Consideration
117 To deal with the UFU's contentions one must first appreciate the way in which the majority in the Industrial Relations Act Case structured their decision. The states parties' attack on the IR Act was broad. A number of legislative topics, each comprising a number of statutory provisions, were impugned. Section 6 of the IR Act imposed the relevant provisions on the states, providing:
This Act binds the Crown in right of the Commonwealth, each of the States, the Australian Capital Territory and the Northern Territory…
118 The majority considered the operation of s 6 at pages 501 to 503, stating:
As already indicated, s 6 specifies that the Act binds the Crown in various capacities, including "in right of ... each of the States". That provision governs the application of the substantive provisions of the Act. In so far as the substantive provisions are expressed in general terms or in terms wide enough to apply to or permit of orders regulating the terms and conditions of those employed at the higher levels of government, the question is not whether, on that account, those provisions are invalid in their application to the States, but whether s 6 is invalid in its specification that the Act and, thus, those provisions bind the States.
Section 6 of the Act is not, in terms, subject to any limitation or prohibition. More particularly, it is not, in terms, made subject to those matters pertaining to State employees which were identified in Re Australian Education Union as falling within the scope and content of the implied limitation recognised in the Melbourne Corporation Case. The question thus arises whether, pursuant to s 7A(1) of the Act or s 15A of the Acts Interpretation Act 1901 (Cth) (the Interpretation Act), s 6 can be read as not binding the States with respect to those matters, particularly as not binding them with respect to the terms and conditions of those employed at the higher levels of government.
It is convenient first to consider s 15A of the Interpretation Act which provides:
"Every Act shall be read and construed subject to the Constitution and so as not to exceed the legislative power of the Commonwealth, to the intent that where any enactment thereof would but for this section have been construed as in excess of that power, it shall nevertheless be a valid enactment to the extent to which it is not in excess of that power."
Section 15A of the Interpretation Act may fall for application in two distinct situations. It may fall for application in relation to "particular clauses, provisos and qualifications, separately expressed, which are beyond legislative power". It may also fall for application in relation to general words or expressions. It is well settled that s 15A cannot be applied to effect a partial validation of a provision which extends beyond power unless 'the operation of the remaining parts of the law remains unchanged". Nor can it be applied to a law expressed in general terms if it appears that "the law was intended to operate fully and completely according to its terms, or not at all".
Where a law is expressed in general terms, it may be more difficult to determine whether Parliament intended that it should, nonetheless, have a partial operation. And there is an additional difficulty if it "can be reduced to validity by adopting anyone or more of a number of several possible limitations". It has been said that if, in a case of that kind, "no reason based upon the law itself can be stated for selecting one limitation rather than another, the law should be held to be invalid".
The limitation by reference to which a law is to be read down may appear from the terms of the law or from its subject matter. Thus, a law which is "clearly made with the intention of exercising the power to make laws with respect to trade and commerce" can be read down "so as to limit its application to inter-State and foreign trade and commerce". Similarly, where a law is intended to operate in an area where Parliament's legislative power is subject to a clear limitation, it can be read as subject to that limitation.
In the present case, s 6 purports to subject the States to a regime which specifies certain terms and conditions with respect to employment generally and which, in relation to other matters, permits the Commission to regulate the terms and conditions on which persons are employed. That is an area in which the legislative power of the Parliament is limited in the manner explained in Re Australian Education Union. The nature and subject matter of the Act suggest the limitation by which s 6 may be read down within constitutional power if its provisions would otherwise infringe that limitation. In other words, s 6 can be read as binding the States to the extent that the provisions of the Act do not prevent them from determining the number of persons they wish to employ, the term of their appointment, the number and identity of those they wish to dismiss on redundancy grounds and the terms and conditions of those employed at the higher levels of government.
If s 6 is read down as indicated, the operation of the substantive provisions of the Act is correspondingly limited but their operation is otherwise unaffected. Thus, if any provision of the Act would otherwise operate to prevent the States from determining for themselves any of those matters which were held in Re Australian Education Union to be beyond the legislative power of the Commonwealth, the reading down of s 6 precludes invalidity for infringing the limitation on Commonwealth legislative power. That being so, it is unnecessary to consider the effect of s 7Aof the Act.
(Citations omitted.)
