The High Court's attack on Federalism

It is an indisputable fact that the Australian Founding Fathers designed a strongly Federalist constitution, with the Federal Government holding few enumerated powers, and the vast bulk of political authority reserved for the states, and that this was overwhelmingly endorsed by the Australian people at referendum. As Sir Samuel Griffith, principle author of the Australian Constitution and later Chief Justice of the High Court of Australia, stated at the Constitutional Conventions, the Australian colonies had been “accustomed for so long to self-government” that they had “become practically almost sovereign states”. Following Federation, the separate states continued as autonomous bodies, “surrendering only so much of their power as is necessary to the establishment of a  general government to do for them collectively what they can not do for themselves”. Federal powers were to be limited – defence, interstate commerce, lighthouses, and so forth.

For the first two decades since 1901, the wishes of the framers and the Australian people were adhered to. The states were sovereign within their respective spheres, and were thus subject to no other power. Furthermore, they were given immunity from any interference from the Commonwealth Government in the exercise of its power. Indeed, noting that before federation the colonies had almost unlimited powers, the court consistently stated that “in considering the respective powers of the Commonwealth and the States it is essential to bear in mind that each is, within the ambit of its authority, a sovereign state”.

It was during this time that two guiding concepts emerged from the court: that of the reciprocal immunity of instrumentalities doctrine, under which the Commonwealth could not subject the States to Commonwealth law, nor could the States subject the Commonwealth to State law, and of the doctrine of implied prohibitions or State “reserved powers”, based on the fact that that the Constitution’s scheme was to confer definite powers on the Commonwealth “and to reserve to the States, whose powers before the establishment of the Commonwealth were plenary, all powers not expressly conferred upon the Commonwealth”.

It should surprise no-one, however, that the forces of centralization grew restless with these rulings, and thus the road to Hades began. 

Packing The Court: The First Shot

The descent to centralism in Australian Constitutional Law can be traced to 1913, with the expansion of the High Court from five to seven in a manner analogous to Roosevelt’s infamous ‘Court-packing’ scandal.

By way of background, following the defeat of two constitutional referendums to increase Commonwealth powers in 1911 and 1913, Attorney-General Billy Hughes, under Prime Minister Andrew Fisher, took the opportunity to try to ‘stack’ the court. This was first attempted with the appointment of Albert Piddington, whereby, as a condition of his appointment, Piddington assured Hughes he was “in sympathy with supremacy of Commonwealth powers”. When this was discovered, Piddington resigned from the bench not having tried a single case.

With this tactic having failed, the government simply increased the size of the court and appointed centralists Rich and Starke to the bench. Combined with the already-known centralist Justices Isaacs and Higgins (who, it must be noted, were members of the Constitutional Conventions where they argued strongly in favour of greater Commonwealth Powers, yet were consistently defeated), the tide was beginning to turn. By 1920, both Griffith and Barton had left the bench, and, with the appointment of Knox as Chief Justice by Billy Hughes, the scene for a constitutional showdown was set.

The Engineers Case: The First Blow

There can be no way of describing the Engineers case other than to say it drove a stake into the heart of Federalism in Australia. It radically revolutionised not only politics, but also law. The effect of the case constitutionally was threefold: it abolished the immunity of instrumentalities doctrine, it abolished the doctrine of reserved state powers, and, more insidiously, changed the method of constitutional interpretation from a form of originalism, to one of literalism, where the historical context of the document was no longer viewed as relevant. No longer were the states sovereign. No longer could they be expected to exercise reserve powers. Rather, power swung decisively – and, many would say, irreversibly – to the commonwealth.

Whilst the legal reasoning of Engineers could charitably be described as creative, it became settled law. All students of politics and lovers of decentralised power should study and learn this odious case.

Shortly after Engineers, in R. v. Licensing Court of Brisbane; ex parte Daniell, a further blow against federalism was struck, with the Court holding that where Commonwealth law evinced a legislative intention to ‘cover the whole field’ of the subject matter, the state law would be rendered inoperative, overturning the previous approach that a federal Act made a state law inoperative to the extent that it was impossible for the citizen to obey both. As a result, the door was opened for the broad-brush invalidation of State law even where the Commonwealth law is silent, enabling the Commonwealth to indirectly prevent the states from legislating. 

The Uniform Tax Cases: The End Of Fiscal Sovereignty

The second major blow to Federalism in Australia came in the guise of the Uniform Income Tax Cases, which involved four Commonwealth statutes which together were designed to drive the States out of the income tax field by means of a combination of inducements, penalties and coercion: in essence the Commonwealth said “abolish the income tax, or financially we’ll destroy you”. In a decision representing a complete triumph of form over substance, the core feature of the First Uniform Tax Case was the decision to treat the States’ ouster from the field as voluntary (in sharp contrast to every legal principle applicable).

