Queensland Electricity Commission v Commonwealth [1985] HCA 56; (1985) 159 CLR 192 (5 September 1985)

HIGH COURT OF AUSTRALIA

QUEENSLAND ELECTRICITY COMMISSION v. THE COMMONWEALTH [1985] HCa 56; (1985) 159 CLR 192

Constitutional Law (Cth)

CATCHWORDS

HEARING

Adelaide, 1985, September 5. 5:9:1985

DEMURRERS.

DECISION

2. The Act came into effect on 31 May 1985. It is incorporated, and to be read as one, with the Conciliation and Arbitration Act 1904 (Cth), as amended, ("the principal Act") and has effect notwithstanding anything in that Act: ss.3, 5 of the Act. Unlike the principal Act, the Act does not apply generally to industrial disputes to which Commonwealth legislative power extends. Section 6(1) of the Act provides that the Act applies to a particular dispute, namely "the industrial dispute between the Electrical Trades Union of Australia and certain authorities that was found to exist by a Commissioner on 18 April 1985". That dispute is the subject of other proceedings in this Court; it arose when the Electrical Trades Union of Australia served a log of claims on the Queensland Electricity Commission and the seven Electricity Boards who are the plaintiffs in one of the matters now before the Court (No. B28 of 1985) ("the Electricity Boards") and on electricity authorities in other States and Territories, and there was a failure to accede to the demands contained in the log. The finding that that dispute existed was made in the Australian Conciliation and Arbitration Commission ("the Commission") by Mr Commissioner Brown; the employers found to be parties to the dispute included the Queensland Electricity Commission and the Electricity Boards but did not include any other authority or person in Queensland.

"(b) a reference to the electricity industry is a

reference to the industry in Australia

constituted by the generation and distribution

of electrical power, or any part of that

industry;

(c) a reference to an authority includes a

reference to the Government of a State or

Territory and also includes a reference to any

person or body of persons, whether

incorporated or not, on whom or on which

powers are conferred by a law of the

Commonwealth, of a State or of a Territory;

and

(d) a reference to an electricity authority -

engaged in the electricity industry; and

electricity authority of Queensland -

includes a reference to a person who is

engaged to carry out work (otherwise than

as an employee) in or in connection with

the electricity industry for or on behalf

of an authority engaged in that industry

in Queensland, whether the person is

engaged to carry out that work by that

last-mentioned authority or by another

person."

"This Act applies by virtue of sub-section (2)

to an industrial dispute between an organization of

employees and a person referred to in sub-paragraph

4(1)(d)(ii) only in so far as the industrial

dispute relates to work referred to in that

sub-paragraph."

4. The Queensland Electricity Commission and the Electricity Boards are all "electricity authorities of Queensland" within the meaning of the Act. The Queensland Electricity Commission is a corporation sole constituted pursuant to s.9 of the Electricity Act 1976 (Q.), as amended ("the Electricity Act") and represents the Crown in right of the State of Queensland: s.9(3) of the Electricity Act. The Electricity Boards are bodies corporate constituted pursuant to ss.101-103 of the Electricity Act. It is expressly provided by s.102(2) of that Act that an Electricity Board does not represent the Crown. However, important powers, functions and duties - including the duty of supplying electricity to consumers within its area - are conferred on each Electricity Board (see s.129 of the Electricity Act) and other sections of the Act reveal that each Board acts substantially under governmental control - see particularly ss.36D, 64, 105, 118-119, 434-435 and 441 of the Electricity Act. With certain exceptions, all electricity generated for distribution to consumers in Queensland is generated by the Queensland Electricity Commission, is distributed by the Queensland Electricity Commission to one or other of the Electricity Boards and is distributed by an Electricity Board to consumers in its area. The exceptions are stated in detail in the amended statements of claim. In some areas some electricity is supplied to the appropriate Electricity Board, under agreements made pursuant to s.67 or s.171 of the Electricity Act, by certain owners of generating plants - namely, in various areas, A.G. Raptis (Karumba) Pty. Ltd., various sugar mills, Mount Isa Mines Ltd., Consolidated Fertilizers Ltd. and the Brisbane City Council. The South-West Queensland Electricity Board is supplied with some electricity from the Electricity Commission of New South Wales pursuant to an agreement under s.36C of the Electricity Act. Under s.150 of the Electricity Act the Council of the Shire of Tenterfield in New South Wales and the Council of the North-West County District of New South Wales are constituted electricity authorities for the purposes of the Electricity Act and supply electricity to the areas of Queensland referred to in s.150. During the period of three years ended 30 June 1984 the Queensland Electricity Commission has always generated more than 97 per cent of the total electricity supplied to consumers in Queensland; each of the other bodies which generated electricity produced a very small proportion of the whole.

5. The provisions of the Electricity Act do not confer powers on the various owners of generating plants which supply electricity to the Electricity Boards pursuant to agreements made under s.67 or s.171 of that Act, and those owners are not "authorities" within the meaning of the Act. The New South Wales bodies which supply the Boards with electricity are "authorities" within the meaning of the Act, but they are of course not "electricity authorities of Queensland".

6. The actual industrial dispute to which the Act applies by virtue of s.6(1), and the industrial disputes to which it may possibly apply by virtue of s.6(2), have a common element - namely, that the dispute could result in the making of an award that would be binding on an electricity authority of Queensland and would establish terms or conditions of employment of employees of that authority. In other words, they are industrial disputes to which an electricity authority of Queensland is a party.

"(1) The Commission does not, in relation to an

industrial dispute to which this Act applies, have

power, in so far as the industrial dispute exists

between an organization of employees and one or

more electricity authorities of Queensland, to

dismiss a matter or part of a matter, or refrain

from further hearing or from determining the

industrial dispute, by reason that it appears to

the Commission -

dealt with, is being dealt with or is

proper to be dealt with by a State

Industrial Authority of Queensland; or

necessary or desirable in the public

interest.

(2) Nothing in sub-section (1) prevents the

Commission from limiting the application of an

award that relates to employees of an electricity

authority of Queensland to such employees, or such

class or classes or group or groups of employees,

as the Commission thinks appropriate having regard

to the work that is, or could be, performed for

that authority by members of the organization of

employees involved in the industrial dispute and by

members of other organizations of employees or of

unions or other associations of employees

registered under a law of Queensland."

"(d) dismiss a matter or part of a matter or

(i) that the dispute or part is trivial;

(ii) that the dispute or part has been dealt

with, is being dealt with or is proper

to be dealt with by a State Industrial

Authority; or

necessary or desirable in the public

interest."

"(1) Subject to this section, any powers of the

Commission in relation to -

industrial dispute to which this Act

applies; or

the industrial dispute is found to exist,

this Act will apply to the industrial

dispute,

shall, after the commencement of this Act, be

exercised by a Full Bench.

(2) Where proceedings before the Commission

constituted otherwise than by a Full Bench are, by

reason of sub-section (1), required to be dealt

with by a Full Bench, the Full Bench may, subject

to sub-section 30(4) of the Conciliation and

Arbitration Act, have regard to any evidence given,

and any arguments adduced, in any other proceedings

(including proceedings that took place before the

commencement of this Act).

(3) Where proceedings in relation to an industrial

dispute or an alleged industrial dispute are before

a Full Bench by reason of sub-section (1), the Full

Bench may direct any member of the Commission -

the industrial dispute or alleged

industrial dispute and to report to the

Full Bench on that matter; or

dispute or a part of the industrial

dispute by conciliation and to report to

the Full Bench on the result of the

endeavours.

(4) A member of the Commission to whom a direction

is given by a Full Bench under sub-section (3) in

relation to an industrial dispute or a part of an

industrial dispute has, for the purpose of

complying with the direction, all the powers of the

Commission or of a member of the Commission under

the Conciliation and Arbitration Act other than the

power to certify a memorandum, or make an award or

order, under sub-section 28(1) of that Act and, for

the purpose of the settlement of all or any of the

matters in dispute, that last-mentioned sub-section

has effect as if any reference in that sub-section

to a member of the Commission were a reference to

the Full Bench.

(5) Where the member of the Commission to whom a

direction is given under sub-section (3) in

relation to an industrial dispute is a member of

the Full Bench by which the direction was given,

sub-section 22(2) of the Conciliation and

Arbitration Act does not apply but, if -

powers with respect to arbitration in

relation to the industrial dispute;

objects to the member taking part in the

exercise of those powers; and

that member is satisfied that there are

reasonable grounds for the objection,

the Full Bench shall direct that that member shall

not take part in the exercise of those powers and,

where such a direction is given, the President may

appoint another member to the Full Bench in place

of the first-mentioned member.

(6) Where proceedings in relation to an industrial

dispute are before a Full Bench by reason of

sub-section (1) and the Full Bench is satisfied

that it would be appropriate, in relation to the

industrial dispute, to hear and determine so much

of the industrial dispute as involves an

electricity authority of Queensland or electricity

authorities of Queensland separately from any other

part of the industrial dispute, the Full Bench may

make a declaration to that effect and, where such a

declaration is made -

to the part of the industrial dispute

that involves employers other than

electricity authorities of Queensland;

and

Conciliation and Arbitration Act for the

purposes of the part of the industrial

dispute to which this section has so

ceased to apply may, subject to

sub-section 30(4) of the Conciliation and

Arbitration Act, for the purpose of any

proceedings in relation to that part of

the industrial dispute, have regard to

any evidence given, and any arguments

adduced, before the declaration was made,

in any proceedings in relation to the

industrial dispute before the Commission

as constituted under this section."

