R v Barger [1908] HCA 43;

R v Barger [1908] HCA 43; - HCA 1908 case summary — Zoe

[37]

The fact that taxation may produce indirect consequences was fully recognized by the framers of the Constitution. They recognized, moreover, that those consequences would not, in the nature of things, be uniform throughout the vast area of the Commonwealth, extending over 32 parallels of latitude and 40 degrees of longitude. The varying conditions of climate - tropical, sub-tropical and temperate - and of locality - near or at great distances from the seaboard - make an effectual discrimination for many purposes between the several portions of the Commonwealth. Lest, however, the Parliament should desire to bring about equality in the incidence of the burden of taxation, or what has been called an equality of sacrifice, by discriminating between such different portions, they were expressly prohibited from doing so. The words of placitum ii. "Taxation; but so as not to discriminate between States or parts of States" recognize the fact that nature has already discriminated, and prescribe that no attempt shall be made to alter the effect of that natural discrimination. So in placitum iii. "Bounties on the production or export of goods, but so that such bounties shall be uniform throughout the Commonwealth," the Parliament is precluded from attempting to equalize the conditions which nature has made unequal. Again, by sec. 88 it is prescribed that "uniform duties of Customs" shall be imposed within two years. The inequality of the indirect effect of Customs duties in different parts of the Commonwealth is obvious to all persons acquainted with its conditions, but any attempt to correct this inequality is forbidden. This is well illustrated by the case of the Colonial Sugar Company v. Irving[9], which related to the Excise duty imposed on all sugar in respect of which Customs duty had not been already paid. It was objected by the appellants that the Act offended against the prohibition of discrimination because in some States the rate of Customs duty on sugar had been higher than in others, from which it followed that the actual burden of the new Excise duty was unequal in its incidence. This contention was rejected by the Judicial Committee, who said that the discrimination, if any, was not effected by the Act imposing the Excise duty, but by the operation of the State laws previously existing. E converso, if the Excise duty had been made to vary in inverse proportion to the Customs duties in the several States so as to make the actual incidence of the burden practically equal, that would have been a violation of the rule of uniformity. The object of the provision is further shown by sec. 92, which provides that "On the imposition of uniform duties of Customs, trade, commerce, and intercourse among the States ... shall be absolutely free."

[38]

It follows from what has been said that the power of taxation is subject to some limits. On the other hand, so long as the prescribed limits are not transgressed, the Parliament may select the persons or the things in respect of which the exercise of the power is to operate. It is contended for the Commonwealth that this power of selection is only limited by the express words of placitum ii. and sec. 88, and that the discrimination or selection may be made to depend upon any other condition whatever, including conditions relating to personal conduct, or the regulation of domestic industrial conditions. The defendants contend, on the other hand, that the limitation of the power of selection is to be found, not only in the express words of sec. 51, placitum ii., and sec. 88, but also in other parts of the Constitution, so that the grant of the power of taxation, which, as already said, is an independent power, must be so construed as to be not inconsistent with the other provisions of that instrument. If this latter contention be rejected, it would follow that the power of taxation is an overriding power, which would enable the Parliament to invade any region of legislation, although it is impliedly forbidden to enter it, and this by the simple process of making liability to the taxation depend upon matters within those regions. In this connection I will read a passage from the judgment of this Court in Peterswald v. Bartley[10]: - "In construing a Constitution like this it is necessary to have regard to its general provisions as well as to particular sections, and to ascertain from its whole purview whether the power to deal with such matters was intended to be withdrawn from the States, and conferred upon the Commonwealth. The Constitution contains no provisions for enabling the Commonwealth Parliament to interfere with the private or internal affairs of the States, or to restrict the power of the States to regulate the carrying on of any businesses or trades within their boundaries, or even, if they think fit, to prohibit them altogether. That is a very important matter to be borne in mind in considering whether this particular provision ought to be construed so as to interfere with the States' powers in that respect. If the majority of the Supreme Court were right, the Constitution will have given to the Commonwealth, and withdrawn from the States, the power to regulate their internal affairs in connection with nearly all trades and businesses carried on in the States. Such a construction is altogether contrary to the spirit of the Constitution, and will not be accepted by this Court unless the plain words of its provisions compel us to do so."

[46]

Now, it is clearly within the competence of a State legislature to regulate the conditions of labour employed in the manufacture of agricultural implements. It is equally clear that a State legislature, having prescribed such conditions, could impose a pecuniary burden upon everyone who did not conform to them, and that the payment might be made proportionate to the number of articles produced. Yet, if such payment were a duty of Excise, the State could not impose it, for the power of the Parliament to impose duties of Excise is exclusive. Such an Act might be framed in several different ways. It might be prescribed that certain conditions as to the remuneration of labour should be observed in the manufacture, and that any manufacturer who failed to comply should be liable to a penalty of so much for every article manufactured. Or, without formally prescribing any such condition, it might provide that any manufacturer who did not observe certain conditions should be liable to a penalty of so much per article. Or it might, instead of using the word penalty, say that the manufacturer who did not comply with certain conditions should be bound to pay a licence fee, the amount of which should be computed at so much for every article manufactured. Or it might provide that every manufacturer should at his option either comply with certain prescribed conditions or pay to the State Treasurer a sum computed &c., and in default should be liable to a penalty of &c. Or, finally, it might provide that any manufacturer who did not comply with certain specified conditions should pay a tax at a specified rate. In all the cases supposed the substance would be the same, though the form would differ. And, in every case, the substance would be a regulation of the conditions of labour in the industry in question. Attention has already been drawn to the immateriality, as far as regards the validity of an Act, of the motives or indirect results in contemplation of the legislature. The professed purpose of an Act is generally stated in its Title. In any of the cases supposed the purpose of the Act, apparent on its face, whatever attempt might be made to disguise it in the Title, would be, not to raise money for the purposes of government, but to regulate the conditions of labour. From this point of view an inquiry into the purpose of an Act is not an inquiry into the motives of the legislature, but into the substance of the legislation. And for the purpose of determining whether an attempted exercise of legislative power is warranted by the Constitution regard must be had to substance - to things, not to mere words.

[48]

My Lords, the question here may be reduced to a very short point, namely, whether the civic authorities have power to make these regulations which are complained of, because in substance they are regulations although they are contained in the form of a licence which they issue and which involves the power to make a regulation. Whether it is called a regulation or a by-law, it is a legislative power which, in my view, the legislature has not confided to them.

