Attorney-General (Vic) (at the Relation of Dale ) v Commonwealth [1945] HCA 30

Attorney-General (Vic) (at the Relation of Dale ) v Commonwealth [1945] HCA 30 - HCA 1945 case summary — Zoe

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McCallum and James Mackintosh Fraser. The statement of claim alleged that the relators were respectively the president, vice- president and honorary secretary of the Medical Society of Victoria ; that Society was a voluntary and unincorporated association of legally qualified medical practitioners respectively carrying on their practice of the medical profession in Victoria and associated together for the maintenance of the welfare and status of the profession, and the promotion of all activities and practices calculated to maintain and improve the health of the community and the advance of medical science and practice and its application to the health of the community ; on 5th April 1944 the Royal assent was signified to an Act of the Parliament of the Commonwealth entitled the Pharma- ceutical Benefits Act 1944; the defendant McCallum was Director- General of Health of the Commonwealth and subject to the direction of the defendant Fraser had the general administration of the Act ; the defendant Fraser was the Minister of State for Health of the Commonwealth and had the overriding direction of the Director- General of Health in relation to the Act; the Act provided, inter alia, for the granting of pharmaceutical benefits to all persons ordinarily resident in the Commonwealth without payment by such persons for such benefits and for the payment to approved pharma- ceutical chemists at rates to be prescribed under the Act for the supplying of the benefits by the Commonwealth ; the payments by the Commonwealth to the approved pharmaceutical chemists were by the Act to be made out of the trust account established under the National Welfare Fund Act 1943, which trust account was constituted out of portion of the annual income tax levied and raised by the Commonwealth ; the Constitution did not authorize the enactment by the Parliament of the Commonwealth of the Pharmaceutical Benefits Act or the appropriation of public moneys of the Common- wealth for the purposes of the Act; the defendants McCallum and Fraser intended to carry into execution the Pharmaceutical Benefits Act and to expend moneys of the Commonwealth in so doing con- trary to the law and the Constitution of the Commonwealth.

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Attorney-General for N.S.W. v. Brewery Employés Union (1); Com- monwealth v. Queensland (2); Tasmania v. The Commonwealth (3) ; Anderson vy. The Commonwealth (4); Tasmania v. Victoria (5) ; Attorney-General (Vict.) v. The Commonwealth (6).) Another basis for the locus standi of the State is afforded by s. 94 of the Constitution. By giving the States a right to the surplus revenue of the Common- wealth s. 94 gives the States an interest in attacking an appropriation as invalid. If it appears that the appropriation is invalid, the money has been illegally appropriated, which means not appropriated at all; it is, therefore, surplus revenue in which the States have an interest. [He referred to New South Wales v. The Commonwealth (7); Surplus Revenue Act 1927; Acts No. 15 of 1908, No. 8 of 1910, No. 4 of 1927, No. 45 of 1934.] Apart from the particular provisions of s. 94, the effect of s. 87 and the ensuing sections up to and including s. 96 is such that the framework of the Constitution gives the States a justiciable interest in Commonwealth revenue and expenditure. In this regard our Constitution differs from that of the United States. Another distinguishing feature now relevant is the juris- diction of the High Court under s. 75 (iii.) of the Constitution. The decision in Massachusetts v. Mellon (8) depends on considerations for which there is no room under our Constitution; it is, therefore, irrelevant to the question now before the Court. The Pharma- ceutical Benefits Act must depend for its validity upon s. 81 of the Constitution. It is submitted that that section is not sufficient to support the Act, which, therefore, is invalid. Section 81 contains no substantive grant of power at all. At all events it is limited to the purposes of the Constitution. It looks in the main to the legis- lative powers of the Commonwealth. In providing that revenue is to be appropriated "for the purposes of the Commonwealth " it must take into account particular provisions of the Constitution (e.g., 8. 61) which call for the expenditure of money ; apart from such provisions, and from such administrative powers and purposes as result from legislation which the Parliament has power to enact, the reasonable construction is that it is confined to the purposes of the legislative powers. It must be limited to purposes to be found in the Constitution, and cannot confer an unlimited power to appro- priate money to any purpose whatever, whether or not it is a purpose