10. Normally a power of the Commission is exercised by a single member of the Commission (s.22(1) of the principal Act), although certain powers are exercisable only by a Full Bench (see particularly s.31(1) of the principal Act). By s.35(2) of the principal Act, an appeal lies to the Commission against awards (including orders) of a member of the Commission other than under s.28 of the principal Act (which deals with the certification of agreements and the making of orders by consent), but such an appeal does not lie "unless, in the opinion of the Commission, the matter is of such importance that, in the public interest, an appeal should lie": s.35(3) of the principal Act. The effect of s.9(1) of the Act is that an industrial dispute to which the Act applies which might otherwise be heard by a single member of the Commission must now (subject to s.9(3)) be heard by a Full Bench and that such advantages as may be thought to flow from the limited right of appeal given by s.35 of the principal Act are lost. Section 9(6) enables the Commission in effect to render the provisions of s.9 applicable only to that part of the dispute that involves electricity authorities of Queensland.

"The Bill is not an amendment to the

Conciliation and Arbitration Act. It is a discrete

piece of legislation designed to facilitate the

restoration of an ordered relationship between

employing bodies in the Queensland electricity

industry and the unions concerned. Honourable

senators will note that the Bill contains a 'sunset

clause'. So, it is a piece of legislation designed

for this purpose only and should not be seen as

having any wider implications for the system of

prevention and settlement of industrial disputes in

this country."

12. It was submitted on behalf of the Commonwealth that the Act is not directed against the electricity authorities of Queensland, but simply makes provision for the prevention and settlement of disputes in a particular industry, and treats equally all the parties to those disputes, including any employers in the industry even though they may have no connexion with the Government of Queensland. What has already been said shows that this argument does not correctly describe the effect of the Act. In fact, the only Queensland employers who were parties to the dispute described in s.6(1) were the Queensland Electricity Commission and the Electricity Boards and there will be a dispute within s.6(2) only if an electricity authority of Queensland is a party to the dispute. The Act does not apply to a dispute in the electricity industry to which no electricity authority of Queensland is a party. Plainly the provisions of the Act are directed against the electricity authorities of Queensland.

13. I am prepared to assume that the provisions of the Act may be described as a law with respect to "conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State" within the meaning of s.51(xxxv) of the Constitution. The words "industrial dispute" in s.6 of the Act have the meaning given to that expression by the definition in s.4(1) of the principal Act, which limits it to disputes (including, inter alia, threatened disputes) which extend beyond the limits of any one State. This Court has today held in the other proceedings to which reference has been made that the dispute in s.6(1) of the Act is genuine and extends beyond the limits of any one State. It is now settled that "the Commission when seized of a dispute extending beyond the limits of one State may 'dispose of the dispute wholly or piecemeal as it thinks convenient', and that if the Commission effects a partial settlement of the dispute by making awards in respect of employers in all States but one, the dispute does not thereby lose its interstate character, nor the Commission its jurisdiction ... ": Reg. v. Isaac; Ex parte State Electricity Commission (Vict.) [1978] HCA 33; (1978) 140 CLR 615, at p 619; Reg. v. Hegarty; Ex parte City of Salisbury [1981] HCA 51; (1981) 147 CLR 617, at p 630. Subject to what will be said hereunder, it would seem to follow that the Parliament may legislate to govern the manner in which the Commission may exercise its function of conciliation and arbitration when it is endeavouring to effect a partial settlement of an interstate dispute by dealing separately with that part of the dispute which concerns employers and employees in one State. However, it is unnecessary to pursue that question.

14. It is now clear in principle, and established by authority, that the powers granted by s.51 of the Constitution are subject to certain limitations derived from the federal nature of the Constitution. The purpose of the Constitution was to establish a Federation. "The foundation of the Constitution is the conception of a central government and a number of State governments separately organized. The Constitution predicates their continued existence as independent entities": Melbourne Corporation v. The Commonwealth [1947] HCA 26; (1947) 74 CLR 31, at p 82. The fundamental purpose of the Constitution, and its "very frame" (Melbourne Corporation v. The Commonwealth, at p 83), reveal an intention that the power of the Commonwealth to affect the States by its legislation must be subject to some limitation. The judgments in Melbourne Corporation v. The Commonwealth were fully examined in Victoria v. The Commonwealth [1971] HCA 16; (1971) 122 CLR 353 and the majority of the Court in the latter case (Menzies, Windeyer and Walsh JJ. and myself) held that what was decided in the earlier case was that although s.48 of the Banking Act 1945 (Cth) was, or might be, a law with respect to banking within s.51(xiii) of the Constitution, it was invalid because it exceeded the limits on the law-making power of the Commonwealth which must be implied in the Constitution. It was recognized that it is not easy to formulate exhaustively and authoritatively the limitations that must be implied, and, indeed, it is undesirable to attempt to do so in the abstract. It is clear, however, that there are two distinct rules, each based on the same principle, but dealing separately with general and discriminatory laws. A general law, made within an enumerated power of the Commonwealth, will be invalid if it would prevent a State from continuing to exist and function as such. Clearly the Act is not a law of that description and it is unnecessary to consider further that aspect of the principle. A Commonwealth law will also be invalid if it discriminates against the States in the sense that it imposes some special burden or disability on them. In Melbourne Corporation v. The Commonwealth, Dixon J. said, at p 83: "But, to my mind, the efficacy of the system logically demands that, unless a given legislative power appears from its content, context or subject matter so to intend, it should not be understood as authorizing the Commonwealth to make a law aimed at the restriction or control of a State in the exercise of its executive authority." He went on to say, at p.84, that s.48 of the Banking Act was "a law directly operating to deny to the States banking facilities open to others, and so to discriminate against the States or to impose a disability upon them". The nature of a law which infringes this limitation may be described in various ways; it may be said that it imposes "a special burden" on the States (Victoria v. The Commonwealth, at p 388), that it is "directed against" the States (Victoria v. The Commonwealth, at p 402), that it "singles out" the States or places "special burdens or disabilities" upon them (Victoria v. The Commonwealth, at pp 411-412) or that is is "a law aimed at (the) restriction or control" of the States (Victoria v. The Commonwealth, at p 424). Similar statements of the law appear in The Commonwealth v. Tasmania ("the Dams Case") [1983] HCA 21; (1983) 57 ALJR 450, at pp 487, 492, 524-525, 543, 554; [1983] HCA 21; 46 ALR 625, at pp 694, 703, 765-767, 801, 823.

"There no doubt also exist limitations to be

implied from the federal nature of the Constitution

and which will serve to protect the structural

integrity of the State components of the federal

framework, State legislatures and State executives

...".

"There is thus a law directly operating to

deny to the States banking facilities open to

others, and so to discriminate against the States

or to impose a disability upon them. The

circumstance that the primary prohibition is laid

upon the banks and not upon the States does not

appear to me to be a material distinction. It is

just as effectual to deny to the States the use of

the banks and that is its object."

17. As Dixon J. pointed out in Melbourne Corporation v. The Commonwealth, at p 83, the "content, context or subject matter" of a legislative power may reveal an intention to authorize the Commonwealth to make a law aimed at the restriction or control of the State. It is unnecessary to consider which of the powers conferred by s.51 might be exercised for that purpose. There is, however, nothing in the content, context or subject matter of s.51(xxxv) that provides any indication of such an intention. A line of decisions, of which the Engineers' Case [1920] HCA 54; (1920) 28 C.L.R. 129 and the Professional Engineers' Case [1959] HCA 47; (1959) 107 C.L.R. 208 are notable examples, shows that the power given to the Parliament by s.51(xxxv) extends to the making of laws which bind the States as employers, but there is nothing in the words of par.(xxxv), or in the nature of the power which it confers, that suggests that it is intended that the Parliament should be entitled to make laws of the kind described in the paragraph but directed at a State and intended to place the State, as employer, in a position of disadvantage as compared with other employers. It is true that there were circumstances in the present case which apparently led the Parliament to consider that special action was necessary to resolve the dispute referred to in s.6(1) of the Act. However, to leave it to the Parliament to decide that discrimination against a State is necessary to achieve the settlement of a particular industrial dispute would be to erode the whole principle established by the cases to which I have referred. The exception indicated by Dixon J. relates to the nature of the power or the provision conferring it and not to the circumstances of a particular case which might be thought to justify particular discriminatory treatment of a State. The limitation, although implied, is a part of the Constitution and it would be wrong to allow it to be nullified in any case in which the Parliament thought its operation to be inconvenient. Moreover, once it is seen that a law "singles out" a State for discriminatory treatment, the Court would not be justified in upholding the legislation on the ground that the interference with the State was of no great importance, except, possibly, in cases clearly de minimis. The integrity of a State could be destroyed as effectively by a succession of minor infringements as by one gross violation of the principle.

18. The purpose of the Act in the present case is to place the electricity authorities of Queensland, which are agencies of that State, under special disabilities. For that reason it is unconstitutional. I would overrule the demurrer.

MASON J.: In each action a declaration is sought that the Conciliation and Arbitration (Electricity Industry) Act 1985 (Cth) ("the Act") is beyond the powers of the Commonwealth Parliament and is invalid or alternatively that ss.4, 6, 7, 8 and 9 of the Act are beyond power and invalid. In each action there is a demurrer asserting that the Act is valid.

2. The first plaintiff in the first action is the Queensland Electricity Commission which is a corporation sole constituted pursuant to s.9 of the Electricity Act 1976 (Q.) and represents the Crown in right of the State of Queensland (s.9(3)). The Commission generates electric power in Queensland which is distributed to consumers in that State through the remaining plaintiffs in the first action. They are bodies corporate constituted pursuant to ss.101-103 of the Electricity Act.

