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Australia's Common Market: mutual recognition legislation
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Law and Public Administration Group 14 November 1994
Parliamentary Research Service
Background Paper No. 20 1994
Australia's Common Market: Mutual Recognition Legislation
This paper has been prepared for general distribution to Members of the Australian Parliament. Readers outside the Parliament are reminded that this is not an Australian Government document, but a paper prepared by the author and published by the Parliamentary Research Service to contribute to consideration of the issues by Senators and Members. The views expressed in this Paper are those of the author and do not necessarily reflect those of the Parliamentary Research Service and are not to be attributed to the Department of the Parliamentary Library.
CONTENTS
Summary ........................................... 1
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. Historical Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Commonwealth Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Goods ........................... .. .............. 10
3 .2 Occupations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3 .3 Exemptions . . . . . . . . . . . . . . . . ...................... ; 17
4. Stat,e Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5. Constitutional Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5 .1 Historical Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Use of Reference Power ............................... 23
5.3 Judicial Interpretation ................................ 25
6. Problems . . . . . . . . . . . . . . . . . . ....................... 27
7. Hypothetical Examples ........... .... .......... ...... 30
8. Conclusion . . . . . . . . . . . . . . . . . ...... ; ................ 3 7
Bibliography ................... . ..... ...... .......... 39
Appendix
List of 1994 PRS Publications
Australia's Common Market: Mutual Recognition Legislation 1
Summary
An increasingly competitive world economic environment has obliged Australia to become more efficient and increasingly competitive "at home". Put another way, a precondition for enhanced international competitiveness is the minimisation of imperfections in domestic markets. One of the inherent weaknesses of Australia's Federal system is the tendency for the States to discriminate against products from other states, and to impose further requirements on qualified persons from other states. The latest attempt to redress this situation has met with mixed success.
The prov1s10ns of the Australian Constitution notwithstanding, specifically sections 90 and 92 which have been described by one High Court Judge as "the constitutional pillars of national economic unity" 1, the six Australian States and the Territories have not always behaved as if they were part of something analogous to a free trade zone or customs union. 2 Market imperfections, some of them the product of government regulation, have proliferated for much of this century and non tariff barriers to interstate trade and commerce still remain
a feature of Australia's economic infrastructure.
An important aspect of the 1980s and 1990s push for micro economic reform has been the drive to remove barriers inhibiting the free flow of goods and services within Australia.
After the 1990 Special Premiers' Conference, the issue of reducing regulatory impediments to the movement of goods and recognition of occupations across the country was taken up by a special committee, the Commonwealth-State Committee on Regulatory Reform, which was chaired by the former NSW
Premier, Neville Wran AC QC. A process of consultation was carried out in the period July to October 1991 , and numerous submissions from a wide variety of interested groups were considered. A discussion paper was circulated in July 1991, which canvassed issues such as the long and short term benefits of mutual recognition of laws across jurisdictions, possible approaches to the implementation of mutual recognition, and elements of various models
of mutual recognition.
Following the consideration of submissions and models, a mutual recognition scheme, a scheme which has required all the States and Territories to adopt Commonwealth legislation under the reference power of the Commonwealth Constitution, was agreed to. 3
Brennan J., Street v Queensland Bar Association 63 ALJR 715, 733 .
2 A customs union consists of two or more states or countries which have no tariff between themselves but a common barrier against the rest of the world.
3 The Agreement contained both draft State and Commonwealth Bills in its Appendices. ·
2 Australia's Common Market: Mutual Recognition Legislation
In 1992, a formal intergovernmental agreement was signed by the Commonwealth and all the States and Territories. The Agreement bound the States to use their best endeavours to pass and bring into force mutual recognition legislation by 31 October 1992. 4 This was to be achieved by the States referring their power to the Commonwealth under section 51(xxxvii) of the Commonwealth Constitution, and then adopting a Commonwealth Mutual Recognition Act. Few States actually did so by the agreed date.
The Commonwealth, however, was bound to use its best endeavours to introduce and pass its legislation by 1 January 1993, to commence on or before 1 March 1993. 5 This goal was achieved, and the Commonwealth also undertook not to amend or repeal its legislation without the consent of all other participating parties. 6
In late 1992, the Commonwealth passed the Mutual Recognition Act 1992 (C'th} , its passage being supported by the Opposition. All States and Territories apart from WA have now passed similar legislation adopting the Commonwealth Act.
The Mutual Recognition Act 1992 (C'th) broadly applies to goods and occupations, subject to a number of exemptions specified in Schedules 1 and 2 of the Act. The important sections of the Act for the purpose of facilitating freer movement of goods and recognition of occupations, provide that, broadly, where goods have complied with all regulatory requirements for manufacture or sale in one State, then, subject to certain exceptions, the goods need not comply with any additional requirements when imported into a second State. In the case of occupations, as long as a practitioner has complied with regulatory requirements for practice in the home State, no further requirements need be complied with in a second State, providing that the occupations are equivalent across the States. . .
The Act can be argued to be an extension of constitutional prov1s1ons guaranteeing freedom of trade in goods and services and disabilities or discrimination imposed on a resident of one State when that person moves to another.
Although the States and Territories (apart from WA) have passed Mutual Recognition legislation adopting the Commonwealth Act, operation periods for the legislation are not uniform across the States.
4 Ibid, Clause. 3.2.
5 Ibid, Clause 3.4.
6 Ibid, Clause 3.7.
Australia's Common Market: Mutual Recognition Legislation 3
The non-uniformity of operation periods, both at the beginning and possibly at the end of the reference period may lead to problems both for individuals seeking to rely on mutual recognition, and for individual States who might find trade being diverted from their jurisdiction because their mutual recognition agreement has expired.
The mutual recognition scheme relies upon the reference power [ section 51 (xxxvii)] of the Commonwealth Constitution. The reference power has been used sparingly. Technical reasons for this include uncertainty over its scope and the availability of other instruments to achieve co-operative goals. More frequently, however, the difficulty of securing agreement between a sufficient number of the States and the Commonwealth has been the major obstacle to co-operative federalism through the use of the reference power.
From the relevant case law, a number of propositions can be extracted about the referral of powers under the Constitution:
⢠references can be for a limited time, or can be for an unlimited time terminable on some future event;
⢠a reference for an unlimited time would probably infringe the doctrine of Parliamentary sovereignty;
⢠the effect of a reference is to add a Commonwealth power to the list in section 51 of the Constitution, subject to normal constitutional constraints on the Commonwealth; and
⢠The reference does not diminish the power of the State in that area, although by virtue of section 1097 of the Constitution, any Commonwealth legislation in that area would have priority.
Mutual recognition is an attempt to secure what sections 92 and 117 of the Constitution have failed to achieve, namely a true common market within Australia encapsulating free trade and movement in goods and occupations. The scope and interpretation of the Mutual Recognition Act 1992 (C'th) is yet to be expounded by the Courts and the Administrative Appeals Tribunal
(AAT), and it remains to be seen how effective the scheme will be. Hypothetical examples provide some possible guidance as to the practical workings of the scheme, and on the whole, based on the analysis used in those examples, the outcomes suggested are consistent with the Mutual Recognition Act 199 2 (C 'th) going somewhere toward achieving freer trade across the
country.
7 Section 1 09 of the Commonwealth Constitution provides that:
"When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid".
4 Australia's Common Market: Mutual Recognition Legislation
Problems with the scheme include the "lowest common denominator" problem which is not easily rectified without State cooperation, and the present lack of uniformity of both commencement and termination dates across the States. Western Australia is still to pass legislation, which is a major stumbling block to smooth operation of the scheme and this could create trade distortions both in favour of and against that State, but overall, the scheme seems to be assured a reasonable degree of success.
Australia's Common Market: Mutual Recognition Legislation 5
1. Introduction
The removal of barriers to world trade and the maintenance of floating exchange rates have raised concerns about the Australia's competitiveness. An increasingly competitive world · economic environment has also obliged Australia to become more efficient "at home" as a precondition for enhanced international competitiveness is the minimisation of imperfections in domestic markets.
One way chosen for reducing inefficiency in Australian domestic markets has been the implementation of the mutual recognition of goods and occupations scheme, a scheme which has required all the States and Territories to adopt Commonwealth legislation under the reference power of the Commonwealth Constitution. Commonwealth legislation underpinning this scheme came into operation in March 1993, after the signing of an intergovernmental agreement with the States and Territories.
This paper examines the scheme and the basis for its operation, the reference power, section 51 (xxxvii) of the Commonwealth Constitution. The relevant legislation is analysed, and potential problems are highlighted. Given the absence of any reported cases under the scheme at the time of writing, hypothetical examples based on fact situations in past cases involving freedom of trade under section 92 of the Constitution are developed and analysed to gauge the likely success of the scheme. 8
2. Historical Background
In the political and economic climate of the 1980s and early 1990s, there has been increasing emphasis on the need for efficiency in Australian industry, and the reduction of business costs to facilitate competition and benefits to consumers. Greater interest in microeconomic reform has also led to moves to simplify regulatory structures and reduce duplication and overlap between
legislation covering various Australian jurisdictions. In particular, the legal conflicts which arose in the past under section 929 of the Constitution before
8 Thanks are due to Joan Wright of the University of Melbourne Law Faculty who reviewed this paper.
9 Section 92 of the Commonwealth Constitution provides that:
"On the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free" .
6 Australia's Common Market: Mutual Recognition Legislation
Cole v Whitfield10 were indicative of unnecessarily complicated, costly and administratively burdensome legislation which had been enacted by the States and Commonwealth to regulate particular sectors of the economy. This type of legislation frequently took the form of impediments to the movement of goods or services across State borders which stood in the way of the achievement of an EEC-type common market or customs union within Australia.
After the 1990 Special Premiers' Conference, the issue of reducing the above impediments was taken up by the Commonwealth-State Committee on Regulatory Reform, which was chaired by former NSW Premier, Neville Wran AC QC. Consultation took place from July to October 1991, and numerous submissions from a wide variety of interested groups were considered. A discussion paper was circulated in July 1991, which canvassed issues such as the long and short term benefits of mutual recognition of laws across jurisdictions, possible approaches to the implementation of mutual recognition,
and elements of various models of mutual recognition. The paper stated that mutual recognition legislation was necessary since:
... Australia faces the prospect of having more barriers to trade in goods and services between States and Territories than will exist between the 12 sovereign nations of the European Community. This is despite Australia being free from the deep-seated historical mistrust that has characterised relationships between some European countries, and also free from the differences in language, culture and legal systems which exist there.