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necessarily involves the power to appropriate for the particular purpose of the legislation ; if not, the " incidental" power in s. 51 (xxxix.) is sufficient to support an appropriation for any purpose on which Parliament can validly legislate under the Constitution. On the other hand, if s. 81 is not to be limited in this way, if it creates an unlimited power of appropriation, provisions such as ss. 96 and 105 are unnecessary. Although some legislative powers are to be found in sections of the Constitution which follow s. 81, the legislative powers are in the main to be found in sections which precede it, especially ss. 51 and 52. The function of s. 81 is to link up those provisions with the financial provisions of Chapter IV. If s. 81 had been intended to give added power, it could have been much more aptly expressed. [He referred to Attorney-General for Victoria v. The Commonwealth (1); R. v. University of Sydney; Ex parte Drummond (2); Quick and Garran, Commonwealth Constitution, (1901), pp. 811, 812; Harrison Moore, Constitution of the Common- wealth of Australia, 2nd ed. (1910), pp. 622-627 ; Wynes, Legislative and Executive Powers in Australia, 1st ed. (1936), pp. 252, 253.) Our Constitution differs materially from that of the United States, in which the relevant question has turned upon the effect of the grant of the power to tax contained in article 1, s. 8, clause 1. That clause is expressed in terms of very wide import: See Selected Essays on Constitutional Law, vol. 3, chapter 6, at pp. 543 et seq.; chapter 7, at pp. 565 et seq. ; United States v. Butler (3) ; Helvering v. Davis (4) ; Charles C. Steward Machine Co. y. Davis (5). Whether or not s. 81 is to be limited as has been submitted, both the National Welfare Fund Act and the Pharmaceutical Benefits Act are invalid. The National Welfare Fund Act has no constitutional authority. It is not an appropriation Act ; it does not authorize the expenditure of any money. It, therefore, cannot be supported by the appropriation power. On the other hand, it does more than merely create a fund as by way of suspense account. It is not a finance Act at all. Its subject matter is " welfare " and " social services," as to which there is no legislative power. It purports to isolate Commonwealth revenue for the purposes mentioned, which are not " purposes of the Commonwealth." Hven if it is assumed that under s. 81 of the

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There is no reason, however, why this should be regarded as the limit of the expenditure covered by s. 81, and the terms of ss. 82 and 87 suggest that this is not the limit. The provision in s. 82 that the revenue " shall in the first instance be applied to the payment of the expenditure of the Commonwealth" suggests that in that section "expenditure " is limited to what may be called the domestic or governmental expenditure, the necessary expenses of carrying out the functions of the Government. So, also, as to the reference to expenditure in s. 87. That is to say, expenditure of the kind referred to in those sections is not contemplated as the whole field of Commonwealth expenditure; the "purposes of the Common- wealth " referred to in s. 81 constitute the larger field. This is supported by s. 61; although it does not deal with appropriation of moneys, it refers to two matters, the execution and maintenance (1) of the Constitution and (2) of the laws of the Commonwealth. If s. 81 was meant to be limited to those two matters, one would have expected to find a similar method of expression: that money was to be appropriated for the purposes of executing the provisions of the Constitution as to the application of Commonwealth revenue and for the purposes provided by the laws of the Commonwealth. The provision of s. 83 that no money shall be drawn from the Treasury " except under appropriation made by law " does not mean that the appropriation must be made by Act of Parliament; "by law " means by the machinery of law and includes the provisions of the Constitution (e.g., s. 84) which themselves appropriate moneys. [He referred to R. v. Commonwealth Court of Conciliation and Arbi- tration (1); New South Wales vy. The Commonwealth (2) ; Common- wealth v. Colonial Combing, Spinning and Weaving Co. Ltd. (3) ; Commonwealth v. Colonial Ammunition Co. Ltd. (4); Osborne v. The Commonwealth (5); Resch v. Federal Commissioner of Taaation (6); Amalgamated Society of Engineers v. Adelaide Steamship Co. Ltd. (7).| In this view of the words "for the purposes of the Com- monwealth " in s. 81, the effect of the section is analogous with that which is attributed to article 1, s. 8, clause 1, of the United States Constitution. The Commonwealth Parliament has passed many Acts appropriating money which would, or might, be invalid if the plaintiff's argument were right. A few of the many instances are the Science and Industrial Research Acts 1920 and 1926, the Maternity (1) (1912) 15 C.L.R. 586, at p. 609. (2) (1908) 7 C.L.R. 179, at p. 187. (3) (1922) 31 C.L.R. 421, at pp. 431,