3. The Act is a response to the industrial conflict that has recently arisen in the electricity industry in Queensland. The Act is designed to accelerate the hearing and determination by the Australian Conciliation and Arbitration Commission ("the Commission") of interstate industrial disputes involving Queensland electricity authorities, in particular the dispute that was found by the Commission to exist on 18 April 1985, a dispute which is the subject of the judgment of this Court in In the Matter of an Application for Writs of Prohibition and Certiorari against the Honourable Mr Justice Ludeke & Ors; Ex parte Queensland Electricity Commission & Ors delivered on 5 September 1985.

"(c) a reference to an authority includes a

reference to the Government of a State or

Territory and also includes a reference to

any person or body of persons, whether

incorporated or not, on whom or on which

powers are conferred by a law of the

Commonwealth, of a State or of a Territory;

and

(d) a reference to an electricity authority -

(i) is a reference to an authority that is

engaged in the electricity industry;

and

(ii) in the case of a reference to an

electricity authority of Queensland -

includes a reference to a person who is

engaged to carry out work (otherwise

than as an employee) in or in

connection with the electricity

industry for or on behalf of an

authority engaged in that industry in

Queensland, whether the person is

engaged to carry out that work by that

last-mentioned authority or by another

person."

" ... any industrial dispute that has, whether

before or after the commencement of this Act, been

found by the Commission to exist between -

(a) any organization of employees that is

declared by the regulations to be an organization of employees to which this

(b) one or more electricity authorities,

if the industrial dispute could result in the

making of an award that would be binding on an

electricity authority of Queensland and would

establish terms or conditions of employment of

employees of that authority." (s.6(2)).

"The Commission does not, in relation to an

industrial dispute to which this Act applies, have

power, in so far as the industrial dispute exists

between an organization of employees and one or

more electricity authorities of Queensland, to

dismiss a matter or part of a matter, or refrain

from further hearing or from determining the

industrial dispute, by reason that it appears to

the Commission -

(a) that the industrial dispute has been dealt

with, is being dealt with or is proper to be

dealt with by a State Industrial Authority of

Queensland; or

(b) that further proceedings are not necessary or

desirable in the public interest."

7. Proceedings in relation to disputes to which the Act applies shall be exercised by a Full Bench of the Commission (s.9(1)), though the Full Bench is authorized, subject to s.30(4) of the Principal Act, to have regard to any evidence given, and any arguments adduced, in any other proceedings where proceedings before the Commission constituted otherwise than by a Full Bench are required by s.9(1) to be dealt with by a Full Bench (s.9(2)). And the Full Bench may direct any member of the Commission: (a) to inquire into any matter involved in the dispute and to report to the Full Bench; or (b) to endeavour to settle the dispute or part of it by conciliation and to report to the Full Bench (s.9(3)).

"Where proceedings in relation to an industrial

dispute are before a Full Bench by reason of

sub-section (1) and the Full Bench is satisfied

that it would be appropriate, in relation to the

industrial dispute, to hear and determine so much

of the industrial dispute as involves an

electricity authority of Queensland or electricity

authorities of Queensland separately from any other

part of the industrial dispute, the Full Bench may

make a declaration to that effect and, where such a

declaration is made -

(a) this section ceases to apply in relation to

the part of the industrial dispute that

involves employers other than electricity

authorities of Queensland; and

(b) the Commission as constituted under the

Conciliation and Arbitration Act for the

purposes of the part of the industrial

dispute to which this section has so ceased

to apply may, subject to sub-section 30(4)

of the Conciliation and Arbitration Act, for

the purpose of any proceedings in relation

to that part of the industrial dispute, have

regard to any evidence given, and any

arguments adduced, before the declaration was

made, in any proceedings in relation to the

industrial dispute before the Commission as

constituted under this section."

9. The plaintiffs attack the validity of the legislation on two grounds: (1) that the Parliament's legislative powers are subject to an implied prohibition against discriminating against States (or their agencies) or the residents of States; and (2) that the presence of the words "of any one State" in the description "extending beyond the limits of any one State" in s.51(xxxv) of the Constitution is inconsistent with the notion that laws made in exercise of the power may differ depending on the identity of the States in which the interstate dispute arose.

"Except with the consent in writing of the

Treasurer, a bank shall not conduct any banking

business for a State or for any authority of a

State, including a local governing authority."

" ... every grant of legislative power to the

Commonwealth should be interpreted as authorizing

the Parliament to make laws affecting the

operations of the States and their agencies, at any

rate if the State is not acting in the exercise of

the Crown's prerogative and if the Parliament

confines itself to laws which do not discriminate

against the States or their agencies."

12. The first reservation suggested in the passage just quoted, which relates to the exercise of the prerogative, has been eroded by the later course of judicial decisions - see, for example, the discussion in Federal Commissioner of Taxation v. Official Liquidator of E.O. Farley Ltd. [1940] HCA 13; (1940) 63 CLR 278, at pp 313-314, 322-323; Victoria v. The Commonwealth ("the Payroll Tax Case") [1971] HCA 16; (1971) 122 CLR 353 at pp 379-380, 384; Victoria v. Australian Building Construction Employees' and Builders Labourers' Federation [1982] HCA 31; (1982) 152 CLR 25, at pp 78-80, 92-93, 105, 119; The Commonwealth v. Tasmania ("the Franklin Dam Case") [1983] HCA 21; (1983) 57 ALJR 450, at pp 492-493, 525; [1983] HCA 21; 46 ALR 625, at pp 704, 768. And a third reservation, relating to the taxation power, which was suggested by Dixon J. in Essendon Corporation v. Criterion Theatres Ltd. [1947] HCA 15; (1947) 74 CLR 1, at p 23, was rejected in the Payroll Tax Case. But the second reservation has been reinforced by later cases, notably by Melbourne Corporation - the one case in which the limitation has resulted in the invalidity of a Commonwealth law. It is important therefore to state with some precision the view of each member of the majority in Melbourne Corporation.

13. According to Latham C.J., federal laws expressed in general terms may apply to the States but not federal laws which: (a) discriminate against the States in the sense of singling them out "for taxation or some other form of control"; or (b) "unduly interfere" with the performance of what are clearly State functions of government (p.60). Laws falling within (a) and (b) are invalid because, being laws with respect to a State or State governmental functions as such, they are not with respect to a subject of Commonwealth legislative power (pp.61-62). Williams J. adopted a similar approach, though he confined his comments to discriminatory laws in category (a) (p.99). Subsequently in the Payroll Tax Case, Barwick C.J., with whom Owen J. agreed, expressed agreement (at p.373) with the view expressed by Latham C.J., basing the limitation on Commonwealth legislative power on characterization of a law.

" ... singles out the States or agencies to which

they have delegated some of the normal and

essential functions of government, and imposes on

them restrictions which prevent them from

performing those functions or impede them in doing

so" (p.66).

" ... neither federal nor State governments may

destroy the other nor curtail in any substantial

manner the exercise of its powers or 'obviously

interfere with one another's operations' (see

(Graves v. New York; Ex rel. O'Keefe [1939] USSC 60; (1939) 306

US 466 (83 Law Ed 927))."

"I cannot see any ground for saying that, in law,

any one activity which government undertakes is

really any more a true function of government than

any other. No fixed criteria for the application

of the assumed distinction have been formulated."

" ... a law which discriminates against States, or

a law which places a particular disability or

burden upon an operation or activity of a State,

and more especially upon the execution of its

constitutional powers." (p.79).

" ... logically demands that, unless a given

legislative power appears from its content, context

or subject matter so to intend, it should not be

understood as authorizing the Commonwealth to make

a law aimed at the restriction or control of a

State in the exercise of its executive authority."

(p.83).

18. Dixon J. pointed out that when a State avails itself of any part of the established organization of the Australian community it must take that organization as it finds it. It must accept the general legal system as established, except in so far as it has legislative power to alter it. The consequence is that the State must accept a monopoly in banking lawfully established by the Commonwealth. But it is another matter when the Commonwealth attempts "to isolate the State from the general system" and to deprive it of a choice available under that system. To attempt to do this is to place the State under a particular disability (p.84).

"Speaking generally, once it appears that a federal

law has an actual and immediate operation within a

field assigned to the Commonwealth as a subject of

legislative power, that is enough. It will be held

to fall within the power unless some further reason

appears for excluding it. That it discloses

another purpose and that the purpose lies outside

the area of federal power are considerations which

will not in such a case suffice to invalidate the

law." (p.79).

"No doubt without discrimination laws applying to

States may operate against them in such a way that

it must be beyond Federal power to enact them."

21. On Dixon J.'s approach it was inevitable that the attack on the validity of the legislation considered in the Bank Nationalization Case, to the extent that it was based on the implied prohibition, would fail. The legislation did not discriminate against or single out the States; it subjected them to a general rule (the banking monopoly) which applied to all (pp.336-338). In that case McTiernan J. agreed with Dixon J.'s statement of principle in Melbourne Corporation (at p.397). Although Latham C.J. and Starke J. reiterated what they had said in Melbourne Corporation, they regarded the instant legislation as not aimed at the States or subjecting them to a particular direction. Rich and Williams JJ. did not discuss the question. Likewise in Wenn v. Attorney-General (Vict.) [1948] HCA 13; [1948] HCA 13; (1948) 77 CLR 84, the legislation was held to be valid because it did not single out the States by any discriminatory provisions. Nor did it curtail or interfere with or burden the governmental operations of the States. It was a valid law of general application (p.115).