119 These passages appeared in a part of the decision devoted to determining the validity of the Commonwealth "Minimum Wage" provisions. In applying Re AEU to those provisions the majority said at 503:
It is necessary now to consider s 170AE which confers power on the Commission to make orders setting minimum wages for those for whom it "is satisfied ... that coverage by a system of minimum wages is appropriate". The terms of s 170AE are wide enough to authorise orders with respect to those employed at the higher levels of government. That being so, s 6 is to be read down as earlier indicated. And when so read down, s 170AE does not authorise orders of that kind. The same is true of s 170AH(3)(a) which, in terms, allows that "[t]he Commission may make an order ... only if ... it considers that the order is necessary to prevent an industrial dispute". Thus, neither s 170AE nor s 170AH infringes the implied constitutional limitation identified in Melbourne Corporation and more fully explained in Re Australian Education Union.
That is, inconsistency with the Melbourne Corporation principle was avoided by reading down s 6 rather than declaring either s 170AE or s 170AH invalid.
120 The majority decided the validity of similar impugned provisions in essentially the same manner. Where provisions of the IR Act had an application that was inconsistent with the Melbourne Corporation principle, s 6 was read down such that inconsistency was avoided. By this process much of the IR Act was spared invalidity, but its application to the state parties was limited.
121 The submissions of the state parties were directed towards seven distinct legislative topics. Provisions of the IR Act falling within six of those topics were found to have limited application to the state parties due to inconsistency with the Melbourne Corporation principle: Industrial Relations Act Case at 503, 510, 521, 525, 533 and 561. The seventh topic was the agreement making and certification provisions of the IR Act.
122 On the UFU's submission it is of real significance that these provisions - the Certified and Enterprise Flexibility Agreement provisions - were not expressly so limited: see Industrial Relations Act Case at 542. The UFU contends that the fact that the majority saw no need to expressly read down the agreement making and certifying provisions is authority for the proposition that Re AEU, and the Melbourne Corporation principle, does not apply where the relevant limitation on a state government is the product of an agreement voluntarily entered into by that party.
123 The proposition that - had there been any need to limit the application of the agreement-making and certification provisions of the IR Act that need would have been expressly articulated as it was in other parts of the judgment - is not without force. However, I do not accept that the majority decision is authority for the proposition that the UFU advances.
124 First, in my view any failure by the Court to expressly limit the agreement making and certification provisions in the IR Act is a tenuous basis for a conclusion that the implied limitation does not apply to voluntary agreements. I doubt that the majority would have recognised such an exception to the Melbourne Corporation principle, as expressed in Re AEU, without clearly articulating it.
125 Secondly, the majority had a reason to not expressly deal with s 6 in relation to the Certified and Enterprise Flexibility Agreement provisions. In rejecting a submission that the Commonwealth Parliament was without power to enact the certification provisions under s 51(xxxv) of the Constitution (the arbitration and conciliation power), the majority said at page 537:
As already indicated in relation to s 150A(2)(b), the Commission's award-making power is dependent on there being a relevant relationship between an award and an interstate industrial dispute. And ordinarily, that is determined by having regard to the term or provision in question and considering its relationship with the claim to which it is directed. When s 170MA is construed with that in mind, it is clear that one consequence of that section is that the Commission cannot certify an agreement if any of its terms lacks a relevant connection with the dispute or industrial situation which would otherwise attract its award-making powers. Or to put the matter another way, the Commission can certify an agreement if and only if it could have made an award in the same terms. And that is so notwithstanding that its powers of certification are otherwise circumscribed so that, for example, they must be exercised if certain other conditions are fulfilled and must not be exercised if certain other conditions are not.
(Emphasis added.)
126 And further at 538:
… Certification of agreements under Div 2 of Pt VIB is conditional upon satisfaction of a number of requirements other than the central requirements that there be an industrial dispute or an industrial situation, that the agreements be made for the settlement or prevention of industrial disputes and, as a matter of construction, that the terms of the agreements be terms that could have been included in an award…
(Emphasis added.)