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Allowance Act 1912, the Child Endowment Act 1941 and the Widows' Pensions Act 1942. It is not suggested that the legislature's view of the meaning of the Constitution is conclusive, but great weight should be given to the legislative practice (Field v. Clark (1) ; Myers v. United States (2) ). The Pharmaceutical Benefits Act is an appro- priation Act appropriating money for the provision of pharmaceutical benefits for all citizens of the Commonwealth. In so far as the Act goes beyond the mere appropriation of money its provisions are directed to enabling those benefits to reach those who require them and are ancillary and incidental to the purpose of the Act ; they are, therefore, supported by s. 51 (xxxix.) of the Constitution. [He referred to Huddart, Parker & Co. Pty. Ltd. v. Moorehead (3) ; Graziers' Association of New South Wales v. Labour Daily Ltd. (4) ; R. v. Brisbane Licensing Court; Ex parte Daniell (5); New South Wales v. The Commonwealth [No. 1] (6).] The Act will not impinge on any State law prohibiting or regulating the sale of particular drugs. There is no compulsion in the provisions of the Act (See ss. 8, 9) relating to the prescribing and supply of drugs; no-one is compelled to give a prescription at all, and there is nothing to preclude compliance with such a State law as has been mentioned. As to the locus standi of the plaintiff, it is submitted that the Court has no jurisdiction to hear a suit at the instance of anyone (including a State) where the matter challenged is purely an appropriation of Commonwealth funds; that is, where no right of an individual or of a State is infringed or threatened. In all the decided cases there has been an interest or right which was alleged to be infringed or threatened. The Court should adopt the view taken in the United States, that the mere appropriation of money is a political matter and is not justiciable : See Massachusetts v. Mellon (7); Willoughby, Constitution of the United States, 2nd ed. (1929), vol. 1, p. 106. Moreover, no existing State legislation is affected, and the mere fact that such legislation in the future might conflict with the Act now challenged is not sufficient to give present jurisdiction. In these circumstances there is no interest, no lis. The question is merely an one and cannot be litigated. The National Welfare Fund Ly side money, and there is no ground for the con- tention that it is invalid. In any case, it does not infringe any rights, and the challenge to it is not justiciable.

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by article 1, s. 8, clause 1, of the Constitution has been interpreted as giving an equally extensive power to expend money to pay the debts and to provide for the defence and general welfare of the United States. The expression "the United States" is used in the Constitution in a variety of meanings, just as is " the Common- wealth " in our Constitution. There is no provision corresponding with our s. 81, and no express provision regarding appropriation apart from article 1, s. 9, clause 7, which, like our s. 83, provides that no money shall be drawn from the Treasury except by appropriation made by law. The view that has been taken is that the power to spend is as wide as the power to tax: See Harvard Law Review (1922-1923), vol. 36, p. 548, " The Spending Power of Congress " ; United States vy. Butler (1) ; Charles C. Steward Machine Co. v. Davis (2) ; Helvering v. Davis (3). The result of the American authorities is that the power to tax to provide for the general welfare of the United States is to be read in its widest form, and, although the Constitution contains no express provision as to appropriation, it is implicit in the very nature of government that the Federal Government has capacity to spend for purposes as large as the purposes for which it is empowered to raise money. The same view could be taken in Australia if there were no s. 81, and that section contains nothing inconsistent with the view. The means by which the result is reached in Australia is different in form, but the result is the same. In the United States such limitation as there is on the power to tax is accepted as the limitation on the power to spend. In Australia regard must first be had to the power to spend under s. 81. Then, as to the power to tax, it is seen that it is subject to two limitations: (1) there shall be no discrimination between States ; (2) the law with respect to taxation must be for the peace, order and good government of the Commonwealth. In practice it will be found that there is no real distinction between the power to tax for the peace, order and good government of the Commonwealth and the power to tax for the general welfare of the United States ; whatever limitation the one imposes is substantially the same as the limitation imposed by the other. If there is any difference, it is in favour of the view that the power in Australia, not being limited by reference to any purpose other than the peace, order and good government of the Commonwealth, is even wider than in the United States; it is, perhaps, for all practical purposes unlimited. [He

