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Wednesday, 23 June 1937


Senator Sir GEORGE PEARCE (West) (ern Australia - Minister for External Affairs) [8.29].- I move-

That the bill be now read a second time.

The purpose of this bill is to provide for the re-constitution of the Inter-State Commission, and to define its powers. Section 101 of the Constitution, which requires the establishment of an InterState Commission, reads -

There shall be an Inter-State Commission, with such powers of adjudication and administration as the Parliament deems necessary for the execution and maintenance, within the Commonwealth, of the provisions of this Constitution relating to trade and commerce, and of all laws made thereunder.

The appointment and tenure of members of the commission is dealt with in section 103 of the Constitution, which provides that -

The members of the Inter-State Commission -

(i)   Shall be appointed by the GovernorGeneral in Council;

(ii)   Shall hold office for seven years,but may be removed within that time by the Governor-General in Council, on an address from both Houses of the Parliamentin the same session praying for such removal on the ground of proved misbehaviour or incapacity ;

(iii)   Shall receive such remuneration as the Parliament may fix; but such remuneration shall not be diminished during their continuance in office.

Other provisions of the Constitution relating to the commission are to be found in sections 102 and 104 which deal with preferences and discriminations on State railways, and in section 73 which gives the High Court jurisdiction to hear appeals from orders, &c, of the commission, but as to questions of law only.

These provisions contemplate the passage of legislation by Parliament before the commission would be properly equipped for carrying out the important functions which the framers of the Constitution intended it to have. Accordingly, in 1912 the Inter-State Commission Act was passed. This act, in addition to providing for such matters as the qualifications and salaries of members of the commission, set out the classes of investigations the commission was charged to undertake. Part V. of the act purported to confer judicial powers on the commission, and it was because of this part that the commission was shorn of very great powers within two years after it commenced to function. I shall refer to this matter later.

On the 11th August, 1913, the original commission came into being with the appointment of Mr. A. B. Piddington, as chairman, and Messrs. Swinburne and Lockyer as members. The commission forthwith proceeded to investigate, under instructions from the Commonwealth Government, the effect of the tariff acts then in force. Other inquiries undertaken by the commission included investigations of the price of commodities and the trade relations of. Australia with the islands of the Pacific. While the commission was engaged on the inquiry into the tariff acts, complaints were made to it that the Government of New South Wales, by seizing certain parcels of wheat which were the subject of inter-State trade, had contravened the provisions for inter-State freetrade contained in section 92 of the Constitution. The commission, in pursuance of its purported judicial powers, investigated the complaints and found, by .a majority, that the Wheat Acquisition Act 1914 of New South Wales, by virtue of which the State government seized the wheal, was invalid as being an infringement of section 92. The Government of New South Wales appealed to the High Court against this decision. By a majority judgment the High Court held that section 101 of the Constitution - the section creating the commission - did not authorize the Parliament of the Commonwealth to constitute the commission a court, or to give to it judicial powers, or to confer upon it the general power to restrain contraventions of inter-State trading rights. The High Court also held that Part V. of the act, which dealt with the judicial powers of the commission, was beyond the power of the Commonwealth Parliament.

* The result of the wheat case was that all control or regulation or execution or maintenance of the commerce provisions of the Constitution or of laws made under it were removed from the commission. In 191S, Commissioner Swinburne resigned and upon the conclusion of the term of appointment of the other commissioners in 1920, no re-appointments or further appointments were made and the Inter-State Commission ceased to function. Some of the duties originally assigned to the commission have from time to time been carried out by other bodies and royal commissions. For instance, the Tariff Board now carries out inquiries with regard to tariff matters.

As I have already pointed out, the establishment of the commission is provided for in the Constitution itself. In the words of that learned constitutional writer - Sir John Quick - the Inter-State Commission was " one of the fundamental and basic institutions of the federal system ". The Royal Commission on the Finances of Western Australia as affected by federation expressed the view that

Parliament could not continue to ignore the constitutional requirement that a commission be appointed. The report stated on page lix-

Tlie creation of an Interstate Commission is one of the terms of the federal partnership agreement. It is in the bond.

