning the succession in relation to the Crown of the State. This, however, depends upon whether there are separate State Crowns, or only one Commonwealth Crown. This was a matter left unresolved by the Australia Acts.
The Australia Acts also terminated the power of the United Kingdom to legislate for Australia. Hence, any changes made by British law to the succession to the British Crown would not affect the Act of Settlement or the Bill of Rights to the extent that they form part of Australian law.
The final complicating factor involves the references to the Queen in the Commonwealth Constitution. The oath set out in the Schedule to the Commonwealth Constitution refers to allegiance to ‘Her Majesty Queen Victoria, Her Heirs and successors according to law’. It does not specify which law. However, covering clause 2 in the Commonwealth of Australia Constitution Act states that the provisions in that Act (s 9 of which contains the Commonwealth Constitution) that refer to the Queen ‘shall extend to Her Majesty’s heirs and successors in the sovereignty of the United Kingdom’. Whether this provision imposes a requirement that the ‘Queen’ referred to in the Commonwealth Constitution must be the person who is Queen of the United Kingdom, or whether it is simply a redundant interpretative provision, remains a matter of dispute.
The different approaches to the meaning of covering clause 2
There are three views as to how covering clause 2 operates in Australia. The first is that it mandates that whoever is the sovereign of the United Kingdom is also, by virtue of this external fact, sovereign of Australia. According to this view, a change in the United Kingdom law of succession would have no legal application as part of Australian law, but if it had the effect of changing the sovereign (eg as a result of abdication) then the new sovereign of the United Kingdom would automatically become the new sovereign of Australia because of the operation of covering clause 2.
The second view is that covering clause 2 is merely an interpretative provision which simply assumes, but does not enact, the existence of a succession law that is operative in Australia. According to this view, covering clause 2 operates to ensure that references to the sovereign are not taken to be confined to the sovereign at the time of the enactment, but extend to whoever happens to be the sovereign from time to time in accordance with the applicable law. This view is consistent with the position in Canada where the equivalent provision was repealed because it was regarded as a redundant interpretative provision, rather than a substantive requirement. The consequence in Australia of this approach is that, as the United Kingdom can no longer legislate for Australia, the applicable law would be the pre-existing law of succession as altered by Australian law.
The third view, which falls between the two extremes is that covering clause 2 incorporated by reference into the Commonwealth of Australia Constitution Act the British laws of succession to the throne. Under s 4 of the Statute of Westminster, those laws could be amended or repealed by United Kingdom legislation to which Australia had given its request and consent. That is no longer the case as s 1 of the Australia Acts provides that no Act of the United Kingdom Parliament may now extend to Australia as part of Australian law. In Sue v Hill (1999) 199 CLR 462, three Justices of the High Court of Australia noted that covering clause 2 identifies the Queen ‘as the person occupying the hereditary office of Sovereign of the United Kingdom under rules of succession established in the United Kingdom’. Their Honours went on to state at [93]:

The law of the United Kingdom in that respect might be changed by statute. But without Australian legislation, the effect of s 1 of the Australia Act would be to deny the extension of the United Kingdom law to the Commonwealth, the States and the Territories.

The argument here is that the rules of succession have been effectively patriated with the Australian Crown and while they continue to exist in their current British form, they may only be amended or repealed by Australian action.
Covering clause 2 could have been amended or its effect clarified at the time of the enactment of the Australia Acts 1986, but it was not. The issue was too contentious and was swept under the carpet, leaving the application of covering clause 2 unclear. However, given the nationalistic approach of the High Court and the view of three judges in Sue v Hill, it is likely that a future court would hold that no British changes to the law of succession could have either a direct or indirect effect upon the law of succession with respect to Australia and that Australian legislation would have to be enacted to effect such a change.
Changing the rules of succession in Australia
What power, then, permits a change to the rules of succession with respect to Australia? Given that the Queen plays an integral role in relation to State Constitutions and State Parliaments and given the Commonwealth’s lack of a specific head of power to deal with succession to the throne, the preferable approach is to employ s 51(xxxviii) of the Constitution. This entails State legislation requesting the enactment of a law by the Commonwealth that only the United Kingdom Parliament could have enacted at the time of federation. Such an approach would be consistent with both a single federal Crown or a heptarchy of State and Commonwealth Australian Crowns.
The only problem with using s 51(xxxviii) is the fact that the succession would be formally placed in a Commonwealth law and there is insufficient jurisprudence yet to be certain that the only way of amending or repealing that law would be through another law supported by s 51(xxxviii). The States might wish to ensure that the law is framed in such a manner as to make clear that it can only be amended or repealed by the same procedure.
Other sources
A full academic article on these issues, including the continuing application of the Statute of Westminster and the constitutional issues that arise in other realms was published in [2011] Public Law 378-401 and is available here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1943287