My Lords, it is idle to say that a great many of these things, as has been urged in the arguments which have been addressed to your Lordships, would be very desirable for the sake, it is said, of public order. ... I do not know what the evil aimed at was. I can give, therefore, no general view of what is the intention and purpose of the Statute. I can only look at the Statute itself and construe it, and when I construe the Statute I find there is in the Statute itself a plain prohibition with respect to certain things. The magistrates, of course, are not only empowered but bound to give effect to legislation which has been passed; but when it is argued that because they are given the power to restrict, within certain hours, the sale of ice-creams therefore they have implied power to do all that might be desirable or expedient with reference to the times and circumstances under which ice-creams shall be sold, it seems to me the argument entirely fails. What is sought to be done, whether directly by by-laws, or indirectly by the language of the licence that is issued, is something that can only be done by the legislature. It is a restraint of a common right which all His Majesty's subjects have - the right to open their shops and to sell what they please subject to legislative restriction - and, if there be no legislative restriction which is appropriate to the particular thing in dispute, it seems to me that it would be a very serious inroad upon the liberty of the subject if it could be supposed that a mere single restriction which the legislature has imposed could be enlarged and applied to things and circumstances other than that which the legislature has contemplated.

[71]

Now, I do not think I can better approach the consideration of this momentous question than by adopting the observations made by the Supreme Court of the United States in 1898 in the case of Nichols v. Ames[18]: - "The power to tax is the one great power upon which the whole national fabric is based. It is as necessary to the existence and prosperity of a nation as is the air he breathes to the natural man. It is not only the power to destroy, but it is also the power to keep alive." I propose to consider in order the various objections to the validity of the Act. It is said that it is not a taxing Act because it assumes to regulate a branch of internal trade, to penalize the payment of unreasonable wages to employés and, therefore, to invade a legislative territory exclusively assigned to the States. It is added that this is the effect of the proviso, and that the Court is consequently at liberty, and bound to hold, in spite of the express enactment of an Excise duty on agricultural implements, that no Excise duty whatever has been imposed, and to say, therefore, that the Act is not within the scope of the taxing power. The words granting that power are very large and very clear. The power itself is conferred by one word, "taxation" - a word so plain and comprehensive that it would be difficult to devise anything to surpass it in simplicity and amplitude. The words of limitation immediately coupled with it, namely, "but so as not to discriminate between States or parts of States," demonstrate that, so far as that clause is concerned, the power is otherwise unlimited. The main question here is whether the Excise Tariff 1906 (No. 16) is "taxation." A distinction is sought to be established between "taxation," and "taxation within the meaning of the Constitution." I can understand a limitation of the exercise of the power of taxation to certain subjects, and the exception of other subjects from its sphere of operation. I recognize, too, that conditions in the mode of exercising the power may be consistently attached to the grant; but, the imposition of a tax on any person or thing for the benefit of the Consolidated Revenue is taxation, and taxation within the meaning of the Constitution. Not all taxation can be sustained as valid. Thus, if imposed upon any State instrumentality or act of Government, or if it discriminates between State and State or parts of States: (secs. 51 (II.) and 99), or offends against sec. 55, or contravenes sec. 92, or is a tax against State property within the meaning of sec. 114, or, in breach of sec. 117, discriminates between residents of different States, the Act would be invalid, at least pro tanto. Nevertheless it would still be taxation, and taxation within the meaning of that word in the Constitution, but it would not be valid or authorized taxation. I therefore lay aside as unmeaning any such distinction, and proceed to examine the other arguments advanced to establish the invalidity of the Act. It is said for one defendant that the power of taxation does not extend to matters within the jurisdiction of the States, that the Commonwealth Parliament cannot do by taxation anything which is reserved exclusively to the States. For the other defendant the same idea was pressed in varied language. It was argued that where the discrimen is based upon conduct within the power of the State to regulate, and not expressly given to the Federation, it is beyond the power of the Federal Parliament. This limitation is arrived at, it is said, from reading the Constitution as a whole, and from a contemplation of the results which would arise if plain and expressive words were accorded their ordinary signification. On what words in the instrument is such a construction based? Counsel were unable to point to a syllable or a phrase which supported their interpretation - nor is any such to be found. First, there is the grant of power to the Commonwealth, then, there are express limitations on the grant, and next, the cluster of sections, beginning with sec. 106, saving the State Constitutions and powers, but "subject to this Constitution," that is, subject to the grant of the enumerated powers to the national authority which are declared to be supreme. The powers of the State Parliament referred to in sec. 107 cannot be greater than those comprised in the State Constitution, and which is "subject to the Federal Constitution." We search in vain for any declaration that the grant of power is subject to the powers reserved, for that would be either meaningless or would nullify the grant. The Commonwealth's powers are given definitely, and without further reservations than those expressly stated; the powers not granted or withdrawn remain with the States.

[89]

The Act of 1886 was called the Oleomargarine Act. Its very title showed the motive of its enactment. It styled itself "An Act defining butter, also imposing a tax upon and regulating the manufacture, sale, importation and exportation of oleomargarine;" and imposed special taxes on manufacturers and dealers in oleomargarine, prescribed penalties for manufacturing or dealing without payment of the tax, prescribed the manufacturer's duty as to keeping books and the conduct of this business. It went much further than anything in the Excise Tariff 1906 (No. 16). It compelled the manufacturer to pack oleomargarine in new firkins, tubs or other wooden packages, each containing not less than 10lbs., and marked, stamped and branded as the Commissioner of Internal Revenue with the approval of the Secretary of the Treasury should prescribe. Retail dealers were bound to sell only from original stamped packages not exceeding 10lbs. and to pack in suitable wooden or paper packages marked and branded as the Commissioner and the Secretary approved, under severe penalties of fine up to 1,000 dollars, and imprisonment up to two years. It required manufacturers to affix a label on each package under a penalty; penalized a person purchasing a package wrongly branded; provided for a chemist and microscopist in the office of the Commissioner; and then came a provision of importance on the second branch of this case - the Commissioner was authorized to decide what substances &c., submitted to inspection in contested cases should be taxed under the Act. Sec. 15 was in these terms: - "That all packages of oleomargarine subject to tax under this Act that shall be found without stamps or marks as provided, and all oleomargarine intended for human consumption which contains ingredients adjudged, as hereinbefore provided, to be deleterious to the public health, shall be forfeited to the United States." That section assumes the tax on oleomargarine; assumes that it cannot lawfully be sold, except in compliance with the taxing directions; and then, as one of the directions, adds the exclusion of ingredients adjudged by a public officer to be deleterious to the public health. So that the tax was not merely a tax on articles as they existed, but on articles selected as not deleterious to health; and it was forbidden to mix with these any ingredients that were deleterious to health. In Ex parte Kollock[35], a man named Kollock was fined for having as a retail dealer sold and delivered one half-pound of oleomargarine not packed in a package with certain marks and brands on it as prescribed by the Commissioner. The validity of the Act was contested. There can be no doubt as to the motive and intention of Congress, and as to the inner and main purpose of the Act. It was to protect the public by regulating the sale of oleomargarine; and as Mr. Judson in his work on Interstate Commerce, says, at p. 82, it was for the avowed purpose of destroying the business. Plainly a question for the State alone, would the defendants say here. The Court, however, did not proceed to inquire as to the substance of the Act or its purpose or object apart from the primary effect of the Act appearing on its face, namely, taxation, and notwithstanding its further significant title as to regulation. Enough for the Court that Congress had imposed the tax. Though the whole Act was an undisguised blow at deception in internal trade in butter - that is to say, at the methods of manufacturers and dealers in the conduct of their business, methods ordinarily within the regulative power of the States - the Court found a tax imposed on goods, and acknowledged the right of Congress, if it thought fit, to use its power of taxation for any other purpose in conjunction with the revenue, however small a part the revenue played in the enactment. Its mere presence was sufficient. The tax, as here, was placed on the goods; the actuating reason, as probably in this case, was an intangible circumstance extraneous to the goods - public deception and public health there, under-payment of employés here. But, whatever the ulterior object in fact, it was and is immaterial. Chief Justice Fuller said[36]: - "The Act before us is on its face an Act for levying taxes, and although it may operate in so doing to prevent deception in the sale of oleomargarine as and for butter, its primary object must be assumed to be the raising of revenue."