This is clearly unacceptable. Australia must act to establish a truly national market and, given the small size of our economy and relative homogeneity of our society, this should not be difficult to achieve. Indeed, there is evidence that a certain minimum acceptable level of regulation between States and Territories already exists; interstate travellers purchase goods and seek professional or trades services in other States and Territories without concern at exposure to higher levels of risk.
Freedom in interstate trade and mobility of labour and capital can only be achieved if the regulatory environments across States and Territories do not prevent this happening. Mutual recognition of standards and regulations by all States and Territories has the potential to achieve these objectives.
Mutual recognition allows all regulations throughout Australia to co-exist, while reducing the current adverse impacts of those regulatory differences. 11
10 (1988) 165 CLR 360. In that case, the High Court adopted a new test for infringement of section 92 of the Constitution. In order to infringe that section, a law would have to be shown to be discriminatory in a protectionist sense that is, by conferring a local economic advantage through discriminatory treatment of interstate trade. Refer Michael Coper, "Section 92 of the Australian Constitution, since Cole v Whitfield", Background
Paper No.4, Department of the Parliamentary Library, 1992, esp pp 12-14.
11 "The Mutual Recognition of Standards and Regulations in Australia", Discussion Paper, Special Premiers Conference July 1991, at p 2.
Australia's Common Market: Mutual Recognition Legislation 7
The Committee reported to the 1991 Conference of Premiers and Chief Ministers, and was responsible for formulating the Mutual Recognition Principle, subsequently adopted in legislation. The Committee put forward a regulatory model and made a number of recommendations including that Heads of Government:
⢠re-affirm their Agreement in Principle to implement a scheme of mutual recognition of standards and regulations relating to goods and entry to occupations;
⢠decide on the legislative mechanism to implement mutual recognition ... and sign the relevant Intergovernmental Agreement on Mutual Recognition; and
⢠re-endorse the time frame for implementation of mutual recognition ( enact legislation by mid 1992 with implementation from 1 January 1993). 12 .
At the meeting of Premiers and Chief Ministers in 1991, agreement was reached on a proposal to implement mutual recognition of standards for goods and occupations, in line with the Committee's recommendations. Agreed outcomes at the conference included the signing of a formal agreement to introduce legislation to remove regulatory impediments to a national market in goods and services 13 , the consideration of certain exemptions such as firearms, and the application of the mutual recognition principle in areas such as road transport, professions, non-bank financial institutions, the environment, and the
national electricity grid. 14
In May 1992, a formal agreement 15 was signed by the Commonwealth and all the States and Territories. Recital B of the Agreement outlined the objectives of the scheme as being to implement mutual recognition to facilitate:
(a) the sale of goods in a State or Territory if the goods can be sold lawfully in another State or Territory; and
12 Report of the Committee on Regulatory Reform to Heads of Government, Conference of Premiers and Chief Ministers, Adelaide, November 1991, in Premiers and Chief Ministers Meeting, Adelaide 21-22 November 1991, Papers, at p 5.
13 Communique, in Premiers and Chief Ministers Meeting, Adelaide 21-22 November 1991, Papers, at p 2.
14 Ibid.
15 The Agreement contained both draft State and Commonwealth Bills in its appendices.
8 Australia's Common Market: Mutual Recognition Legislation
(b) the carrying on of an occupation in a State or Territory by a person who is registered in connection with an equivalent occupation in another State or Territory. 16
The Agreement bound the parties to endeavour to pass and bring into force mutual recognition legislation by 31 October 1992. 17 This was to be achieved by the States referring their power to the Commonwealth under section 51 (xxxvii) of the Commonwealth Constitution, and then adopting a Commonwealth Mutual Recognition Act. Of the States and Territories, only NSW actually managed this task by the agreed date.
The Commonwealth was also obliged to endeavour to enact mutual recognition legislation by 1 January 1993, to commence on or before 1 March 1993. 18 These deadlines were met, and the Commonwealth also undertook not to amend or repeal its legislation without the consent of all other participating parties. 19
Initial progress appeared slow and mutual recognition legislation had not been passed in any jurisdiction by September 1992. To "ginger up" the debate, a paper entitled Liberating Enterprise to Improve Competitiveness was released by a group of business associations lamenting the allegedly costly and anti competitive nature of business regulation in Australia. In relation to mutual recognition, the paper recommended that the Commonwealth, States and Territories:
... convene at the earliest opportunity a Special Premiers' Conference which would re affirm the principle of mutual recognition and set a timetable for its implementation.20
The paper was also generally critical of the regulation of business, and stated that mutual recognition was only a first step down a far reaching path of regulatory reform. 21
In late 1992, the NSW legislation was passed first, as it was necessary for power to be referred to the Commonwealth before it could pass its own legislation.
16 "Agreement Between the Commonwealth, NSW, Victoria, Queensland, WA, SA, Tasmania, the ACT and the NT Relating to Mutual Recognition", Recital B.
1 7 Ibid, Clause 3.2.
18 Ibid, Clause 3.4 .
19 Ibid, Clause 3.7.
20 "Liberating Enterprise to Improve Competitiveness", September 1992, at p 2.
21 Ibid, p 8.
Australia's Common Market: Mutual Recognition Legislation 9
In December of that year, the Commonwealth passed the Mutual Recognition Act 1992 (C'th), its passage being supported by the Opposition. 22 In the Second Reading Speech, the then Minister for Science and Technology, the Hon Ross Free, again emphasised the efficiency gains that would flow from
mutual recognition:
The principal aim of mutual recognition is tci remove artificial barriers to interstate trade in goods and the mobility of labour caused by regulatory differences among Australian States and Territories . Mutual recognition is expected to enhance greatly the international competitiveness of the Australian economy and is a major step forward in the achievement of micro-economic reform. It involves a recognition by heads of government that the time has come for Australia to create a truly national market--a goal which the founding fathers of this nation enshrined in the Constitution but which the parochial politics of successive State and Territory governments have frustrated for almost 100 years ..... Mutual recognition
is an outstanding example of what can be achieved when all governments in Australia cooperate and work together in the national interest. The Commonwealth Government would like to acknowledge the positive contribution made by all heads of government in fostering and promoting this important development.23
The Commonwealth legislation came into operation on 1 March 1993,24 and legislation in the remaining States followed, as discussed in Part 4, below.
3. Commonwealth Legislation
The national scheme of Mutual recognition was implemented by the States and Territories 25 adopting the Mutual Recognition Act 1992 (C'th) and simultaneously referring their power to enact such legislation of to the Commonwealth under section Sl(xxxvii) of the Commonwealth
Constitution. 26
To adopt the legislation, each State passed an Act stating that it adopts the Commonwealth Act within section Sl(xxxvii) of the Commonwealth Constitution, whereupon the Commonwealth Act applies to that State, which becomes a "participating jurisdiction" within section 43 of the Commonwealth
22 Press Release, Peter Costello M.P., 12 November 1992.
23 House of Representatives, Parliamentary Debates (Hansard), 3 November 1992, p 2432.
24 Commonwealth Government Gazette No. GN 7, 24 February 1993, p 577.
25 Mutual Recognition Act 1992 (C'th); Mutual Recognition (Australian Capital Territory) Act 1992; Mutual Recognition (Northern Territory) Act 1992; Mutual Recognition (New South Wales) Act 1992; Mutual Recognition (queens/and) Act 1992; Mutual Recognition (South Australia) Act 1993; Mutual Recognition (Tasmania) Act 1993; and
Mutual Recognition (Victoria) Act 1993. West Australia is yet to pass · mutual recognition legislation as at the time of writing.
26 Section 51 (xxxvii) is outlined in part 5 of this paper.
1 O Australia's Common Market: Mutual Recognition Legislation
Act. Section 5 of the Commonwealth Act states that the Act only applies to participating jurisdictions.
The Mutual Recognition Act 1992 (C'th) (the C'th Act) broadly applies to goods and occupations, subject to a number of exemptions specified m Schedules 1 and 2 of the Act. These areas will be examined in turn.
3.1 Goods
Part 2 of the Commonwealth Act deals with goods. "Goods" as defined in section 4(1) of the Act to include animals, labels and packages. Section 8 of the Act states that the mutual recognition principle, as defined in section 9, applies to goods imported into one State from another. The mutual recognition principle is basically that goods which comply with requirements in the original State need not comply with certain requirements imposed by the
importing State. These requirements, which do not have to be complied with, are listed in section 10, requirements are:
(a) standards relating to production, composition, quality or performance;
(b) standards relating to presentation of goods such as labelling and packaging;
( c) inspection requirements in the importing State;
( d) requirements that any step in production not occur outside the importing State; and
( e) requirements which would restrict or prevent sale in the importing State.
Section 10 addresses barriers to trade, both in a specific and non-specific way, and acknowledges the fact that there are many different ways of impeding trade in certain goods, other than price controls or taxation. Monetary impediments are now more easily open to attack since the adoption of protectionism as the basis for the test of invalidity under section 92 of the
Constitution. 27 Indeed, it is arguable that section 10 in effect extends, or at least attempts to clarify the concept of the free market beyond that which currently prevails under the interpretation of section 92, by specifying particular non-pecuniary factors such as inspection requirements and other restrictions on sale as offensive to the mutual recognition principle.
Protectionism, in the sense adopted by the High Court, does embrace both pecuniary and non-pecuniary burdens, but even though the concept may extend
27 Cole v Whitfield (1988) 165 CLR 360.
Australia's Common Market: Mutual Recognition Legislation 11
to laws which do not directly involve increased imposts on goods28, the limits of the non-pecuniary aspect of the test is as yet unclear. Protectionism is essentially an economic concept, since regardless of whether barriers to trade are fiscal or non-fiscal, their purpose is usually to confer economic advantage. The acceptance of the notion that non-pecuniary burdens can be discriminatory is a view which is closer to the test of "reasonable regulation" adopted by the High Court in the 1950s in cases such as Commonwealth v Bank of NSfif.!29 or
"criterion of liability" in the 1970s in cases such as North Eastern Dairy Co. Ltd v Dairy Industry Authority (NSW).30
Section 10 can be argued to be covering not only technical standards, but also matter§ pertaining to the legality of sale of goods. 31 If this wide view is accepted, then there is a need to cut down the breadth of application of the section. Section 11 provides such a mechanism by specifying exceptions to the mutual recognition principle ( current requirements that must be complied with).
The exceptions in section 11 are:
(a) laws in the importing State which relate to manner of sale or conduct of business, examples being contractual aspects of sale, registration of sellers or the need for franchise licences;
(b) laws governing transport, storage and handling of goods directed at health and safety or the environment;
( c) laws governing inspection where the inspection laws relate to health, safety or the environment and inspection is not a prerequisite to the sale of goods in the importing State,
providing that all the laws mentioned above apply equally to goods produced or imported into the importing State. The section is consistent with the general exemptions in the Schedules to the Act, apart from section 11 (2) which deals with the manner of sale. The general exemptions are discussed in part 3.3.
