Dairy Industry Adjustment Bill 2000-Constitutional Issues


Current Issues Brief 14 1999-2000

Bernard Pulle
Economics, Commerce and Industrial Relations Group
7 March 2000

Contents

Glossary
Major Issues
Introduction
Legislative Scheme for the Deregulation of the Dairy Industry

Legislation by the Commonwealth
Legislation by the States
Joint Commonwealth-State Package
Minister to Formulate DSAP Scheme
Discretionary nature of DSAPs

Are the DSAPs and DEPs Bounties for the Purpose of Section 51(iii) of the Constitution?
Are the DSAP Scheme and the DEP Scheme Based on Section 51(i) of the Constitution?

Implications of Section 99 of the Constitution

Does the Bill authorise the Acquisition of Property on Terms that are not just Contrary to Section 51(xxxi) of the Constitution?
Endnotes

Glossary

DAA

Dairy Adjustment Authority

DEP

Dairy Exit Permit

DMS

Domestic Market Support

DPA 1986

Dairy Produce Act 1986

DSAP

Dairy Structural Adjustment Payment

Major Issues

The Dairy Industry Adjustment Bill 2000 (the Bill) provides eligible dairy farmers with Dairy Structural Adjustment Payments (DSAPs) over 8 years in quarterly instalments, or the option of up to a $45 000 tax free Dairy Exit Payments (DEPs) in the first two years of the program, where a farmer wishes to leave farming. These will replace the market milk and manufacturing milk support payments under Commonwealth and State legislation respectively. The Bill only provides the guidelines for the formulation by the Minister of the DSAP and DEP schemes. The DSAP which an entity may be entitled to, will have three components:

  • standard payment right
  • exceptional events supplementary payment rights, and
  • anomalous circumstances payment rights.

The Bill provides guidelines for the calculation of the face value of an entity's payment rights. The details will only be known when the Minister formulates these schemes in writing which will be disallowable instruments. The grant of the exceptional events supplementary payment right and the anomalous circumstances payment right will be at the discretion of the Dairy Adjustment Authority (DAA). The Explanatory Memorandum to the Bill states that the impact of deregulation will be that there would be an average annual per farm fall in income of $28 350. Under the proposed package the national average payment in compensation will be $118 192 per farm. Levels of payment to individuals will vary between States. The average in Victoria is expected to be $95 000 while in Western Australia it is expected to be $240 000.

This paper examines the constitutional basis for making these different and discretionary payments against the power of the Commonwealth to make laws with respect to bounties under section 51(iii) of the Constitution as well as with respect to the trade and commerce under section 51(i).

The bounties power requires that such bounties shall be uniform throughout the Commonwealth. This paper makes the point that such uniformity of payment may be achieved by a uniform payment per farm based on an estimated national average of farm losses or by a payment that covers a predetermined percentage of the estimated loss that farms are expected to incur in the period covered by the DSAP scheme. The discretionary nature of the exceptional events supplementary payment right and the anomalous circumstances payment right element may not make the bounty or actual monetary payment uniform as required by section 51(iii) of the Constitution.

Any payments under the trade and commerce power is subject to the requirement in section 99 of the Constitution that the Commonwealth shall not by any law or regulation of trade, commerce or revenue give preference to one State or any part thereof over another State or any part thereof. This paper makes the point that a payment that covers a percentage of the loss expected to be incurred by each farm may meet this constitutional requirement of non-preferential treatment. While a discretionary payment may meet the requirements of equity such a payment may not meet the requirement of non-preferential treatment in section 99 of the Constitution. In Elliott v The Commonwealth of Australia(1) Dixon J took the view that any law or regulation which is designed to produce some tangible advantage obtainable in the course of trading or commercial operations, or some material or sensible benefit of a commercial or trading character is forbidden by section 99.

This paper indicates that these constitutional hurdles of uniformity of payment of bounties under section 51(iii) and non-preferential grants required by section 99 may be cleared by the Commonwealth acting under the grants power in section 96 of the Constitution. This will require the Commonwealth to provide grants to the States to be distributed to farms on an equitable basis to meet the losses that farms will incur as a consequence of deregulation.