[116]

The authority to so construe an Act is rested mainly on the case of the Attorney-General for Quebec v. Queen Insurance Co.[47]. I am deeply conscious of the weight of the judgment with which I have the misfortune to disagree, but, with the utmost deference, I am of opinion that none of the cases cited justify or support any such principle. The Queen Insurance Co.'s Case[48] was this: - A Quebec Act was challenged as being a Stamp Act, and therefore beyond the power of the provincial legislature. It was called "An Act to compel assurers to take out a licence," but when examined it was found to be in substance a Stamp Act. But how did the Privy Council arrive at that result? They took its very words, and found that the only payment insisted on was by requiring stamps to be affixed to policies, receipts and renewals. But not a word was changed in the Act, not a word was added to it. The fullest ordinary meaning was given to its own terms as they stood. To make that case an authority for the defendants at all it should be shown that the Privy Council had arrived at their decision by assuming an equivalent. Russell v. The Queen[49] affords no assistance. Under the Canadian Constitution legislation on the drink question falls within the competency of the Dominion or of a Province, according as the purpose and effect of the Act is to suppress intemperance generally throughout Canada or locally in the Province. To ascertain, therefore, which legislature had the power, the Privy Council considered the purpose and effect of the Act. Again, the case of Guy v. Baltimore[50] is one of a numerous class of cases in which the United States Supreme Court has adjudged that where a State law, even admittedly within its ordinary powers, so that no question of validity could arise upon the construction of the State Constitution under which it is made, nevertheless in its effect conflicts with an exclusive federal power, it is pro tanto void as being in conflict with the United States Constitution. In such a case it is material to ascertain the effect of the Statute, because, although the power to pass it is derived from the State Constitution, the restriction is found in the Federal Constitution, and the restriction is violated by the effect.

[119]

The Act is by this process taken to be equivalent to an enactment containing no reference to a tax, and consisting merely of regulative provisions; the words of the Commonwealth Parliament are rejected, and others it has not used are constructively substituted. No similar case can be found. It would be perfectly easy to destroy every Excise Act in a similar manner. All that is necessary is to apply the doctrine of equivalence. The Commonwealth imposes, say, a gun tax or a dog tax of £1 a year. That might be regarded as a penalty on keeping a gun or a dog; such a tax is very frequently said colloquially to be a penalty. A motor car tax might, in like manner, be held equivalent to a penalty on the possession of motor cars. The State might penalize the possession of opium by £100 fine for every ounce. If the Commonwealth, for the purpose of suppressing the evil, imposes a tax of £100 an ounce, could it be said it was only a penalty for regulation, and not a tax? But I do not see how such an Act could stand, if this Excise Tariff 1906 is bad. Let us get even closer to the present Act. Take the case of cigarettes. A differential Excise tax of, say, sixpence per pound is placed on cigarettes if made by machine. Is that a penalty on using machinery, and unlawful? If not, could the differential tax be placed on cigarettes made by black labour, or by women, or boys, or consumptives? Would it be said to be no tax whatever, but mere regulation by penalty in respect of trade? If an affirmative answer is given, it cuts across all the principles of the unlimited power of taxation, which have been emphasized in the examples already cited. If, however, it be admitted that black labour, or the employment of women and children, may be made the basis of differentiation, why not under-paid labour? What difference of principle is there between any of the cases suggested? In all of them the tax is on the goods, but for various reasons, motives, objects, or purposes which seem to the legislature appropriate to actuate it in the exercise of the granted power. If it be doubted whether the tax as a tax is really on the goods, though for the purpose of securing fair conditions of labour, an easy test is at hand. Assume, first, the proviso deleted. The Act then stands as a clear and unmistakeable tax on all the machinery specified. A machine made under unreasonable conditions of labour is taxed, so is a machine alongside it made under reasonable conditions. Now assume the proviso to operate. It exempts the latter machine, and says nothing about the former; but the former remains liable as it was before, it is not interfered with. How can it be said the article is not taxed because the legislature, for its own reasons, chooses to differentiate between it and another article which has come into existence under different circumstances? If the tax had been imposed by one Act without a proviso, and then a year or a day after another Act were passed, not as a proviso but independently, exempting machines made under the circumstances specified in the proviso, could anyone have reasonably argued the unconstitutionality of the first Act as not being a taxing Act at all? And if substance is the main thing, why, in the absence of express restriction, apply a different rule of validity according as the legislature puts it into one document instead of two?

[144]

At the time the Australian Constitution was framed it had been decided in America in 1884, in The Head Money Cases[70], that the uniformity referred to in the American Constitution meant geographical uniformity, and not intrinsic uniformity, of the tax. In other words, that a Tax Act was uniform if it operated with the same force and effect in every place where the subject of it was found. This decision was re-affirmed in Knowlton v. Moore[71]. The Court in that case added: - "The preference clause of the Constitution and the uniformity clause were, in effect, in framing the Constitution, treated, as respected their operation, as one and the same thing, and embodied the same conception." It is clear, therefore, that, if the American uniformity clause had been adopted in Australia, every taxing Act must have operated with exactly the same force and effect on the same articles, whether in Tasmania or at the Gulf of Carpentaria, and, although the tax was nominally uniform, might have pressed much more severely on the taxpayer in the one place than in the other. But the clause was not adopted. The word "uniform" is used in connection with Customs duties, and the separate use of that expression, coupled with the marked change of language in the words of the limitation in sec. 51 (II.), naturally leads to the belief that there was an intentional departure from the American rule of uniformity. That belief is considerably strengthened by two circumstances, the first is the language of the limitation itself. The word "taxation" confers power on a national Parliament; a power to be exercised over all persons, things and circumstances, without regard to the existence of separate States. It would have been a simple and natural method, if the adoption of the American rule of geographical uniformity were desired, to have inserted in this Constitution the words of its prototype, or to have had forbidden discrimination "between any parts of the Commonwealth." But "States and parts of States" are referred to, and that expression more naturally lends itself to the assumption that the prohibition to the Federal Parliament was against differentiating in its measure of taxation between States and parts of States, because they were particular States or parts of States.