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What then is the authority which can determine what purposes are purposes of the Commonwealth ? As the appropriation is to be made by law (s. 83), the natural answer is - the authority which makes Commonwealth laws, that is, the Commonwealth Parliament, not the executive authority which administers laws when made, nor the judicial authority which interprets and applies the laws. Thus, in my opinion, the Commonwealth Parliament has a general, and not a limited, power of appropriation of public moneys. It is general in the sense that it is for the Parliament to determine whether or not a particular purpose shall be adopted as a purpose of the Commonwealth. I take as illustrations some past appropriations for purposes in relation to which the Parliament has approved the expenditure of moneys but where, when the purposes are considered in themselves, there is no power to legislate with respect to the matters to which the expenditure relates. In some cases there is only an appropriation of money for the purpose stated, in other cases there are statutes containing detailed provisions for the establishment of organizations for the purpose of spending the money. I mention appropriations for Antarctic exploration, medical research, literary grants and pensions, subscriptions to international organizations, such as the Agricultural Institute at Rome, public health, assistance to distressed Australians abroad. Among statutes I mention those conveniently to be found under the heading of Research and Science in vol. III. of the Commonwealth Acts 1901-1935 - Institute of Anatomy, Economic Research, Forestry Bureau, Geo-physical Survey, Science and Industry, Endowment and Research. (I omit the Act relating to a Solar Observatory at Canberra, because there is no doubt that, in relation to the Territories of the Commonwealth, the Parliament has a quite general power of appropriation for any purpose whatever.) The application of Commonwealth moneys to these objects, so far as it merely involves the expenditure of money, is, in my opinion, authorized by the Constitution. Such expenditures do not interfere with the rights of the States or of any persons, and if the Commonwealth Parliament approves the expenditure there is, in my opinion, full legal justification for the expenditure.

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I have felt more difficulty with reference to the first question than T have been able to find in the second. For the legislation appears to me only too clearly to be ultra vires. In discharging our duty of passing upon the validity of an enactment, we should make every reasonable intendment in its favour. We should give to the powers conferred upon the Parliament as ample an application as the expressed intention and the recognized implications of the Constitu- tion will allow. We should interpret the enactment, so far as its language permits, so as to bring it within the application of those powers and we should not, unless the intention is clear, read it as exceeding them. Then, if it appears impossible to refer all the provisions of a statute to the legislative power belonging to the Parliament, we should examine it to see whether there is any divisible part of the legislation for which support can be found. But when all this has been done, the Pharmaceutical Benefits Act emerges as a statute which must be held completely invalid upon the simple ground that it is not relevaat to any power which the Constitution confers upon the Parliament. It is entitled an Act to make provision for the supply of pharmaceutical benefits, and the title describes its central purpose. The purpose is carried out with some elaboration by the enactment, which provides a detailed and coherent plan. It is enough to state briefly the chief features of the plan. A pharma- ceutical formulary is to be prepared on behalf of the Commonwealth containing formulae for uncompounded medicines and medicinal compounds and to it there is an addendum naming materials and appliances. The expression "pharmaceutical benefits" is used to describe what is contained in the formulary and the addendum. Pharmaceutical chemists who are willing to supply such benefits may obtain approval for the purposes of the Act. A chemist, when approved, must display at his shop a sign in a prescribed form show- ing that he is an approved chemist. He must, on presentation by a customer of a prescription, in proper form, signed by a medical practitioner, supply the medical benefit mentioned in the prescription and he must make no charge to the customer. If he demands any payment from the customer he commits an offence. He is entitled to be paid by the Commonwealth but at rates fixed, not by him, but by regulations made under the Act. He may not supply the same pharmaceutical benefit again to the customer unless the prescription