Section 11(2) however, gives a number of examples of when it will apply to provide exemption from the mutual recognition principle. These examples are:
(a) contractual aspects of sale;
28 The history of the section and its possible application to non-fiscal protectionist burdens is discussed in Cole v Whitfield at pp 392-397.
29 (1949) 79 CLR 497, per Lords Porter, Simonds, Normand, Morton of Henryton and MacDermott at pp 640-641 .
30 (1975) 134 CLR 559, per Barwick CJ at p 587.
31 Wright, E.J., "Mutual Recognition and the National Market for Goods", · Australian Business Law Review, Vol 21, p 270 at p 277.
12 Australia's Common Market: Mutual Recognition Legislation
(b) registration of sellers;
( c) the need for franchise licences;
( d) persons to whom goods can be sold; and
( e) circumstances of sale.
Wright, writing in the Australian Business Law Review, provides a number of useful examples of laws which fall into these categories such as hire purchase laws (manner of sale), prohibition on selling goods at certain times (conduct of business), and the sale of liquor or tobacco (franchise licences). 32 Other examples which relate to persons and circumstances include laws which prohibit the sale of alcohol to minors or intoxicated persons, or the sale of classified material to minors, laws which restrict gun ownership to certain classes of people and laws which restrict ownership of native flora and fauna.
Wright also maintains that section 11 (2) operates to protect agricultural marketing schemes. 33 These marketing schemes usually involve the creation of a statutory corporation to which producers must sell all their produce. The authority usually has the power to fix prices for the produce and is the sole distributor of the produce to the market, regulating supply and production. Proceeds of sale are returned to producers less a levy to fund the authority.
These schemes have been consistently under attack, either on the basis of section 92 of the Constitution which prevents interstate protectionism, 34 or on the basis of section 9035 of the Constitution, which prevents the States from levying excise duties. Each time there has been a significant re-evaluation of case law in these areas by the High Court, new challenges have been mounted, the most recent section 92 case being Norman v Barley Marketing Board
(NSW)36 in which the marketing scheme in question was upheld. In a joint judgment, the Court held that, in regard to the Act establishing the scheme,
... such burdens as the Act imposes are neither discriminatory nor protectionist and that any burden on interstate trade flowing from the operation of the Act is incidental to the attainment of a non-protectionist object and is not disproportionate to the attainment of that object. 37
32 Wright, E.J., "Mutual Recognition and the National Market for Goods", Australian Business Law Review, Vol 21, p 270 at p 282.
33 Ibid, at p 283.
34 For example, in Norman v Barley Marketing Board, (1990) 171 CLR 182.
35 For example, Parton v Milk Board (1949) 80 CLR 229.
36 (1990) 171 CLR 182.
37 Ibid, at p 199.
Australia's Common Market: Mutual Recognition Legislation 13
If mutual recognition, which seeks to promote freer interstate trade and commerce, covers ground that section 92 does not, then marketing schemes would be prime targets. As Wright correctly points out however, a marketing scheme under which there is a requirement to sell all milk to an authority38 relates to contractual aspects of sale and persons to whom sale can be made, while powers to fix prices or laws which create zoning arrangements39 relate to circumstances of sale. Marketing schemes would therefore not be affected by the mutual recognition principles40 by virtue of the section 11 (2) exemptions.
Section 12 of the Act gives defences for prosecutions involving the sale of goods. The section requires the defendant to establish that the mutual recognition principle applies and that the goods were labelled at the point of sale to the effect that the goods were produced or imported in the first State, and that there were no reasonable grounds for believing otherwise. To establish this, the defendant can use defences, presumptions or evidentiary procedures under the laws of both States. The prosecution may also use presumptions or evidentiary procedures under the laws of both States.
Section 14 exempts matters41 listed in Schedules 1 and 2 from Part 2 of the Act, and section 15 allows temporary exemptions of up to 1 year to be made by individual States.
3.2 Occupations
Part 3 of the Commonwealth Act covers occupations. Section 17 states that the mutual recognition principle for occupations is that a person registered for an occupation in one State is entitled to be registered and to carry on that occupation in another State providing:
(a) the local registration authority of that other State is notified; and
(b) the occupations across the States are equivalent.
The principle does not apply to laws in the second State which regulate the manner of carrying on an occupation provided that those laws:
(a) apply equally to all persons carrying on the occupation in that second State; and
38 See for example section 50 of the Dairy Industry Act 1992 (Vic).
39 Such as Part IV of the Milk Authority Act 1971 (ACT).
40 Wright, op. cit., at p 283.
41 To date these include laws aimed at environmental protection and quarantine laws.
14 Australia's Common Market: Mutual Recognition Legislation
(b) are not based on the attainment of some qualification or experience relating to fitness to carry on the occupation.
Division 2 sets out the procedural requirements for notifying the local registration authority. These authorities are defined in subsection 4(1) to be the bodies which are charged under the relevant State legislation with the registration of certain professions or trades. Notification of an authority tnust be in accordance with subsectfon 19(2) of the Act, which requires a notice to disclose certain facts to the Authority, such as the fact that a person's registration is not cancelled in other States, and that the person is not the subject of any disciplinary proceedings in other States. Once the notice has been provided, before any decision is made, the person is entitled to be registered and is deemed to be registered, and can carry out any activities allowed by virtue of registration in that State, subject to certain restrictions.
For example, in Victoria, a person can apply to become registered as a plumber under section 92 of the Building Control Act 1981 (Vic). To become registered, certain requirements must be complied with, including the need to be of good character, and to hold certain qualifications. In NSW, similar requirements exist to become a plumber under section 14 of the Plumbers,
Gasfitters and Drainers Act 1979 (NSW) . Under mutual recognition, once a plumber were registered in either State, then providing plumbing involves the same activities in the second State, the plumber could automatically become registered in that second State.
Under sections 22 and 23 of the Mutual Recognition Act 1992 (C'th), registration can be refused if the authority is not satisfied that the occupations between the States are equivalent, or there is missing or materially false or misleading information in the section 19 notice. For instance, there may be different professional qualifications required in different states for certain occupations, which may be sufficiently different to not be equivalent for the purposes of the act. An example using the occupation of chiropractor and osteopath is given in section 6.
Equivalence is determined under section 29, and is based on the sorts of activities which each occupation allows in the respective States. Review of decisions and rulings on equivalence of occupations can be obtained from the Administrative Appeals Tribunal under sections 34 and 30 respectively. Under
section 32, Ministerial declarations can also be made as to equivalence of occupations.
Australia's Common Market: Mutual Recognition Legislation 15
The mutual recognition provisions regarding occupations arguably represent an extension of section 117 of the Commonwealth Constitution42 which concerns disabilities or discrimination imposed on a resident of one State when that person moves to another State. The section has been construed narrowly in the past, with particular attention being paid to the requirement of residence as a basis for invalid discrimination. Early cases took the view that only discrimination on the basis of residence would be invalid43 , allowing easy avoidance of that section, if another ground of discrimination in legislation could be found. This view allowed discrimination in occupations through the use of a number of different barriers which had substantive effect against interstate professionals. A case in point is Henry v Bohm44, which concerned the validity of residency requirements for admission to the South Australian Bar. Interstate practitioners admitted in another jurisdiction had to reside in
South Australia for three months before they could be admitted to the bar in that State. The residency rules were challenged by a Victorian practitioner, and were ultimately upheld. The High Court adopted the narrow view of the section, its reasoning being that residence was not made the basis of any disability or discrimination to which a South Australian would not also be
subject. 45 Stephen J dissented, preferring the view espoused by Lord Wright in James v Commonwealth 46, that section 117 is analogous to section 92 and provides a constitutional guarantee of equal right to all residents of all States. 47 It was conceded that in any event, the protection afforded by section
117 would be narrow.48 Mutual r~cognition would render provisions such as these ineffective as a means of preventing admission to the bar in the second State. A requirement of residence is unlikely to relate to the manner of carrying on an occupation, and therefore will not be exempt from the mutual
recognition principle in section 17 of the Act.
In any event, the High Court has now moved away from its earlier narrow view. In Street v Queensland Bar Association49, a challenge to similar
42 Section 117 provides that:
43
44
45
46
47
48
49
"A subject of the Queen resident in any State, shall not be subject in any other State to any disability of discrimination which would not be equally applicable to him if he were a subject of the Queen resident in such other State".
Davies and Jones v Western Australia, (1904) 2 CLR 29.
(1973) 128 CLR 483 .
â¢
Ibid, per Barwick CJ at p 490.
(1936) 55 CLR 1.
Ibid, per Stephen J at p 506.
128 CLR 483, per Stephen J at p 506.
(1989) 168 CLR 461 .
16 Australia's Common Market: Mutual Recognition Legislation
provisions in Queensland by a NSW practitioner, it was held that the rules in question did not apply to the interstate practitioner. Henry v Bohm was overruled, although a clear interpretation of the section is difficult to find, as seven separate judgments were delivered. Limitations on section 117 were acknowledged by the Court, even though it adhered to the notion of residence being the important factor causing discrimination. Laws which were suggested as not being discriminatory included those laws relating to franchise in a State, qualifications for public office and conduct threatening public safety5°, rights naturally associated with residence51 , limits drawn from the federal balance52 and essential governmental functions. 53 The exact scope of many of these exceptions remains unclear, although mutual recognition may affect them, allowing registration in a profession without compliance with certain requirements where section 117 would not. Thus, requirements for local examinations in a State for entry into a profession would not infringe section
117, but would offend the mutual recognition principle. A law requiring, say doctors, registered in one State to sit local examinations ( which all practitioners in that State have to sit) to practice in another State would presumably be a law based on the attainment of some qualification relating to fitness to carry on the occupation. The exception to the mutual recognition principle would not apply, and the interstate person would not need to sit the examinations to be registered. It seems logical to construe the phrase "fitness to carry on the occupation" as referring to the educational requirements, although this may create problems as described in Part 6, below.
It is worth noting that the mutual recognition prov1s1ons dealing with occupations can be argued to pick up a deficiency of section 92, namely that occupations and possibly the provision of some services do not constitute "trade and commerce" within section 92. Dawson J in Street took this view, stating that:
There can be no doubt that in 1900, a barrister was not regarded as being engaged in trade and commerce .... the practise of law, together with divinity and medicine, has traditionally been regarded as professional and was so regarded in 1900. 54
The section 92 argument in Street was not addressed in detail by other members of the Court, although Brennan J thought that the object of section
;
50 Ibid, per McHugh J at p 584.
51 Ibid, per Mason CJ at p 492.
52 168 CLR 461 per Toohey J at p 560.