This paper also examines the question whether any of the provisions of the Bill amount to the acquisition of property on terms that are not just in contravention of section 51(xxxi) of the Constitution. It concludes that while the statutory rights that entities in the dairy farming industry have to receive payments under Commonwealth and State legislation will be property for the purposes of section 51(xxxi), the termination of those rights by statute may not amount to the acquisition of property in the meaning of 'acquisition' in that section.

Introduction

The current dairy industry regulatory environment can be divided into two broad categories based on whether milk is used as liquid milk for human consumption (market milk) or in the manufacture of dairy products (manufacturing milk).

Market milk arrangements are underpinned by State and Territory legislation and provide a guaranteed producer price for milk used as market milk that is about double the producer price for manufacturing milk. The mechanisms for guaranteeing this premium are governed by State and Territory legislation which vary between each State and Territory. Separate quota arrangements operate in New South Wales, Queensland and Western Australia while Victoria, South Australia and Tasmania operate different schemes which provide for equitable sourcing and payment for market milk.

Manufacturing milk arrangements are underpinned currently by Commonwealth legislation under the Dairy Produce Act 1986. It provides for the operation of the Domestic Market Support (DMS) scheme, which assists producers of manufacturing milk through monthly payments (0.95 cents per litre in 1999-2000).(2)

The Federal Government agreed to provide the adjustment package for dairy farmers by measures in the Dairy Industry Adjustment Bill 2000 (the Bill) provided that all States and Territories decide to remove their market milk farm gate pricing arrangements.

The adjustment package in the Bill, which is expected to cost up to $1.74 billion, provides eligible dairy farmers with:

  • quarterly Dairy Structural Adjustment Payments (DSAPs) over eight years in quarterly instalments, or
  • the option of up to a $45 000 tax free Dairy Exit Payments (DEPs) in the first two years of the deregulation program, where a farmer wishes to leave farming.(3)

The impact on over 13 000 dairy farmers of deregulation is that they will experience a fall in income as they will no longer receive either the premium on market milk through State-Territory arrangements or a DMS payment on manufacturing milk. Projections of price falls vary from 10 cents per litre (around 19 per cent of the current producer price for market milk) up to 25 cents per litre (48 per cent of the current producer price for market milk). ABARE estimates, taking the mid-range between these projections (at 15 cents per litre) that the impact of deregulation would be an average annual per farm fall in income of $28 350.

The beneficiaries of deregulation will be the manufacturers, processors and exporters of dairy products. This sector of the dairy industry is expected to benefit directly from lower input prices. Processors will no longer be subject to a complex set of regulations governing the purchase of fresh milk for human consumption from State dairy industry authorities. Manufacturers will also not be required to pay the manufacturing milk levy imposed under the Commonwealth's DMS scheme nor will they be involved in the dispersal of market support payments to manufacturing milk producers.(4)

The Bills Digest on the Bill should be referred to for background and main provisions.

Legislative Scheme for the Deregulation of the Dairy Industry

The legislative scheme for the deregulation requires action at Commonwealth and State level.

Legislation by the Commonwealth

Section 108G of the Dairy Produce Act 1986 (DPA 1986) provides for the winding up of the Domestic Market Support Fund (DMS Fund) as soon as practicable after 1 July 2000.

In consequence Part VII of the DPA 1986 and relevant parts of Schedule 6 of the Primary Industry (Excise) Levies Act 1998 and Schedule 4 of the Primary Industry (Customs) Levies Act 1998 would cease to operate with the end of the DMS scheme.

The measures in the Dairy Industry Adjustment Bill 2000 provide the outlines of the DSAP scheme and the DEP scheme to be formulated by the Minister in writing. Clause 35 of Schedule 1 provides that the DSAP scheme formulated by the Minister in writing will be a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

Proposed subsection 52C(4) to the Farm Household Support Act 1992 provides that the DEP scheme formulated by the Minister will be a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act.

The funding of the DSAP scheme and the DEP scheme is provided by a levy to be imposed on all retail sales of milk. The following Bills provide for the imposition of the levy:

  • The Dairy Adjustment Levy (Excise) Bill 2000
  • The Dairy Adjustment Levy (Customs) Bill 2000, and
  • The Dairy Adjustment Levy (General) Bill 2000.

