[3] Const Prohibitions - (1) FREEDOM OF INTERSTATE TRADE - S 92 Flashcards
[1] - PRELIMINARY ISSUE - What preliminary issue must be resolved before applying s 92 prohibition?
is the [Cth provision] within another power (and otherwise within legislative competence)?
[1] - PRELIMINARY ISSUE - even if no constitutional head of power can be identified, does s 92 still operate?
yes, regardless of head of power (Cole v Whitfield)
[1] - PRELIMINARY ISSUE - [provision] is within legislative competence in respect of State and Cth if:
State: prima facie valid provision bc States have plenary power to enact legislation (Australia Acts)
Cth: provision valid if supported by a head of power (Cole v Whifield) - (usually s 51(i) T&C)
[2] If provision within legislative competence, what’s the second question?
Does it nevertheless breach s 92?
What case resolved debate over meaning of absolutely free in s 92?
Cole v Whitfield - rejected laissez faire individual rights view in the Bank Nationalisation case, confirming instead that s 92 upholds a free-trading market between the States.
[2] - test: [Cth provision] will be in breach of s 92 if
it amounts to a discriminatory burden in the protectionist sense (Cole v Whitfield, affirmed most recently in Betfair v NSW).
A law will amount to discriminatory protectionism where there is discrimination against interstate trade (de jure or de facto) and protectionism of state trade (in intention or effect).
Discrimination against interstate trade and commerce may be found either:
(1) by the legal operation of the law (de jure discrimination)
(2) as a matter of the practical operation of the law (de facto discrimination)
de jure discrimination
legal operation of the law
de facto discrimination
matter of the practical operation of the law
A provision will not be discriminatory de jure if:
it applies equally to [State] goods and interstate goods (Barley Marketing Board). (but practical operation of the provision may be discriminatory)
Discrimination against interstate trade and commerce may be found either:
(1) by the legal operation of the law (de jure discrimination)
(2) as a matter of the practical operation of the law (de facto discrimination)
de jure discrimination
legal operation of the law
de facto discrimination
matter of the practical operation of the law
Even if a provision isn’t discriminatory de jure, it may be discriminatory in its
practical operation (de facto discrimination)
Ways a provision can be discriminatory
(1) on its face (words)
(2) not on its face (practical effect) ie favouring domestic over other states, giving competitive advantage/removing an interstate competitive advantage
If a provision relates to the regulation of the same good or service, is this necessarily discriminatory?
No - can distinguish from Betfair (in that case distinguished online gambling from other types of gambling), whereas here regulating all types - not discriminatory
When considering whether a ‘same good/service/ has been regulated by a provision and whether that provision is discriminatory, consider the extent to which the product/services are like/substitutable by reference to
whether there is a cross elasticity of demand of that product/service by reference to whether a price increase of one will result in consumer shift to the other (Betfair No 1).
Is a prohibition on an individual trader from trading (rather than a State) discriminatory
NO
the law must affect intrastate or interstate trade generally, advantaging intra compared to interstate trade (Betfair No 2) –> present position isn’t about individual Rs as s 92 attaches to trade itself not persons
What does protectionist mean
protection of local industries against competition from foreign, out-of-state industries such as by granting a competitive or market advantage to local goods or removing a competitive advantage it otherwise would have (Bath v Alston Holdings).
Is restriction/prohibition on exports discriminatory protectionism?
Maybe - where the restriction/prohibition on export of a commodity to other states confers an advantage/benefit on producers within the State over out-of-State producers (Barley Marketing Board)
Discrimination will be protectionist where
The intent/purpose of the statute is protectionist, or it is protectionist in practical effect:
Why didn’t the Tasmanian regulations in Cole v Whitfield breach s 92?
as they applied equally to inter and intrastate trade and because their effect was not to protect the local crayfish industry from interstate competition but to conserve and protect crayfish stocks in the state
Discrimination - didn’t operate ‘at the border’ or distinguish btw local and interstate trade/produce
Protectionism - object of regulations was to protect and conserve important natural resource, about maintaining the right size of crayfish to sustain the industry –> didn’t give Tasmanian crayfish a CA over imported crayfish
Why did Victoria’s imposition of a license fee for retail tobacconists breach s 92?
wholesalers in other states would themselves be paying their own wholesale taxes, which would be reflected in the price paid by retailer.
If on top of this, Vic retailer had to pay a license fee, tobacco bought interstate would be much more expensive than Vic tobacco
Bath v Alston Holdings.
Even if there’s a breach of s 92, the provision will be valid if:
it satisfies the structured proportionality test per Palmer (as adopted from McCloy)
structured proportionality test identified by Edelman J in Palmer
(1) does law have a rational connection to a legitimate purpose of the provision rather than merely the effect of the law?
(2) If yes, are the means that impose the burden on T&C to achieve the purpose reasonably necessary - ie, are there other less burdensome means?
(3) Is the law adequate in its balance such that the extent of discrimination/incursion is justifiable given the law’s purpose
Why was the 3 step structured proportionality test adopted from McCloy identified by Edelman J in Palmer satisfied?
the burden on interstate movement imposed by the border closures was suitable for achieving the purpose of preventing COVID-19 from entering the WA community.
no alternative would be as effective in preventing the spread of COVID-19 into WA. That finding of fact meant that the border closure was necessary to achieve its purpose.
whilst severe, was justified when taking into account the competing importance of the protection of health and life
possible exception where there’s been a breach of s 92
strong minority judgement in Bath v Alston suggests that there will be no breach where the burden on interstate T&C is imposed to “level the playing field” with equivalent intrastate parties
after Betfair, what does it seem like the HCA will focus on in respect of discrimination and protectionism?