[155]

How can this paragraph possibly discriminate between localities? It is said the Arbitration Court may declare the award to apply to certain areas, that the area may even be a whole State, and therefore the taxing Act discriminates between States. In my opinion, this contention ought not to prevail. Does the Commonwealth Conciliation and Arbitration Act show partiality for some localities as against other localities? Does it discriminate between States and parts of States? I am astonished to hear that it does. If it does, it ought not be difficult to point out the localities it favours or the States or parts of States for which it shows preference. It enables industrial disputes extending beyond the limits of a State to be settled by an award. The award determines the questions in dispute, and in settling these, as, for instance, wages or hours of employés, the Court is not bound to examine separately and in detail the circumstances of every establishment in the industry involved in the dispute. It may make an award binding the parties appearing, represented or summoned, and may further bind others in the industry, wherever situated, by making its determination a common rule. So far there is no pretence at differentiating between localities as such. But because one common rule binding the whole industry everywhere in Australia would probably, and, indeed, almost certainly, work injustice, the Court is empowered to have regard to "local circumstances," not to the mere fact of locality, much less any particular locality, and, so far as these circumstances are substantially similar, to make a common rule apply. The extent of the similar circumstances must necessarily be coincident with some area of territory, which may be delimited; and it may coincide with State boundaries, or comprise only a small portion of a State, or include a region falling partly within one State and partly within another, or embrace two States. These are mere accidents and have no relation to States as such. The area is marked out by the circumstances, not the circumstances by the area. The area is merely a convenient label to indicate similar industrial circumstances, irrespective of State boundaries, or State districts. The Act applies the one rule to goods made "in any part of the Commonwealth," the one standard, reasonableness, or if any variation of rule is possible, it is variation of the Court's idea of justice, and in no way determined by the mere fact of locality. So far from finding in the Act partiality for any special localities, I discern the most absolute impartiality, and absence of discrimination in favour of or against any particular locality. Discrimination between localities in the widest sense means that, because one man or his property is in one locality, then, regardless of any other circumstance, he or it is to be treated differently from the man or similar property in another locality. No such design or necessary result can be gathered from the Excise Tariff 1906 (No. 16) or the Commonwealth Conciliation and Arbitration Act 1904.

[164]

No doubt, this Act does tend to encourage employers who pay fair wages to their employés; and it was meant to do so. Therefore, with our limited experience of the working of a federal system, our first and superficial impressions must be adverse to the constitutionality of the Act. "This is," we say, "an attempt of the Federal Parliament to regulate wages. Wages are a matter for the State Parliament only; why should the Federal Parliament be meddling with what is not its business?" Yet in this short argument there are two misleading expressions. Every one agrees that if this Act regulates wages, in the sense of prescribing wages, commanding what wages shall be paid, making it illegal, in any sense, to pay other wages, the Act is, to that extent, void. But it is competent for the Federal Parliament to use any of its admitted powers in such a manner as to affect or influence the rate of wages, however materially. The truth is that, where two law-making powers operate over the same territory and the same people, the laws of one authority must necessarily touch, at every point, the subjects committed to the other authority, and must frequently affect the conduct of persons with regard to those subjects. It would profoundly affect the exercise of the State powers with regard to State subjects if the Federal Parliament were to prohibit the importation of foreign books, to forbid inter-state carriage of cattle, or the export of wool, or the import of scientific apparatus, to sweep away all lighthouses, to abolish the marriage tie, to prescribe that all infants shall be sent to the custody of certain institutions. The electors would have something to say as to such legislation; but its influence on State businesses, State education, State railways, State morals, or State solvency, would not make it void. It is true that, if the Federal Parliament can make its taxation depend on the scale of wages paid by an employer, it can make its taxation depend upon other things - the length of each man's foot, his abstinence from tobacco and beer, the number of his children; or it can impose a licence fee on all persons carrying on a specified trade, with remission to those who carry on under specified conditions. But it is idle to say that neither the Convention nor the British Parliament intended such things. Of course it did not; but it intended that the Federal Parliament should be free to deal with federal subjects as it thought best for the people of Australia - it did not intend that the Federal Parliament should move in leading strings. The mere fact, therefore, that the Federal Parliament lays down certain unusual conditions as to wages in a taxation Act does not make that Act void, provided that it does not purport to regulate wages in the sense of making a law, a legislative command, to pay wages. The second fallacy lurks in the statement that wages are a matter for the State Parliaments only. It is true that the Federal Parliament has no power to make laws prescribing wages. But, in the exercise of its admitted powers, the Federal Parliament may - indeed, must - often touch wages incidentally; and, if and so far as the federal law is within the admitted powers, it is valid, no matter what the State laws may say (Constitution, sec. 109). To say that the Federal Parliament cannot make a law because legislation on the subject belongs to the States is rather to invert the true position. The Commonwealth has certain powers, and as to those powers it is supreme; the State has the rest. We must find what the Commonwealth powers are before we can say what the State powers are. The Federal Parliament has certain specific gifts; the States have the residue. We have to find out the extent of the specific gifts before we make assertions as to the residue. The question, then, is merely what is the extent of this power of taxation given to the Federal Parliament, and how far may the power be applied? It is not contended for the Federal Parliament, as was contended, it seems, for the magistrates in Rossi v. Edinburgh Corporation[74], that it has power to amplify its powers, and to prescribe all that may seem to be "desirable or expedient" as an addition to its powers. It is merely contended that what has been done in this Act is within the plenary power of taxation actually granted. Now, by section 51 of the Constitution, the Parliament has, subject to the Constitution, "power to make laws for the peace, order, and good government of the Commonwealth with regard to ... taxation; but so as not to discriminate between States or parts of States." So the Parliament has, primâ facie, power to tax whom it chooses, power to exempt whom it chooses, power to impose such conditions as to liability or as to exemption as it chooses. But the Constitution expressly forbids discrimination between States or parts of States; and, according to the dictum of the High Court in Federated Amalgamated Government Railway and Tramway Service Association v. New South Wales Railway Traffic Employés Association[75], the Federal Parliament has no power to tax State officers or State agencies. Subject to this latter implication, which has been based on the nature of the Constitution, there is only one limitation - the Parliament must not discriminate between States or parts of States. The fact that this limitation is expressed excludes all limitations by implication: expressio unius exclusio alterius. With the qualifications which I have mentioned, (and certain others immaterial for the present purpose: see secs. 92, 99, 114, 117), the taxing power of the Federal Parliament is plenary and absolute; unlimited as to amount, as to subjects, as to objects, as to conditions, as to machinery. "If the right to impose the tax exists, it is a right which in its nature acknowledges no limits": Weston v. Charleston[76]; McCray v. United States[77]. This position also has not been disputed by the defendants - at all events, expressly.