Legislation by the States

The Explanatory Memorandum to the Dairy Industry Adjustment Bill 2000 states that deregulation will involve State government decisions to remove regulation that currently impacts on the Australian dairy industry.(5) It adds that it will involve the repeal of all or substantial parts of the :

Dairy Industry Act 1979 (NSW)

Dairy Industry Act 1992 (Vic)

Dairy Industry Act 1993 (Qld)

Dairy Industry Act 1992 (SA)

Dairy Industry Act 1983 (WA), and

Dairy Industry Act 1994 (Tas).

Joint Commonwealth-State Package

It is clear that the package of measures for the deregulation of the dairy industry is a joint Commonwealth-State initiative as will be seen from the legislative measures now in train and those on the part of the States that are to follow. The Explanatory Memorandum sums it up as follows:

For the package to be fully implemented, State governments are required to repeal those parts of their legislation that embodies the current market milk arrangements. The agreement of State Ministers for Agriculture to the package is being sought, including their commitment to amend or repeal relevant state legislation.(6)

Minister to Formulate DSAP Scheme

The details of the DSAP scheme will only be known when the Minister formulates the scheme in writing.

Clause 10 of the Bill requires the Minister to formulate in writing a scheme for the implementation of DSAP after the commencement of Schedule 1 on the general lines set out in Schedule 1.

Clause 11 of Schedule 1 states that the DSAP scheme must be directed towards ensuring the policy objectives set out in clauses 12 to 23 of Schedule 1.

Clause 12 requires the DSAP scheme to provide 3 types of payment rights, as follows:

  • standard payment rights,
  • exceptional events supplementary payment rights, and
  • anomalous circumstances payment rights.

The guidelines for the basis of the three types of payment rights are set out as follows in clause 9 of Schedule 1.

  • Standard payment rights will be based on milk deliveries in 1998-99 and will be worked out by reference to a rate of 46.23 cents per litre for market milk and a national average of 8.96 cents per litre for manufacturing milk.
  • Exceptional events supplementary payment rights may be granted in cases where, because of exceptional events, the volume of milk deliveries in 1998-99 is less that 70 per cent of the average milk deliveries in the three previous financial years.
  • Anomalous circumstances payment rights may be granted to entities which have been affected by anomalous circumstances.

Clause 13 of Schedule 1 links an entity's standard payment right to the 'overall enterprise amount' in relation to a dairy farm enterprise. This expression is defined in clause 2 of Schedule 1 as follows:

Overall enterprise amount, in relation to a dairy farm enterprise, means the sum of:

  1. the amount calculated at the rate of 46.23 cents per litre of market milk delivered by the enterprise in the 1998-99 financial year; and

  2. the amount calculated at the rate of 76.03 cents per kilogram of the milk fat content of manufacturing milk delivered by the enterprise in the 1998-99 financial year; and

  3. the amount calculated at the rate of 178.77 cents per kilogram of the protein content of manufacturing milk delivered by the enterprise in the 1998-99 financial year.

Note 1: It is expected that the result of applying the rates mentioned in paragraphs (b) and (c) will be a national average of 8.96 cents per litre of manufacturing milk.

Note 2: See also clause 30 (which deals with the transfer of the whole or part of market milk delivery rights).

The reference to a national average standard payment right gives the impression that all dairy producers will receive uniform standard payment rights. Whether this will be the case will only be known when the details of the DSAP scheme are formulated by the Minister. The details will indicate whether the following constitutional issues may arise.

Discretionary nature of DSAPs

The Bill by subclause 14(4) provides that exceptional events supplementary payment right is a grant at the discretion of the DAA. The Bill also provides by subclause 15(4) that the anomalous circumstances payment right is also a grant at the discretion of the DAA.

Further, clause 16 sets a cap of $350 000 on the total face value of payments rights granted to a particular entity in respect of a particular dairy farm enterprise, unless the entity passes the 70 per cent dairy income test. This test requires that the entity derived more than 70 per cent of the total gross income from eligible dairy income in the 1998-99 financial year.