53 Ibid, per Brennan J at pp 512-513.
54 168 CLR 461, at p 539.
Australia's Common Market: Mutual Recognition Legislation 17
92 was to secure freedom of markets, rather to than secure equal treatment for individuals. 55
3.3 Exemptions
The exemptions to the Mutual Recognition Act 1992 (C'th) are found in Schedules 1 and 2, which deal with goods and laws relating to goods respectively. The exemptions are broadly analogous to the exemptions contained in Part 2 of the Act discussed in section 3 .1 above. The exemptions can be broadly categorised as dealing with:
(i) the environment (Schedule 2, items 2, 3, 5-13, and 3256);
(ii) quarantine (Schedule 2, item 1 );
(iii) pornography (Schedule 1, item 4; Schedule 2, items 14-31);
(iv) weapons (Schedule 1, item 1; Schedule 2, item 4);
(v) fireworks (Schedule 1, item 2); and
(vi) gaming machines (Schedule 1, item 3).
The reasons for exempting these matters are not made clear, although it appears that Heads of Government decided that a national market in these goods was not desirable. 57 The Discussion Paper58 identified these categories of exemptions, stating that:
Mutual recognition will not apply to certain products for which a national market is not considered to be appropriate. Due to the cultural and social homogeneity that exists in Australia, few products fall into this category but it might include, for example, firearms, fireworks, gaming machines and pornographic material...There will also be a schedule of exempt laws. These too will be few in number, deal with important issues not directly related to the regulation of standards which, in the absence of an exemption, would be undermined by the implementation of mutual recognition. 59
In the Attachment to the Discussion Paper, the appropriateness of choosing these particular goods was advocated on the basis that:
55 Ibid, at p 503.
56 Added by amendment, NSW Government Gazette No. 19, 26 February 1993, p 754.
57 Explanatory memo, p 3.
58 "The Mutual Recognition of Standards and Regulations in Australia", Discussion Paper, Special Premiers Conference July 1991, at p 6.
59 "The Mutual Recognition of Standards and Regulations", p 6.
18 Australia's Common Market: Mutual Recognition Legislation
The goods must be ones where the basic reason for regulating sale or use is not because sub-standard versions of the product are unsafe or undesirable, but because the unfettered use of the product is itself seen to be inherently unsafe or undesirable. It is envisaged that this would only be the case where there are widely divergent and strongly held views about the morality of permitting use of the product, or about the safety of the community at large if its use is permitted other than by specially trained people.60
The environment and quarantine are fairly easy to justify as areas of exemption. The different States and Territories all have different physical and geographic characteristics which would make mutual recognition in certain areas illogical. For example, more urbanised States such as NSW and Victoria may require stricter air emission standards than less populous States. It may be quite illogical to apply such strict standards to those States. Similarly, laws
which protect native fauna and flora across States will vary according to the numbers and types of species of flora and fauna in individual States. Laws which are justified in a particular State may be unreasonable or inapplicable in another. Laws which reflect standards depending on different endowments of natural resources such as water, air, forests and minerals across various
States should not necessarily be subject to mutual recognition. An obvious problem generally, however, is the enforcement of only "lowest common denominator" standards overall. (This-problem is illustrated in Part 6, below.)
Similarly, the quarantine exemption reflects the need to contain the transmission of diseases across State borders, but at a practical level, the exemption is more difficult to justify. Traffic at State borders is rarely stopped these days, and there would seem to be no impediments to unwittingly
transferring infectious material across State borders.
It is unclear why social policy issues such as pornography, fireworks and weapons are exempted from the Act. The weapons exemption may represent the strength of rural lobby groups in the discussion process leading up to the agreement, or the influence of the National Party in NSW or the Country Liberal Party in the NT when having their respective governments sign the agreement. It is possible to argue that the exemption is justified on the basis of any link between crime rates and urbanisation, and that less populous States
should not have to have as strict weapons laws as more urbanised States. For critics of existing gun laws, however, this argument is tenuous at best.
A further argument for these policy issues being singled out is that they are the major areas of State legislation, and are generally free from Commonwealth .interference. Although this proposition is correct, it still does not explain why those particular social issues were chosen, and not other areas of relatively
unimpeded State legislative power, such as road laws or criminal law.
60 Ibid, Attachment at p 8.
Australia's Common Market: Mutual Recognition Legislation 19
The pomography61 laws exemption is more difficult to rationalise, perhaps reflecting the desire to minimise any trade in such material, and still allowing the States to legislate in accordance with the local "moral" climate.
Fireworks too do not seem to be exempted for any particular reason. Although they are dangerous, and sale and possession of them is prohibited in some States, there does not seem to be any reason why fireworks, amongst many other dangerous goods should be singled out for exemption from the mutual recognition principle. A possible rationalisation is that fireworks may constitute a fire hazard in localities which are prone to hot weather and the risk of bushfire, especially during the summer months, and that this gives rise to the need for separate legislation across the States according to that risk in the particular area.
Gaming machines are a large source of revenue for State governments, and trade in gaming machines could lead to a form of tax competition between the States. Gaming machines are usually subject to licensing provisions, fixed percentage pay outs and other technical requirements. Taxation is usually calculated on gross tumover62, which in tum depends on the percentage pay out. The machines are programmed to generate a particular pay out. Mutual recognition may allow machines to be traded out of jurisdictions with the smallest fixed percentage pay out, as the machines would have complied with local law, and would not have to comply with a second State's law setting a higher fixed percentage pay out, as this would relate to a standard of the good affecting performance [section lO(a)]. Thus, States would have to compete to offer the smallest fixed percentage pay out to protect their revenue base. This example provides one possible rationale for the exemption.
4. State Legislation
A model State Bill was provided in the intergovernmental agreement, and by and large, most States have used the model when passing their State Acts. All States except WA have now passed mutual recognition Acts, although there are slight variations from State to State in content of the Acts, and in their commencement dates. Commencement dates are shown in the table below.
61 There is no definition of what constitutes "pornography" for the purposes of the Act, and so the word is used loosely. It is likely that different States will have different views concerning the content of 'pornography'.
62 See for example the Gaming Machine Act 1987 (ACT), section 57.
20 Australia's Common Market: Mutual Recognition Legislation
Stateff erritory Assent Proclamation/Operation
NSW 30 October 1992 2 Nov 1992
Victoria 20 April 1993 1 June 1993
Queensland 7 December 1992 1 March 1993 63
ACT 1 December 199264 25 February 1993 65
Northern Territory 18 December 1992 1 March 1993
South Australia 16 September 1993 1 October 1993
Western Australia No Act No Act
Tasmania 25 June 1993 1 September 1993 ·
All of the State Acts have an adoption section66, in broadly similar wording, a section permitting regulations for temporary exemptions of goods to be made67 and a section stating that the reference of power to the
Commonwealth is to last at least five years. 68 The sections dealing with the duration of the reference show however that the date for commencement of the five years in the State Acts is not uniform. The State Acts refer to the commencement of "this Act", which must refer to the State Act, since any reference to the Commonwealth Act refers specifically to "the Commonwealth Act. "69 Although this fact is irrelevant in the case of Queensland and the NT as their Acts came into operation on the same day as the Commonwealth Act7°, the other States are out of step, as their legislation commenced on different dates.
63 Section 1, 2 commenced on 7 December 1992, the remaining provisions on 1 March 1993.
64 Date of notification in the Gazette.
65 Section 1, 2 commenced on 1 December 1992, the remaining provisions on 25 February 1993.
66 Vic, Tas, SA, NSW section 4, ACT, NT and Qld section 5.
67 Vic, SA, section 5, NSW section 6, Tas, Qld, NT, ACT section 7.
68 NT, ACT, NSW section 3, Tas, SA section 4, Qld section 5, Vic section 6.
69 Victoria, section 4(2), Qld, section 5(1 ).
70 1 March 1993.
Australia's Common Market: Mutual Recognition Legislation 21
For example, the Victorian adoption of the Commonwealth Act will last three months longer than Queensland and the Northern Territory. Barring further legislative activity, this will mean that for three months in 1998, Victoria will be at a comparative disadvantage to those States, since it will not be able to enforce certain legal requirements under its own law due to its mutual recognition legislation. These other States in contrast, will be able to enforce their own barriers to trade.
All States, apart from Victoria and SA, have a provision which allows the Governor in that State or the Chief Minister in the Territory to fix a date by proclamation for the expiry of the State or Territory Act71, but which cannot be before 1 March 1998. 72 The South Australian Act states in section 4(2)(a) that it expires five years after commencement of the Commonwealth Act. Thus, there is the possibility for uniform termination of the reference across the States, Victoria excepted, but this depends on whether individual States allow their reference to continue beyond 1 March 1998.
Western Australia is presently in a unique position having not passed an Act at all. A Cabinet minute approved in 1993 stated that WA would participate in the scheme, and gave approval for legislation to be drafted. The current position is that legislation has been drafted and was supposed to be introduced during the last session of Parliament. Due to the urgency of the legislative program during the last parliamentary session in WA, mutual recognition was given a low priority. A Bill has been drafted and sent to Cabinet on one occasion and is due to go before Cabinet again shortly. 73 Unless the WA Act is to have retrospective effect, WA too may find itself comparatively disadvantaged in 1998 or 1999.
All the States, with the probable exception of NSW, could be argued to have technically breached their obligations under clause 3 .2 of the Agreement on mutual recognition which requires them to use their best endeavours to pass the legislation and bring it into force by 31 October 1992. Unfortunately, the use
of the phrase "best endeavours" and the fact that intergovernmental agreements are notoriously difficult to enforce74, other than by the Commonwealth threatening to withhold grants money, means that action is unlikely to be taken by the Commonwealth as a result.
The non-uniformity of operation periods across the States, both at the beginning and possibly at the end of the reference period of 5 years may lead
71 Qld, section 5(4), ACT, NT section 3(1 ), Tas section 4(3), NSW section 4(4).
72 Qld, section 5(5), ACT, NT section 3(1 ), Tas section 4(4), NSW section 4(5).
73 Conversation with officer of the Dept of Premier and Cabinet (WA), 25 October 1994.
74 See for example the SA v Commonwealth; Railway Standardisation Case, (1962) 108 CLR 130.
22 Australia's Common Market: Mutual Recognition Legislation
to problems both on the part of individuals seeking to rely on mutual recognition, and on the part of individual States who might find trade being diverted away from their jurisdiction because their mutual recognition reference has expired. Again, this simply illustrates the reluctance of the States to refer power to the Commonwealth, and demonstrates in a practical way, how difficult it is to achieve uniformity in legislation across Australia. This fact, coupled with the limited nature of the reference period demonstrates that the problem may not be solved at all, and that this scheme is a piecemeal attempt to achieve a more permanent solution at a later stage.