[165]

Next, to examine the Act in question. The first section states the title. The second section says that duties of Excise are to be imposed on the goods and at the rates mentioned. So far, it is a taxing Act pure and simple; for an obligation is created to pay to the Crown Excise duty in respect of the goods specified. Then follows a proviso that the Act is not to apply to goods manufactured under such conditions as to the remuneration of labour as are sanctioned in any one of four methods. That is to say, the Act taxes all manufacturers of the goods, but exempts those who fulfil certain conditions; and there is full power under the Constitution to discriminate between persons, although not between States. In this case, the discrimination, the boundary line, between those who have to pay is placed within the area of what is, with the qualifications which I have stated, a State subject - the conditions of labour; just as a federal Act might fix the boundary line for a postal district or for a defence or a quarantine area, at Lake Eyre or at Ipswich, or at other places subject to State control; and, conversely, a State Parliament might, I presume, discriminate - if it thought such a discrimination wise - in its labour legislation, between those who pay and those who do not pay Excise duty - commanding those who do not pay Excise duty to pay higher wages than those who do. There is power for the Federal Parliament to exempt all persons having black eyes, all persons not having horses, all persons who subscribe to certain hospitals, all persons who can speak French, all persons who give their employés a half holiday every week, all persons who are teetotallers. No doubt, such taxation would tend, more or less, to induce men to get rid of their horses, or to subscribe to the hospitals, or to learn French, or to give the half holiday, or to abstain from drink. Yet horses and hospitals, education and the relations of employers and employés, morality, health and social habits, are all matters for the State legislature. Only the State Parliament can (so far as we are concerned in the present case) prescribe what horses a man may own, can make commands as to sanitary arrangements or as to employment, can create offences in connection with such subjects, can visit the persons to whom the command is addressed with punishment if they do not comply. Inasmuch as labour laws cannot be said to be ancillary to its taxing legislation, in this case, the Federal Parliament cannot legislate on labour so as to make that lawful which the State makes unlawful; or so as to make that unlawful which the State makes lawful.

[167]

If the Federal Parliament has power to tax, it can tax whom it chooses, it can exempt whom it chooses. The defendants' counsel were so evidently pressed by this admitted doctrine that they were driven to urge boldly that this Act is not, in substance, taxation at all. But if it is not a taxation Act, it is nothing - it is not a command of the legislature at all. For the only command is to pay duties; the clauses as to fair and reasonable remuneration do not, in form or in substance, contain a command, or anything in the nature of a command. The Act says, "Duties of Excise shall ... be imposed on the dutiable goods specified ... at the rates specified" (sec. 2). Why is this not a taxing Act? Does the fact that there is a proviso for exemption based on labour conditions make it other than a taxing Act? I shall deal presently with the more difficult question as to the limits of the right of the Federal Parliament to interfere with a State subject. The question now is, does the addition of a proviso, which may (I shall assume for the present) be beyond the Federal Parliament's powers, convert that which would otherwise be a taxing Act into a non-taxing Act? Would it be a taxing Act from the point of view of the British Parliament? This Constitution is contained in an Act of the British Parliament; and we should expound the words according to their meaning in an Act of the British Parliament in 1900. For instance, if there were any variance between the British Acts Interpretation Act and the Australian, the British would govern the meaning of the Constitution. Our Interpretation Act, made under the Constitution, could not affect the meaning of the Constitution. Would this Act be treated by the British Parliament as coming under the words "laws ... with respect to ... taxation"? Fortunately, we have a very good practical test. In the British Parliament, as in other Parliaments formed on its model, there are certain very definite rules of practice and procedure applicable to taxation and other money bills, as distinguished from ordinary bills. A taxation bill has to be proposed by a Minister of the Crown; it has to originate in a committee of the whole House of Commons; and the House of Lords never ventures to initiate or to amend such a bill. Any parliamentarian would open his eyes with amazement if he were told that this practice would not be applicable to a bill in the terms of this Act, or that this is not a taxation Act. The fact that the United Kingdom is a unified or unitary State does not affect this matter. The meaning of "laws ... with respect to ... taxation" is the same in a unified State as in a federation, although the legislature in a federation may be more hampered by limitations of its powers. This is, then, a taxation Act; and it is an Excise taxation Act, as the tax is imposed on the production or manufacture of commodities (see Peterswald v. Bartley[78]). It is, therefore, a tax such as the Federal Parliament can impose, and the State Parliament cannot impose (Constitution, secs. 90, 93). The State, indeed, could prescribe the rates of wages, and could impose penalties proportioned to the number and the character of the articles manufactured. But the Federal Parliament alone can create an obligation to pay Excise duty; and the State alone can create an obligation to pay certain rates of wages; and this is a vital difference.

[169]

Subject to the objection taken that this Act discriminates between States, if it is once conceded that this is a taxation Act, the matter is really ended. For the Federal Parliament can tax and exempt whom it chooses; can prescribe such conditions of exemption, however absurd, as it chooses; and it does not matter, so far as regards the validity of the Act, what the legislators' motives may be - even if it be to encourage or to discourage people in acting in a certain way with regard to a subject reserved to the States. The motives of the legislators are for their constituents to consider. If a tax be laid upon motives and grounds "wholly beside the intention of the Constitution," the remedy ... is "solely by an appeal to the people at the elections" (Story, Comm., s 374). The Courts have merely to determine what the Act does, what it enacts in substance, not in name; and whether it is within the power conferred by the Constitution. It is conceded on all sides that this Court is not to be bound by the name which Parliament has chosen to give to the Act, but is to consider what the Act is in substance - what it does, what it commands or prescribes. But if, in fact, the Act purport to impose a tax, the Court has to assume that the primary object is the raising of revenue, even though the Act should in fact be passed with the view of destroying State banks in favour of national banks: Veazie Bank v. Fenno[79]; or of protecting manufacturers; or of preventing oleomargarine from being sold as butter: Ex parte Kollock[80]; or of discouraging speculative sales in Wall street, New York: Treat v. White[81]. In some cases the American Courts seem to treat this assumption as a presumptio juris et de jure - a presumption that cannot be rebutted. But, at all events, the doctrine is clearly established. The question, then, for us, is not why, or with what object, the Federal, or State Parliament has passed an Act, but whether it is within the scope of its powers; not why the Federal Parliament ploughs this ground, but is the ground within the boundaries of any of the federal powers? This doctrine, as to the immateriality of motives, is not an exceptional doctrine, applicable only to Constitutions. According to English law, a man who has a legal right to property cannot be interfered with in the exercise of his rights, even if he exercise them with vindictive or blackmailing motives: Bradford Corporation v. Pickles[82].