Thus there is a discretion in the DAA to top up payments attributable to the standard payment right by exceptional events supplementary payments and anomalous circumstances payments until the cap of $350 000 is reached. Considering that the anticipated maximum payment is likely to be $240 000 in Western Australia and the average throughout Australia is to be $118 192, the majority of DSAPs are likely to depend on the discretion of the DAA. Such discretionary payments made under the bounties power in section 51(iii) or the trade and commerce power under section 51(i) of the Constitution may raise questions of lack of uniformity and discrimination respectively prohibited by these constitutional provisions.

Are the DSAPs and DEPs Bounties for the Purpose of Section 51(iii) of the Constitution?

Section 51(iii) of the Constitution gives the Commonwealth power to make laws with respect to bounties on the production or export of goods. It provides:

The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:-

(iii) Bounties on the production or export of goods, but so that such bounties shall be uniform throughout the Commonwealth.

A bounty is monetary aid, a direct pecuniary grant.(7) The package is designed to assist farmers adjust to fall in income which ABARE estimates would be an average annual per farm fall in income of $28 350.(8) DSAPs will be bounties under section 51(iii) of the Constitution as they will be paid in respect of the production or export of dairy products although based on the 1997-98 farm numbers. The Explanatory Memorandum points out that nearly 50% of the milk production is exported.(9)

It will be noted that section 51(iii) requires that bounties shall be uniform throughout the Commonwealth. This is a more stringent requirement than the requirement in section 51(ii) of the Constitution that laws with respect to taxation must not discriminate between States or parts of States. Menzies J in Conroy v Carter(10) brought home this difference when he stated:

The requirement of s. 51(ii) of the Constitution that laws with respect to taxation must not discriminate between States or parts of States does not mean that such laws must operate with complete uniformity throughout the Commonwealth. This is clear from a comparison between s. 51(ii) and s. 51(iii). The latter provision requires bounties to "be uniform throughout the Commonwealth". Nor does s. 51(ii) require that taxation laws must operate uniformly throughout the States of the Commonwealth; had this been meant it would no doubt have been said in the language similar to that used in s. 51(iii).

If the DSAP scheme formulated by the Minister achieves the expected national average of 8.96 cents per litre of manufacturing milk throughout Australia the bounty may be said to be uniform throughout the Commonwealth. Questions may also arise whether the exceptional events supplementary payment rights and the anomalous circumstances payment rights will be uniform in their application throughout the Commonwealth.

The Explanatory Memorandum to the Bill whilst stating that the national average payment will be $118 192 per farm indicates that that levels of payments to individuals will vary between States.(11)

Under the proposed package, it is estimated that the national average payment will be $118 192 per farm (table 1). Levels of payments to individuals will vary between States (table 1). For example, the average in Victoria is expected to be $95 000 while in Western Australia it is expected to average $240 000.

The Explanatory Memorandum also gives a table of indicative estimates of payments which shows the disparity in annual fall in farm income throughout Australia.(12)

Table 1: Indicative estimates of adjustment payments

 

Current Farm Income

Annual fall in income (a)

Adjustment payment (b)

 

$ per farm

$ per farm

$ per farm

New South Wales

83 510

-46 210

169 408

North Coast

49 450

-32 760

-

Central/South Coast

107 840

-55 290

-

Riverina

100 070

-54 740

-

Victoria

44 690

-21 590

95 061

Western Districts

39, 840

-16 270

-

Goulburn Murray

45 000

-23 370

-

Gippsland

43 270

-17 890

-

Other Victoria

61 010

-24 020

-

Queensland

56 470

-32 940

123 914

South Australia

55 520

-31 550

160 159

Western Australia

89 510

-53 500

237 254

Perth Metropolitan

103 480

-66 890

-

South-West

77 160

-41 650

-

Tasmania

58 300

-22 230

100 315

AUSTRALIA

53,740

-28,350

118,192

(a) Source: ABARE.

(b) Source: ADC using ABARE 1997- 98 farm numbers.

The use of the bounties power in section 51(iii) of the Constitution to design a scheme for the payment of DSAPs with a limit of $350,000 per farm will require that the payments be uniform.