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ing directly upon the individual. It was said that s. 81 of the Con- stitution, in referring to appropriation for the purposes of the Commonwealth, empowers the Parliament to expend money for any purpose that is for the benefit of the people of the Commonwealth, or for the advancement of their interest and that, for the rest, s. 51 (xxxix.) warranted an amplification or extension of the area of legis- lation once the description of benefit or advancement had been determined on. This is not the view which in the past I have enter- tained ot the power of appropriation given by s. 81 and of the requirement expressed by s. 83 that the appropriation must be "by law." No-one, I think, suggests, and I certainly do not, that any narrow interpretation or application should be given to these provisions. Even upon the footing that the power of expenditure is limited to matters to which the Federal legislative power may be addressed, it necessarily includes whatever is incidental to the existence of the Commonwealth as a state and to the exercise of the functions of a national government. These are things which, whether in reference to the external or internal concerns of govern- ment, should be interpreted widely and applied according to no narrow conception of the functions of the central government of a country in the world of to-day. There is no reason why such matters should be taken to fall outside the province of Federal appropriation though ascertained and defined by reference to the legislative power of the Commonwealth. But the claim is made that, under ss. 81 and 83, the Parliament has power to authorize the expenditure of money without any limitation of purpose. The claim means that, though the Commonwealth is a government of defined and enumerated powers, the power to spend money is independent of the limitations which affect the other powers of the Commonwealth and is not to be restricted by reference to the purposes for which, otherwise, the Commonwealth is conceived to have been established. There has not been wanting support for this view among those who have written about the Constitution, though I think the more general opinion has been against it. But I cannot see that this case requires us to choose between the two views. If it be conceded to the full that the power of appropriation authorizes the expenditure of money on any purpose the Parliament may think fit without restriction as to subject matter, it nevertheless appears to me to be a proposition that has little or no relevance to this case. It is cer- tainly not one that can support the Pharmaceutical Benefits Act asa whole. If it were true that the Act was primarily an appropria- tion for expenditure and that it did not appear impossible to sever

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A. the provisions which went beyond what is incidental to such an appropriation, it would be then necessary to consider how much could be supported under s. 81 and how much of the rest could be stripped from the enactment without changing its essential character. But the fact is that under the Pharmaceutical Benefits Act appropria- tion of money is the consequence of the plan; the plan is not consequential upon or incidental to the appropriation of money. There is only one matter that appears to me to arise in this case for decision in respect of s. 81. It is the suggestion that it might be read as if it were the power in the American Constitution authorizing the raising of revenue to provide for the general welfare of the United States. The suggestion means to my mind that we should read or write into the Australian provisions a conception foreign to them. Article I., s. 8, of the Constitution of the United States confers upon Congress power "to lay and collect Taxes Duties Imposts and Excises, to pay the Debts and provide for the common Defence and general welfare of the United States." Upon this text there has been an historic controversy. 'The conclusions of the Supreme Court which largely have set the controversy at rest, are embodied in the following passages from the opinion of the Court in United States v. Butler (1) "It is not contended that this provision grants power to regulate agricultural production upon the theory that such legislation would promote the general welfare. The Government concedes that the phrase 'to provide for the general welfare' qualifies the power "to lay and collect taxes.' The view that the clause grants power to provide for the general welfare, independently of the taxing power, has never been authoritatively accepted. Mr. Justice Story points out that if it were adopted 'it is obvious that under color of the generality of the words, to " provide for the common defence and general welfare," the Government of the United States is, in reality, a government of general and unlimited powers, notwithstanding the subsequent enumeration of specific powers ' (Story, Commentaries on Constitution of United States, 5th ed., vol. 1, s. 907). The true construction undoubtedly is that the only thing granted is the power to tax for the purpose of providing funds for payment of the nation's debts and making provision for the general welfare " (2). "While, therefore, the power to tax is not unlimited, its confines are set in the clause which confers it, and not in those of s. 8 which bestow and define the legislative powers of the Congress. It results that the power of Congress to authorize expenditure of public moneys for