[171]

The Act does not conflict, and cannot conflict, with any possible State law prescribing wages. Under the State law, the manufacturer may be commanded (e.g., under a Factories Act or an Arbitration Act) to pay 6s. a day. By paying the 6s. he satisfies the law; but he also gets a remission of Excise duty if he pay 7s. The Federal Parliament does not say "You must pay fair wages." It says: - "You will be rewarded by an exemption from Excise duty if you pay fair wages. If this Act were an Act prescribing wages, the manufacturer who does not comply with the standard of wages referred to in the Act would be breaking the law; whereas here the man who does not comply would not (assuming the Act to be valid) break the law any more than the man who does. The case of United States v. De Witt19 Wall, 41., on which the defendants rely, is, therefore, no authority in their favour. In that case, the federal Act purported to prohibit the mixing of naphtha and illuminating oils, and the selling of such a mixture; it created an obligation on the subject of illuminating oils, and thus interfered with the internal concerns of each State. The Excise Tariff puts the employer under no legal obligation whatever as to wages. The manufacturer who pays low wages acts as lawfully as the man who pays high wages. There is an essential difference between being under a legal obligation and not being under it; between breaking the law and keeping it; between being under a command enforceable by some kind of punishment, criminal or civil, and being merely subject to an inducement. Even punishment does not constitute a law; there must be a command, or something in the nature of a command, some obligation imposed, expressly or by implication. A tyrant may punish a messenger who brings bad news; but this is not for breach of any law. Moreover, it is a mistake to say that the term sanction, in connection with laws, can be applied to rewards as well as to punishments." As was clearly pointed out by Austin (Jurisprudence, 3rd ed., vol. i., p. 93), "Rewards are indisputably motives to comply with the wishes of others. But to talk of commands and duties as sanctioned or enforced by rewards, or to talk of rewards as obliging or constraining to obedience, is surely a wide departure from the established meaning of the terms." A man is punished for breaking the law. This is the juridical sense of "punish." If, as is urged for the defendants, he is to be punished for not paying certain wages, where is the provision for any trial for such an offence? Suppose an information to be drawn up, "For that A.B. being a manufacturer did not pay," &c. Such an offence is not to be found in any federal Act. In the case of this Act, the only offence to be found is non-payment of Excise duty; and the manufacturer can be sued for the duty, and cannot escape an order unless his wages are approved in some one of four methods. But he cannot be sued, either civilly or criminally, for not paying the approved wages. No employé can sue him for the difference between the wages paid and the wages declared by the Conciliation Court to be fair and reasonable. In this case the manufacturer is rewarded for not making use of his right to act in a manner perfectly lawful, but not favoured by the Federal Parliament; and there is, after all said and done, a difference between using a stick to a beast and offering him a bundle of carrots. It may even be conceded that the suffering is the same in substance, whether we call it punishment or not. But if the municipal rates in Bathurst are higher than the municipal rates in Bendigo, it would be a mere rhetorical misuse of words to say that people are "punished" for living in Bathurst.

[173]

It is impossible that the federal law should not affect people in their actions with regard to State subjects. We cannot partition a man or a community into separate federal and State pieces, one to be touched by the Federal and the other by the State Parliament. As has been said in the Supreme Court of the United States, in the converse case of a State Act which interfered with the operation of the federal law as to inter-state and foreign commerce: "Legislation, in a great variety of ways, may affect commerce and persons engaged in it without constituting a regulation of it, within the meaning of the Constitution": Sherlock v. Alling[84]; Hall v. De Cuir[85]. If the contrary doctrine is to be adopted in Australia, the State Governments, although one of them supports the defendant McKay in his attack on the Commonwealth law, will be grievously crippled in their action. At present, under the United States doctrine, a State legislature is treated as having power to exclude, in the interests of public health, goods coming from a diseased port. But, according to the defendants' argument, this would be an invalid interference with the exclusive power of the Federal Parliament on the subject of foreign commerce - unless, indeed, the extreme view put for the defendants be accepted, that because the State has such a police power the Federal Parliament has no power at all to exclude such goods under its trade and commerce power. If the defendants are right, the State cannot, it seems - unless the same extreme view be accepted - enact a valid licence law, or local option law, or prohibit the sale or manufacture of intoxicating liquors; for it would discourage importation, diminish the profits of the importers, and lessen the federal revenue (see Licence Cases[86]; Kidd v. Pearson[87]). If the defendants are right, the State cannot give that encouragement to industries which it often has given - say to the growth of hemp, of oil plants - for the home production distinctly interferes with foreign commerce and Customs revenue. If the defendants are right, it is hard to see how the State can exclude pestilence to body or mind, plague, cholera, or obscene pictures, lottery tickets, convicts, opium (see Licence Cases[88]). If the defendants are right, the doctrine must be applied so as to make State laws invalid as well as to make federal laws invalid: and legislation of the State must be treated as void which affects people in their actions with regard to federal subjects by encouraging or discouraging them in a definite direction. If the defendants are right, how can a State Act for Sunday observance be supported, if it check interstate commerce? If the defendants are right, there lies before us the prospect - agreeable, perhaps, to a limited class - of perpetual struggles, in which attempts will be made to treat State laws as invalid because they affect (incidentally, as in this case) federal subjects, and federal laws as invalid because they affect similarly State subjects; and the State Governments will probably find that the doctrine will re-act with baneful pressure on their own activities.

[176]

In the United States, the recognized position is that stated briefly by Mr. Black (Constitutional Law, 2nd ed., p. 341) - that an Act of Congress "is not to be declared invalid merely because it has a purpose and design which ranks it as a police regulation." Therefore, Congress has forbidden lottery tickets to be carried by the United States mails. The object was, admittedly, to discourage gambling; and the morals and habits of the people are matter for the States, not for Congress. It was not pretended that the Act would make the postal service more profitable or more efficient. The same author also instances the federal Acts against trusts, adulterated foods, oleomargarine, diseased persons, quarantine, opium imported by Chinese, as being valid Acts, though aimed at and actually affecting subjects reserved to the States. So far as I can find, in every instance in the United States, in which a federal Act has been attacked for interfering with a State subject, in a taxation Act otherwise within the powers of Congress, the Act has been held valid. The case of Veazie Bank v. Fenno[89] was followed in National Bank v. United States[90]. In the Licence Tax Cases[91] Congress did not, as in our Excise Tariff, merely impose a tax, and exempt those who fulfil a certain condition. It enacted that no person should engage in selling lottery tickets, or in the retailing of liquors without a licence, and paying the licence fee to the revenue. It was urged that the internal trade of a State was not subject to federal legislation; the object of the tax - to discourage the liquor traffic and gambling - was obvious; one of the States in question had actually prohibited lottery tickets; and yet the Act of Congress was held valid. But the latest oleomargarine case is very instructive (McCray v. United States[92]). There, a federal Act is treated as valid which goes further than this Act in the direction of controlling or influencing men's actions with regard to a State subject. The purpose is boldly avowed in the title: "An Act to make oleomargarine and other imitation dairy products subject to the laws of any State ... into which they are transported, and to change the tax on oleomargarine, and to impose a tax to provide for the inspection and regulate the manufacture and sale of certain dairy products." So the purpose is (inter alia) to regulate manufacture and sale. The Act then imposes a tax on oleomargarine of ten cents per pound; but if the article is free from artificial colouring designed to make it look like butter, the tax is only ¼ cent per pound. An action was brought for a penalty against a retail dealer who had purchased for resale oleomargarine artificially coloured and not stamped at the rate of ten cents per pound. It was urged for him that the Act was an unwarranted interference with police powers, a usurpation of the State powers; that the Act was not for the purpose of raising revenue at all. The "bogey" argument was used as it has been used in this case - the awful possibilities of legislation if Congress were treated as having such a power. It was urged "that if a lawful power may be exerted for an unlawful purpose, and thus by abusing the power it may be made to accomplish a result not intended by the Constitution, all limitations of power must disappear." But the Court held that the exercise by Congress of the power of taxation was unfettered (save so far as expressly excepted in the Constitution); that the motive or purpose of Congress was to be left out of consideration, and only the actual scope and effect of the Act were to be regarded; that the consequences alleged, the destruction of the industry, were nothing to the purpose. "Since ... the taxing power conferred by the Constitution knows no limit except those expressly stated in that instrument, it must follow, if a tax be within the lawful power, the exertion of that power may not be judicially restrained because of the results to arise from its exercise"[93]. "The right of Congress to tax within its delegated power being unrestrained, except as limited by the Constitution, it was within the authority conferred on Congress to select the objects upon which an Excise should be laid"[94]. "The judiciary is without authority to avoid an Act of Congress exerting the taxing power, even in a case where, to the judicial mind, it seems that Congress had, in putting such power in motion, abused its lawful authority by levying a tax ..., the result of the enforcement of which might be to indirectly affect subjects not within the powers delegated to Congress"[95].