5. Constitutional Aspects
The mutual recognition scheme is based on section 51(xxxvii) of the Commonwealth Constitution, the reference power, which provides that the Commonwealth has power over:
Matters referred to the Parliament of the Commonwealth by the Parliament or Parliaments of any State or States, but so that the law shall extend only to States by whose Parliaments the matter is referred, or which afterwards adopt the law.
This section canvasses some of the issues which arise concerning section 51 (xxxvii), and provides a synopsis of High Court decisions dealing with the section.
5. 1 Historical Background
The reference power has been used sparingly by the States, who are apprehensive about officially conceding power to the Commonwealth when the scope of Commonwealth legislative power is quite wide under other provisions of section 51. In 1920, Amalgamated Society of Engineers v Adelaide Steamship75 delivered the Commonwealth expansive legislative powers, but even before this decision the reference power was used by the States on only three occasions. 76 The section is argued to have a number of purposes when adopted in the Constitution.
75 (1920) 28 CLR 128.
76 This figure is based on the list of references found in the notes found after the Schedule in the 1986 edition of the Commonwealth Constitution. A full list of references up to 31 Oct 1986 can be found in these notes. The three references are the Commonwealth Powers (War) Act 1915 (NSW), the Commonwealth Powers (Air Navigation) Act 1920 (Vic), and the Commonwealth Powers (Air Navigation) Act 1920 (Tas) .
Australia's Common Market: Mutual Recognition Legislation 23
First, as Quick and Garran77 point out, the section was intended to cater for the situation where particular States might want centralised regulation of an issue relevant to those States alone. The example used is the case of NSW, Victoria and SA referring to the Commonwealth the power to deal with utilisation of the waters of the Murray for irrigation purposes78 , thereby facilitating intergovernmental cooperation, and overcoming any constitutional limitations to which the Commonweaith would otherwise be subject.
Secondly, as argued by Johnson, writing in the Melbourne University Law Review79, the reference power could be used to overcome extraterritorial restrictions on State legislative power, in that two or more States could agree to apply one set of laws to both States. There was no doubt that at Federation, the States were still limited by their former colonial status80 , and even after the Statute of Westminster was passed in 1931, their power to legislate extraterritorially was still limited. 81
The final rationale for the section was that it would act as a "catch all" for future unforeseen developments. 82 These developments could involve issues requiring a national approach, over which the Commonwealth may have no direct power, and which would require constitutional amendment to give it power. Given the difficulty involved with amendment under section 128 of the
Constitution, a reference power provides a more flexible alternative whereby agreement can be reached by a State, or States, to give the Commonwealth the necessary powers subject to agreed terms and conditions.
5.2 Use of the Reference Power
Use of the reference power has been infrequent indeed, and if WA passes a mutual recognition Act, then this will be the first time a common Act has been adopted by all Australian jurisdictions under section 5l(xxxvii). 83 A number of reasons are apparent for this behaviour on the part of the States.
77 Quick, J and Garran, R, The Annotated Constitution of the Australian Commonwealth, Legal Books, Sydney, 1976, at pp 649-650.
78 Ibid.
79 Johnston, G, "The Reference Power in the Australian Constitution", Melbourne University Law Review, Vol 9, May 1973, p 42.
80 Hanks, P, Australian Constitutional Law, Materials and Commentary, 4th Edition, Butterworths 1990, at p 12.
81 See for example the comments of Dixon J in Broken Hill 5th v NSW Commissioner of Taxation, (1936-37) 56 CLR 337 at 375.
82 See Johnston op. cit. at p 44.
83 Ibid, p 46.
24 Australia's Common Market: Mutual Recognition Legislation
Primarily, as Johnson points out, the States fear the relinquishing of power to the Commonwealth. As Johnson puts it:
The unwillingness of the States to refer matters to the Commonwealth may be symptomatic of a desire to retain as many powers as possible and resist inroads by the Commonwealth into the State domain, and often a suggested reference has been seen simply as increasing the amount of power of the Commonwealth Parliament without a corresponding benefit to the States. 84
This seems all the more likely in the advent of cases in recent times expanding Commonwealth legislative powers such as Commonwealth v Tasmania; the Dams Case. 85
Other avenues exist to achieve collective aims on the part of the States without the need to refer away power, which gives little flexibility. The use of intergovernmental agreements has become a popular method of cooperation in the past 20 years. The agreements have enforcement difficulties (as mentioned
above) and allow governments to gain political mileage from being seen to be cooperating, while enabling them to either take their time complyi,ng, or to selectively ignore parts of agreements, or pull out completely without fear of sanction if the issue concerned becomes too politically contentious. This is not to say that these agreements are ineffectual, merely that they provide political and policy escape hatches if required. These agreements will often be implemented by "mirror" legislation on the part of all jurisdictions, which provides two layers of regulation (Commonwealth and State), each layer rectifying any constitutional limitations of the other jurisdiction.
The use of "bucket" schemes is another method by which uniformity can be achieved without the need for references under section 51 (xxxvii). Under this type of arrangement, a body is created which then has power "tipped" into it from both the States and the Commonwealth. This allows the powers and functions of such a body to be strictly controlled while at the same time overcoming any constitutional limitations on the part of the States or the Commonwealth.86 In R v Duncan; Ex Parte Australian Iron and Steel Pty Ltd., which concerned the validity of such a scheme, the High Court stated that:
There is no express provision in the Constitution, and no principle of constitutional law, that would prevent the Commonwealth and the States from acting in cooperation, so that each, acting in its own field, supplies the deficiencies in the power of the other, and so that together they may achieve, subject to such limitations as those provided by section 92 of the Constitution, a uniform and complete legislative scheme .... Further, no reason is provided
by constitutional enactment or constitutional principle why the Commonwealth and a State
84 Ibid.
85 (1983) 158 CLR 1.
86 Other than those arising from section 92 of the Commonwealth Constitution.
Australia's Common Market: Mutual Recognition Legislation 25
or States should not simultaneously confer powers on one person and empower that person to exercise any or all of those powers alone or in conjunction. 87
These schemes have been used to set up various industry bodies, such as the Coal Industry Tribunal, and facilitate indirect governmental cooperation via the use of a separate autonomous body to deal with the policy goal.
Finally, the uncertainty surrounding the use of section 5 l(xxxvii) was an added disincentive to use it in the period before the first significant case concerning the section, in 1950. In particular, issues such as whether references could be conditional, whether they were irrevocable, and what wording needed to be used were issues which worried the States. Although the reported cases on the
section are few, answers to some of these questions were provided.
5.3 Judicial Interpretation
The major decision dealing with section 51(xxxvii) is Graham v Paterson88, decided in 1950. In that case, a baker was prosecuted for contravening legislation which fixed the price of bread in Queensland. 89 Under the Commonwealth Powers Act 1943 (Qld), Queensland had referred the power over profiteering and prices to the Commonwealth for a period of five years after the end of the war. An argument put to the Court was that since the power was referred to the Commonwealth for five years after the war, the State had thereby deprived itself of the power and the prosecution could not be brought under the State Act. The High Court rejected this argument, on the basis that it assumed that all such references were necessarily irrevocable.
Such irrevocability would infringe the doctrine of Parliamentary sovereignty and allow the binding of future Parliaments. In the leading judgment, Latham CJ stated:
It has sometimes been suggested that a reference under section 5 l(xxxvii) must be an irrevocable reference for all time-that while the matter referred must necessarily be described by reference to its attributes or qualities, yet the reference cannot be limited by reference to a quality or attribute of a temporal character. Such a contention would involve the proposition that a State Parliament can pass an unrepealable Statute, or at least that any attempt to repeal a matter under section 51 (xxxvii) would necessarily produce no result. The result of the adoption of such a suggestion would be that one State Parliament could
bind all subsequent Parliaments of that State by referring powers to the Commonwealth Parliament. 90
87 (1982-83) 158 CLR 535, per Gibbs J at p 553.
88 (1950)81CLR1.
89 The Profiteering Prevention Act 1948 (Q/d).
90 81 CLR 1, at p 18.
26 Australia's Common Market: Mutual Recognition Legislation
Latham CJ went on to discuss the general effect of references. He said at p 19:
Section 5l(xxxvii) does not provide that any power of the Parliament of a colony which becomes a State should become exclusively vested in the Commonwealth Parliament or be withdrawn from the Parliament of the State. It is section 52, and not section 51, which gives exclusive powers to the Commonwealth Parliament. Therefore the powers of the State
Parliament are not diminished when an Act is passed to refer a matter under section 5 l(xxxvii) .... Thus the reference of matters under section 5 l(xxxvii) does not deprive the State Parliament' of any power. It results in the creation of an additional power in the Commonwealth Parliament.
McTiernan J and Williams J both agreed with this analysis. Williams J was also particularly sceptical about the possibility of future State Parliaments being bound. 91
In Airlines of NSW v NSw92, a number of constitutional issues concerning the Commonwealth's power over air navigation were raised, and two members of the High Court, Taylor J and Windeyer J, made comments about section 51 (xxxvii). Both members canvassed the issue of references under the section for fixed periods of time, supporting the view that fixed references were possible. Windeyer J° also doubted the possibility of irrevocable references,
stating:
Any law made by the Commonwealth Parliament with respect to a subject for a limited period could, I consider, operate only for the duration of the period of the reference. That period could, I think, be limited in time in any way ... but I entertain a serious doubt whether a reference could be for an indefinite period terminable by the State legislature.93
The most recent decision of the Court interpreting the section is R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex Parte Australian National Airways Pty. Ltd 94, which was another case concerning air navigation. The Tasmanian Government had passed the Commonwealth Powers (Air Transport) Act 1952 (Tas), which referred power to the Commonwealth under section
5I(xxxvii). The Act contained a section allowing the Tasmanian Governor to fix a date for expiry of the reference by proclamation. (This power is also given to a number of State Governors or Governors in Council under various of the mutual recognition Acts.) It was argued that such a section was
incompatible with a section 5I(xxxvii) reference. The High Court, in a unanimous judgment upheld the section as valid, commenting:
91 81CLR1atp25.
92 (1963-64) 113 CLR 207.
93 81CLR1,atp53.
94 (1965) 113 CLR 207.