The royal commission appointed to inquire into the finances of South Australia also recommended the reconstitution of the Inter-State Commission or the establishment of an independent body for a limited period for the purpose of considering and advising on applications for grants to States. The Commonwealth Grants Commission is, of course, a body similar to that mentioned in the alternative recommendation of the royal commission, but the proposed functions of the Inter-State Commission will be much more extensive in scope than those of the Grants Commission. In recommending the re-constitution of the Inter-State Commission, the Royal Commission on the Constitution dealt in some ' detail with the functions with which the commission could be entrusted. I refer honorable senators to pages 249-250 of the royal commission's report. Referring to section 102 of the Constitution by which it is provided that no preference or discrimination by any State with respect to railways is to be taken to be undue and unreasonable or unjust to any State unless so adjudged by tlie Inter-State Commission, the royal commission stated -

Although preferences or discriminations by means of freights on railways have to some extent been adjusted by agreement among the railways commissioners, we think that there is still need for some supervision over freights designed to attract goods from their natural geographic or economic outlets.

The royal commission proceeded to point out that many important duties might be carried out by an Inter-State Commission in addition to those mentioned in the Constitution and in the act of 1912. It instanced grants to States as- a matter which could be undertaken and expressed the view that -

A permanent body should be established which should continuously watch the effect of federal laws and administrative machinery on the various States, and should be in a position to advise, either with or without a special inquiry, whenever applications for grants are made to the Commonwealth.

Professor Hancock, of the University of Adelaide, states in his hook Australia that there is an urgent need to reestablish the commission or else to set up some other body fit to act in the matter of assistance to States as " eyes and ears of Parliament " to use the words of Alfred Deakin.

There is thus a considerable body of well informed opinion in support of the proposal for the reconstitution of the Inter-State Commission or some such body, and having regard to the requirements of the Constitution, the Government believes that the commission will serve a valuable purpose in dealing with large questions affecting the relations between the Commonwealth and the States and between the States themselves. As to the latter class of questions, matters of considerable importance in relation to the effect of State legislation on interstate commerce have in the past been litigated in the High Court between the States, and it is conceivable that similar problems will arise in the future. Questions of fact are usually involved in these problems and it may well be that the commission could investigate and report on such questions.

With the re-constitution of an InterState Commission, a body will be in existence to act as a standing commission of inquiry to which could be referred many of the matters now entrusted to royal commissions and similar bodies. There arc many advantages in having a permanent investigating body adapted to undertake inquiries and make reports as to 'matters upon which the Parliament may bc asked to legislate. The availability of information and recommendations of an independent body such as the commission would prove inestimable in the consideration of the many important problems that confront the Commonwealth Government and would greatly facilitate the work of the Parliament itself. I think it will be agreed generally that it is essential to the proper carrying out of administrative and governmental functions that the authority upon whom responsibility rests for making a decision should he possessed of the best available information and the arguments for and against a particular course of action. At present the Commonwealth Government has the advantage of the reports of the Commonwealth Grants Commission, the Tariff Board, and the Council for Scientific and Industrial Research, besides the assistance of the staffs of the various public departments in dealing with problems presented for its consideration.

Several suggestions were made before the Royal Commission on the Constitution during 1927 and- 1928 as to the class of inquiries that the commission might be asked to undertake. For instance, it was suggested that it could inquire into laws which place some States at a disadvantage as compared with others. These laws may not, perhaps, infringe the Constitution, and, in consequence, it would not be possible to have them considered by judicial bodies such as the High Court. The commission could, however, consider the effect of such laws and, having at its disposal all the machinery for obtaining evidence, it may be expected that such matters would receive very full consideration; moreover, the evidence would be so sifted that a government which had to consider the matter could confidently accept the facts found by the commission as the basis for legislative or other action.