[177]

There is, indeed, one point in which the Oleomargarine Case differs from the present, and it has been pressed on us for all that it is worth. The classification there was based on the inherent character, quality or description of the subject matter. This is, of course, the most common basis of differentiation. But we have no right to import into the Constitution a qualification of the plenary power to make laws "with respect to ... taxation" by laying down that every differentiation must be made on this basis. In the United States, as well as in Australia, there are frequent cases of Congress classifying by facts other than the character, quality, or description of the article. Take petroleum. A duty is imposed on any petroleum coming from a country which produces petroleum, if it imposes a duty on United States petroleum. Other examples are to be found in reciprocity duties, which depend on the foreign country's fiscal attitude towards the United States. The prohibition of goods made by prison labour is another instance - it depends, not on the character of the goods, but on the character of the workers. Sometimes the tax depends on the machines used for making. I find a tax on lace window curtains if made on the Nottingham lace curtain machines. I find also an extra tax imposed on printing paper against countries which impose an export duty on pulpwood exported to the United States. Yet the manufacture of paper is a State subject; and the tax is not based on the character or quality of the printing paper. A duty is imposed on sculpture if produced by professional sculptors, not if produced by others. Goods are often made free of duty if imported for this or that specific exhibition. But there is no need to multiply such instances. It is abundantly manifest that the United States Congress, even though it is a Parliament of limited powers, differentiates in its taxation on the basis of any facts of any kind that it thinks fit; and that it actually differentiates on the basis of the labour employed in production, although it has not been given any authority to regulate labour. If the case of Peterswald v. Bartley[96] lays down a different principle - which is very doubtful - the expression of that principle was not necessary for the decision, and does not bind me; and I respectfully differ from it.

[178]

The rule in Canada is the same. The Supreme Court says: - "This Court has, in various cases, held that the Federal Parliament, on the matters left under its control by sec. 91 of the British North America Act, must have a free and unfettered exercise of its powers, notwithstanding that, by doing so, some of the powers left under provincial control by sec. 92 of the Act, might be interfered with": Citizens' Insurance Co. v. Parsons[97]; and see Cushing v. Dupuy[98]; Tennant v. Union Bank of Canada[99]; Toronto Corporation v. Canadian Pacific Railway[100]. In Canada, the Provincial Parliaments have power over local matters, and in particular have exclusive power to grant licences for the liquor business. The Dominion Parliament has exclusive power over trade and commerce. The Dominion Parliament passed a temperance Act, reciting that "it is very desirable to promote temperance in the Dominion"; and under its local option clauses one Burke could not get the licence which the State law allowed to him. He attacked the Dominion law as unconstitutional, and was unsuccessful. Ritchie C.J. said (City of Fredericton v. The Queen[101]): - "If ... Parliament, in its wisdom, deems it expedient ... so to regulate trade and commerce as to restrict ... the trade and traffic in, or dealing with, any articles ... it matters not, ... whether such legislation is prompted by a desire ... to encourage native industry, or local manufactures, or with a view to the diminution of crime or the promotion of temperance, ... The effect of a regulation of trade may be to aid the temperance cause, ... but surely this cannot make the legislation ultra vires, if the enactment is, in truth and in fact, a regulation of trade and commerce, foreign or domestic. The power to make the law is all we can judge of ... It may be, that all who voted for this Act may have thought it would promote temperance, and were influenced in their vote by that consideration alone. ... Still, if the enacting clauses of the Act itself deal with the traffic in such a manner as to bring the legislation within the powers of the Dominion Parliament, no such declaration in the preamble ... can so control the enacting clauses as to make the Act ultra vires." Taschereau J. added[102], quoting Chief Justice Taney in the Licence Cases[103]: - "The object and motive of the State are of no importance, and cannot influence the decision. It is a question of power." A temperance Act is not the less a regulation of trade and commerce "because it has been enacted in the view of promoting temperance." This decision was reviewed by the Privy Council in a later case (Russell v. The Queen[104]), and upheld under the power of the Dominion Parliament to legislate for public order and safety; but the Privy Council expressly declined to dissent from the view that it could be also upheld under the commerce power. "Legislation of the kind referred to," said the Judicial Committee[105], "though it might interfere with the sale or use of an article included in a licence granted under sub-sec. 9, (the power to grant licences for the sale of liquor), is not in itself legislation upon or within the subject of that sub-section." Their Lordships pointed out the absurdity of the position if the Dominion Parliament could not prohibit the sale of arms because the Provincial Parliament had made laws for making revenue from the sale of arms. Conversely, in Attorney-General of Manitoba v. Manitoba Licence Holders Association[106], a provincial prohibition law was held valid, although it interfered with Dominion revenue, and with trade and commerce operations outside the Province.