Australia's Common Market: Mutual Recognition Legislation 2 7
How long the enactment is to remain in force as a reference may be expressed in the enactment. It none the less refers the matter. Indeed, the matter itself may involve some limitation of time, or be defined in terms which involve a limitation of time .... There is no reason to suppose that the words "matters referred" cannot cover matters referred for a time which is specified or which may depend on a future event even if that event involves the will of the State Governor in Council and consists in the fixing of a date by proclamation. 95
From these cases, a number of propositions can be extracted about references under section 51(xxxvii). These are:
(i) references can be for a limited time, or can be for an unlimited time terminable on some future event;
(ii) a: reference for an unlimited time would probably infringe the doctrine of Parliamentary sovereignty;
(iii) the effect of a reference is to add a Commonwealth power to the list in section 51 . of the Constitution, subject to normal constitutional constraints on the Commonwealth; and
(iv) the reference does not diminish the power of the State in that area, although by virtue of section 10996 of the Constitution, any Commonwealth legislation in that area would have priority.
Even though the section has been interpreted in such a way as to minimise any possible adverse consequences for the States, there has still been a paucity of references under the section. The cases do uphold the validity of references limited for periods of time, and by notification by a State Governor, as is the case in the mutual recognition legislation in some States. The continued caution of the States is however, evidenced by provisions in the mutual recognition Acts of all States except Victoria and SA which have adopted provisions limiting the reference more strictly than those of Victoria and SA.
6. Problems
The initial Discussion Paper97 raised the question of how to treat problems · which may arise under the mutual recognition scheme. The paper took a "wait
95 113 CLR 207, per Dixon CJ, Kitto, Taylor, Menzies, Windeyer and Owen JJ at p 226.
96 Section 1 09 of the Commonwealth Constitution provides that:
"When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid".
97 Supra, note 58.
28 Australia's Common Market: Mutual Recognition Legislation
and see" approach, expressing a preference for ad hoc solutions to resolve any emergent problems. Such matters, it was argued, would be best resolved either by:
... jurisdictions unilaterally changing their regulations to solve the problem in a way which does not offend mutual recognition. In other cases the solution will require jurisdictions to agree on the approach to be taken, such as agreeing on a common minimum Standard.98
The most obvious problem is that of the "lowest common denominator" factor. This applies both to goods and occupations. Under mutual recognition, the jurisdiction which has the "lowest" standards for particular goods may end up setting the standards for other jurisdictions with mutual recognition legislation.
The setting of lower standards may actually benefit a State, if compliance costs in that State are lower than others because of the lower standards. In this situation, businesses may be attracted to the State with the lowest standards, since this may entail lower production costs. Furthermore, there will be no incentive on the part of the State to improve its own standards, since business may be attracted and accordingly, State revenue and economic activity may increase. In fact, there may develop a form of "standards competition" which would be engaged in to try to attract business to any particular State. Competing States may attempt to reduce their regulatory requirements to attract production. The solution to such a problem would be an underpinning of the
scheme with common minimum standards. This solution was considered and dismissed in the Discussion Paper in the following terms:
Consideration was given to whether anomalies might not best be resolved by a central body having responsibility for establishing common minimum standards. However, this option would require excessive expenditure and an unacceptable administrative burden. Furthermore, it is not thought that the establishment of either uniform or common minimum standards is necessarily a desirable object in itself. 99
Surely, one purpose of mutual recognition is the movement towards minimum, if not uniform standards.
In a similar fashion, lowest common denominator educational standards may develop from the occupations part of the mutual recognition legislation. An admittedly contrived example illustrates that situations may occur which will either lead to the erosion of educational standards or frustrate the aim of mutual recognition.
Suppose Mr X obtained a Diploma of Chiropractic from the Chiropractic and Osteopathy Institute Incorporated in South Australia, after 31 December 1979. Under section 18 of the Chiropractors Act 1991 (SA), Mr Xis entitled to be
98 "The Mutual Recognition of Standards and Regulations in Australia", Discussion Paper, Special Premiers' Conference July 1991, Attachment at p 7.
99 Ibid, p 6.
Australia's Common Market: Mutual Recognition Legislation 29
registered if he fulfils all requirements in the regulations, pays the fee, is over 18 years of age, is of good character and holds a prescribed qualification. Regulation 11 of the Chiropractors Regulations 1992 (SA) includes the Diploma referred to above as a prescribed qualification, but also imposes a number of additional requirements for registration, namely 12 months" full time clinical experience covering a variety of areas including X-ray procedures, patient care and management. Mr X becomes registered in SA and then moves to NSW.
In NSW, the requirements for registration under the Chiropractors and Osteopaths Act 1991 (NSW) are found in section 9. The section requires an applicant to pay the fee, be over 18 years old, be of good character, and either hold a prescribed degree, sit a NSW Chiropractors Board examination or be registered under a prescribed law. Regulation 4 of the NSW regulations includes the Diploma obtained in SA ·as a prescribed qualification, but only if it was obtained before 31 December 1979. The Chiropractors Act 1991 (SA) is not named as a prescribed law under regulation 6. The position is normally, that Mr X must sit the NSW Board examination in spite of his 12 months' experience and SA registration to become registered in NSW. Mutual recognition in this case should allow Mr X to become registered in NSW without the need to sit the examination, due to section 17(1) of the Mutual Recognition Act 1992 (C'th).
The position will, however, depend on the construction of the exception in section 17(2). Mutual recognition does not apply where the extra requirement of the second State (sitting the examination in NSW, which for the minute is assumed to be regulating the manner of carrying on an occupation) applies equally to all others carrying on that occupation in the State (which it does) and does not relate to qualification or experience relating to fitness to carry on the occupation. If it is argued that the examination is a necessary qualification in NSW or relates to fitness to carry on the occupation or experience, then the exception applies and mutual recognition has no effect.
This result appears to be contrary to the intention of the scheme. On the other hand, if the examination is not seen as providing any formal qualification or experience relating to fitness to carry on the occupation, registration is possible without the need to sit the examination. Although the aim of the legislation is achieved, depending on the content of the examination, the educational
requirements for registration in SA are undermined by the fact that requirements in NSW to practise in the occupation may be significantly less onerous. Why bother obtaining registration under the stricter requirements in SA in the first place?
In contrast to the goods situation, anomalies of this type are supposed to be rectified by the concept of equivalence of occupations under section 29 of the Mutual Recognition Act 1992 (C'th). Equivalence is defined as being where registration for occupations in different States entails the carrying on of
substantially the same activities. The Division containing section 29 gives the
30 Australia's Common Market: Mutual Recognition Legislation
Administrative Appeals Tribunal (AA T) or the Minister the power to declare equivalence or impose conditions on registration to achieve equivalence. In the above example, it is still possible that the occupations in each State are substantially the same, but that the educational requirements can be different. If this is the case, then equivalence does not solve the problem. Alternatively, imposing conditions to achieve equivalence is tantamount to allowing or merely modifying the original requirements under the law in the first State, which defeats the purpose of the Mutual Recognition Act 199 2 (C 'th). Restrictions would be imposed by the AA T rather than by the original substantive law.
How the AA T and the Courts will deal with these problems remains to be seen. Underpinning the scheme with uniform minimum standards may have gone some way towards alleviating possible anomalies which may arise. The problem of uniform commencement and termination dates across the States is yet to be dealt with, and the scheme can not be completely effective in any event until WA passes an Act. The trade effects arising from failure to pass a mutual recognition Act in WA do not appear to be significant for that State, given the very low priority placed on mutual recognition by WA. This, of itself, might lead to the conclusion that the scheme will, overall, have minimal economic effects on trade patterns across the States.
7. Hypothetical Examples
In the absence at the time of writing of any reported cases dealing with mutual recognition legislation, a selection of fact situations 100 taken from past cases involving section 92 of the Constitution may be analysed on the basis of mutual recognition legislation applying, to provide a further insight into the practical application of mutual recognition. These fact situations cover a number of areas germane to the purpose of mutual recognition, but only in relation to trade in goods. Cases dealing with occupations are few, the major cases having been discussed in Part 3, above.
The very first case dealing with section 92, Fox v Robbins101 , concerned licence fees to sell wine in WA. Under the prevailing WA legislation, a licence fee of £50 was required to sell wine produced from grapes grown outside WA. For selling wine grown from WA grapes, the fee was £2. The WA legislation prohibited the sale of wine made from grapes grown outside of WA, and Robbins was charged for selling wine made from Victorian grown grapes without a licence. The WA Act was held to be invalid as contrary to
100 The expression "fact situation" is used in its legal sense. Cases with similar facts should give rise to the identification of similar legal issues. In this way even hypothetical cases can be analysed in terms of the legal issues and principles involved.
101 (1908) 8 CLR 115.
Australia's Common Market: Mutual Recognition Legislation 31
section 92, and this is the sort of discrimination the current interpretation of section 92 attempts to prevent.
Given mutual recognition, it is arguable that the higher fee would not need to be paid, as it is a requirement relating to sale which would prevent or restrict or have the effect of preventing or restricting the sale of wine made from Victorian grapes under section IO(e) of the Mutual Recognition Act 1992
(C'th). Presumably, the higher licence fee would lead to higher prices which would impede sales of such wine. It is clear that the section 11 exception does not apply, since the law in WA does not apply equally to wine grown from WA or Victorian grapes. The example in 11(2)(c) being business franchise licences also supports this interpretation. In this case, mutual recognition seems to give the desired result.
In W & A. McArthur Ltd v Queensland102 , the legislation challenged was a price fixing statute, the Profiteering Prevention Act 1920 (Qld). Under this Act, maximum prices for the sale of calico in Queensland were set. A NSW company imported calico goods into Queensland and sold them above the fixed price, and was prosecuted. The High Court held the legislation invalid in so far as it applied to goods originating in NSW, even though the Profiteering Prevention Act 1920 (Qld) made no distinction between local and imported
goods. The Act simply set a price ceiling on all goods of a particular type, regardless of their origin. The Court found that the regulation was still an interference with free trade.
Under mutual recognition, price fixing legislation is probably preserved. This result would not be surprising, given the apparent preservation of marketing schemes by the mutual recognition legislation, which rely in many cases on price controls. Although under section 10( e) of the Mutual Recognition Act
1992 (C 'th), the price controls relate to sale, and prevent or restrict sale, the section 11(2) exemption would apply. Under section 11(2), since the price fixing law makes no distinction between local and imported goods, it applies equally to those goods and therefore is not affected by mutual recognition. This result allows some barriers to trade to stand, namely State price fixing
legislation. This is a necessary consequence of protecting marketing schemes.