22. In the Payroll Tax Case Walsh and Gibbs JJ. (at pp.410-411, 424) agreed with Dixon J.'s view in Melbourne Corporation and Menzies J. was evidently of a similar opinion (pp.391-392). Further, a majority of the Court (Menzies, Windeyer, Walsh and Gibbs JJ.) held that the prohibition extends to a law which operates to interfere with a State carrying out its constitutional functions of government (pp.392, 403, 411, 424). In the Franklin Dam Case three justices (Mason, Brennan and Deane JJ.) proceeded on the footing that the prohibition did so extend (pp.492, 525, 554-555; pp.703, 767-768, 823-824 of A.L.R.); although as Brennan J. and I pointed out, it is against impairment of the capacity of the State to function as a government, rather than against interference with or impairment of any function which a State Government undertakes, that this aspect of the prohibition is directed (see pp.492, 524-525; pp.703, 767-768 of A.L.R.). The minority had no occasion to consider the question. Earlier in Koowarta v. Bjelke-Petersen [1982] HCA 27; (1982) 153 CLR 168, Stephen J. (at p 216) acknowledged that there are limitations to be implied from the federal nature of the Constitution "which will serve to protect the structural integrity of the State components of the federal framework, State legislatures and State executives".

23. This review of the authorities shows that the principle is now well established and that it consists of two elements: (1) the prohibition against discrimination which involves the placing on the States of special burdens or disabilities; and (2) the prohibition against laws of general application which operate to destroy or curtail the continued existence of the States or their capacity to function as governments (Victoria v. Australian Building Construction Employees' and Builders Labourers' Federation [1982] HCA 31; (1982) 152 CLR 25, at p 93). The second element of the prohibition is necessarily less precise than the first; it protects the States against laws which, complying with the first element because they have a general application, may nevertheless produce the effect which it is the object of the principle to prevent.

24. Three comments should be made in relation to the prohibition as it has been expressed. First, the principle prohibits discrimination against a particular State as well as against the States generally. Discrimination against a particular State, at least so long as it involves the imposition of a special burden or disability on that State, by isolating it from the general law applicable to others, including other States, falls squarely within the principle. Secondly, notwithstanding its basis in a constitutional conception of a relationship between a central government and separate State governments and the emphasis given to its application to the exercise of executive power by the States, the principle, as Stephen J. indicated in Koowarta, protects legislatures as well as executive governments. Thirdly, it does not follow that every law which deprives a State of a right, privilege or benefit which it enjoys will amount to discrimination in the sense already discussed. A law which deprives a State of a right, privilege or benefit not enjoyed by others, so as to place the State on an equal footing with others, is not a law which isolates the State from the general law. So, in Federal Commissioner of Taxation v. Official Liquidator of E.O. Farley Ltd. Dixon J. suggested (at pp 313-314) that a Commonwealth law enacted under s.51(xvii) might regulate the Crown's priority in payment of debts in bankruptcy and insolvency, both in respect of the Commonwealth and the States (see also In re Foreman & Sons Pty. Ltd.; Uther v. Federal Commissioner of Taxation [1947] HCA 45; (1947) 74 CLR 508, at p 529; The State of Victoria v. The Commonwealth ("the Second Uniform Tax Case") [1957] HCA 54; (1957) 99 CLR 575, at pp 611-612). And this leads to the more general proposition that the Commonwealth Parliament may by an exercise of its legislative powers abrogate a prerogative of the States without necessarily offending the prohibition against discrimination.

25. The prohibition against discrimination operates to strike down laws which apply to agencies of a State as well as to a State itself - see, for example, Melbourne Corporation, at pp.78-79. Although there has been no examination of what is meant by "agencies of a State" in this context, there is no reason for thinking that the expression is confined to authorities which represent the Crown in the sense that they are entitled to the shield of the Crown. The foundation for the implication is not the special character and privileges of the Crown in right of the States, but the constitutional conception of the Commonwealth and the States as constituent entities of the federal compact having a continuing existence reflected in a central government and separately organized State governments. To restrict the prohibition to a State and such of its agencies as represent the Crown in right of that State would significantly limit the protection given to the States which, as governments, are free to choose whether a function should be carried out by a department of government or by an authority brought into existence for that purpose. The object of the implied prohibition is to protect the State in the exercise of its functions from the operation of discriminatory laws whether the functions are discharged by the executive government or by an authority brought into existence by the State to carry out public functions even if the authority acts independently and is not subject to government direction and even if its assets and income are not property of the State. And it is significant that s.48 of the Banking Act, held to be invalid in Melbourne Corporation, was directed not only to a State but also to an "authority of a State, including a local governing authority". Accordingly, it is of no moment whether the plaintiffs in the first action, other than the Queensland Electricity Commission, represent the Crown in right of the State of Queensland. It is enough that they are agencies of the State, brought into existence for a public purpose. And it is not in question that all the plaintiffs in the first action are "electricity authorities" within the meaning of s.4(1)(d) of the Act, so that the Act applies to the dispute found to exist on 18 April and to any industrial dispute which could result in the making of an award that is binding on one or more of them and would establish the terms and conditions of employment of its or their employees.

26. There can be no objection to an exercise of the conciliation and arbitration power which establishes a particular tribunal or a particular procedure for the settlement of disputes in one industry, say the electricity industry. In relation to that industry Parliament might, if it saw fit, require that, in the interests of expedition, the jurisdiction of the Commission be exercised by a Full Bench. It might even provide that disputes in that industry be not referred to a State Industrial Authority but be determined by the Commission itself. Such a law would apply to all without differentiation. But when the Parliament singles out disputes in the electricity industry to which agencies of the State of Queensland are parties and subject them to special procedures which differ from those applying under the Principal Act to the prevention and settlement of industrial disputes generally, and of industrial disputes in the electricity industry in particular, it discriminates against the agencies of the State by subjecting them to a special disability in isolating them from the general law contained in the Principal Act.

27. The limitation on the power of the Commission provided for in s.8(1), the restriction of the exercise of the Commission's jurisdiction to the Full Bench (s.9(1)) and the power given to the Commission by s.9(6) to hear the Queensland element of the dispute separately and then to declare that s.9 does not apply to the remainder of the dispute, are three patent illustrations of the differential treatment for which the Act provides. The limitation in s.8(1) is particularly significant because it prohibits the Commission from taking action which it is authorized to do under the Principal Act, even to the extent of prohibiting the Commission from dismissing a matter or from further hearing or determining the dispute, when the Commission considers that further proceedings are not necessary or desirable in the public interest.

28. It has been acknowledged that some federal legislative powers are concerned with the States specially or contemplate some measure in particular relation to a State or are of such a nature that they may require to be exercised in relation to a particular State, e.g., defence power (Melbourne Corporation, at p.81). Conciliation and arbitration is not such a power. Indeed, when regard is had to the impact which its exercise might have on the relationship between the States and their employees in the exercise of the functions of governments, it seems that the power should not be read as authorizing legislation which singles out a State for discriminatory treatment.

29. In some situations it will transpire that a provision, which on its face appears to discriminate against a particular State, ceases to have that character, when attention is given to the nature of the law and the purpose and effect which it has. The deprivation of a right, privilege or benefit, not enjoyed by others, is one illustration. And it may be that action on the part of a State or its agencies may be of such a kind as to call for a special exercise of a particular federal power in circumstances where that exercise involves no real discrimination against the State. Here, however, the provisions are so extreme in their operation that they could not be sustained on this footing.

30. It is not to the point that parties to the dispute other than the Queensland electricity authorities are subjected to the same procedures. They are subjected to those procedures if, and only if, the dispute could result in an award that would be binding on a Queensland authority and would establish the terms and conditions of employment by that authority. It is this circumstance that attracts the new regime with its attendant special disabilities. This regime is tailored for Queensland authorities, as distinct from the authorities of other States, and, what is more important, from the general run of employers in the industry.

31. It appears that a small amount (less than three per cent) of electricity generated in Queensland for distribution to consumers in that State is generated by persons other than the plaintiffs in the first action and supplied under agreements pursuant to ss.67 and 171 of the Electricity Act. Examples are Mount Isa Mines Ltd., which supplies electricity to Mount Isa and nearby communities, and a number of sugar mills which generate electricity surplus to their needs during the sugar cane crushing season. The suggestion that such suppliers are electricity authorities of Queensland within the meaning of the Act is not well founded. Although the term "authority" is not comprehensively defined, in the context in which it appears, reinforced by the inclusive definition, it means a body exercising statutory powers for public purposes (cf. Committee of Direction of Fruit Marketing v. Australian Postal Commission [1980] HCA 23; (1980) 144 CLR 577, at p 580).

32. Even if this were not so, the submission would be no answer to the plaintiffs' case. A law may discriminate against a State even if it subjects some others (e.g. private employers) as well as agencies of the State to a special burden or disability. In such a situation the true effect of the law may be to isolate the State agency and the private employers from the general law. This, on the assumption that I am presently making, is the effect of the Act. It discriminates against the State of Queensland by singling out disputes to which employers in that State are parties, those employers being for the most part authorities brought into existence by the State to carry out public functions, and then subjecting those disputes to a regime of differential treatment. It is significant that the Act applies in the first instance to the dispute found to exist on 18 April to which no private employer in Queensland is a party.

33. Although it is unnecessary to deal with the plaintiffs' second argument based on the presence of the words "of any one State" in s.51(xxxv), I should indicate that my initial reaction to it was less than favourable.

34. What I have already said leads to the conclusion that ss.8 and 9 of the Act are invalid. As these sections are the principal operative provisions, in each action I would overrule the demurrer and declare that the entire Act is invalid as being beyond power.

WILSON J.: These two actions come to the Full Court for the hearing of a demurrer by the defendant in each case, the Commonwealth, to a claim by the plaintiffs that the Conciliation and Arbitration (Electricity Industry) Act 1985 (Cth) ("the Act") is outside the powers of the Parliament and invalid. The parties do not raise any issue which would require the cases to be considered separately.