This may be achieved by:

  • the payments being uniform for each farm throughout Australia based on an estimated national average of farm losses regardless of the fall in farm income for each farm, or
  • the payments being uniform to the extent that they make good a specified proportion of the fall in farm income for each farm throughout Australia.

The same considerations will apply to the scheme for the payment of DEPs up to $45 000 per farm.

The details of the DSAP scheme and the DEP scheme to be formulated by the Minister will require to be examined for compliance with the requirement of uniformity in section 51(iii) of the Constitution, if that section is being relied upon for establishing the payments under the DSAP scheme.

The requirement of uniformity does not arise if the Commonwealth makes an appropriation under section 81 of the Constitution for the purposes of the Commonwealth. This would generally be purposes appropriate to the Commonwealth as a nation and international person (A-G (Vic) v Commonwealth (Pharmaceutical Benefits)).(13) Whether the deregulation of the dairy industry falls into this category of purposes is doubtful.

Are the DSAP Scheme and the DEP Scheme Based on Section 51(i) of the Constitution?

Section 51(i) of the constitution provides:

The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:-

(i) Trade and commerce with other countries, and among the States:

Regulation of, or government engagement in, overseas or interstate trade is a power conferred on the Commonwealth by section 51(i). The High Court has also invoked the implied incidental power in order to extend section 51(i) to take in an intrastate act. The underlying principle was stated by Fullagar J in O'Sullivan v Noarlunga Meat Ltd (No 1) as follows.

Where any power or control is expressly granted, there is included in the grant, to the full extent of the capacity of the grantor and without special mention, every power and every control the denial of which would render the grant itself ineffective. (14)

In Noarlunga Meat the High Court permitted federal control of premises where beasts were slaughtered for export.

Implications of Section 99 of the Constitution

The Commonwealth may be able to rely on the trade and commerce power to support the payment of the DSAPs and the DEPs as part of a scheme to deregulate the dairy industry, 50 per cent of whose produce is also exported.

The main obstacle to the use of the trade and commerce power for the deregulation of the dairy industry lies in section 99 of the Constitution which requires that the Commonwealth should not show a preference to one State or a part thereof in any law regulating trade or commerce.

Section 99 provides:

The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof.

This is somewhat similar to the requirement in section 51(ii) of the Constitution that taxation laws should not discriminate between States or parts thereof which was referred to earlier, although the meanings of discrimination and preference are not identical.

A benchmark of what is prohibited by section 99 in relation to showing a preference to one State or a part thereof was set by Dixon J in Elliott v. The Commonwealth of Australia as follows.(15)

What is forbidden by sec. 99 is, in a matter of advantage to trade or commerce, the putting of one State or part of a State before another State or part thereof. But the section does not call upon the Court to estimate the total amount of economic or commercial advantage which does or will actually ensue from law or regulation of trade or commerce. It is enough that the law or regulation is designed to produce some tangible advantage obtainable in the course of trading or commercial operations, or some material or sensible benefit of a commercial or trading character. To give preference to one State over another State discrimination or differentiation is necessary. Without discrimination between States or parts of respective States, it is difficult to see how one could be given preference over another. But I agree that it does not follow that every discrimination between States is a preference of one over the other. The expressions are not identical in meaning. More nearly, if not exactly, the same in meaning, is the expression 'discrimination against". If sec. 99 had been expressed to forbid the Commonwealth by a law or regulation of trade, commerce, or revenue to discriminate against a State or a part of a State, I do not think its effect would have been substantially varied.

As the DAA is vested with a discretion in the DSAPs and based on that discretion enterprises may decide to take the exit payments instead of the DSAP the law implementing DSAPs may be said to give scope for contravening the prohibition against preference in section 99 of the Constitution.