CRU Intern Sophie Maltabarow discusses the likelihood of success of the challenge by Fortescue Metals to the Minerals Resource Rent Tax:
Andrew Forrest and the beleaguered Fortescue Metals Group had a victory in the High Court last week against the corporate watchdog. A unanimous judgment held that Mr Forrest’s statements on binding agreements with State-owned Chinese entities back in 2004 were not false or misleading. This decision would have come as a personal relief for Mr Forrest, as the High Court found that he had not breached his Directors duties to exercise the level of degree of care and diligence required by s 180(1) of the Corporations Act 2001 (Cth). Fortescue Deputy Chairman Herb Elliott stated that ‘ASIC’s allegations have been an expensive distraction. We can now focus our full attention to ensuring the continued success of Fortescue Metals Group for many years to come.’ Fortescue Metals was also successful in an appeal against the decision of the Australian Competition Tribunal in September. But Mr Forrest has another legal proceeding underway: Fortescue Metals filed a statement of claim in the High Court on 22 June 2012, challenging the constitutionality of the Minerals Resource Rent Tax (MRRT) which came into effect 1 July 2012.
The MRRT taxes profits made by companies mining iron ore and coal. In working out a mining corporation’s profit, the amount paid by it in State royalties is first deducted. This ‘loophole’ equalizes the effect of different State royalties on the overall burden of the tax on miners. It means that the higher a state royalty, the lower the MRRT paid and the lower the revenue received by the Commonwealth. Greens leader Christine Milne has introduced a private member’s bill in the Senate to close this loophole in the MRRT. The Minerals Resource Rent Tax Amendment (Protecting Revenue) Bill 2012 provides that any increases in State or Territory royalties after 1 July 2011 should be disregarded when calculating royalty credits for the MRRT.
Big Mining has spoken out against any amendment to the MRRT. If it has to accept the tax, it wants to keep the loophole.
It is no surprise that the Greens are taking on Big Mining in an attempt to protect tax revenue. Nor is it a surprise that mining companies want to preserve their current protection from any rise in State royalties. The credibility problem here for Big Mining is that the Fortescue Metals Group has also sought to challenge the constitutional validity of the tax in the High Court and it relies on the argument that this very loophole causes the MRRT to be unconstitutional.
Fortescue’s challenge is most likely based on an assumption that by the time the High Court decides the case there will be a change in government. The tactical benefit to the constitutional litigation is that if the MRRT is struck down by the High Court, a future coalition government would not have to get its repeal of the tax through the Senate. If the Gillard Government together with the Greens removes the loophole, however, the constitutional challenge would be destroyed.
Mitch Hooke, chief executive of the Minerals Council of Australia, has reportedly said that any change to the MRRT would ‘simply add to the instability and uncertainty of Australia’s taxation regime’ and negatively impact on mining investment in Australia. Surely a constitutional challenge, if Fortescue Metals believes that it has any chance of having the MRRT struck down, also adds to the uncertainty? The line from Fortescue Metals is that by challenging the tax, it is being a ‘good corporate citizen’. It seems clear, however, that both these approaches to the MRRT are motivated by self-interest. The miners complain that the loophole makes the MRRT unconstitutional because it is discriminatory, but at the same time they are lobbying to keep it because it benefits them.
In fact it was Big Mining that negotiated the loophole in the first place. After the federal government abandoned the ‘Resource Super Profits Tax’, a renegotiation deal was done behind closed doors. Three of the largest mining companies in Australia – BHP Billiton, Rio Tinto and Xstrata – negotiated with the federal government for the MRRT in its present form. The States and smaller mining companies were not party to these discussions. The large mining companies successfully negotiated the deduction of State royalties from mining profits before the tax applies and removed a clause which would have capped the amount that could be deducted. The miners are not going to let their loophole go without a fight, even though Fortescue Metals is challenging its constitutional validity.
All the grounds of purported constitutional invalidity raised by Fortescue Metals rely on the MRRT liability being reduced by State royalties. First, Fortescue Metals argues that the MRRT is in contravention of s 51(ii) of the Constitution, the taxation power, because it discriminates between States. Fortescue Metals argues that, all other things being equal, whether a miner will have to pay either more or less of the MRRT in a particular State will depend on the royalty rates in that State. Further, as State governments have the power to raise, reduce or grant exemptions from royalty rates, the MRRT liability may be subject to variation. And therefore this variation amounts to discrimination between the States. Success in this argument will depend upon the High Court taking a highly literal interpretation of the Constitution and the meaning of ‘discrimination’, as the effect of the loophole is to ensure that the overall liability to pay State royalties and the MRRT is equalised for all miners regardless of the State in which they are operating mining projects.
Fortescue Metals is arguing that the effect is to prevent a State from using its power to adjust its royalties rates to encourage economic development, gain a competitive advantage or discourage mining where it is damaging to the environment. The High Court has given some sympathy to such a prima facie discrimination argument in a different context. In the 1988 decision of Bath v Alston Holdings, a majority held that a Victorian law, which would have removed the potential competitive advantage of inter-state tobacco wholesalers selling to Victorian retailers when they did not have to pay tax on tobacco in their home State, was discriminatory and protectionist and therefore contravened s 92 of the Constitution. The minority instead looked to the practical operation of the legislation and made the point that the ‘economic effect of the tax is the same’, regardless of whether the retailer purchases the tobacco from wholesalers within or outside of Victoria. If Fortescue’s challenge is heard by the High Court, it will be interesting to see whether the discrimination between States argument in s 92 can be applied in the context of s 51(ii).
Second, Fortescue Metals submits that the MRRT is unconstitutional because it impairs or curtails the capacity of a State to function as a government with control over the economic development of its natural resources. This is because it removes a State’s capacity to create a competitive advantage by varying its royalty rates. It would have the effect of ‘rendering illusory or inefficacious’ any attempt by a State to differentiate itself from other States or countries. The difficulty here will be showing that the capacity of States to vary royalty rates with economic impact amounts to a constitutional power of the State which is protected by the Constitution. It is unclear whether the Melbourne Corporation doctrine, which preserves the rights of the States to carry out essential governmental functions, would extend to protect control over the use of natural resources and to the capacity to promote the economic development of the State through royalty rates. Regardless of the chances of its success, this argument still relies on the effect of the loophole to challenge the MRRT’s validity.
Third, Fortescue Metals asserts that the MRRT gives preference to one State over another in contravention of s 99 of the Constitution. Again, this argument relies on the loophole. It argues that a State with higher royalties is, in effect, given preference by the MRRT, because it gains additional revenue without damaging its competitive position in the market.
Recent High Court authority suggests this argument will not be successful. In the 2004 case of Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vic), the High Court upheld the validity of a mirror tax scheme. The Commonwealth Places (Mirror Taxes) Act 1998 (Cth) imposes taxes on Commonwealth places (such as airports) which are equivalent to the relevant state taxes, and then returns that tax revenue to the state. One of the arguments made against the scheme was that it contravened s 99 of the Constitution because it gave preference to one state over another. The High Court rejected this argument. It stated that while the tax scheme ‘may produce differences in revenue outcomes between States,’ this simply reflected the difference in taxation regimes from State to State, and that the differences were ‘appropriate and adapted to a proper objective’.
Finally, the MRRT is challenged on the basis of s 91 of the Constitution, which provides that ‘nothing in this Constitution prohibits a State from granting any aid to or bounty on mining for gold, silver, or other metals’. The assertion is that, because the MRRT has the effect of removing any competitive benefit for a State to have a lower royalty rate, it prevents a State from aiding the mining industry through a reduction in royalties. This argument may prove difficult, as the High Court has previously said in 1978 in Seamen’s Union of Australia v Utah Development Co that s 91 ‘neither grants power nor withholds it. It merely limits the scope of the prohibition in s 90,’ which gives the federal government exclusive power over customs, excise, and bounties. There is no positive right for the MRRT to impinge on.
It is also interesting to consider the States’ stance on the ‘loophole’ issue, keeping in mind that they were not included in the final negotiations on the MRRT. The loophole presents an obvious cash-raising opportunity for the States. The Sydney Morning Herald reported that the federal Treasurer Wayne Swan has written to States and territories, saying that he intends to penalise dollar-for-dollar any attempts by States to make a revenue-grab by increasing their royalty rates. NSW has already increased its royalty rates since the MRRT was passed by parliament, and Queensland has announced it intends to do the same. Interestingly, Queensland has also announced that it will join Fortescue Metals in its challenge to the MRRT’s constitutional validity. It may well find itself in a similarly logically-uncomfortable situation.
If Senator Milne’s bill passes through parliament before any challenge is decided by the High Court, miners will be left without their current protection from rises in State royalties and the grounds for Fortescue Metals’ constitutional challenge will be destroyed. Even if the challenge does make it to court, Fortescue Metals’ chances of success are not high. It may well be prudent for Mr Forrest to listen to the words of his Deputy Chairman in response to their win against ASIC and the end to ‘expensive distractions’.

CRU intern, Sophie Maltabarow, has contributed the following blog:
Bob Katter’s campaign against free trade faced another set back in August, with the Joint Standing Committee on Treaties (JSCOT) recommending that his Treaties Ratification Bill 2012 not be passed. While academic opinion regards the Bill as likely to be constitutionally valid, it would present some serious practical and political implications for treaty-making in Australia.
Mr Katter introduced the private member’s bill on 13 February 2012. His Australian Party’s website expresses concern about free trade agreements and states that it ‘is committed to providing support and protection to Australian industries and reversing this madness, bringing jobs back home and reviving our once proud manufacturing and agriculture industries.’ The Treaties Ratification Bill forms part of the Australian Party’s policy platform, which also includes preventing any further free trade agreements and ensuring that, where practical, all Governments purchase only Australian goods.
The Bill has only one substantive provision. It states:

‘The Governor-General must not ratify a treaty unless both Houses of Parliament have, by resolution, approved the ratification.’