The proposed commission would necessarily require the services of an expert staff to obtain and collate information under the direction of the commission. As time goes on, a trained investigation staff would be developed. This staff would be recruited largely from the Public Service. At the present time, skilled assistants are made available to royal commissions. These assistants are largely drawn from the Commonwealth Public Service, and, upon the completion of the work of a royal commission, return to their respective departments. As the result of their association with a royal commission, these public servants not only obtain much useful information concerning the subject under inquiry, but also receive a valuable training in the methods employed by the commission in pursuing its investigations and making its reports. Now, this training, although of great use to an officer in his subsequent duties in his particular department, is of a character which could be used to greater advantage if the officer were continuously employedupon duties of an investigatory nature. It is obvious, I think, that the continued employment of such officerswith the commission will result in the conservation and coordination of the efforts of these trained officers, and the commission would thus have at its disposal men to whom it could confidently entrust the duty of compiling, collating, and dissecting reports, statements, statistics, and accounts, assisting in the preparation and indexing of reports, and duties of a like nature.

I come now to the provisions of the hill itself. In the first place provision is made for the appointment of three commissioners, who are to constitute the commission. One of the commissioners will be appointed chairman, and will receive a salary of £2,500 per annum. The salary of each of the other commissioners will be £2,000. In accordance with the provisions of the Constitution, the commissioners will be appointed for a period of seven years, and may not be removed from office except by the GovernorGeneral on an address from both Houses of the Parliament praying for removal on the ground of proved misbehaviour or incapacity. One of the commissioners, not necessarily the chairman, must have been a justice, judge, barrister or solicitor. It is inevitable that inquiries into certain matters, possibly of an ancillary character, must be made that might not warrant the whole commission undertaking a long journey. Provision has therefore been made for the commission to delegate an inquiry to one of its members, but the member conducting such an inquiry must report his conclusions back to the full commission.

The general powers of the commission are set forth in clause 18 of the bill, which reads as follows : -

18.   - (1.) The commission shall inquire into and report to the Governor-General upon -

(a)   any anomalies, preferences or discriminations alleged to exist in relation to inter-state commerce;

(b)   any alleged contravention of the provisions of the Constitution relating to inter-state commerce;

(c)   applications made by any State to the Commonwealth for the grant by the Parliament of financial assistance in pursuance of section ninetysix of the Constitution ;

(d)   any matters relating to grants of financial assistance made in pursuance of that section by the Parliament to any State which are referred to the commission by the Governor-General ;

(e)   any matters, relating to the making of any grant of financial assistance by the Parliament to any State in pursuance of that section, which are referred to the commission by the Governor-General ;

(f)   any matters concerning the financial relations between the Commonwealth and any State; and

(g)   any other matters, whether related to any matter specified in the preceding paragraphs of this section or not, which the Governor-General refers to the commission.

Honorable senators will see that in these provisions there is no restriction of the grounds upon which a State may base its application for a grant for financial assistance. A State may choose its own grounds, and present to the commission evidence supporting its request upon those grounds. There is no narrowing of the grounds upon which a State may base its applications; they may be as wide as the State may care to make them.

Honorable senators will observe that these powers consist of powers of investigation and report. So far as matters relating to trade and commerce are concerned - and these are the matters for which the establishment of the commission is necessary - the investigation may be instituted upon either reference by the Governor-General or the complaint of any State. The commission will then proceed to make investigations, and will report its conclusions to the GovernorGeneral, after which any action which may be necessary to give effect to its findings, whether that action be of a legislative, judicial or administrative character, may then be taken by the Commonwealth.

In addition to the investigation of matters relating to trade and commerce, it is also proposed that the commission shall assist the Commonwealth, and obviate the expense of establishing other tribunals, by inquiring into and reporting on certain other matters. These matters are set forth in paragraphs c to g of clause 18. Honorable senators will recognize in paragraphs c, d and e the matters at present within the scope of the Commonwealth Grants Commis- sion. In consequence of the proposed transfer of functions, it will be no longer necessary for that body to continue to operate, and provision is made in the bill for the repeal of the Commonwealth Grants Commission Act 1935, together with that portion of the Port Augusta to Port Pirie Railway Act which amends the Commonwealth Grants Commission Act.

Paragraph / relates to any matters concerning^ the financial relations between the Commonwealth and the States - not merely to the making of grants by the Commonwealth. Important questions relating to the financial relations of the Commonwealth and States are likely to arise from time to time, and it may frequently be of material assistance to the Commonwealth to have such questions fully investigated by an impartial and independent tribunal such as the InterState Commission.