2. The long title of the Act describes it as "An Act relating to the prevention and settlement of disputes in the electricity industry". It is a law with respect to "conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State" (Constitution, s. 51(xxxv)) and hence prima facie within power. It is not suggested, nor could it be suggested, that the Act is open to attack merely because it is binding on the Government of a State or on an authority engaged in the electricity industry which draws its powers from a law of a State. It is fundamental doctrine that the Commonwealth Parliament has power, under s. 51(xxxv) of the Constitution, to make laws binding on the States: Amalgamated Society of Engineers v. Adelaide Steamship Co. Ltd. [1920] HCA 54; (1920) 28 CLR 129; Australian Railways Union v. Victorian Railways Commissioners [1930] HCA 52; (1930) 44 CLR 319; Ex parte Professional Engineers' Association [1959] HCA 47; (1959) 107 CLR 208. However, the exercise of the power is subject to limitations, as yet not precisely formulated, which are "necessarily drawn from the federal structure of the Constitution itself": Re Coldham; Ex parte the Australian Social Welfare Union (1983) 57 ALJR 574, at p 580; 47 ALR 225, at p 236.

3. It is an implied limitation of this kind upon which the plaintiffs rely. They claim that the Act is invalid because it "discriminates against or 'singles out' a State or imposes some special burden or disability upon a State or inhibits or impairs the continued existence of a State or its capacity to function" (per Mason J. in The Commonwealth v. Tasmania [1983] HCA 21; (1983) 57 ALJR 450, at p 487; [1983] HCA 21; 46 ALR 625, at p 694). It is clear from the context of this passage in his Honour's judgment that Mason J. was not attempting a precise formulation but merely drawing together in a general statement the descriptive features of the implied limitation doctrine as they are to be gleaned from the discussions in the cases to which he then referred.

4. Before I proceed to examine the provisions of the Act upon which the plaintiffs rely to make out their case it is desirable to define the central issue more precisely. It is unnecessary to consider the scope of the implied limitation on the power of the Commonwealth, whether by a general law or otherwise, to inhibit or impair the continued existence of the States or their capacity to function in a constitutional sense. The argument for invalidity of the Act is based squarely on the proposition, first mentioned in earlier cases and then discussed very fully by Dixon J. in Melbourne Corporation v. The Commonwealth [1947] HCA 26; (1947) 74 CLR 31 at pp 78-84, and accepted in substance in later cases, that a Commonwealth law which discriminates against the States in the sense that it imposes some special burden or disability upon them so that it may fairly be described as a law aimed at restricting or controlling the exercise of their executive authority will be invalid: Railways Union Case, at p 390; West v. Commissioner of Taxation (N.S.W.) [1937] HCA 26; (1937) 56 CLR 657, at pp 681-682, 687; Bank of N.S.W. v. The Commonwealth [1948] HCA 7; (1948) 76 CLR 1, at pp 243, 326, 335-338, 397; Victoria v. The Commonwealth [1971] HCA 16; (1971) 122 CLR 353, at pp 391-392, 410-411, 424. The question in the present cases is whether this test can be seen to be satisfied when it is applied to the Act now under challenge.

5. The Act is to be read as one with the Conciliation and Arbitration Act 1904 (Cth) ("the principal Act") but has effect notwithstanding anything in the principal Act (ss. 3, 5). By s. 6(1) the Act is made to apply to a particular industrial dispute, namely, the dispute between the Electrical Trades Union of Australia and certain authorities that was found to exist by a Commissioner on 18 April 1985. The finding of a dispute referred to in s. 6(1), so far as it relates to those of the plaintiffs which are electricity authorities in Queensland, has been the subject of challenge in other proceedings in this Court on the basis that there is no real or genuine dispute. However, for the purposes of the present actions the parties have agreed to be bound by the decision of the Court on that issue. That decision, upholding the decision of the Commissioner and on appeal the decision of a Full Bench of the Australian Conciliation and Arbitration Commission finding a dispute to exist, has now been delivered (on 5 September 1985): In the Matter of an Application for Writs of Prohibition and Certiorari against the Honourable Mr Justice Ludeke; Ex parte Queensland Electricity Commission. The reasons for judgment provide a convenient description of the dispute to which the Act is expressly applied.

6. Section 6(2), subject to the following provisions of the section, extends the application of the Act to any other industrial dispute involving an organization of employees declared by regulation to be an organization to which the sub-section applies if it could result in the making of an award that would be binding on an electricity authority of Queensland and would establish terms or conditions of employment of employees of that authority. There are a number of contingencies governing the operation of the provision.

7. Section 7 might be described as no more than window-dressing. It requires the Commission to "endeavour in accordance with this Act to settle the industrial dispute as expeditiously as is appropriate having regard to all the circumstances". Section 39(1) of the principal Act already imposes on the Commission a duty to deal with a dispute expeditiously. On the other hand, the presence of s. 7 in the Act may well reflect the Parliament's appreciation of the urgency of a resolution of the dispute in so far as it affected electricity authorities in Queensland and its desire to facilitate the process of conciliation and arbitration with a view to the early settlement of the dispute.

"8. (1) The Commission does not, in relation to an

industrial dispute to which this Act applies, have

power, in so far as the industrial dispute exists

between an organization of employees and one or

more electricity authorities of Queensland, to

dismiss a matter or part of a matter, or refrain

from further hearing or from determining the

industrial dispute, by reason that it appears to

the Commission -

dealt with, is being dealt with or is

proper to be dealt with by a State

Industrial Authority of Queensland; or

necessary or desirable in the public

interest".

9. Section 9(1) provides that the powers of the Commission in relation to a dispute to which the Act applies shall be exercised by a Full Bench. The significance of this provision may be seen by reference to ss. 22, 31, 34 and 34A of the principal Act. The scheme of the principal Act is that, except as otherwise provided, a power of the Commission is exercisable by a single member of the Commission (s. 22(1)). Section 31 identifies several matters of general importance as to which, in the circumstances described, a power of the Commission is exercisable only by a Full Bench. Section 34 outlines the circumstances when the President, on application by a party to the proceedings, or by the Minister, on the ground that the matter is of such importance that in the public interest it should be so dealt with, may direct that a Full Bench determine the matter. It is noted that s. 34(3)(b) contemplates that an application may be made in respect of part only of an industrial dispute. Section 34A, inserted by amending Act No. 110 of 1979, empowers the President, if he is of the opinion that there are special reasons that justify his so doing, to take steps which may result in a Full Bench undertaking the hearing and determination of a dispute or part of a dispute. A necessary consequence of the determination of a dispute being undertaken by a Full Bench is that there can be no appeal from an award of the Commission. When an award is made by a member of the Commission there may be an appeal if, in the opinion of a Full Bench, the matter is of such importance that, in the public interest, an appeal should lie (s. 35(3)).

"(6) Where proceedings in relation to an industrial

dispute are before a Full Bench by reason of

sub-section (1) and the Full Bench is satisfied

that it would be appropriate, in relation to the

industrial dispute, to hear and determine so much

of the industrial dispute as involves an

electricity authority of Queensland or electricity

authorities of Queensland separately from any other

part of the industrial dispute, the Full Bench may

make a declaration to that effect and, where such a

declaration is made -

to the part of the industrial dispute

that involves employers other than

electricity authorities of Queensland;

and

The plaintiffs complain that by reason of this sub-section the operation of the earlier provisions of s. 9 may be confined to proceedings in relation to the part of the dispute that involves an electricity authority of Queensland if the Full Bench of the Commission is satisfied that it would be appropriate to so confine it.

11. The submission of the plaintiffs is that the Act is invalid because in the course of legislating with respect to the conciliation and arbitration of an interstate industrial dispute the Parliament has singled out those electricity authorities of Queensland which are parties to a dispute, being agencies of the State of Queensland, for special treatment. It is argued by the Commonwealth that those of the plaintiffs which are Electricity Boards do not possess a sufficiently close relationship to the State of Queensland to enjoy any protection that may be available under the doctrine of implied prohibitions. It is true that, unlike the Queensland Electricity Commission, the Boards do not represent the Crown: Electricity Act 1976 (Q.), s. 102(2). But the concept of "agency of the State" in this area of discourse is not confined to bodies which represent the Crown. The successful plaintiff in Melbourne Corporation was a local government authority. The Boards are corporations constituted by the Electricity Act and clothed with important statutory powers, functions and duties (ss. 102, 129). They are subject to governmental control in material respects (see, particularly, s. 129A). In my opinion, the Boards are to be identified with the State of Queensland for the purposes of this case. It is accepted that the Queensland Electricity Commission is an agency of the State in the relevant sense.

"logically demands that, unless a given legislative

power appears from its content, context or subject

matter so to intend, it should not be understood as

authorizing the Commonwealth to make a law aimed at

the restriction or control of a State in the

exercise of its executive authority ...

...

At bottom the principle upon which the States

become subject to Commonwealth laws is that when a

State avails itself of any part of the established

organization of the Australian community it must

take it as it finds it. Except in so far as under

its legislative power it may be able to alter the

legal system, a State must accept the general legal

system as it is established. If there be a

monopoly in banking lawfully established by the

Commonwealth, the State must put up with it.

But it is the contrary of this principle to

attempt to isolate the State from the general

system, deny it the choice of the machinery the

system provides and so place it under a particular

disability. Whether the right to exercise such a

choice is of great or of small importance to the

States is not a material matter for inquiry. It is

enough that it forms part of the functions of the

Executive Government of the States in administering

the finances of the States".

13. The plaintiffs rely upon these passages from his Honour's judgment. They say that the vice of the Act is that it attempts to isolate the Queensland authorities from the general system of Commonwealth conciliation and arbitration of interstate industrial disputes, denies them the choice of the machinery the system provides and so places the State of Queensland under a particular disability.