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The present action, in my opinion, raises more than abstract questions. The Act has not yet been proclaimed, but we were informed by counsel for the defendants that it will be proclaimed at the beginning of next year, and that in the meantime the necessary preliminary steps are being taken so that it may then be brought into effective operation. The question will therefore arise in the imme- diate future whether the public in each of the States are entitled to the benefits and subject to the obligations imposed by the Act. The cause of action relied upon is not founded upon any conflict between State and Federal legislation, but upon the right, in some instances of the individual, and in other instances of the public or a section of the public, to restrain a public body clothed with statutory powers exceeding those powers. The cause of action was discussed and explained by O'Connor J. in the Union Label Case (1), and by my brothers Rich and Dixon in Tasmania v. Victoria (2). In England no question can arise as to the validity or invalidity of an Act ot the Imperial Parliament, but such questions can arise with respect to regulations or executive acts purported to be made or done under the authority of Imperial Acts, and in England a claim for a declaration that such regulations or executive acts are beyond power would clearly constitute a cause of action. Instances where individuals who could claim some special interest in themselves have litigated such causes of action are illustrated by such cases as Dyson v. Attorney-General (3); Burghes v. Attorney-General (4); Wagg v. Attorney-General for the Irish Free State (5); Youford and Darsham Farmers' Association Ltd. vy. Llewellin (6); while instances where it would be necessary to join the Attorney-General are discussed by Viscount Maugham in Moscrop's Case (7). As the Chief Justice has said in Toowoomba Foundry Pty. Ltd. v. The Commonwealth (8), "itisnow . . . too late to contend that a person who is, or in the immediate future probably will be, affected in his person or pro- perty by Commonwealth legislation alleged to be unconstitutional has not a cause of action in this Court for a declaration that the legislation is invalid.' The rights and liabilities created in favour of and imposed upon the public of the State of Victoria by the Pharmaceuti- cal Benefits Act are just as immediate as the impact upon individuals

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I shall now proceed to consider the second question. The Pharma- ceutical Benefits Act has already been set out in considerable detail in the judgments of the Chief Justice and my brother Dixon, so that I shall only refer briefly to its main provisions. Its purpose, to be gathered from its title and contents, is to make the pharma- ceutical benefits contained in the Commonwealth Pharmaceutical Formulary available free of charge to every person ordinarily resident in the Commonwealth. In order to obtain these benefits a person must be personally examined by a qualified medical practitioner, who, if satisfied that the pharmaceutical benefit is necessary for his treatment, must write and sign a prescription, which must be in the prescribed form and written on a form supplied by the Common- wealth. The person then takes the prescription to an approved pharmaceutical chemist, who supplies the prescribed pharmaceutical benefit free of charge and is paid by the Commonwealth at the prescribed rate. The Act contemplates that qualified medical prac- titioners will make the necessary personal examinations, and that pharmaceutical chemists will apply for approval. But it also author- izes the Minister to make special arrangements in the case of isolated areas, and to make arrangements with medical practitioners so that their services will be available without charge to members of the public for the purpose of furnishing prescriptions and orders for the purposes of the Act. It creates a number of criminal offences for failure to comply with its provisions, and empowers authorized persons to enter the premises of approved pharmaceutical chemists, and, inter alia, take samples of drugs &c. which may be supplied as pharmaceutical benefits, and examine any person employed in any such premises with respect to any matter under the Act. It also authorizes the Governor-General to make regulations not inconsistent with the Act, prescribing all matters which by the Act are required or permitted to be prescribed, and which are necessary or convenient to be prescribed for carrying out or giving effect to the Act, and in certain particulars, including the standards of composition or purity of pharmaceutical benefits subject to which payment in respect of the supply thereof will be made.

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