Paragraph g empowers the commission to investigate" and report on any other matter referred to it by the GovernorGeneral. . This power may frequently enable the Commonwealth to avoid the expense of establishing a royal commission to inquire into a particular matter.

Part IV. exercises the power conferred on the Parliament by section 102 of the Constitution to forbid the giving of unfair preferences by a State by means of railway rates. This power is conferred subject to the provision that no undue preference shall be deemed to exist unless first adjudged so by the Inter-State Commission. Although the functions of the commission under this part are merely to investigate and report, the actual proceedings will be, in effect, something more. The investigation will he in reality the first step in legal proceedings to restrain. The Commonwealth, a State, or any of the several local authorities and associations enumerated in clause 23, may make complaint to the commission that a State railway is giving unfair preferences. The commission may then investigate the matter and report to the GovernorGeneral .


Senator E B Johnston - Would it have power over Commonwealth railways?

Senator Sir GEORGEPEARCE.Yes ; under its general powers of inquiry. If the report disclosed that the complaint was well founded, the AttorneyGeneral might then take the necessary legal proceedings in the High Court to restrain the State concerned from continuing the unfair preference. The saving provisions of sections 102 and 104 of the Constitution, which provide that, in determining whether there is an unfair preference, regard shall be had to the financial obligations incurred by the State in connexion with the railway and to the necessity for developing territory in a State, are preserved in the bill.

In connexion with inquiries hitherto held by the Commonwealth Grants Commission, provision is made for the report of the commission to be tabled before the Parliament before any proposed law to give effect to the report is introduced. A similar provision appears in the bill. All other matters will necessarily be included in the annual report of the commission, and that is required to be tabled within fifteen sitting days after its receipt by the Governor-General.

The usual provisions are made empowering the commission to compel the attendance of witnesses arid the production of documents and to take evidence on affirmation or oath. As a rule, evidence is to be taken in public, but where it is desirable in the public interest so to do, the commission may take the evidence in private. Where the evidence relates to trade secrets, or to the profits or financial position of any witness or party, the evidence must, if a request be made, be taken in private. Provision is also made for the protection of witnesses from any retaliatory action by an employer or any one else.

Such, in outline, are the prinicipal features- of the bill; but, before concluding, I desire to refer Once again to the provision relating to the initiation of inquiries on, the complaint of any State. In this right of initiation, the States are to be given a very real power to bring before the public notice any anomalies, . preferences or . discriminations alleged to exist in relation to interstate commerce. It is real in the sense that any State which feels that it is .being unfairly affected by Commonwealth legislation as to trade will have a statutory right to bring its complaint before an independent body empowered to investigate the complaint and report the result of the inquiry to the Governor-General. The inquiry would normally be conducted in public, and a State would not be hampered in any way in the full presentation of its complaints to the commission. No Commonwealth government would be so unmindful of its responsibilities as not to give earnest consideration to any recommendations of the commission. If the commission had no other function than to inquire into and report on the complaints of States, its re-establishment would be amply justified. It is a great hindrance to the healthy development of a State for either its government or its people to labour under a sense of injustice resulting from the operation of Commonwealth legislation or policy. If a grievance is well-founded, it is desirable that it should be communicated to the authority capable of remedying it. The bill provides machinery not only for the making of the complaint, but also for its investigation by a body other than the authority empowered to remedy any grievance that is the subject of the complaint.

In commending the bill to honorable senators, I therefore ask them to bear in mind, in the first place, that tlie Constitution requires that there shall be an Inter-State Commission, and, secondly, that there is abundant scope for the exercise by the commission of its proposed powers of inquiry into matters deeply affecting the smooth working of the Constitution.

The States, secure in the knowledge that their grievances will be entrusted to a body in which they can repose their trust, will be in a position to proceed to carry out their policies for the betterment of the peoples within their respective jurisdictions, and to co-operate more contentedly in the great work which the Australian people set themselves to do when they federated in 1900.

Debate (on motion by Senator Collings) adjourned.







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