Freedom of Trade, Commerce & Intercourse
s92 – “Trade, commerce & intercourse among the states shall be absolutely free.”
• S51 (i) allows for Cth to make laws w.r.t to trade & commerce and s92 ensures that they do not inhibit or discriminate against interstate trade.
• Limitation on power applies to states, territories, & Cth James v Cth (1936)
• Trade & Commerce defined as in s 51(i) James v Cth (1936)
Process to apply - Cole v Whitfield (1988)
1. Is there a burden on interstate trade?
No ¬â†’ no need proceed any further
2. If yes, is the burden discriminatory either on its face, or in its practical effect?
No → no need to proceed any further
o Remember discrimination can be either
- Directly – when it’s unequal in its application
- Indirectly – when it applies neutrally, but practical effect is to discriminate against interstate trade.
3. If yes, does the discrimination have a protectionist effect?
o Protectionist meaning it confers a competitive advantage on local products. Ie.
- Tariffs
- Non-tariff barriers eg quotas or limits on imports
- Subsidies on goods produced
- Burdens on dealing with imports that make dealing with them more difficult
o Not usually protectionist if it’s regulatory (prescription of standard for product/service or norm of commercial conduct)
o Not likely to be protectionist if it applies equally to all trade (inter & intra)
4. If yes, then law probably breaches s92.
→ But ask “is the protectionist effect pursuant to some non-protectionist effect?” If so, appropriate and adapted considerations apply.
Facts of the leading case Cole v Whitfield (1988)
• Tasmanian act prescribed minimum size for crayfish to be caught; SA set a lower minimum. Purpose was to maintain crayfish population in Tas.
• Whitfield imported crayfish into Tasmania from SA that were smaller that the Tasmanian minimum but bigger than the SA minimum.
• Held that regulations were not invalid under s92. Weren’t discriminatory in form. Prohibition on sale & possession applied equally to all crays caught in Tas. & SA.
• Didn’t have effect of giving intrastate traders a comp. advantage
• Object or purpose of Act was conservation of crayfish population, not protection of Tas. crayfish production or intrastate trade & commerce.
• The law must discriminate by protecting – discrimination not unconstitutional unless “in a protectionist sense.”
Discriminatory in practical effect Castlemaine Tooheys v SA (1990)
• Law didn’t impose any particular restrictions on interstate trade, but nonetheless was found to be discriminatory based on its practical effect.
• Bond brewing group wanted to increase nationwide share of beer market, particularly in SA. When Bond group entered SA market, SA enacted new legislation that effectively discouraged the sale of non-refillable bottles, that the Bond group used extensively, but SA producers didn’t.
• Bond argued that it discriminated in favour of SA producers. SA argued that its real purpose was to control litter & conserve energy in production.
• HC held law discriminatory in effect. Law was protectionist & while directed to legitimate end, was not appropriate & adapted to achieving it.
• Effect on interstate trade must be only incidental & not disproportionate to achieving the goals.
Applying Cole v Whitfield Bath v Alston Holdings (1988)
• Vic Act provided for licensing of tobacco sellers. Imposed differential rates based on whether tobacco was purchased from a Vic wholesaler. Encouraged intrastate purchases of tobacco.
• Aim held to be protectionist (even though levelling the playing field), therefore contrary to s92
o In form: the provisions select the fact that tobacco was purchased in Vic as the qualifying condition from exemption from additional fee.
o In substance: the provisions protect local wholesalers from interstate competitors whose product might be cheaper (for some reason).
• Identified two types of protectionist effect
1) Giving comp. advantage to local producers
2) Removing comp. advantage from interstate producers.
• Law invalid because it imposed “discriminatory burdens of a protectionist kind”
Applying Cole v Whitfield Barley Marketing Board v Norman (1990)
• Concerned validity of NSW based uniform marketing scheme in Barley.
• All Barley grown in state had to be sold through the Board.
• Guaranteed minimum price & prohibited direct dealing with NSW growers.
• Held that the scheme didn’t infringe s92 because it treated all purchasers of Barley equally. There was no additional burden placed on interstate trade.
• The law must protect by discriminating - If it’s protectionist, but doesn’t protect by discriminating against commercial interests in other states, it won’t contravene s92
Restrictions on interstate trade Bank Nationalisation Case [1950]
• 1947 Act had object of nationalising banking. S92 arose w.r.t. s 46 which empowered federal treasurer to stop private bank from continuing.
• But because banking encompasses inter & intra state activities, then it was argued that it put restrictions on interstate activities.
• Held that it infringed s92 (Privy Council adopted individual rights approach – not consistent with the contemporary economic doctrine of free trade)
Intercourse
• Intercourse = physical movement & all forms of interstate communication.
• Freedom is not absolute – but different test applies.
• Principle of freedom applies more so than with trade.
3 Step Process Nationwide News v Wills (1992)
1. Is the law enacted chiefly for a purpose other than preventing or impeding interstate intercourse?
No→ will therefore fail Deane’s test in Cuncliffe & be declared invalid by way of s92
2. Is the imposition of the burden appropriate & adapted to the fulfilment of the other purpose?
3. Is the imposition of the burden to border crossing an incidental & necessary consequence of the law’s operation?
• Act prohibited criticism of the Industrial Relations Commission. Australian challenged Act on s92, because their papers were sold in every state & Act inhibited guarantee of free interstate intercourse.
• Law not invalid in this case. Purpose of the provision “is wholly unrelated to the placing of any burden on any movement across state boundaries.” Per Brennan
• S92 cannot apply to ideas – only to people & modes of communication.
Legitimate Regulation Allowed Cuncliffe v Cth (1994)
• The above 3 step test is a distilled version of Deane J’s test:
“A law which incidentally and non-discriminately affects interstate intercourse in the course of regulating some general activity, such as the carrying on of a profession, business or commercial activity, will not contravene s 92 if its incidental effect on intrastate intercourse doesn’t not go beyond what is necessary or appropriate and adapted for the preservation of an ordered society or the protection or vindication of the legitimate claims of individuals in such a society.” (at 346)
• Migration Act (Cth) prohibited non registered agents from providing assistance to persons seeking visas and entry permits.
• s92 not infringed as section doesn’t purport to put interstate intercourse in a position where it is immune to laws of a general nature that aren’t aimed at interstate intercourse.
Incidental restriction on Trade Australian Capital TV v Cth (1992)
• ‘If the real object of a law is not the restriction of movement across state borders, the fact that such restriction occurs incidentally will not offend s92 provided the means adopted to achieve the object are neither inappropriate nor disproportionate” per Dawson J at [192]
• New part of Act prohibited political advertising during election period, except for use of free time.
Cuncliffe Upheld AMS v AIF (1999)
• WA Family Court Act 1975 allowed for an injunction to prevent a mother moving her child from WA to NT.
• Held to be inconsistent with freedom of interstate intercourse.
• Upheld reasoning in Cuncliffe v Cth