As for the types of discrimination or preference that may offend the provisions of sections 51(ii) and 99 the following may be relevant to the issues that may arise in respect of any disparity in payments between and within States under the DSAP and DEP schemes to be formulated by the Minister:

  • In R v Barger the High Court found a tax based on compliance with certain labour conditions which could differ from State to State was a discrimination within the meaning of section 51(ii) and a preference within the meaning of section 99. (16)
  • In Cameron v DFC the High Court found a discrimination in the Income Tax Regulations which provided a method of calculating the value of livestock, State by State in consequence of which the fair average values of sheep, horses and pigs varied as much as 50 per cent between some States. (17)
  • In Commissioner of Taxation v Clyne the provisions of the zonal rebate scheme in section 79A of the Income Tax Assessment Act 1936 were challenged as being outside the constitutional powers under section 51(ii) of the Constitution. (18)In the event the High Court did not find it necessary to decide whether or not section 79A was constitutional. However certain observations of Dixon CJ, which had the support of the majority of the High Court, may be regarded as expressing the view that the zone allowance provisions do conflict with the Constitution.
  • In Conroy v Carter the High Court was equally divided on the question of discrimination found a discrimination in section 6(1)(b) of the Poultry Industry Levy Collection Act 1965 on a procedural matter relating to the collection of the levy.(19) The effect of this section was to disadvantage a person liable to pay the levy if the Commonwealth had an arrangement with a State Egg Board which enabled the Board to retain funds equivalent to the levy from funds payable to that person. This disadvantage would not arise if the Commonwealth had no such arrangement with a State or where the State was not prepared to make such deductions.

The certain exception to the rule against discrimination is when the Commonwealth acts under the grants power in section 96 of the Constitution. Thus the Commonwealth can tax all states equally and then reimburse under section 96 one or other State without offending section 51(ii). This was the view of the High Court and confirmed by the Privy Council in W. R. Moran Pty Ltd v DFCT(NSW).(20)

[T]here is nothing in s. 51 to prevent the Commonwealth Parliament from passing measures in concert with any State or States with a view to a fair distribution of the burden of the tax proposed, provided that always that the Act imposing taxes does not itself discriminate in any way between States or parts of States, and that the Act granting pecuniary assistance to a particular State is in its purpose and substance unobjectionable.

In Moran five Commonwealth Acts imposed certain taxes on wheat and flour and a sixth Commonwealth Act provided for the appropriation of the proceeds of the taxes in payments to the States including an additional payment to Tasmania. An Act of the State of Tasmania provided for the distribution of such additional payment amongst payers of tax on flour consumed in that State. The object of the scheme was to ensure to wheat growers in all the States a payable price, as it was called, for wheat and to raise the necessary sum by imposing a tax on flour sold in Australia for home consumption.

Again the Commonwealth by using section 96 can prefer one State or part of a State and not offend section 99. Thus in Grasstree Poultry Enterprises P/L v Bycroft a federal poultry levy was imposed in all States; the States were reimbursed under section 96 discriminately and the Commonwealth agreed with Queensland's plan to allocate 97 per cent to North Queensland. This scheme was upheld by the High Court.(21)

The legislative scheme for the deregulation of the dairy industry has not followed the expedient of using the grants power under section 96 of the Constitution to make grants to the States for distribution to individual farms on a basis agreed with the Commonwealth. In consequence the Minister in formulating the DSAP and DEP schemes may find it necessary to comply with the requirements of section 99 of not showing a preference to one State or any part thereof.

Does the Bill authorise the Acquisition of Property on Terms that are not just Contrary to Section 51(xxxi) of the Constitution?

The measures in the Dairy Industry Adjustment Bill 2000 provide for the deregulation of the dairy industry when the current arrangements for payments under the DMS scheme under the Dairy Produce Act cease to operate after 1 July 2000. As indicated earlier in this Current Issues Brief the DSAP and DEP schemes replace not only the payments under the DMS scheme but also payments received by various sectors of the dairy industry under State legislation. The loss of payments under State legislation whilst being attributable to the scheme for the deregulation of the dairy industry is not a direct consequence of Commonwealth legislation.

Section 51(xxxi) provides:

The Parliament, shall subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:-

(xxxi) The acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws.

In Newcrest Mining (WA) Limited v. The Commonwealth(22), McHugh J cited with approval the definition of property for the purposes of section 51(xxxi) given by Dixon J in Bank of NSW v The Commonwealth(23) when he stated:

The constitutional term "property" has been liberally construed. It encompasses traditional estates and recognised interests in land and chattels and extends to include choses in action, intangible property rights and "innominate and anomalous interests".