The next example uses the facts from Ex Parte Nelson (No.1)1°3, which concerned quarantine legislation in NSW. Under the relevant Act, the importation of stock from elsewhere could be prohibited by notice in the Gazette, on the grounds of an infectious disease existing in the State of origin
of the stock. Furthermore, any person introducing stock had to give full information about that stock to an inspector. Nelson was charged under both sections. The High Court found that neither provision infringed section 92.
102 (1919-1920) 28 CLR 530.
103 (1928) 42 CLR 209.
32 Australia's Common Market: Mutual Recognition Legislation
Under mutual recognition, laws relating to quarantine are specifically exempted under Schedule 2 of the Mutual Recognition Act 1992 (C'th), as long as they satisfy the 4 elements in Item l(a). The elements are broadly that the law in question:
(i) regulates the importation of goods into the State or a defined area; and
(ii) the State area 1s substantially free of a particular disease or organism; and
(iii) it is reasonably likely that the goods will introduce or substantially assist the introduction of the disease or organism into the State; and
(iv) it is reasonably likely that the introduction of the disease or organism would have a long term and substantially detrimental effect on the State or part of it.
These elements are cast in fairly wide terms and will cover a large variety of state quarantine type laws. The requirements probably mean that a degree of specificity is needed in State legislation or as in the above case, notification in the Gazette, to identify a "particular" disease or organism against which a law or proclamation is directed. It is likely that the Gazette notice in Ex Parte Nelson (No. I) would fall within the Schedule 2 exemption.
The law relating to provision of information is more difficult. It does not fall within the Schedule 2 exceptions, as it does not prohibit importation of the stock. Unless another exemption can be found, mutual recognition may apply and render this obligation ineffective. The exception in section 11 (2) does not apply since the law does not apply equally to locally and imported goods. It
applies to imported goods only. Under section 10 of the Mutual Recognition Act 1992 (C 'th), provision ofinformation does not seem to fall within any of the categories of laws that do not need to be complied with in the importing state. The provision of information could be argued to be a requirement
restricting sale, but this argument is difficult to sustain, since the law relates to the introduction of stock, not its sale. If this is the case, then mutual recognition would not seem to apply at all, and the information would have to be provided.
In a similar facts situation, the case of Tasmania v Victoria104 concerned the issue of a Proclamation by the Victorian Governor in Council under the Vegetation and Vine Diseases Act 1928 (Vic), prohibiting the importation of Tasmanian potatoes, as being likely to introduce disease into Victoria. On this occasion, the High Court held the Proclamation as invalid, as absolute
104 (1934) 52 CLR 157.
Australia's Common Market: Mutual Recognition Legislation 33
prohibition was too remote from the purpose of preventing disease from Tasmanian potatoes. 105
This case gives an example of a quarantine type law which was cast too widely to link it to its purported purpose. This logic is analogous in the case of the quarantine exemptions from the mutual recognition principle under Schedule 2 of the Mutual Recognition Act 1992 (C'th) and the Proclamation in Tasmania v Victoria could be argued to be outside Schedule 2 as it did not ref er to a
"particular" disease. Accordingly, the Proclamation is a requirement restricting sale (by prohibiting it) and would not need to be complied with under section lO(e). The section 11(2) exemption does not apply, as the law does not treat local and imported goods equally.
In Fergusson v Stevenson106, NSW fauna protection laws were in issue. An individual was charged under the Fauna Protection Act 1948 (NSW) with possession of protected fauna. The items in question, kangaroo skins, had been bought in Brisbane and consigned to the defendant in Sydney. The High Court held that the charges against the defendant could not be sustained, as the transaction was protected by section 92.
Under mutual recognition, laws relating to the protection of flora and fauna are exempt from the mutual recognition principle under Item 2 of Schedule 2. As long as the law can be shown to substantially have the purpose of protecting species from extinction in that State and prohibits possession, sale, killing or capture of animals or plants in that State, then the law will fall within the exemption. The exemption initially appears to be cast fairly wide, as virtually any law dealing with animals can be argued to be for their protection, although it does not cover animal by-products such as skins explicitly. Such by products would likely be picked up through the use of an appropriate definition, as in Fergusson v Stevenson. 107
As for the law in Fergusson v Stevenson, it would need to be shown to be substantially for the protection of the kangaroo from extinction, and would have to contain prohibitions 'concerning sale or possession of the animals. Although this would not appear to be too difficult a burden to prove, the High
Court in Fergusson v Stevenson acknowledged the argument that the law in question in that case was for the preservation of native wildlife, but still found that section 92 rendered the prosecutions under that act invalid. In refuting the argument that section 92 could not protect an individual from offences under
the Act, the Court noted that:
105 Ibid, per Gavan Duffy CJ, Evatt J and Mc Tiernan J at pp 168-169.
106 (1950-1951)84CLR421.
107 (1950-1951) 84 CLR 421 at 431.
34 Australia's Common Market: Mutual Recognition Legislation
The first thing to negative is the existence in Australia of any universally or generally accepted understanding of what are or should be legitimate articles of commerce which excludes kangaroo skins. The attitude towards the killing of kangaroos necessarily varies
in different parts of Australia between at the one extreme protecting kangaroos and at the other treating them as pests. 108
In the later case of Ackroyd v McKechnie109, which concerned a similar law covering the trade in cockatoos, the High Court struck down a provision of the Queensland Fauna Conservation Act 1974 by adhering to the view that such laws were not outside section 92. The Court explicitly stated that the argument proposed in favour of the law was the same as that in Fergusson v Stevenson.
Gibbs CJ stated that:
It is impossible to agree that the prohibition of the movement of cockatoos from New South Wales to Queensland is reasonably necessary either in the interests of the health of the community or of the preservation of cockatoos. 110
If this argument is accepted, then stronger reasons may have to be shown before a State law falls within the Schedule 2 exemption.
Since animals are included in the definition of goods under section 4(1) of the Commonwealth Act, any failure to show a conservation of species purpose will result in the mutual recognition principle applying to the animals in the same way as any other good.
It is questionable whether the views in these 2 cases would survive Cole v Whitfield, · which espoused the current test for s 92 invalidity, namely protectionist discrimination. Although s 92 covers both fiscal and non-fiscal burdens on trade, the sorts of restrictions imposed by the legislation in Ackroyd and Fergusson would not likely be construed as protectionist. In most
states 11 1, trade in native flora and fauna is illegal, and goes beyond the mere preservation of a resource for human exploitation. If trade in a heavily exploited natural resource such as crayfish can be restricted to protect stocks, then arguably trade in a less exploited resource can be restricted to not only protect the stock, but also the bio-diversity of existing flora and fauna in the public interest.
108 Ibid, at p 434.
109 (1986) 161 CLR 60.
110 Ibid, at p 69.
111 See for example, section 47 of the Flora and Fauna Guarantee Act 1988 (Vic), which prohibits the trade of protected fauna.
Australia's Common Market: Mutual Recognition Legislation 35
In Chapman v Suttie112, the defendants, who were licensed gun dealers, were charged with offences under the Firearms Act 1958 (Vic) which prohibited the sale of firearms without obtaining firearms certificates from purchasers. The defendants sold firearms to interstate purchasers without obtaining the certificates. The defendants appealed against their convictions, invoking section 92. The High Court allowed the appeals, as the sales were made bona fide in the course of interstate trade.
Under the Mutual Recognition Act 1992 (C'th), specific exemption from the mutual recognition principle is given to firearms and other offensive weapons under Item 1 of Schedule 1. The law in Chapman v Suttie easily falls within this exemption, which is couched in general terms and is therefore much wider than the more specific Schedule 2 exemptions.
An interesting case dealing with the type of trade barriers at which mutual recognition is directed is O'Sullivan v Miracle Foods (SA) Pty. Ltd. 113 In that case, three different restrictions on the sale of margarine in SA were challenged as being contrary to section 92. The restrictions were imposed by the Margarine Act 1939 (SA) and provided that margarine imported info SA could only be sold if:
(i) the margarine contained 0.1 % starch or arrowroot; and
(ii) the packaging was labelled with the word "margarine" in bold black letters of at least 30 point; and
(iii) the margarine had been subjected to inspection and approval by a SA inspector.
The High Court held the labelling requirement to be valid, the inspection requirement to be invalid and the ingredient requirement to be invalid in so far as it applied to margarine produced in another State.
The ingredient requirement would clearly be contrary to the mutual recognition principle, as it would be a requirement relating to the composition of goods within section lO(a) of the Mutual Recognition Act 1992 (C'th) . Such a requirement would not have to be complied with when importing margarine
into SA.
Similarly, the labelling requirement would not have to be complied with, as it falls within section 1 O(b) of the Mutual Recognition Act 199 2 (C 'th) as a requirement relating to labelling. The mutual recognition principle would
112 (1962-1963) 110 CLR 321.
113 (1965) 115 CLR 1 77.
36 Australia's Common Market: Mutual Recognition Legislation
apply and margarine imported into SA would not have to be labelled m accordance with the SA laws.
The inspection requirement would also be contrary to the mutual recognition principle. Section IO(c) of the Mutual Recognition Act 1992 (C 'th) states that laws requiring inspection do not need to be complied with. The inspection law will not be exempted under section 11(4) because inspection was a pre requisite to sale under the SA legislation (section 11(4)(a)).
In this situation, mutual recognition achieves its objectives.
In contrast with O 'Sullivan v Miracle Foods (SA) Pty. Ltd., in SOS (Mowbray) Pty. Ltd. v Mead11 4, a Tasmanian provision 115 prohibiting the sale of margarine to which a prohibited colouring or flavouring substance had .been added, was held to be valid. when challenged on the basis of section 92. In this fact situation, the analysis under mutual recognition is similar to
O'Sullivan v Miracle Foods (SA) Pty. Ltd. , and the result identical. Ingredient . requirements will generally infringe the mutual recognition principle.
The last example uses the facts from a recent case on section 92, Bath v Alston Holdings Pty. Ltd. 116 ⢠In that case, the provisions of the Business Franchise (Tobacco) Act 1974 (Vic) were challenged. The Act provided that no tobacco could be sold in Victoria except by licence holders. The fee for a retail licence was calculated partially by reference to interstate purchases of tobacco by the retailer. An extra 25 percent ad valorem amount of interstate purchases (if any) was added to the licence fee. The High Court found that the provisions
infringed section 92 in so far as they related to the calculation of the licence fee by reference to interstate purchases. The Court found that the provisions discriminated in a protectionist sense in favour of local tobacco, the test formulated in Cole v Whitjield. 117 Accordingly, the Victorian law, by applying unequally to local and imported goods discriminated in a protectionist sense. The Mutual Recognition Act 1992 (C'th) would arguably apply to ensure that the provision would not need to be complied with. The exemption in
section 11(2) does not apply since, on the analysis of the majority in Bath v Alston Holdings Pty. Ltd., the licence provisions did not "apply equally" to imported and local goods. Although there was no discrimination as to the need for retailers to be licensed, the method of calculation of the fee payable for that
licence included an interstate element which meant that for all practical
114 (19 71) 124 CLR 529.