14. Counsel for the Commonwealth argues, inter alia, that to be beyond power a discriminatory law must be such as to threaten "the structural integrity of the State components of the federal framework, State legislatures and State executives", adopting the phrase used by Mason J. in another context in The Commonwealth v. Tasmania [1983] HCA 21; (1983) 57 ALJR 450, at p 492; [1983] HCA 21; 46 ALR 625, at p 703, citing Stephen J. in Koowarta v. Bjelke-Petersen [1982] HCA 27; (1982) 153 CLR 168, at p 216. In my opinion, if this is the result of a Commonwealth law, it will offend the constitutional implica# tions whether it be a discriminatory law or a law of general application (cf. Victoria v. The Commonwealth, per Gibbs J. at p 424; The Commonwealth v. Tasmania, per Mason J. at p 487 of ALJR; p 694 of ALR, per Brennan J. at pp 524-525 of ALJR; pp 765-767 of ALR, per Deane J. at p. 543 of A.L.J.R.; p. 801 of A.L.R.). But to purport to express the criterion of invalidity exhaustively in this way is to set too high a test in the case of a law which is aimed at or singles out a State or States. In such a case the appropriate test is not concerned with the effect of the law on the continued existence of a State or its structural integrity. It is sufficient that its operation imposes some disability, restriction or control upon the exercise of its functions, not necessarily amounting to an inhibition of its capacity to function as a government.

15. However, I have more sympathy with other submissions which are advanced for the Commonwealth. First, discrimination in the relevant sense involves not merely different treatment but burden or disadvantage. The law will only be beyond power if the differentiation is such as to work to the disadvantage of a State or States. It is discrimination against a State or States, in a manner unintended by the content, context or subject-matter of the particular power, that must be shown if a finding of invalidity is to follow. Secondly, discrimination must be the purpose of the law in the sense of its legal operation and effect. This proposition is supported by the requirement that the law must be aimed at or single out a State or an agency of the State. The State must be encompassed directly within the purpose of the law as distinct from it being affected incidentally by the operation of the law.

16. These submissions highlight the difficulty I find in resolving this case. There is no doubt that the Act varies the operation of the general system of Commonwealth conciliation and arbitration of interstate industrial disputes embodied in the principal Act. The variation is confined to that part of a dispute identified in s. 6 of the Act the arbitration of which could result in an award binding on the electricity authority of a particular State. On its face, therefore, the Act would appear to single out agencies of Queensland for special treatment. But, even if that be so, does it impose a disability? In seeking to support the demurrer the Commonwealth argues that each of the two submissions to which I have referred has a relevant application to the case.

17. In the first place, it is said that the Act does not impose any significant detriment upon the electricity authorities of Queensland. It is convenient to deal first with s. 9(6) of the Act. This provision confers a special power on the Full Bench of the Commission in its discretion to isolate that part of the industrial dispute that involves an electricity authority of Queensland so as to allow the remainder of the dispute to be dealt with otherwise than in accordance with the section. Upon the discretion being exercised, the remainder of the dispute may be handled by a member of the Commission instead of by the Full Bench. It is said that it is not necessarily a detriment to an employer party to a dispute to have that dispute arbitrated in the first instance by a Full Bench instead of by a single member. That may be so, although I doubt whether an employer would willingly forego the chance to bring an appeal from the initial decision of the Commission, however slender in a particular case that chance may be, having regard to the provisions of the Act to which I have already referred.

18. Viewed in the abstract, the impact of s. 8(1) of the Act on the plaintiffs is plainly more serious. The provision in effect repeals the power which, by virtue of s. 41(1)(d)(ii) and (iii) of the principal Act, the Commission would ordinarily have to dismiss a matter or part of a matter or refrain from further hearing or from determining a dispute or part of a dispute on the ground either that the dispute or part of it is proper to be dealt with by a State industrial authority or that further proceedings are not necessary or desirable in the public interest. The sub-section operates only in so far as the dispute exists between an organization of employees and one or more electricity authorities of Queensland. Thus it will be seen that the law limits the powers of the Commission in dealing with part only of a dispute, a part which is identified by reference to the involvement of electricity authorities of Queensland. The plaintiffs claim that the law amounts to a significant interference with the conduct of their industrial relations. On the other hand, the Commonwealth argues that having regard to the serious nature and national implications of that part of the dispute, referred to in s. 6(1) of the Act, that concerns the plaintiffs it is quite fanciful to suppose that had the Act not been enacted the Commission would have been prepared to exercise the discretion conferred on it by s. 41(1)(d) of the principal Act. The Queensland employers are already subject to the jurisdiction of the Commission and they could not command in their favour the exercise of that discretion.

19. In the second place, it is said for the Commonwealth that in any event the Act is not aimed at the Queensland employers. Its purpose is to facilitate the process of settlement by conciliation and arbitration of part of an interstate industrial dispute that threatens, if not settled urgently, to escalate into a national crisis of major proportions. There is no reason why the Parliament may not in the exercise of the legislative power conferred by s. 51(xxxv) of the Constitution make a law with respect to a particular part of an existing interstate dispute. The power of the Commission to deal piecemeal with an interstate dispute is well established: Reg. v. Isaac; Ex parte State Electricity Commission (Vict.) [1978] HCA 33; (1978) 140 CLR 615; Reg. v. Hegarty; Ex parte City of Salisbury [1981] HCA 51; (1981) 147 CLR 617. The fact that the agencies of only one State happen to be parties to that part of the dispute to which the Act is directed is merely a reflection of the way in which the dispute has developed. It is the dispute itself and not the identity of the disputants that has prompted the enactment of the law. To this submission the plaintiffs reply that whatever the circumstances may be with respect to the dispute affecting the Queensland electricity authorities the fact remains that the Act singles them out as the distinguishing feature by reference to which the provisions of ss. 8(1) and 9(6) of the Act are attracted.

20. In choosing between these rival contentions with respect to the dispute referred to in s. 6(1) it is helpful to consider the scope and purpose of the Act as reflected in s. 6(2) of the Act. That provision potentially casts its net very wide indeed. It is capable, subject to the following sub-sections, of attracting the operation of the Act to any industrial dispute that has, whether before or after the commencement of the Act, been found by the Commission to exist between a prescribed organization of employees and one or more electricity authorities so long as the dispute could result in the making of an award binding on an electricity authority of Queensland and would establish terms or conditions of employment of employees of that authority. With no particular dispute in view there is no compelling public interest which might evidence the purpose of the provision as being directed to the early resolution of the dispute and only incidentally to the electricity authorities of Queensland. The conclusion is inescapable that in relation to a dispute of the kind referred to in s. 6(2) the Act is aimed at electricity authorities of Queensland with a view to imposing special rules on the conduct by the Commission of that part of the dispute which affects them. It necessarily imposes a restriction or disability upon them in relation to the conduct of their industrial relations and hence in the exercise of their statutory powers or functions. The sub-section in my opinion is clearly beyond the power of the Parliament and is invalid.

"to isolate the State from the general system, deny

it the choice of the machinery the system provides

and so place it under a particular disability".

22. I would overrule the demurrers.

BRENNAN J.: It is now settled that a law which fairly answers the description of a law "with respect to" a subject of legislative power appearing in s.51 of the Constitution and which does not offend any of the prohibitions expressed in the Constitution may yet be invalidated by a prohibition against the making of the law implied in the Constitution (Victoria v. The Commonwealth ("the Payroll Tax Case") [1971] HCA 16; (1971) 122 CLR 353). None of the express prohibitions is relevant in the present case. In only one case - Melbourne Corporation v. The Commonwealth [1947] HCA 26; (1947) 74 CLR 31 - has such a law been held invalid as enacted contrary to an implied prohibition. The question is whether the Conciliation and Arbitration (Electricity Industry) Act 1985 (Cth) ("the Act") has been enacted contrary to an implied prohibition or is otherwise beyond power.

" where the affirmative terms of a stated power

would justify an enactment, it rests upon those

who rely on some limitation or restriction upon

the power, to indicate it in the Constitution."

" the implication that should be made is that the

Commonwealth will not in the exercise of its

powers discriminate against or 'single out' the

States so as to impose some special burden or

disability upon them, unless the nature of a

specific power otherwise indicates, and will not

inhibit or impair the continued existence of the

States or their capacity to function."

" The fact that certain private employers are given

an exemption which is denied to the States does

not necessarily mean that the statute

discriminates against the States in the sense

defined by Sir Owen Dixon. The question is, to

some extent, one of degree. ... If the position

of the States is compared with that of private

employers generally, it is not possible to say

that the States are under such a special burden

or disability that the legislation is aimed at

the restriction or control of the States."

" Discrimination against a State, where it can be

seen to be justified, is not a ground for

invalidating a Commonwealth law which would

otherwise be authorised by a legislative power

conferred on the Commonwealth Parliament. ... in

my opinion (it) could not be contended, that

discrimination in itself would be sufficient to

invalidate such a law." (Emphasis added).

4. To determine whether a discriminatory law is valid or invalid, it is necessary to identify the particular burden or disability that is placed on the States or State by the law and then to determine whether any legislative power granted to the Commonwealth authorizes the imposition of that discriminatory burden or disability. If a power is available to support the imposition of that discriminatory burden or disability, it is for the Parliament alone to decide whether that burden or disability should be imposed.

" Just as when the Federal Government desires to

use or take advantage of anything the nature or

character of which is determined by an exercise

of the exclusive power of the State, it must take

it as it finds it, so the States, when they avail

themselves of services or facilities regulated or

determined by Federal law, must accept it as part

of the system enjoyed by the whole community.