In terms of this definition the right to receive payments for the production of milk under State legislation would be property for the purposes of section 51(xxxi) of the Constitution. But the question arises whether the Commonwealth was 'acquiring' those rights in exchange for payments to be made under the DSAP and DEP schemes proposed by measures in the Bill.

The meaning of 'acquisition' for the purposes of section 51(xxxi) given by Mason J (as he then was) in the Tasmanian Dam Case was cited with approval by McHugh J in Newcrest.(24) He stated

In the Tasmanian Dam Case, Mason J pointed out that s 51(xxxi) does not apply merely because Commonwealth 'legislation adversely affects or terminates a pre-existing right that an owner enjoys in relation to his property; there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it be'.(25):

In Newcrest the right to mine was adversely affected by proclamations made under the National Parks and Wildlife Conservation Act 1975 (Cwth).

In Georgiadis v Australian and Overseas Telecommunications Corporation (Georgiadis), Mason CJ, Deane and Gaudron JJ said:

[A]cquisition in s 51(xxxi) extends to the extinguishment of a vested cause of action, at least where the extinguishment results in a direct benefit or financial gain (which, of course, includes liability being brought to an end without payment or other satisfaction) and the cause of action is one that arises under the general law. The position may be different in a case involving the extinguishment or modification of a right that has no existence apart from statute. That is because, prima facie at least and in the absence of a recognised legal relationship giving rise to some like right, a right which has no existence apart from statute is one that, of its nature, is susceptible of modification or extinguishment. There is no acquisition of property involved in the modification or extinguishment of a right which has no basis in the general law and which, of its nature, is susceptible to that course. A law which effected the modification or extinguishment of a right of that kind would not have the character of a law with respect to the acquisition of property within s. 51(xxxi) of the Constitution. [Emphasis added]. (26)

It may be taken that these dicta apply to statutory rights created by Commonwealth or State legislation. As the right to receive DMS payments as well as payments under State legislation is a statutory right the termination of these payments by statute may not give rise to an acquisition of property.

Further, the loss of payments for market milk under State legislation cannot be directly attributed to measures in the Commonwealth Bills now before Parliament for the deregulation of the dairy industry. Hence, the passage of these Bills would not create a law of the Commonwealth which would breach the provisions of section 51(xxxi) of the Constitution.

Endnotes

  1. (1935) 54 CLR 657 at p. 683.

  2. Explanatory Memorandum to the Dairy Industry Adjustment Bill 2000; paragraphs 5 and 6, pp. 2 and 3.

  3. ibid., paragraph 18, pp. 4 and 5.

  4. ibid., paragraph 29, p. 6.

  5. ibid., paragraph 46, p. 9.

  6. ibid., paragraph 54, p. 10.

  7. Seaman's Union of Australia v Utah Development Co (1978) 144 CLR 120, 135 and 142.

  8. Explanatory Memorandum to the Dairy Industry Adjustment Bill 2000; paragraphs 25 and 26, pp. 5 and 6.

  9. ibid., paragraph 32, p. 6.

  10. (1968-1969) 118 CLR 90, at p. 103.

  11. Explanatory Memorandum to the Dairy Industry Adjustment Bill 2000; paragraph 37, p. 7.

  12. ibid., paragraph 39, pp. 7 and 8.

  13. (1945) 71 CLR 237 at pp. 266, 269, 271-2

  14. (1954) 92 CLR 565, pp. 597-8.

  15. (1935) 54 CLR 657 at p. 683.

  16. (1908) 6 CLR 41.

  17. (1923) 32 CLR 68.

  18. (1957-58) 100 CLR 246.

  19. (1968) 118 CLR 90.

  20. (1940) 63 CLR 338 at p. 349.

  21. (1969) 119 CLR 390.

  22. (1997) 190 CLR 513 at p. 573.

  23. (1948) 76 CLR 1 at p. 349.

  24. (1983) 158 CLR 1 at p. 145.

  25. (1997) 190 CLR 513 at p. 573.

  26. (1994) 179 CLR 297.

 

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