[179]

These are merely a few out of the many precedents on this subject. But I shall only add that these cases are clearly distinguishable from those cited to us on behalf of the defendants in which there was a sham exercise of power. If it is an exercise of the Parliament's power in fact, it makes no matter that it has been passed from motives or with objects outside the power. But if the Parliament pretend to exercise a power which belongs to it, and in fact exercise a power which does not belong to it, the Act is invalid. This is the explanation of the cases relating to State Acts which purported to regulate Chinese in the State, but which were in fact attempts to regulate commerce with foreign nations and immigration: Chy Lung v. Freeman[107]; Tai Sing v. Maguire[108]. So also in Attorney-General for Quebec v. Queen Insurance Co.[109], the Provincial Parliament having power to impose a licence tax, and having no power to impose a stamp tax, imposed a stamp tax on insurance policies, and called it a "licence" tax. The Judicial Committee, having ascertained that the Act was in truth a stamp tax, declared it void. In all such cases, if the Act had been passed by the legislature of a unified State, such as the United Kingdom, or France, it could not have been described as an Act of the nature which it professed to be. That is a fair test: how should the Act be properly described in a country in which there is no limitation of powers? The case of this Excise tariff is very different. Not only has the Federal Parliament not imposed any legal obligation whatever on the manufacturers with regard to the remuneration of labour, or given any command, or anything in the nature of a command, on the subject; but the Act in question is one which, if it were passed in the United Kingdom, or in any other unified State, would be a taxation Act, and taxation by way of Excise. Moreover, the very recent case, Employers Liability Cases[110], shows that the Supreme Court of the United States goes even further than is claimed in this case on behalf of the federal power. It shows that Congress can even regulate - create obligations as to - the conditions of labour as between employers and employés, provided that it confine itself to foreign or inter-state trade and commerce. A fortiori, in this case, the Federal Parliament, confining itself to its power of taxation, which is plenary, can impose labour conditions as a condition of the incidence of its taxation.

[180]

I come now to the objection that by this Act Parliament discriminates "between States or parts of States." It is to be observed that it is Parliament - that is to say, the Act of Parliament, that must not discriminate: "The Parliament shall ... have power to make laws for the peace, order and good government of the Commonwealth with respect to ... taxation; but so as not to discriminate between States or parts of States." Now, there is certainly nothing on the face of this Act which makes any such discrimination. There is not one rate of Excise for Queensland and another for West Australia. Nor is there one set of conditions of exemption for Tasmania and another for Victoria. Each manufacturer is to be treated on his own merits; and all the four bases for exemption are applicable to all manufacturers, wherever they are found in Australia. It is not prescribed in the Constitution that taxation must be uniform - uniform in any of its numerous senses. Every manufacturer is exempted from duty if his goods are manufactured under wage conditions which (a) are declared fair and reasonable by both Houses of Parliament, or (b) are in accordance with an industrial award under the Commonwealth Conciliation and Arbitration Act 1904, or (c) are in accordance with an industrial agreement filed under that Act; or (d) are declared to be fair and reasonable by the President of the Arbitration Court (or his deputy). These alternative means for getting exemption are open to all manufacturers everywhere. It is true that there may have been an industrial award extended by common rule over a definite area of New South Wales or Victoria, and that this award probably could not be used by manufacturers in Western Australia. But Parliament does not discriminate between States when it applies the same rule to all the States, even if some of the means of exemption are not for the time being in fact applicable in all the States. Parliament may not discriminate between States; but the facts may, and often must: Colonial Sugar Refining Co. v. Irving[111]. In that case the Commonwealth Excise Tariff 1902 allowed an exemption in the case of goods on which Customs or Excise duty had been paid under State legislation before the imposition of the Commonwealth duties. In Queensland there had been no State Excise duty; and it was urged, on behalf of a sugar company manufacturing in Queensland, that the Excise Tariff discriminated against Queensland manufacturers by making them pay Excise duties while manufacturers in other States were exempted. But the argument was overruled. Lord Davey, in delivering the judgment of the Judicial Committee, said[112]: - "The rule laid down by the Act is a general one, applicable to all the States alike, and the fact that it operates unequally in the several States arises not from anything done by the Parliament, but from the inequality of the duties imposed by the States themselves."

[181]

"But," it is urged, "this Act authorizes discrimination." I am inclined to think, with my brother Isaacs, that it does not in any case authorize discrimination "between States or parts of States" in the sense of the Constitution. The meaning of "parts of States" is shown in sec. 99 (and see Pennsylvania v. Wheeling & Belmont Bridge Co.[113]). But assume that it does authorize discrimination in the sense of leaving the conditions as to wages to several delegates without any express direction that there must be no discrimination between States; that fact does not make the Act invalid. Discrimination between States &c. is not a necessary result of the Act. Even granting - what is by no means established - that clauses (a) (b) (c) and (d) of the proviso make such discrimination possible, it has not taken place; and even if it had, it might be a ground for attacking any discriminating order or award or exemption, but not for treating the Act as void. When a power is created which, by its terms, allows a thing to be done either in a lawful or in an unlawful way, the power is not unlawful; but the exercise of the power will be valid or invalid according as it follows the lawful or the unlawful course: Griffith v. Pownall[114]; Slark v. Dakyns[115]. No one contends that Parliament may, by delegation, confer power to discriminate. The point is, the Court is not to assume that the unlawful course will be taken; and if it should be taken, the Act is not thereby rendered invalid. This principle was fully recognized in the two Canadian cases which were actually cited to us to prove the opposite. The Dominion Parliament, in pursuance of its powers, incorporated a company to carry on business in Canada or elsewhere. The company confined its operations to Quebec, and the power to incorporate companies for business in Quebec belonged to the Quebec legislature. Yet it was held that the fact of the company so confining its operations did not affect its incorporation: Colonial Building and Investment Association v. Attorney-General of Quebec[116]; Toronto Corporation v. Bell Telephone Co. of Canada[117]. Moreover, it is quite possible that there will be no industrial award, no industrial agreement, no resolution of both Houses applicable to these manufacturers; and, for aught that appears on this demurrer, the President will apply the same rigid standard to all the manufacturers in all the States. It is even possible for any industrial award, and any industrial agreement, and any resolution of Parliament, and the President to adopt precisely the same standard. How, then, can it be said that Parliament, by this Act, makes any discrimination directly or by delegation between States or parts of States? The truth is that all the four authorities will have to deal with each manufacturer on his merits, according to all the conditions of life and of business in which he moves; and locality would be merely one of the facts influencing the conditions. It may be that in the back blocks food and freights are dearer than on the coast; but rent and other expenses may be cheaper. Locality must affect conditions of life; but the discrimination is not based on locality. This is obvious as to the President; but it is true also as to awards which may be made a common rule as to certain districts by reason of similarity of conditions within the district. The same basis - similarity of conditions - would have to be applied in the making of an industrial agreement, or in the passing of a resolution by Parliament. Even if (to take an extreme case, not alleged) exemption were allowed to A. B. and C. in South Australia, and refused to D. E. and F. in New South Wales, all six paying the same rate of wages, there would be no discrimination "between States or parts of States," but a lawful discrimination between persons on the basis of the totality of their conditions. As the case of the Colonial Sugar Refining Co. v. Irving[118] shows, it would not be a discrimination "between States or parts of States" if a graduated income tax were passed, and if it happened that the incomes in Western Australia were larger than in the other States. Finally, inasmuch as the same taxation, and the same rate of taxation, are applied to all those manufacturers who, in whatever State they reside, cannot bring themselves within any one of the same alternative conditions of exemption, I am of opinion that this Act creates no discrimination "between States or parts of States."

At a glance

Court

Decision date

Before

Source

Judgment (264 paragraphs)

R v Barger [1908] HCA 43; (1908) 6 CLR 41 (26 June 1908)

Parties

Legislation Cited (2)

Cases Cited (1)