The effect of the provision is to make positive approval by both Houses of Parliament a condition precedent to the ratification of any treaty by the executive government.
Treaty ratification in Australia – a democratic deficit?
Katter is not the first to raise the issue of parliamentary approval of treaty ratification. The power to enter into a treaty is an executive power, but many have raised concerns that there is a democratic deficit in treaty-making and proposed measures to ameliorate it. In 1983, Senator Harradine tried and failed to establish a Senate Standing Committee on Treaties. The Australian Democrats introduced a Parliamentary Approval of Treaties Bill in 1994, but it was not passed. The Senate Legal and Constitutional References Committee, in its Trick or Treaty? Report in 1995 considered the question of parliamentary approval of treaty ratification, but opted first to try greater parliamentary scrutiny through the establishment of JSCOT and other accountability measures such as the tabling of treaties and the publication of national interest analyses. These measures were introduced in 1996 and for a time quelled concerns about a democratic deficit in treaty-making.
Bob Katter believes that the current measures do not go far enough. His Bill requires positive approval by both Houses of Parliament before the executive may enter into any treaty. However, the Bill lacks the subtlety and flexibility of the current arrangement. It fails to address the different requirements of urgent or sensitive treaties, and also the large number of administrative or minor treaties. Further, it does not address parliamentary involvement in treaty amendments or withdrawals.
Constitutional questions
The question raised is whether Parliamentary approval as a condition precedent to treaty ratification by the executive is constitutionally valid. The power to enter into a treaty is an executive power, exercised under s 61 of the Constitution, whereas the power to implement the treaty by legislation is exercised by the Parliament under s 51(xxix) of the Constitution. While it is undisputed that the Parliament can legislate to abrogate the executive’s prerogative powers, it is unlikely that Parliament could go so far as to confer executive powers upon itself. This would threaten the separation of powers, to the extent that it exists, between the Parliament and the Executive.
Constitutional law experts Professor Twomey and Professor Williams, both witnesses at the JSCOT Inquiry’s public hearing, were of the opinion that parliamentary approval prior to treaty ratification would most likely be constitutionally valid. Legislating to create a condition precedent does not go so far as to usurp the executive’s prerogative power to negotiate and enter treaties themselves. The Bill merely modifies this power, and this modification is likely to be within the Parliament’s legislative powers.
Practical and political issues
Professor Twomey, in her submission to the Inquiry, noted that aside from constitutional issues the Bill raises a number of practical difficulties. First, requiring positive approval of all treaties by both Houses of Parliament would lead to an ‘unwieldy and impractical’ demand on Parliament’s time. JSCOT has reviewed over 600 treaties since 1996, an average of almost 40 treaties per year. The majority of these treaties are uncontroversial. Even Bob Katter conceded in Parliament on 25 June that the practical effect of the Bill would be to ‘gum up the operations of the Parliament of Australia,’ which suggests that Mr Katter intends to use this Bill to limit the number of treaties Australia enters into. The JSCOT report commented that this isolationist approach is ‘unrealistic and counter to Australia’s national interest’ in the 21st century. Second, the Bill’s blanket requirement for Parliamentary approval of treaties does not allow any flexibility to deal with urgent treaties. As it stands, the Bill would seriously limit Australia’s ability to act in the case of an international emergency.
The Bill raises further political difficulties because it requires the approval of both Houses of Parliament. In recent Australian politics, minor parties or independents have often held the balance of power in the Senate. Mr Laurie Ferguson voiced his concern during parliamentary debate, arguing that the effect of the Bill would enable minor parties in the Senate to hold the government to ransom and potentially cripple Australia’s capacity to conduct international negotiations. On this basis, JSCOT’s Inquiry into the Treaties Ratification Bill 2012 recommends that the bill should not be passed.
Mr Katter may have seen the Treaties Ratification Bill 2012 as an ingenious way to rein in the growing number of international free trade agreements. But the JSCOT report makes clear that the Bill’s one blanket provision is insufficient to deal with magnitude and complexity of Australia’s international agreements. The Bill is unlikely to pass.