Such things are a consequence of the distribution

of powers and stand apart altogether from some

exercise of legislative power which singles out

the States or which operates specially to impede

them in their functions. Section 48 of the Act

of 1945 discriminated against States and in that

way singled out the States in order to curtail

their freedom in using the general banking

system."

" Speaking generally, once it appears that a

federal law has an actual and immediate operation

within a field assigned to the Commonwealth as a

subject of legislative power, that is enough. It

will be held to fall within the power unless some

further reason appears for excluding it. That it

discloses another purpose and that the purpose

lies outside the area of federal power are

considerations which will not in such a case

suffice to invalidate the law. In the United

States much use has been made in this way of the

postal power and of the commerce power to

legislate in a way calculated to vindicate

morality or achieve a social purpose rather than

to advance the postal services or promote or

regulate inter-state commerce as such. When this

is done the result is that laws confined to an

existing head of federal power nevertheless reach

as a matter of purpose into fields lying under

State legislative authority. But it is one thing

to say that a federal law may be valid

notwithstanding a purpose of achieving some

result which lies directly within the undefined

area of power reserved to the States. It is

altogether another thing to apply the same

doctrine to a use of federal power for a purpose

of restricting or burdening the State in the

exercise of its constitutional powers. The one

involves no more than a distinction between the

subject of a power and the policy which causes

its exercise. The other brings into question the

independence from federal control of the State in

the discharge of its functions."

6. The implication against the imposition of discriminatory burdens or disabilities on the States does not rest on the notion that the States in the exercise of their powers are not liable to have a burden or disability imposed on them by a Commonwealth law but on the notion that the burdens or disabilities imposed on the States must be no more severe than those imposed on others unless the power supporting the law supports the discrimination. To establish the validity of such a discriminatory law, there must appear a connection between the criterion for imposing the discriminatory burden or disability and the power relied on to support it.

7. In Melbourne Corporation the Court held that s.48(1) of the Banking Act 1945 exhibited such a connection with the banking power (s.51(xiii)) as to give it the character of a law with respect to banking, but the banking power did not support the Banking Act's ulterior purpose and effect: the denial of banking facilities to the States and their authorities without the Treasurer's consent. The banking power did not authorize the imposition of such a discriminatory disability on the States. It may be that a prohibition against discriminatory laws is implied only when a law seeks to impose a discriminatory burden or disability on the States or on a State in consequence of a law directed to another entity, and that the validity of a discriminatory law directed to the States themselves depends not on an implication but on the proper characterization of the law. At all events, a law's direction to another entity may give it the character of a law with respect to a subject of legislative power although that power does not suffice to support the imposition of the discriminatory burden or disability on the States. In either case, the question is whether a head of legislative power supports the discriminatory imposition of a burden or disability on the States. The independence of the States in exercising their powers, implicit in s.106 of the Constitution, and the binding effect of Commonwealth law upon them is thus reconciled: no inroad may be made on State independence in the exercise of their powers save what is necessary to give effect to a general Commonwealth law unless the power supporting the law supports the discriminatory imposition of a burden or disability on the States. As the implication arises from the independence of the States implicit in s.106 of the Constitution, the prohibition applies in respect of each State. It would empty the implication of its content if a Commonwealth law could impose discriminatory burdens or disabilities on each of the States in turn although the Constitution prohibited a law imposing the same discriminatory burdens or disabilities on all States. Accordingly, I would hold that the discriminatory imposition of a burden or disability on a particular State is prohibited when the burden or disability affects the independence of that State in the exercise of its powers and no head of Commonwealth power supports a discriminatory imposition of such a burden or disability.

" any industrial dispute that has, whether before

or after the commencement of this Act, been found

by the Commission to exist between -

declared by the regulations to be an

organization of employees to which this

sub-section applies; and

if the industrial dispute could result in the

making of an award that would be binding on an

electricity authority of Queensland and would

establish terms or conditions of employment of

employees of that authority."

" in so far as the industrial dispute exists

between an organization of employees and one or

more electricity authorities of Queensland, to

dismiss a matter or part of a matter, or refrain

from further hearing or from determining the

industrial dispute, by reason that it appears to

the Commission -

dealt with, is being dealt with or is

proper to be dealt with by a State

Industrial Authority of Queensland; or

necessary or desirable in the public

interest."

10. By s.4(1)(d)(ii) of the Act a reference to an "electricity authority of Queensland" includes a reference to a person engaged to carry out work (other than as an employee) in or in connection with the electricity industry for or on behalf of an authority engaged in that industry in Queensland. The term includes all the plaintiffs in the first action brought to challenge the validity of the Act. The Queensland Electricity Commission ("the Electricity Commission") is a corporation sole constituted under the State Electricity Commission Acts 1937-1965 (Q.) and continued in existence under the Electricity Act 1976-1984 (Q.). It is one of the plaintiffs in the first action. The Boards, which are the other plaintiffs in the first action, are bodies corporate constituted for their respective areas of electricity supply under the Electricity Act (ss.101, 102, 103). By s.9(3) of that Act the Electricity Commission represents the Crown "(f)or all the purposes of this Act and of any other Act". The Boards do not represent the Crown (s.102(2)), but the Minister has power to require the Electricity Commission to issue to a Board a direction "as to the manner in which (the Board) shall exercise and perform its powers, functions and duties" (s.129A). The Electricity Commission is charged with a duty of supplying electricity in bulk to Electricity Boards and to any other electricity authority (s.36C(a)). It is the duty of an Electricity Board subject to certain exceptions to supply electricity to consumers within its area (s.129(a)). The supply of electricity to another person is prohibited without a licence (ss.138, 397). On the facts alleged in the amended Statement of Claim, over 97% of the electricity supplied by the plaintiff Boards is generated by the Electricity Commission.

11. The Electricity Act makes detailed and extensive provision for regulating the generation and supply of electricity throughout Queensland. It brings the generation and distribution of electrical power in Queensland, an essential facility, within the control of the Electricity Commission and the Boards - authorities which either represent the Crown or are ultimately subject to ministerial control. The Electricity Commission and the Boards are statutorily vested with the powers deemed conducive to the function of providing electricity to the bulk of the State's consumers. To the minor extent to which private industry participates in the generation and distribution of electricity, it is controlled by a system of licences. These features combine to identify the Electricity Commission and the Boards not only as electricity authorities of Queensland for the purposes of the Act but as authorities of the State which are protected to the same extent as the State itself from the discriminatory imposition on them of burdens or disabilities affecting the exercise of their powers.

12. Does the Act impose a burden or disability on the Queensland electricity authorities? Although the Conciliation and Arbitration Act is "designed to aid employers and employees alike, and to secure the continuity of operations" (per Higgins J. in the Engineers Case, at p.167), the compulsory subjection of State authorities to the arbitral procedure prescribed by the Conciliation and Arbitration Act is a burden on the independent exercise of their powers and, if an award binding the State authorities is made under that Act, the award is likewise a burden. It is the Conciliation and Arbitration Act, and not the Act presently attacked, which subjects State authorities to that burden in the first place. That is a general law to which no objection is taken. What the Act does is to remove two of the grounds on which the Commission is otherwise empowered to refrain from hearing and determining a dispute, and thereby reducing the matters for preliminary consideration by the Commission before it decides whether to settle the issues in dispute by making an award. The purpose and effect of the Act is to hasten the hearing and determination of disputes to which the Act applies and to enhance the prospect of the making of an award binding on the State authorities which, if and when it is made, will burden those authorities in the performance of their functions. That is sufficient to constitute a discriminatory burden on them for which support must be found, if at all, in s.51(xxxv) of the Constitution.

" not for the special benefit of either or both of

the disputing parties, but primarily, and by

means of composing industrial differences, for

the 'peace, order and good government of the

Commonwealth'- that is, for the whole people of

the Commonwealth. It follows from this, that to

apply to the solution of this matter,

considerations which solely affect either or both

of the parties, and to ignore the interests and

welfare of the community in relation to the

differences which imperil the continuance of the

industry in which they are engaged, and therefore

to ignore the interest which the community has,

to have an industrial dispute settled, however

suddenly it arises, and the sooner the better, is

to mistake the fundamental nature of

sub-sec.xxxv."

" It is the function of a political branch to make

the assessment. It is not the function of a

municipal court to decide, and there are no legal

criteria available to decide, whether the

political assessment is correct. The court can

go no further than determining whether the

political branch acted reasonably in making its

assessment: cf. United States v. Sandoval [1913] USSC 247; (1913)

231 US 28 at 46; 58 Law.Ed.107 at 114. ...

... If the political assessment could not have

been made reasonably, the measure does not bear

the character of a special measure and the court

must so hold. As Brennan J. said at 217; Law Ed.

at 685, the courts 'will not stand impotent

before an obvious instance of a manifestly

unauthorized exercise of power'. The court does

not have to decide a political question; at most

it must decide the limits within which a

political assessment might reasonably be made."