115 Section 6 of the Dairy Produce Act 1969 (Tas).
116 (1987-1988) 165 CLR 411 .
11 7 (1988) 165 CLR 360.
Australia's Common Market: Mutual Recognition Legislation 37
purposes, licence holders would pay higher licence fees if they bought interstate tobacco. The provisions were stated to be:
... undeniably protectionist in form and substance. In form, the provisions ... select the fact that tobacco was "purchased in Victoria" from a licensed wholesaler as the qualifying condition for exemption from inclusion in the products by reference to which liability to ad valorem tax is calculated. In substance, those provisions protect local wholesalers and the tobacco products they sell from the competition of an out of State wholesaler whose
products might be cheaper in some other Australian market place for a variety of other possible reasons ... 118
The notion of laws applying "equally" is not as clear cut as is first apparent, especially if a Court or tribunal talces a predominantly substantive approach to the phrase, as in Bath. The provisions in question in Bath can be argued to fall within section IO(e) of the Mutual Recognition Act 1992 (C'th) as being provisions having the effect ofrestricting sale, since presumably, higher licence fees mean higher prices for the sale of goods. These higher prices would put the interstate goods at a competitive disadvantage relative to the local goods, and the same result as in the case itself would arise.
8. Conclusion
Mutual recognition is an attempt to secure what sections 92 and 117 of the Constitution have failed to achieve, namely a common market within Australia including free trade and movement in goods and occupations. The scope and interpretation of the Mutual Recognition Act 1992 (C'th) is yet to be expounded by the Courts and the Administrative Appeals Tribunal, and it remains to be seen how effective the Act will be. In particular, the
interpretation of section 11 (2) ( exemption from the principle based on unequal application of laws) and section 10( e) ( requirements restricting sale or having the effect of restricting sale) will be crucial to the attainment of the Act's objects. Areas of uncertainty which may cause problems include Items 1 and 2 in Schedule 2 of the Act ( exemptions relating to quarantine and flora and fauna), and laws imposing forms of price control. These areas may involve the drawing of fine distinctions in characterising types of laws to fall under exemptions or otherwise, reminiscent of the sort of analysis which has been
used in the past when dealing with section 92.
It remains to be seen whether mutual recognition will be used as a precursor to more section 92 challenges, allowing applicants to start in the AA T in some circumstances, rather than the Federal Court. The hypothetical examples discussed in this paper provide some guidance to the practical workings of the
scheme and, on the whole, based on the analysis used in those examples, the outcomes suggested are consistent with the Mutual Recognition Act 1992 (C'th) going some way toward achieving freer trade across the country.
118 165 CLR 411, at p 425.
38 Australia's Common Market: Mutual Recognition Legislation
Problems with the scheme include the "lowest common denominator" problem ., which is not easily rectified without State cooperation, and the present lack of uniformity of both commencement and termination dates across the States. Western Australia is still to pass legislation, which is a major stumbling block to smooth operation of the scheme and which can create trade distortions both in favour of and against that State, but overall, the scheme seems to be assured of a reasonable degree of success.
Australia's Common Market: Mutual Recognition Legislation 39
Bibliography
Hanks, P, Australian Constitutional Law, Materials and Commentary, 4th Edition, Butterworths 1990.
Johnston, G, "The Reference Power in the Australian Constitution", Melbourne University Law Review, Vol 9, may 1973, p 42.
"Liberating Enterprise to Improve Competitiveness", September 1992
Parliamentary Research Service, The Mutual Recognition Bill 1992, Bills Digest.
Pearce, D and Geddes, R, Statutory Interpretation in Australia, 3rd edition, Butterworths, Sydney 1988.
Quick, J and Garran, R, The Annotated Constitution of the Australian Commonwealth, Legal Books, Sydney, 1976.
Report of the Committee on Regulatory Reform to Heads of Government, Conference of Premiers and Chief Ministers, Adelaide, November 1991, in Premiers and Chief Ministers Meeting, Adelaide 21-22 November 1991, Papers.
"The Mutual Recognition of Standards and Regulations m Australia", Discussion Paper, Special Premiers Conference July 1991.
Wright, E J, "Mutual Recognition and the National Market for Goods", Australian Business Law Review, Vol 21, p 270
Zines, L, The High Court and the Constitution, Butterworths, 2nd edition, Butterworths 1987.
No. Title Author/Group Contact
Extension
BACKGROUND PAPERS 1994
1 House of Representatives By-elections 1949-1994 G. Newman/Stats 2481
2 Medicare, Private Health Insurance and Proposals P. Mackey/SP 2412
for Change
3 The Sad Lack of Magic Pudding; Problems with M. Warby/Stats 2485
Protectionism
4 State Election Dates M. Healy &
M. Bini/LPA 2476
5 Arts Policy in Australia A history of Commonwealth involvement in the arts J . Gardiner-Garden/SP 2415
6 Agricultural, Livestock & Forestry Levies & Charges J . Fleming I. Ireland/LP A 2438
7 Index to Parliamentary Questions on Defence: G. Brown/FADT 2452
8 Growth and Employment Strategies: Europe, Japan S. O'Neill &US P. Hanratty/ECIR 2463
9 From There and Back Aga_ in? Australian Inflation M. Warby/Stats 2485
and Unemployment 1964-1993
10 Greening the National Accounts: Possibilities , M. Warby/Stats 2485
Problems and Perspectives
11 Electric Blues: Unresolved Issues with Copyright DrG. Hughes 2434
and Computer Software (Consultant)/LPA
12 How has our Government Grown? Measuring the State M. Warby/Stats 2485
13 Uranium Mining Legislation in Australia: An Overview M. Bini/LPA 2430
14 Commonwealth Funding for Schools G. McIntosh/SP 2414
15 The Constitution - 19th Century Colonial Office Document or People's Constitution A Twomey/LPA 2432
16 The Development of Commonwealth Labour Market Programs: A Chronology G. Winter/SP 2437
17 Chronology of ALP Uranium Policy 1950 - 1994 R. Panter P. Kay/STER 2420
18 Women and the Environment H. O'Connor
(Consultant)/SP 2410
19 Growth of Intra-Asian APEC Trade and Some Implications for Australia P. Sagar/FADT 2623
No. Title
CURRENT ISSUES BRIEFS 1994
1 "Restoring Full Employment": An Overview
2 Report: Outlook 94 Conference (Minerals and Energy)
3 Reducing Unemployment: A Conference Report
4 Assessments of the Economic Outlook
5 Japan and the Hosokawa Government: A Preliminary
Author/Group
S. O'Neill G. Winter & D. Daniels ECIR/SP
P. Kay/STER
P. Hanratty/ECIR
J . Kain/ECIR
Contact Extension
2457
2422
2457
2460
Post-mortem M Underdown/F ADT 2443
6 Strange Bedfellows: The United Nations Human Rights Committee and the Tasmanian Parliament A Twomey/LP A 2432
7 Population Policies: Family Planning and Reproductive Rights C. Larmour/SP 2410
8 A House Divided: The South African Election of April 1994 A Shephard/F ADT 2450
9 Australia's Overseas Aid Program: An analysis of the 1994-95 Aid Budget R. Tomar/F ADT 2459
10 The Killing Fields of Rwanda
11 Background to the Macedonian Question ,
12 Innovation without change? Commonwealth involvement in Aboriginal health policy
13 Cambodia: The Immediate Outlook
14 Grocery Chains: The Foodland Bid
15 Comet and Asteroid Impacts: Does Earth Need Protection
16 Moving Mountains, Whipping up Whirlwinds. Political Succession in North Korea
17 The Rwandan Crisis: Communal Conflict & International Responses
18 Racial Vilification: An Overview of the Issues
19 Mutual advantage: Papua New Guinea Politics, The election of Sir Julius Chan and Australian interests
20 It Ain't Necessarily So: Country of Origin Labelling
A Shephard/F ADT
M. Underdown/F ADT
J . Gardiner-Garden/SP
F. Frost/FADT
B. Bailey/LP A
G. Brown/F ADT M. James/STER
M. Underdown/FADT
F. Frost/F ADT
V. Duranti/SP
D. Woolner/FADT
B. Bailey/LP A
2450
2443
2415
2440
2434
2452 2423
2443
2440
2411
2450
2434
No. Title Author/Group Contact
Extension
CURRENT ISSUES BRIEFS 1994
21 Citizen Initiated Referenda: cure-all or M. Cotton &
curate's egg? R. Bennett/LP A 2430
22 Bikpela Maunten i Paiarap: The Rabaul Volcanoes R. Tomar/F ADT & 2459
P. Kay/STER 2422
23 Defamation and Politicians: Fair Game or Keeping the Game Fair A Twomey/LP A 2432
24 The Coalition's and Government's Cultural Policy Statements - Background and Analysis J. Gardiner-Garden/SP 2415
25 Income Contribution from Bankrupts: Recent Federal Court Decision B. Bailey/LP A 2434
No. Title Author/Group Contact
Extension
RESEARCH PAPERS 1994
1 National competition Policy: Overview and Assessment J. Kain/ECIR 2460
2 Natural Gas. An Australian Growth Industry P. Kay/STER 2422
3 The United Nations and International Security D. Anderson/F ADT 2453
4 The Budget 1994/95 Macroeconomic Policy and Prof J .D.Pitchford 2460 National Saving (Consultant)/ECIR
5 Senate power in relation to money bills: A Twomey/LP A 2432
an historical perspective
6 Reform in Russia: Prospects for Democratic' Dr R. Miller 2440
Institutions and a Market Economy (Consultant)/F ADT
7 Russia's Foreign Relations: Recent Developments Dr. R. Miller 2440
and Future Prospects (Consultant)/F ADT
8 Australian Urban and Regional Development: Ass Prof F. Stilwell 2460
Th,e Policy Challenge (Consultant)/ECIR
9 Hong Kong in Transition B. Martin
(Consultant)/F ADT 2440
10 Income Splitting J. Smith
(Consultant)/ECIR 2460
11 Growing Research Links between Industry H. Preston
and Higher Education (Consultant/STER) 2420
12 Rail & Urban Public Transport: Commonwealth P.Laird Funding and Policies (Consultant/ECIR)
13 Global Population Movements, Temporary Movements in the Asia-Pacific Region and Australia's Immigration Program A Millbank/SP 2479