‘An unprecedented, extensive and unconventional relationship between a High Court judge and a governor-general during a constitutional crisis’? Really? Such was the claim made in The Australian on 28 August. Much hyperbole has been generated by the recent revelations concerning Sir Anthony Mason’s involvement in the 1975 dismissal, but for the most part it shows ignorance of the past. Not only was it not ‘unprecedented’ or ‘unconventional’ for a High Court judge to have advised a vice-regal representative on the extent of his or her powers back in 1975, but it is actually quite hard to find an occasion when judges have not been involved in advising upon the exercise of reserve powers.
The reserve powers are powers exercisable by the Governor-General or a State Governor without, or contrary to, the advice of his or her responsible Ministers. They are primarily exercised in circumstances where the Governor-General does not have ‘responsible’ advisers (eg when the Governor-General is appointing a new Prime Minister or where the Prime Minister has lost the confidence of the lower House and seeks an election or to continue to govern without confidence, in which case the Governor-General can refuse a dissolution or dismiss the Prime Minister) or where there is a breach of the rule of law (eg the Prime Minister persists in acting in breach of the law, in which case he or she may be dismissed). Although the appointment of every Prime Minister is technically an exercise of the reserve powers, it is normally uncontroversial because it is clear who has the support of a majority in the lower House. For the purposes of this post, a reference to the ‘reserve powers’ means the refusal of a dissolution, the dismissal of a government or the appointment of a Prime Minister or Premier who does not or may not hold the confidence of the House.
Excluding Lord Hopetoun’s blunder, the very first exercise of a reserve power by a Governor-General in Australia was the refusal of a dissolution to the first Labor Prime Minister, terminating Labor’s first term in office after a mere four months. Prime Minister Chris Watson had lost a crucial vote on an industrial relations bill. He had made it clear that the vote would indicate confidence in his government. He asked the Governor-General to dissolve Parliament and hold an election. The Governor-General, Lord Northcote, sought the advice of the Chief Justice of the High Court, Sir Samuel Griffith. After listening to that advice, he refused Watson a dissolution and asked Watson to stay in office until a new administration could be formed. George Reid was then asked to form a government.
In 1905 Reid’s Government was defeated on the Address in Reply, which is the equivalent of a vote of no confidence. Reid sought a dissolution but was also refused. Although it is likely that Griffith advised the Governor-General (as he did in relation to other constitutional matters), there are no documents to establish whether or not he did, leaving this the only example of the exercise of such a reserve power at the Commonwealth level in relation to which we cannot be sure that a High Court judge advised.
Certainly, Griffith advised in relation to the third exercise of the reserve powers, being the refusal of a dissolution to Fisher Government in 1909. He also advised the Governor-General on the extent of his discretion in relation to the grant of a double dissolution in 1914 and advised how the Governor-General should deal with the resignation of Fisher as Prime Minister in 1915. Edmund Barton, when a High Court Justice, was also a frequent adviser to the Governor-General. Both Barton and Griffith advised on whether a referendum could be held over conscription and also on how to deal with Prime Minister Hughes’ resignation after the second conscription referendum failed in 1917.
Interestingly, the Governor-General, Sir Ronald Munro Ferguson, took the view that Griffith and Barton were entitled to advise him because they were Privy Councillors. In England, it is the role of Privy Councillors, including members of the Judicial Committee of the Privy Council, to advise the monarch. There are formal mechanisms to give this advice, such as s 4 of the Judicial Committee Act 1833, but such advice also apparently continues to be given informally to the Queen by British judges. After Sir Samuel Griffith’s retirement, the Governor-General urged the appointment of the new Chief Justice, Sir Adrian Knox, as a Privy Councillor, in order to gain the benefit of his advice.
It is not known the extent to which Knox advised the Governor-General. It may have been the case that there was no need to do so. As the two-party system solidified and majority governments became the norm at the Commonwealth level, there was no real call on the Governor-General to exercise reserve powers and therefore little need for constitutional advice. This did not mean that High Court Justices were necessarily more circumspect in their offerings of advice. Sir John Latham, for example, advised the Prime Minister on the drafting of a referendum to overturn the High Court’s judgment in the Communist Party Case.
The next occasion for the exercise of reserve powers at the national level did not arise again until the Prime Minister, Harold Holt, went missing in 1967. The Governor-General then sought the advice of the Chief Justice, Sir Garfield Barwick, as to what to do. Having taken Barwick’s advice, the Governor-General exercised his reserve power to terminate Harold Holt’s commission as Prime Minister and appoint John McEwen as Prime Minister until a new Liberal leader could be chosen.
In the meantime, at the State level, constitutional crises still abounded and advice was regularly given to Governors by judges. In 1932 the NSW Governor received advice from the NSW Chief Justice on dismissing the Lang Government, just as in 1927 his predecessor had received the Chief Justice’s advice on his reserve powers concerning the dissolution of Parliament and the ‘swamping’ of the upper House. In 1939, the next Chief Justice of the NSW Supreme Court advised the Governor about a constitutional crisis involving the defeat of the Government on a financial measure.
In Victoria, political instability and constitutional crises extended into the 1950s. In 1952, for example, the Chief Justice of the High Court, Sir Owen Dixon, along with the Chief Justice of the Victorian Supreme Court and a puisne judge, advised the Governor about a conflict very similar to that of 1975. Labor, with the support of break-away Liberals, blocked supply in the upper House. The Governor refused the Country Party Premier an election because supply would have run out during the election period. A new Premier was commissioned, who managed to achieve the passage of supply in the upper House but was then defeated in the lower House. Sir Owen Dixon first advised the Governor to refuse a dissolution and appoint the Labor leader, John Cain, as Premier because he led the largest party in the House. The Governor, Sir Dallas Brooks, replied that Cain would not accept the premiership because he preferred to go to the election as Opposition Leader. Dixon then advised the Governor to restore the former Premier to the premiership and grant him an election, which the Governor duly did. Note that Dixon was not simply advising on the scope of the Governor’s powers, but on how they should be exercised in the political circumstances.
The Victorian Governor again called upon Dixon’s aid on 2 April 1955. John Cain had been elected Premier of Victoria, but the Labor Party had split. Cain only had supply until 30 June and a faction of the Labor Party had proclaimed that it would not vote for supply when Parliament resumed. It was most likely that when Parliament met a vote of no confidence in the Government would be passed. Cain decided he wished to keep governing until the end of June without recalling Parliament to pass the supply bills. But if he resigned then, there would still have been a significant period in which the State had no supply. Dixon advised the Governor that he should ensure that there was no interval in which the services of Government were not paid. He told Brooks to tell Cain that he would not dissolve Parliament unless supply was provided or unless the possibility of a government of some kind obtaining supply was exhausted. This effectively warned Cain that rather than being permitted to go to an election as Premier, he would be replaced and a new government formed. In these circumstances, Cain agreed to the recall of Parliament in order to face a vote of no confidence. Cain’s government was defeated, he was granted a dissolution and went to the election as Premier, at which he was defeated.
Both these supply crises and the role of the Chief Justice in advising the vice-regal representative on their resolution show distinct similarities to what occurred in 1975. Interestingly, Sir John Kerr’s personal papers in the National Archives show that he took a great interest in what had occurred during the Victorian crises.
There were other occasions when Sir Owen Dixon gave advice to the Western Australian Governor. We only know this because he left behind diaries which informed the biography of Dixon written by Philip Ayres. We also know of Griffith’s and Barton’s extensive advice because their records were left to libraries and archives and because of the work of Don Markwell in writing about them. No doubt these examples are the tip of the iceberg and that much more informal advice has been given to vice-regal officers from judges over the years. In these circumstances, advice to vice-regal officers from judges can hardly be described as unprecedented, unusual or unconventional.
Looking at Sir Anthony Mason’s informal advice to Sir John Kerr through post-1975 eyes is unfair. In the context of the time, his actions were not inconsistent with those of his predecessors or his colleagues.
The primary objection to a judge giving informal advice to a vice-regal officer on a constitutional matter is that the matter might later come before the court. This was recognised by the Justices of the NSW Supreme Court when they agreed to advise the Governor in 1856 on the transition to responsible government. The Chief Justice, Sir Alfred Stephen, writing to the Governor, Sir William Denison on 8 February 1856, observed:

It is right to remind you, that in giving our views in the capacity rather of lawyers than of judges, without argument (or the means of hearing arguments) from any party to be affected by them, we may possibly hereafter, should the same question arise in the course of any judicial proceeding, see occasion to change these views, and that it will be our duty in the event of discussion to keep our minds open to change.

The other alternative is for a judge to decline to sit on a matter upon which he or she has previously advised. It should be remembered, however, that the likelihood of the exercise of the Governor-General’s reserve power to dismiss a Prime Minister being regarded as justiciable by the High Court in 1975 was extremely low. The question of whether the double dissolution criteria had been met could have come before the Court, but it does not appear that Sir Anthony advised upon that issue.
Since 1975, there have been significant changes. Some decisions of Governors-General have become subject to judicial review (see: R v Toohey (Aboriginal Land Commissioner); Ex parte Northern Land Council (1981) 151 CLR 170; and FAI Insurances v Winneke (1982) 151 CLR 342), but even now it is unlikely that the exercise of a reserve power would be regarded as justiciable. The High Court has also developed a stricter separation of powers, particularly when it comes to judges fulfilling roles that involve advising the executive, even as persona designata (see: Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1). Yet all this, which we can see with the benefit of hindsight, could not have been seen in 1975.
Today, it would be unwise for a judge to advise a vice-regal representative. This has not, however, completely stopped this practice from occurring. In 1985, only ten years after the dismissal, the Victorian Governor, Sir Brian Murray, facing the prospect of dismissal from office, sought advice from the Victorian Chief Justice. The Chief Justice wisely refrained from advising but one of the other judges, Sir John Starke, who was shortly to retire, did provide advice to the Governor. Again, this is only known because of archival work. No doubt other examples also exist.
Perhaps the last word should go to the current Chief Justice of the High Court, Robert French. Taking into account the controversy surrounding the 1975 dismissal and the uncertainty concerning the justiciability of acts of the Governor-General, he concluded in his article ‘The Chief Justice and the Governor-General’ (2009) 33 MULR 647, at 656:

[I]t is difficult to conceive of circumstances today in which it would be necessary or appropriate for the Chief Justice to provide legal advice to the Governor-General on any course of action being contemplated by the holder of that office, whether such advice were tendered with the prior consent of the government of the day or otherwise. If, in some constitutional crisis requiring consideration of the possible exercise of reserve powers, the Governor-General felt the need to seek independent legal advice, there are plainly sources other than the Chief Justice to whom he or she could resort.