Protectionism, as discrimination will invariably follow
What happened in Bank Nationalisation Case (1948) + what did the banks argue?
Banking Act nationalised the the banking sector by vesting in the Cth bank (a government-created bank) all the then-existing business of the non-government banks
The banks argued that banking was within the scope of “trade, commerce and intercourse” mentioned in s 92 and as the Act prohibited private banking (and thus a form of trade and commerce), it breached s 92 and thus its guarantee of a free market system
Outcome in Bank Nationalisation Case
Whilst Banking Act was within a head of power breached s 92
What interpretation was adopted in Bank Nationalisation Case?
adopted laissez faire interpretation of s 92 - meaning that any sort of regulation that somehow infringed upon the system of free trade it provided would be struck down
What was the Australian Wheat Board case about?
At issue here was validity of cth legislation creating the Wheat Board, statute provided for the compulsory acquisition of wheat by the Board to create pricing and market stability, can be said Board had a monopoly over the wheat – no exception was made to intrastate trade in wheat
What were the 2 polar views expressed in the Australian Wheat Board case (there was no ratio in this case bc of the divergence of opinions)?
Barwick J - Interpreted s 92 as protecting the individual’s participation in interstate trade & commerce, with the only form of legitimate limitation being regulatory in nature in order to foster the trade (not to deny or qualify it)
Murphy - Customs barrier view: Interpreted s 92 as limited to prohibiting fiscal burdens on interstate trade ie, it only prevented direct trade barriers at the borders
What was at issue in Castlemaine Tooheys v SA (1990)?
What is the validity of SA legislation that on its face is attempting to solve social problems (of encouraging recycling) by imposing a solution that in fact disadvantaged the trade in beer brewed interstate against beer brewed intrastate?
Was there discriminatory protectionism in Castlemaine Tooheys v SA (1990)?
Yes
(1) De facto discrimination was a natural result of the scheme (retailers wouldn’t want to buy non-refillable - interstate bottles), commercially disadvantaging interstate retailers who used non-refillable bottles - had impact on their market share
(2) Protectionism in effect (not intention) - clear practical effect of the scheme was to confer a significant advantage to SA market
The scheme discriminated against the interstate product in a protectionist way and was thus in breach of s 92
What was the exception identified in Castlemaine?
o If the law had a legitimate non-protectionist object, measures which are appropriate and adapted to achieve that object will be consistent with s 92 so long as any burden imposed is incidental and not disproportionate to that achievement
Did the amendments in Castlemaine satisfy the proportionality exception to Cole v Whitfield?
No - Whilst the amendment was on rational and legit grounds of reducing litter etc, wasn’t appropriate and adapted, was disproportionate to the non-protectionist end of environmental protection
What happened in Barley Marketing Board?
- NSW State scheme set up by the Barley Marketing Board for the acquisition and sale of all barley in NSW, including barely in the course of interstate trade - no one could purchase barely directly from NSW producers (so board thus determined the price)
Did the scheme in Barley Marketing Board breach s 92 (assess both discrimination and protectionism)?
- Although imposing a prohibition on interstate trade, the law treated intrastate growers equally, and intrastate and interstate purchasers equally –> WASN’T DISCRIMINATORY
De jure - didn’t restrict exports (only intrastate barely regulated)
De facto- all purchasers were treated equally
Protectionism
- intent –> objective to increase NSW barely prices
- effect - the legislation didn’t give any CA to intrastate purchases
Per Barley Marketing Board,
if the prohibition does not disadvantage imports coming in but rather limits the supply of exports from your state going to other states, valid or invalid?
valid
Facts in Betfair
Betfair ran betting exchange out of Tas, operated by internet - WA prohibition on betting exchanges in WA even tho there were none, + prohibiting a person to publish a WA race course in the course of business w/o prior approval
What did WA gov argue in BEtfair
That under Castlemaine exception it didn’t breach s 92, as WA was concerned about bad impact of betting exchanges
Outcome in Betfair
Held the prohibitions were invalid and breached s 92 (had effect of protecting betting operators in WA from interstate competition)
Discrimination
- directly denied by words, indirect by betfair players not given access about wA racefields on website
Protectionist - gave CA to WA operators (whilst also prohibited betting exchanges in WA, it protected established wagering operators from other interstate forms of gambling)
In short, why did the WA gov’s argument that the Castlemaine exception applied in Betfair case?
o the width of the sections constituted a prohibition on a very wide class of would-be gamblers (extended to all sporting events, not just horseracing) + sections were inappropriate to achieving the end supposedly advanced
How was the Castlemaine exception modified by Betfair (2008)?
Pure proportionality test in Castlemaine turned into a ‘margin of appreciation test’: not whether the measure is proportionate to achieving the legitimate non-protectionist end but whether it can reasonably be regarded as being so
–> more of a focus on protectionism
Betfair (No 2) what happened
- Betfair + Sportsbet challenged constitutional validity of NSW Racing Act under s 92, by arguing that Act meant you paid a higher fee if involved in a higher amount of betting (higher turnover) - disproportionately affected certain companies
Outcome in Betfair No 2
not a breach of s 92 - fees did not discriminate in a protectionist sense against interstate trade but applied uniformly to all betting operators (disproportionate effect didn’t create a breach of s 92)
What did Betfair No 2 establish in terms of when s 92 will be breached?
It will only contravene s 92 if it involves the unequal treatment of inter and intrastate trade to the serious trading advantage of intrastate trade when compared with interstate trade