127 These passages relate to the submission put by the state parties that s 51(xxxv), the conciliation and arbitration power, in the Constitution did not support the enactment of the Certified and Enterprise Flexibility Agreement provisions. It was argued that the word "conciliation" required the interposition of a third party to effect the resolution of a live dispute and once the agreement had been reached no conciliation could occur. As the majority said at 536:
According to the argument, if there is no conciliation or arbitration the Parliament cannot legislate to give the parties' agreement the same effect as an award.
In rejecting the argument the majority said:
It may be that its provisions are properly to be regarded as ancillary or incidental to the exercise of the powers of conciliation or arbitration and, thus, validly enacted pursuant to s 51(xxxv) of the Constitution.
(Citations omitted.)
128 As the CFA contends, because the certification provisions were incidental to the Commonwealth's award making power, they were subject to the same limitations as the award making power. At numerous points in the decision, elements of the award making power were expressly read down to avoid inconsistency with the Melbourne Corporation principle. There was therefore no need for the majority to expressly read s 6 down in relation to the Certified and Enterprise Flexibility Agreement provisions because the operation of the certification power was already subject to limitations that would avoid any inconsistency with the Melbourne Corporation principle.
129 Thirdly, there is no express reasoning in the Industrial Relations Act Case to the effect that voluntarily made industrial agreements certified by the Commission are outside the scope of the second limb of Melbourne Corporation principle as it was described in Re AEU. The attack on the relevant provisions of the IR Act based on the Melbourne Corporation principle appears to have been, in substance, limited to submissions that the provisions had a discriminatory effect on the States. I accept the CFA's contention that there does not appear to have been an argument advanced that the impugned provisions impaired the capacity of the state to function as a government: Industrial Relations Act Case at 541 to 542.
130 Fourthly, in light of the clear expression of the principle in Re AEU and the absence of any express statement to the contrary in the Industrial Relations Act Case or elsewhere, I do not accept the approach to the implied limitation for which the UFU contends. The basis to the Melbourne Corporation principle was recently discussed by the High Court in Fortescue Metals Group Limited v The Commonwealth [2013] HCA 34. In this case Hayne, Bell and Keane JJ, with whom French CJ at [6], and Kiefel J at [229] agreed in separate judgments, explained at [130]:
In Melbourne Corporation, Dixon J said that:
"The foundation of the Constitution is the conception of a central government and a number of State governments separately organized. The Constitution predicates their continued existence as independent entities."
And as was said in the Work Choices Case, the separate polities whose continued existence is predicated "are to continue as separate bodies politic each having legislative, executive and judicial functions". Hence, as the decisions in Austin and Clarke each demonstrate, the Melbourne Corporation principle requires consideration of whether impugned legislation is directed at States, imposing some special disability or burden on the exercise of powers and fulfilment of functions of the States which curtails their capacity to function as governments.
131 There are many like statements in the case law. In Queensland Electricity Commission v Commonwealth (1985) 159 CLR 192 at 218 Mason J described the foundation to the rule as follows:
The foundation for the implication is not the special character and privileges of the Crown in right of the States, but the constitutional conception of the Commonwealth and the States as constituent entities of the federal compact having a continuing existence reflected in a central government and separately organized State governments.
See also: New South Wales v Commonwealth (2006) 229 CLR 1 at 120 per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ; Western Australia v Commonwealth (1995) 183 CLR 373 at 480 per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ; Momcilovic v The Queen (2011) 245 CLR 1 at 104 per Gummow J.
132 The implied limitation is a recognition that the Constitution is concerned with the federal structure of government in Australia. Whether by legislation or some other voluntary act the States cannot disturb the federal structure created by the Constitution. The focus must be on the effect of a Commonwealth law upon the capacity of a state to function as a government, and it is of little relevance whether the state agrees to the imposition of any such limitation. Any curtailment or impairment of the capacity of a state to perform functions critical to its capacity to govern cannot be overcome by the exercise of a specific legislative or executive power.
133 I have some difficulty in treating the implied constitutional limitation as applicable to industrial agreements that are bona fide voluntarily entered into by a state party and which may therefore have no practical impact on a State's capacity to govern. However, in my view the Melbourne Corporation principle as expressed in Re AEU applies to an enterprise agreement approved by the Commission, whether or not it is voluntarily entered into by the state party. Given the UFU's concessions that cll 26, 27, 28 and 122 of the Agreement are terms of the type described in Re AEU¸ they are invalid and cannot be enforced.