It is rare for the world to be watching when the High Court of Australia makes a decision. But so it was yesterday with British American Tobacco Australasia Limited & Ors v Commonwealth, the so-called ‘plain packaging’ case. The case concerned a challenge by several multinational cigarette companies (aka ‘Big Tobacco’) to the federal Tobacco Plain Packaging Act 2011, due to come into effect in December this year. The Act prohibits, among other things, the use of logos and trademarks on cigarette packets, and requires in their place health warnings on a background described as ‘drab dark brown’, and the printing of brand names in a small, generic font. The idea is to make packets as unglamorous, indeed disgusting, as possible and thus reduce smoking by repelling purchasers. Several other countries, apparently, are contemplating similar legislation; they watched for confirmation that this world-first initiative would survive. The decision, upholding the Act in its entirety and ordering the plaintiffs to pay costs, was greeted with resounding applause.
The international interest, no doubt, is encouraging for the Australian government and inspiring for anti-smoking campaigners. Still, it is intriguing, even faintly nonsensical, for other countries to take heart from this decision. The BATA challenge was mounted on numerous grounds, but revolved, essentially, around the particular constitutional claim that the Act compulsorily acquires the companies’ intellectual property without proper compensation. Section 51 (xxxi) of the Australian Constitution (the provision that starred, albeit misleadingly, in the iconic 1997 comedy ‘The Castle’) empowers the Commonwealth to acquire property, but requires ‘just terms’ in return. There may well be counterparts in the laws and constitutions of other countries, but existing Australian case law is unlikely to provide a trans-national precedent, and this latest case is unlikely to alter this.
Fascinating and frustrating at the same time, the Court only handed down its Orders yesterday, telling us that ‘at least a majority’ had found the law to be constitutionally valid (is someone still making up his or her mind?) and reserving the reasons for a later date. Analysis of the reasoning must therefore be speculative. But while we don’t know what the Court will say, we have some idea of what it will not say. Australia, it seems clear, has resisted the invitation to go down the ‘regulatory takings’ road that the United States has pioneered and other countries have followed.
The Fifth Amendment of the U.S. Constitution (upon which Australia’s section 51 (xxxi) was more or less modelled) requires that ‘just compensation’ must be given when private property is taken for public use. This provision evolved in the twentieth century to apply not only to actual acquisition, but also to the regulation of property that goes ‘too far’, not merely impairing value or utility, but depriving the owner of the property’s use or economic value, or thwarting ‘investment backed expectations’. Zoning and land use laws were the seedbed of the doctrine in the 1920s, and have generated the greatest challenges. The Supreme Court has not been consistent in its approach, however, and it has looked to the degree to which the public interest is served by the relevant law against the extent of the regulation. This of course, is the rub in the present case. There can be no doubt that the cigarette companies’ economic value and investment backed expectations will be affected by the Act, and that such an argument would be central if a similar U.S. law were to pass, but how much weight would the countervailing public interest be given? As Chief Justice French said, when invited by BATA to consider the regulatory takings argument, ‘none of the [U.S.] cases to which you have taken us involve somebody putting into the marketplace a substance which places at risk of serious and fatal disease … all who use it.’
But this aside, no one on the Court seemed to want to bite at the regulatory takings carrot. The decision, at a guess, will rest instead on the familiar argument (one that does not arise under U.S. takings law) that the Act (which merely adjusts statutory rights) does not involve an acquisition. To breach section 51 (xxxi) something first has to be ‘acquired’ by the Commonwealth. What is acquired does not have to be the same as what was lost, but some Commonwealth benefit has to be made out. No one was seriously arguing that the cigarette companies’ intellectual property had been transferred to the Commonwealth. BATA, however, submitted that a benefit lay in the ‘negative use’ of property, in the Commonwealth’s ability to impose its own design, etc, on BATA’s property, and in its use of the property for its own ends. The Court, it is clear, did not embrace these propositions. We wait now, to find out why.
Meanwhile, other countries should not celebrate too soon, but would be wise to hold off for the WTO’s ruling in the challenge brought by Ukraine, Honduras, and the Dominican Republic to the Australian Act alleging breach of international trade law. That is where the international lesson will really lie. Meanwhile, in Australia (with a ruling that paradoxically reverses the grounds for the fictional ‘little man’s’ victory against big commercial interests depicted in ‘The Castle’) the government and, with it, the ordinary public can breathe freely. At least for the moment.

Luke Beck, a CRU Associate, has contributed the following post about prayer in the Commonwealth Parliament:
From time to time there are calls for Parliament to stop opening its proceedings with prayers. Equally, there are those who support the practice. For example, former prime minister, John Howard once said that to get rid of parliamentary prayers would be to ‘abandon our Judeo-Christian heritage’.
But why does Parliament open with prayers and is the practice legal?
Why Parliament prays
Parliament did not introduce prayers because of ‘our Judeo-Christian heritage’. It introduced prayers in response to lobbying from churches.
During the 1890s when the Constitution was being drafted, the colonial churches began a campaign of petitions calling for three things. The petitions read:

1. That in the preamble of the Constitution of the Australian Commonwealth it be recognised that God is the Supreme Ruler of the world, and the ultimate source of all law and authority in nations.

2. That there also be embodied in the said Constitution, or in the standing orders of the Federal Parliament, a provision that each daily session of the Upper and Lowers Houses of the Federal Parliament be opened with a prayer by the President and Speaker, or by a chaplain.

3. That the Governor-General be empowered to appoint days of national thanksgiving and humiliation.
The Constitutional Convention drafting the Constitution received 49 petitions to this effect containing more than 36,000 signatures. That was a very large number in the 1890s.

The petitioners achieved two of their aims. The preamble to the Constitution says that in deciding to federate the Australian people were ‘humbly relying on the blessing of Almighty God’. And prayers began in Parliament in June 1901.
It is interesting to note that the Constitutional Convention did not start its day with prayers. And, only some of the colonial Parliaments had prayers. Indeed, some of them had even abandoned the practice by the time of the Constitutional Convention. Some of the delegates to the Constitutional Convention considered the parliamentary practice to be a ‘farce’, ‘a perfect piece of mockery’ and a ‘matter of … indifference’.
What are the prayers?
There are two parliamentary prayers. In the House of Representatives the Speaker reads the following prayers:

Almighty God, we humbly beseech Thee to vouchsafe Thy blessing upon this Parliament. Direct and prosper our deliberations to the advancement of Thy glory, and the true welfare of the people of Australia.

Our Father, which art in Heaven: Hallowed be Thy Name. Thy Kingdom come. Thy will be done in earth, as it is in Heaven. Give us this day our daily bread. And forgive us our trespasses, as we forgive them that trespass against us. And lead us not into temptation; but deliver us from evil: For Thine is the kingdom, and the power, and the glory, for ever and ever. Amen.

The first prayer in the Senate read by its President has a minor difference in wording.
Are these prayers ‘Judeo-Christian’? You can probably recognise the second prayer as the Lord’s Prayer. But it is not generically Christian.
There are two versions of the Lord’s Prayer: a Catholic one and a Protestant one. The difference is the line ‘For thine is the kingdom, and the power, and the glory, for ever and ever’. That line appears only in the King James Version of the Bible used by Protestants.
When the prayers were introduced in the House of Representatives in 1901, the Catholic Archbishop of Melbourne at the time called them ‘distinctly Protestant’.
The first prayer is not just distinctly Protestant it is also distinctly Anglican. It is a modified version of the ‘Prayer for the High Court of Parliament’ in the Church of England’s Book of Common Prayer.
Is it legal?
As it happens, there are also petitions relevant to this question.
The churches were not the only ones sending petitions to the Constitutional Convention in the 1890s. Petitions with almost 8,000 signatures were sent to the Convention asking it to ensure that the Commonwealth would not be able to legislate to interfere with religious liberty.
These petitions were largely organised by the Seventh Day Adventists who were worried that any reference to God in the Constitution might be seen as giving the Commonwealth power to legislate for religious matters. They feared they might be on the receiving end of any such legislation.
They got what they wanted too. At the end of the Constitutional Convention, its president Edmund Barton, who later became Australia’s first prime minister, explained what had been decided:

While, therefore, a concession has been made to the popular opinion that some reverential expression should be embodied in the preamble, due care has been taken by the Convention that no reliance upon that provision, and no far-fetched arguments based upon it, shall lead to any infraction of religious liberty under the laws of the Commonwealth which we hope to create

The due care was section 116 of the Constitution. It says:

The Commonwealth shall not make any law for establishing any religion, or for imposing any religious observance, or for prohibiting the free exercise of any religion and no religious test shall be required as a qualification for any office or public trust under the Commonwealth.