The effect of the First Uniform Tax case cannot be underestimated. It has been seen as marking a ‘turning point in Australian constitutionalism’ and in federal financial relations, with Prime Minister Sir Robert Gordon Menzies stating it marked ‘the end of the Federal Era’ in Australia, and Justice Dawson calling it the ‘most important single step in the increase in the effective powers of the Commonwealth at the expense of the powers of the state”. There can be no doubt that this case not only heralded a great deterioration in the States’ financial independence since it deprived them of their independent source of income tax,  but effectively enshrined Australia’s gross vertical fiscal imbalance.

As a result of this case, the States no longer had control of their own finances, and had to depend on the graces of the Commonwealth Government. The era of vertical fiscal imbalance had begun. 

Koowarta and Tasmanian Dams: The Final Nail

The ‘third wave’ of centralism within Australian constitutional thought, politely categorised as ‘cosmopolitanism or globalism’ (although more accurately categorised as “total bollocks”), began with Koowarta v Bjelke-Peterson, where it was held that the Racial Discrimination Act was a valid exercise of the ‘external affairs’ power. Enacted to give effect to the United Nations Convention on the Elimination of All Forms of Racial Discrimination, the Act was a significant departure from previous External Affairs jurisprudence, as its effects applied entirely within Australia, and did not involve either foreigners or foreign powers (which you would think would kinda be needed for “external affairs”). In any event, in his case, the majority ruled that the mere existence of a treaty obligation was sufficient to render the matter an ‘external affair’, regardless of the particular subject in question.

Not a year after the decision in Koowarta was handed down, the use of the external affairs power to allow the Federal Government to regulate purely internal matters was confirmed in Commonwealth v Tasmania (The Tasmanian Dams Case). As a result, if the Commonwealth Executive signs a treaty on any subject – any whatsoever – then it can legislate on that matter, irrespective of whether the subject in question is a Commonwealth or State power. After this case, there remained no limit to the matters that may be dealt with by treaty by the Executive. Essentially, if the Executive wished to do something, all they had to do was sign a treaty on it, making a mockery of the intentions of the Constitution.  After this case, the Federal Government had the power to legislate in such a way to render virtually all State powers ineffective if it so chooses. Constitutional Federalism was dead, and only political federalism remained. 

The WorkChoices Case: Dancing On The Grave

The salt in the wound for Constitutionalists came in the Workchoices cases, which gave the Commonwealth power over industrial relations through their power to regulate the trading activities of corporations. As such, it allowed the Commonwealth to govern completely all aspects of the relationship between employers and employees.

In order to fully appreciate the constitutional impact of WorkChoices, a few historic notes must be made, and this requires brief consideration of where the regulation of Australia’s IR began, the “conciliation and arbitration power” given to the Commonwealth. This was, in fact, a section which received considerable attention in the Convention Debates, with future Prime Minister George Reid remarking that “no part of the Bill has received more careful consideration than this particular clause”, and there was extended argument during the debates about whether the Commonwealth parliament should have the power, or indeed any similar power.

Ultimately, the proposal succeeded very narrowly because a number of opponents were persuaded that the power was very confined and would be used only in limited circumstances, leaving “no doubt that the architects of the Constitution assumed that the States would be responsible for the regulation of IR, the intention was that the Commonwealth should only be permitted to make laws supporting the resolution of a small number of interstate industrial disputes”. Without going into it in great detail, it is clear that the drafters of the Constitution chose to define Commonwealth legislative power in the area of Industrial Relations by reference to two limitations: firstly, a restricted class of disputes was chosen – industrial disputes extending beyond the limits of any one state, reflecting a concern for what would now be called the federal balance. Secondly, the ends and means of the legislation were limited: conciliation and arbitration were to be the means, and the prevention and settlement of such disputes were to be the ends.

It is also critical to note that in the first half of the last century, there were a total of six failed referenda attempting to amend the arbitration power to give more power to the Commonwealth – the first as early as 1911, the last in 1946. The fierce opposition to these proposals, as articulated through parliamentary debate by John Quick, the preeminent authority on Australia’s constitution, was grounded on the premise that if passed they would “mark the beginning of the end of the Commonwealth of Australia as a union of States. They will mark the beginning of the destruction and the degradation of the Australian States as political units and partners in a scheme for the government of the Australian people…there can be no doubt that if they are enacted upon the Constitution they will deal a staggering blow to the State Legislatures and Governments”. So allow me stress this once again – there were SIX failed referendums to give the Commonwealth power over industrial relations. And then, in WorkChoices, they were given them by judicial fiat. And now there is nothing – legally – the commonwealth can’t do.

So there you have it. A history of Federalism in Australia, and how the High Court overturned the wishes of the Constitutional Framers, ratified in referenda by the Australian people, through judicial fiat.