So, do the standing orders requiring parliamentary prayers violate section 116? The prayers appear to closely identify Parliament – the heart of the Australian state – with Protestant Christianity. After all, the first prayer says that Parliament works to the advancement of God’s glory. This might be seen as involving some sort of religious establishment.
The standing orders also rather look like they impose a religious observance. They command the Speaker (and the President of the Senate) to read the prayers. Mandatory prayer might also be seen as an interference with the free exercise of religion.
Even if all of this were accepted it would only make the prayers unconstitutional if the standing orders requiring they be read are ‘laws’. There are arguments for and against that conclusion, and the answer is not clear.
That said, one politician seems to have had a point when he said in opposing the introduction of parliamentary prayers in 1901:

What did the framers of the Constitution mean? Did they mean that the Parliament was not to impose religious observances in the streets or in the schools? Did they mean that Parliament was not to impose religious observances anywhere else but here?

If you look closely at section 116 you will see that its final clause about religious tests is not limited in its application only to laws. If it were to be accepted that the requirement to read prayers every day amounts to a religious test for the position of Speaker (and also President of the Senate) then there might well be constitutional problems with the parliamentary prayers.
Legalities aside, given that in the 2011 census nearly half of the population reported either being Catholic (25.3%) or having no religion (22.3%) it might be wondered why Parliament continues to say distinctly Protestant prayers every day.

Does the Tasmanian Parliament have the power to pass a law permitting same-sex marriage? The short answer is ‘Yes’. But the more difficult question is whether that law will be effective or whether it will be inoperative because it is inconsistent with a Commonwealth law. The answer to this question is unclear and unknowable until the High Court decides.
The answer will depend upon two decisions which ultimately the High Court would have to make, assuming that the constitutional validity of the Tasmanian law would be challenged. The first is whether the Commonwealth Parliament’s constitutional power in s 51(xxi) to make laws with respect to ‘marriage’ extends to the marriage of same-sex couples. If the answer is ‘No’, then there would be no issue of a conflict between State and Commonwealth laws and a State Parliament, exercising its plenary legislative powers, could enact laws concerning same-sex marriage (although there may be an argument about whether the term ‘marriage’ ought to be used in such circumstances). If the answer is ‘Yes’, then the High Court would have to decide whether there was an inconsistency between any State law on marriage and the Commonwealth’s marriage law. If there was an inconsistency, then the Commonwealth law would prevail and the State law would be inoperative to the extent of the inconsistency.
The meaning of ‘marriage’ in the Commonwealth Constitution
Whether the Commonwealth Parliament has the power to legislate with respect to the marriage of same-sex couples will depend upon the approach to constitutional interpretation taken by the Court. If an originalist approach is taken, the Court will consider the contemporary meaning of the term ‘marriage’ at the time the Constitution was enacted in 1900. In doing so, it would take into account the common law, the statutes and the practice of the late nineteenth century. In 1866 Lord Penzance, in Hyde v Hyde, defined marriage as being ‘the voluntary union for life of one man and one woman, to the exclusion of all others’. This definition is likely to be regarded as representing the meaning of the term ‘marriage’ at the time the Constitution was enacted. It has been adopted by Australian courts from time to time in interpreting the meaning of ‘marriage’ in the Constitution. For example, Justice Brennan applied it in The Queen v L (1991) 174 CLR 379, 391-2.
The constitutional definition of ‘marriage’ cannot be expanded by the Parliament. As Justices Mason and Deane noted in Re F; ex parte F (1986) 161 CLR 376, at 389:

Obviously, the Parliament cannot extend the ambit of its own legislative powers by purporting to give to “Marriage” an even wider meaning than that which the word bears in its constitutional context.

However, the High Court can expand its meaning by way of constitutional interpretation if it is to take a non-originalist approach. It could look to the meaning of ‘marriage’ today, taking into account ‘contemporary understandings of its meaning’ including changes in the meaning of language and the different social circumstances in which the language applies. Justice McHugh explained these two contrasting approaches in Re Wakim; Ex parte McNally (1999) 198 CLR 511, where he said at 553:

[I]n 1901 “marriage” was seen as meaning a voluntary union for life between one man and one woman to the exclusion of all others. If that level of abstraction were now accepted, it would deny the Parliament of the Commonwealth the power to legislate for same sex marriages, although arguably “marriage” now means, or in the near future may mean, a voluntary union for life between two people to the exclusion of others.

The difficulty, however, if one takes a non-originalist approach, is identifying at what point the contemporary meaning of a term has changed and what level and evidence of community support is needed to justify a change in constitutional meaning. Given the current highly contested political debate on the meaning of ‘marriage’ this would be a difficult decision for the High Court to make.
Inconsistency of laws on marriage
If the High Court decided that the Commonwealth Parliament does have the power to legislate about same-sex marriages under s 51(xxi) of the Constitution, then a question would arise as to whether any Tasmanian law on the subject would be inconsistent with a valid Commonwealth law on the subject. The Marriage Act 1961 (Cth) provides in s 5 that ‘”marriage” means the union of a man and a woman to the exclusion of all others, voluntarily entered into for life.’ It picks up Lord Penzance’s definition from 1866 and would safely fall within an originalist interpretation of s 51(xxi) of the Constitution. The Marriage Act then sets out the requirements for all marriages solemnised in Australia and sets out the pre-conditions for marriage and the circumstances in which marriages are invalid.
The question would be whether the proposed Tasmanian law would be inconsistent with the Marriage Act. This would depend upon the wording of the Tasmanian law. If the Tasmanian law purported to give to same-sex couples the legal status of being ‘married’ for the purposes of all law across Australia, including Commonwealth law, this would give rise to a direct inconsistency with the Marriage Act, as it would be purporting to grant people a status which is denied to them by a Commonwealth law. It would therefore be inoperative to the extent of this inconsistency.
In any case, it would be beyond the legislative powers of the Tasmanian Parliament to purport to confer on persons the status of ‘married’ for the purposes of laws in other States or the Commonwealth. Hence, a Tasmanian same-sex marriage, even if made under a valid and operative Tasmanian law, would not give the same-sex couple any of the legal rights of a ‘married’ couple under Commonwealth law or under the law of any other State (unless the States or Commonwealth legislated to recognize the status of same-sex couples married in Tasmania or the courts interpreted existing laws widely enough to pick up a married status under Tasmanian laws). Same-sex couples married in Tasmania would most likely not, in effect, be legally ‘married’ for any purposes other than Tasmanian laws. This might dampen the anticipated tourist trade in same-sex weddings, if such a ‘marriage’ would not change the couple’s marital status on mainland Australia.
Even if the Tasmanian law was drafted so as to confine its effects to Tasmanian laws, it might still be held to be inconsistent with the Commonwealth’s Marriage Act to the extent that the Commonwealth law was regarded as ‘covering the field’ of marriage. Although the Marriage Act confines its definition of marriage to opposite sex couples, it is likely to be argued that it was intended to cover the entire field of marriage within Australia and to prohibit marriage of same-sex couples, just as it prohibits certain other marriages, including marriages between certain family members. Section 48 states that marriages solemnised in Australia otherwise than as stipulated by the provisions of the relevant division are not valid. Section 88EA also says that a union solemnised in a foreign country between a man and another man or a woman and another woman must not be recognized as a marriage in Australia. These provisions suggest an intention to cover the field. While s 6 of the Marriage Act states that the Act shall not be taken to exclude the application of State laws in so far as they relate to the ‘registration’ of ‘marriages’, this is only directed to registration – not the solemnisation of marriages and it is also confined to ‘marriages’ as defined by the Act.
Conclusion
A Tasmanian law permitting same-sex marriage, even if operative, would do little more than facilitate the holding of a ceremony, the consumption of champagne and the taking of photos. It might confer on the parties to a same-sex marriage the status of ‘married’ for the purposes of Tasmanian legislation, but it is most unlikely that they would be regarded as legally ‘married’ for the purposes of Commonwealth law or under the law of any other State and would therefore not attract any legal benefits or status accorded to a married couple.
In addition, there is a distinct possibility that such a law would be held to be inoperative because it is inconsistent with a valid Commonwealth law. It is therefore not yet time for same-sex marriage proponents to crack open the champagne.

CRU Associate, Amanda Sapienza, writes as follows about the Commonwealth’s legislative response to the Williams case:
A court decides that government activity is invalid because it is inconsistent with representative government. The government’s response to the decision is carried out in a way that marginalises the operation of representative government. Ironic?
The Financial Framework Legislation Amendment Bill (No 3) 2012 (Cth) became law on 28 June 2012 with all of the media fanfare that legislation of that title deserves. The Bill sought to authorise spending by the Commonwealth government on more than 400 executive funding schemes by amending the Financial Management and Accountability Regulations 1997 (‘the Regulations’) to list all of the relevant schemes. The genesis of the Bill in the High Court’s decision in Williams v Commonwealth [2012] HCA 23 and the level of parliamentary scrutiny (or lack thereof) that the Bill received in the House of Representatives are discussed by Anne Twomey in an earlier post on this Blog here: http://blogs.usyd.edu.au/cru/2012/06/parliaments_abject_surrender_t_1.html. The concerns raised in the House of Representatives by the Opposition and Greens members were repeated in the Senate. In the end, however, it seems that a feeling prevailed that it was better to do something than nothing to save the chaplains program. The unamended Bill was given Royal Assent less than 48 hours after being introduced. It became the Financial Framework Legislation Amendment Act (No 3) 2012 (Cth) (‘the Amending Act’) and all the concerns voiced were consigned to the relevance of extrinsic material.
What the government appears to have overlooked is that the High Court’s requirement for legislative support for the chaplains program was driven in part by concerns about representative government and the lack of parliamentary oversight of Commonwealth spending on executive funding schemes. Leaving aside the substantive provisions of the Amending Act, even the government’s choice about how to effect the changes to the the Regulations suggests that giving full effect to representative government was not a priority.
Delegated legislation, of which the Regulations are an example, is commonplace in government regulation these days. Accusations of Executive usurpation of governance, at the expense of the Parliament, are frequently levelled at governments due to their increasing reliance on administration by regulation rather than legislation. The decision to locate the schemes in the Regulations rather than in an Act would have raised some eyebrows in this regard.
However, because of their ever-expanding role in administration, the making of regulations is itself strictly governed by legislation. The Legislative Instruments Act 2003 (Cth) sets out detailed requirements for the drafting, consultation, publication and parliamentary scrutiny of legislative instruments (which include the Regulations). The consultation and parliamentary scrutiny provisions apply whenever a new regulation is made, even where all the new regulation does is amend an older regulation. New regulations remain open to a disallowance motion for 15 sitting days after being tabled in each House of Parliament. A disallowance resolution can be passed by either House of Parliament within 15 sitting days of a disallowance motion being moved. However, these provisions do not seem to apply when a regulation is amended by an Act of Parliament rather than another legislative instrument. The rationale for this distinction appears clear: why subject an Act, which has already been passed by both Houses of Parliament, to further parliamentary scrutiny? If anyone had a problem with it, the problem would have been raised during the debates or committee stages. And in ordinary cases this would be a fair and complete answer to the lack of provision for disallowance.
What does all of this mean for the passage of the Amending Act and the consequential changes to the Regulations? Because the actual insertion of all of the schemes into the Regulations was achieved by an Act and not a legislative instrument, none of the schemes are open to disallowance by either House of Parliament. In the particular circumstances of the passing of the Amending Act the disallowance procedures might have been preferable from the perspective of representative government, as the following scenario demonstrates:

1. The Act would have been passed and the amending regulations duly made and registered on the Federal Register of Legislative Instruments (better known as comlaw.gov.au), thereby taking almost immediate effect to preserve all presently existing schemes.
2. Even if the amending regulations were not tabled in each House immediately, the passage of the Amending Act would have alerted the Opposition and cross-benchers to their existence and they could have obtained a copy from the register.
3. The Opposition and cross-benchers could have taken the winter Parliamentary recess to consider whether they supported each scheme in the Regulations.
4. A disallowance motion could be moved within 15 sitting days of the amending regulations being tabled in each House. On the present Parliamentary sitting calendar, that period might not expire until 20 September 2012 (later if the amending regulations were not tabled in each House until after the winter recess) and it is possible that a motion would not have to be voted on until February 2013.
5. By that stage the Opposition and cross-benchers might have agreed on at least some of the schemes that they wanted deleted from the Regulations and a disallowance motion could have had the numbers to pass the relevant House.

Disallowance only takes effect from the time of the disallowance. Everything done pursuant to the Regulations up until any disallowance remains valid. This would likely have satisfied the Greens, who were willing to pass the Bill to cover existing schemes but sought to have full parliamentary control over future spending. It also would likely have satisfied the Opposition, who foreshadowed that they did not agree with some of the schemes to be listed in the Regulations and wanted the Amending Act to sunset after 6 months.
While the process would have delayed the provision of certainty to administrators and recipients under the schemes, it would have at least ensured that the elected representatives had the proper time and resources to consider each and every scheme carefully. In this instance, it seems that changing a regulation by Executive-made regulations would have been truer to the concept of democracy and representative government than ordinary parliamentary processes.
As to why the government chose the Act route rather than the amending regulations route, one can only speculate. It certainly can’t have been because they did not want to trouble the Governor-General for another signature. The Governor-General made a new regulation amending the Regulations on 28 June 2012 (Financial Management and Accountability Amendment 2012 (No 3) (Cth)) but this had nothing to do with the enormous change that occurred to the Regulations on that very day courtesy of the Amending Act.
Going forward, it may be open to the government to amend the schemes either by Act or by amending regulation. In either case, the broad wording of the schemes in the Regulations means that the Opposition and cross-benchers are going to have to ask detailed questions of the government to ascertain precisely what the amendment entails. And that will only arise in the cases where the Regulations need to be changed. The Amending Act permits spending pursuant to schemes that either are listed in the Regulations, belong to a class of schemes listed in the Regulations or are for a purpose of a program listed in the Regulations. When the broad wording of this power is put together with the broad wording of the schemes, it seems that the Regulations will not need to be amended very often. This means that new executive funding schemes will not be subject to parliamentary scrutiny very often. And this, together with what has already occurred, means that the High Court’s concerns about representative government that led to the Amending Act in the first place have not been allayed by it whatsoever.

National Federation of Independent Business, et al., v. Sebelius (USSC 28 June, 2012).
Yesterday morning (Washington time), as Australians slept, the United States Supreme Court handed down its much-anticipated decision on the constitutional validity of the Patient Protection and Affordable Care Act (aka ‘Obamacare’). The Act, a keystone in Obama’s credentials as a progressive and reforming President, had proven as controversial and politically-charged (if not more so) as any law in post-war U.S. history. Challenges to the Act were immediate; Florida and twelve other States filed a complaint on the day the President signed the Act into law.
The 900+ page Act involved a complex matrix of provisions, designed to universalise health insurance coverage for Americans, and to extend the reach of existing Medicaid schemes (State medical coverage for classes of poor and disabled persons, funded through federal grants). At the Act’s heart, the most controversial provision was the ‘individual mandate’, requiring (almost) all persons, not otherwise covered by health insurance (through their employer or under Medicaid), to purchase private health insurance. A penalty was to be levied on those who did not.
It was this (unpopular) provision that commentators regarded as the soft underbelly of the Act, and many thought most likely to be defeated. (Would its invalidation have destroyed the whole scheme? For the constitutional lawyers, assuming invalidation, the next question was whether the provision could be severed, leaving the rest of the Act intact. The District Court of Northern Florida had already said that it couldn’t; the Appeals Court of the Eleventh Circuit had disagreed.) Congress had sought to persuade the Supreme Court that the provision was supported by the Constitution’s Commerce Clause. Like the Australian Constitution’s Trade and Commerce power (s 51 (i) ), the Commerce power is confined to interstate and international commerce, but (unlike in Australia) it had been given a vastly expanded scope over the years, at least until relatively recently, permitting Congress to do many things that appeared (to Australian eyes) only loosely concerned with ‘commerce’. In this case, Congress argued that the health insurance mandate was part of the regulation of interstate commerce (in the health industry), or alternatively, that it substantially affected interstate commerce, or that it was ‘necessary and proper’ (like Australia’s incidental power) for the regulation of interstate commerce.
The Court’s decision took almost everyone by surprise. By a 5:4 majority, it upheld the whole Act. This was not the only surprise. It was Chief Justice Roberts who proved to be the ‘swing’ judge (not, as considered most likely, Justice Kennedy). Indeed, it was Roberts (a conservative, who had locked horns with President Obama in the recent past) who wrote the Opinion of the Court (some, it is true, had predicted this – although not what the Opinion would be). But, perhaps the biggest surprise was that the Court based validity not on the Commerce Clause, but on a constitutional provision that had been argued in support of the provision only as an alternative, and fairly weakly at that: Congress’s Taxation power.
In an exercise that is entirely familiar to Australian constitutional lawyers, the Court took the provision through a test of characterisation. It held that the fact that the Act spoke of a ‘penalty’, rather than a tax was not fatal; that, indeed, a penalty could be a tax, regardless of what it was called. (Our Australian students would immediately know this as ‘dual characterisation.’) What made the ‘penalty’ a tax? The amount was capped at no more than the average annual insurance premium; it did not involve punitive measures or prosecution for noncompliance (effectively, people could choose to pay the ‘tax’ as an alternative to paying health insurance); and it was to be collected by the IRS, alongside regular taxes.
A consequential surprise was the Court’s attention to the Anti-Injunction Act of 1867. This Act bars suits for ‘restraining the assessment or collection of any tax’, prior to the tax being imposed and a plaintiff being sued for failure to pay (its purpose is to protect the government’s capacity to collect revenue without interruption). If the mandate had been characterised as a tax, the Court might have lacked jurisdiction to hear the challenge. The plaintiffs in this case wanted their day in court, and they needed, therefore, to avoid the tax argument. They got both. No commentators, however, had really seemed to treat the Anti-Injunction Act as a genuine threat. By contrast, the Court spent significant time on it. How, then, did the suit proceed? The Court found that, although the Affordable Care Act’s mandate ‘penalty’ was in fact a tax, Congress had effectively legislated around the Anti-Injunction Act, as it was entitled to do.
Why was the Act not supported by the Commerce Clause? Congress, the Court concluded, could not regulate the failure to engage in or enter commerce. It could only regulate commerce that already existed (this, it said, was what ‘regulate’ implied: you can’t regulate nothing.) And the ‘necessary and proper’ argument failed similarly.
Interestingly, it was the latter that had been the quiet hope of supporters of the Act who feared that what could be called the ‘broccoli mandate argument’ might otherwise work to defeat it. The ‘broccoli’ argument (arising from a question put to the Solicitor-General during oral argument by the ever-colourful Justice Scalia) had gone along these lines: if Congress is empowered to make people do things (like buying health insurance) just because these are good for their health, then what were the limits on what Congress could make people do? Could they force people to eat broccoli? The ‘necessary and proper’ response was that compulsory health insurance membership was necessary to regulate the health care industry, but compulsory eating of broccoli was not. In the end, this saving device was not needed (although broccoli did get a mention in the dissent.)
The second key issue was the Medicaid Expansion provisions of the Act. These rested on the capacity of Congress to make conditional grants to the States, via the Constitution’s ‘Spending’ power (Congress is empowered ‘to pay the Debts and provide for the … general Welfare of the United States’). The Act provided for increased federal grants to the States to support the expansion of existing Medicaid schemes, and also provided that all Medicaid grants to any State that would not comply would be withdrawn. Could Congress use the Spending power coercively (withdrawal was a significant threat: Medicaid currently makes up more than 10% of States’ budgets)? The Court concluded that it could not. (The principle, then, holds, that the Spending power cannot be used coercively, although, in fact, no Act has ever been found to be relevantly coercive. In this, as in its reach, we are reminded of section 96 of the Australian Constitution.) Again, the objection did not prove fatal: the provision was saved by the canon of statutory interpretation that requires every effort to uphold the constitutionality of an Act; the Court read the provision to mean that only the extra ‘Expansion’ grants could be withheld.
The dissenting Justices – Scalia, Kennedy, Thomas, and Alito – found the Act entirely invalid. They agreed that the Act was beyond the Commerce Clause, because it purported to ‘direct creation of commerce’; and that failure to engage in commerce was not ‘commerce’. They agreed that ‘the failure to purchase health insurance, unlike the failure to purchase… broccoli, creates a national, social-welfare problem..’ But they rejected the proposition that this difference demonstrated that the failure to enter the health-care insurance market ‘unlike the failure to buy … broccoli, is an activity that Congress can “regulate” ’. They virtually laughed out loud at the proposition that an exaction of money can simultaneously be a penalty and a tax. That, they said, would be ‘a creature never hitherto seen in the United State Reports’.
The ‘creature,’ it seems, has arrived. For those in Australia who watch U.S. constitutional law (at least those with the patience to plough through the 193 pages) this case will hold more than usual interest. It offers a counterfactual on what might have happened had the 1946 referendum (which added section 51 (xxiiiA) to the Constitution) not been successful. For the present, it provides an interesting glimpse into another country’s constitutional battles over federal spending. Along with challenges to taxation laws, these (as we have just seen with Williams v. Cth) promise much rich fare for Australia’s constitutional lawyers.