15. The first dispute to which the Act relates is an existing dispute (s.6(1)). The Act contains no description of that dispute which serves to distinguish it as requiring speedy settlement, but the distinguishing feature may appear from the dispute itself. We are familiar with the nature of this dispute for the finding of its existence has been challenged in this Court: In the Matter of an Application for Writs of Prohibition and Certiorari against the Honourable Mr Justice Ludeke & Ors; Ex parte Queensland Electricity Commission & Ors delivered on 5 September 1985 (unreported). We may turn to the material in that case to ascertain the nature of the dispute mentioned in s.6(1) of the Act. The finding upheld in that case shows that the dispute arose from the employers' rejection of a log of claims served by the ETU on employers in the electricity industry in Queensland, Western Australia, South Australia, Victoria, Tasmania, the Northern Territory and the Australian Capital Territory, including the Snowy Mountains Hydro-Electric Authority. The log includes claims for award provisions which would protect employees from peremptory dismissal even for misconduct and which would entitle employees to a substantial period of notice of intention to dismiss. The log also claims a union preference clause. In these respects the present relationship between the electricity authorities of Queensland and their employees is governed by Queensland law, - specifically, by Acts of the Queensland Parliament passed in 1985. These Acts, enacted in consequence of severe industrial disruption of the electricity industry in Queensland, provide, inter alia, that an employee who fails to comply with a direction to perform work issued by the Electricity Commissioner may be summarily dismissed and is liable to pay a pecuniary penalty (Electricity (Continuity of Supply) Act 1985 (Q.), ss.3 and 4), that an employee engaging in a strike (defined to include, inter alia, a go slow strike, or the observance of bans or limitations: see Industrial Conciliation and Arbitration Act Amendment Act 1985 (Q.), s.2)) is liable to dismissal without notice or to suspension without pay (Electricity Authorities Industrial Causes Act 1985 (Q.), s.27), that no union preference provision in an Act or award has any effect (Electricity Authorities Industrial Causes Act, s.22) and that contracts of employment must contain a "no strike" clause (Electricity (Continuity of Supply) Act, s.7(3)). The Queensland Acts excited much controversy. If the Commission were to hear and determine the dispute evidenced by the rejection of the log, the matters now governed by the controversial provisions of the Queensland Acts could be and probably would be canvassed in arbitration proceedings between the parties to the dispute. They could be settled by the terms of an award. If the Parliament took the view that a speedy settlement of the dispute involving these matters was desirable in the interests of "the whole people of the Commonwealth", the elimination by s.8(1) of the Act of the question whether "further proceedings are not necessary or desirable in the public interest" from the preliminary issues to be considered by the Commission can reasonably be regarded as a means of achieving that result. The elimination of the question whether "the industrial dispute has been dealt with, is being dealt with or is proper to be dealt with by a State Industrial Authority of Queensland" is of little moment. The matters governed by the Queensland Acts could not be arbitrated by a State Industrial Authority.

16. The matters which are presently governed by the Queensland Acts and which are in issue in the dispute mentioned in s.6(1) of the Act may reasonably be thought by the Parliament to have such a potential for interstate industrial disruption as to warrant the prescribing of a special procedure for speedy settlement of the interstate industrial dispute in which those issues fall for determination, especially as the Commission had recently given close and extensive consideration to the general provisions which it thought appropriate to safeguard security of employment: see Termination, Change and Redundancy Case (1984) 8 I.R.34; 9 I.R.115. There is nothing in s.6(1) to suggest that it is the governmental character of the electricity authorities of Queensland rather than the nature of the dispute mentioned in that sub-section which is the criterion by reference to which the special settlement procedures are made applicable. One cannot infer that such discrimination as the Act effects with respect to this dispute is "aimed at the restriction or control of the State" or its authorities. An inference which can be drawn from the nature of the dispute is that the special settlement procedures are made applicable because of the exigencies of the dispute itself arising from the effect of the Queensland Acts on the issues in dispute. But that does not establish that the criterion of the discrimination is the character of the disputants. If the Parliament was entitled to regard the Queensland Acts as clothing some of the issues in the dispute with the potential to cause interstate industrial disruption - a view which it is not open to this Court to deny - the Act in so far as it prescribes appropriate speedy settlement procedures applicable to that dispute is within the conciliation and arbitration power. The circumstance that the employing authorities who are subject to the Queensland Acts are authorities of the State is not a statutory criterion of the application of the Act to the dispute mentioned in s.6(1).

17. On the available material, the Parliament was entitled to make a political assessment that there were distinguishing features of the dispute mentioned in s.6(1) which made the dispute one which required speedy settlement. As the special procedures prescribed by the Act were appropriate means of achieving the speedy settlement of that dispute, the Act in its application to that dispute is a valid law with respect to conciliation and arbitration and it is supported by s.51(xxxv) of the Constitution.

18. The disputes mentioned in s.6(2) are not identified as existing disputes. Disputes answering the description contained in s.6(2) may relate to a great diversity of issues arising in a great diversity of circumstances. A dispute may fall under s.6(2) though it is limited to issues of a most pedestrian kind having little practical industrial significance; the issues in such a dispute may be quite unaffected by the Queensland Acts; the centre of such a dispute may be outside Queensland. If it was Parliament's intention that s.6(2) should bring under the Act only those disputes which raise issues requiring the same speed of settlement as the issues in the dispute mentioned in s.6(1), the sub-section does not say so. On its face there is only one criterion which attracts to a s.6(2) dispute the special procedures prescribed by ss.8(1) and 9. That criterion is the possibility of the making of an award binding on a Queensland electricity authority. That is a singling out of the electricity authorities of Queensland in order to impose on them a discriminatory burden or disability affecting the exercise of their powers. No purpose of securing industrial peace can be perceived in the application of the procedures prescribed by the Act to disputes described in s.6(2). The imposition of such a discriminatory burden on the electricity authorities of Queensland cannot find support in s.51(xxxv) of the Constitution. Accordingly, the Act is invalid in its application to disputes mentioned in s.6(2).

19. The Act is expressed to apply distributively to the dispute mentioned in s.6(1) and to the disputes mentioned in s.6(2). The disputes mentioned in those respective provisions are, so to speak, self-contained. At all events, there is no necessary connection between one dispute and others and the severance of s.6(2) does not affect the operation of the Act in its application to the dispute mentioned in s.6(1). The invalidity of s.6(2) does not affect the validity of the Act in its application to the dispute mentioned in s.6(1).

20. A subsidiary argument against the validity of the Act should be noted. The issues involved in the dispute which have an especial significance to the Queensland part of the dispute are said not to be a dispute extending beyond the limits of Queensland. But the Queensland "location" of the circumstances which might be regarded as distinguishing that dispute from others and as requiring it to be settled speedily does not change the interstate character of the dispute. The dispute involves every issue in the rejected log of claims. It is true that some of those issues have a particular importance in Queensland by reason of the Queensland Acts and it is true that the importance of those issues in Queensland might be thought to require speedy determination of those issues, but the dispute itself is clearly one which involves employers and the ETU in more than one State.

21. I would overrule the demurrers so far as they assert the validity of s.6(2) of the Act but otherwise I would allow the demurrers.

DEANE J.: In the infancy of the Commonwealth, while national identity and spirit were still at a formative stage, the view prevailed that the federal nature of the Constitution gave rise, as a matter of implication, to an overriding doctrine of general immunity of the States and their instrumentalities from the reach of Commonwealth legislative and executive powers (from any "attempted invasion of the ambit" of State authority by a Commonwealth authority: see the Railway Servants' Case (1906) 4 C.L.R. 488, at p.537) and to a related principle of construction requiring that the content of those powers be confined by reference to what were seen as the "powers reserved to the States by sec.107 of the Constitution" (D'Emden v. Pedder [1904] HCA 1; (1904) 1 CLR 91, at p 109). That broad doctrine of immunity and that constricting principle of construction waxed strong in the first four volumes of the Commonwealth Law Reports. Thereafter, they began to wane (cf. the Steel Rails Case [1908] HCA 28; (1908) 5 C.L.R. 818, at pp.832-833, 834ff., 840ff. and 852-853; the two Engine Drivers' Cases [1911] HCA 31; (1911) 12 C.L.R. 398 and [1913] HCA 71; (1913) 16 C.L.R. 245; the Municipal Employees' Case [1919] HCA 73; (1919) 26 C.L.R. 508). Neither survived the war-time strengthening of national identity and the associated assertion, at post-war conferences, of independent international personality. They were rejected, in August 1920, by this Court in the Engineers' Case [1920] HCA 54; (1920) 28 C.L.R. 129.

2. That rejection did not, however, involve a denial of the fact that the written terms of the Constitution were predicated upon and embodied (cf., particularly, Constitution, ss.106,107) an assumption of the continued existence of the States as viable political entities. Nor did it mean that that assumption, which can be discerned in the Constitution itself, was thereafter to be ignored or that the Constitution was to be construed in this Court as if no implications at all could be recognized as flowing from it. To the contrary, it was asserted by judicial statements in a series of subsequent cases and established in Melbourne Corporation v. The Commonwealth [1947] HCA 26; (1947) 74 CLR 31 that, while the content of the plenary legislative powers entrusted to the Commonwealth was not to be constricted by a doctrine of implied immunity of States and their instrumentalities or by preconceptions of the identity or extent of residuary powers preserved in the States, the nature of the federal system set out in the written provisions of the Constitution led inexorably to the implication of some more limited restriction upon the exercise by the Commonwealth of those legislative powers.

" I do not think that either under the

Constitution of the United States or The British

North America Act or the Commonwealth Constitution

has countenance been given to the notion that the

legislative powers of one government in the system

can be used in order directly to deprive another

government of powers or authority committed to it

or restrict that government in their exercise,

notwithstanding the complete overthrow of the

general doctrine of reciprocal immunity of

government agencies and the discrediting of the

reasoning used in its justification. For that

reason the distinction has been constantly drawn

between a law of general application and a

provision singling out governments and placing

special burdens upon the exercise of powers or the

fulfilment of functions constitutionally belonging

to them. It is but a consequence of the conception

upon which the Constitution is framed. The

foundation of the Constitution is the conception of

a central government and a number of State

governments separately organized. The Constitution

predicates their continued existence as independent

entities".

"... the implication that should be made is that

the Commonwealth will not in the exercise of its

powers discriminate against or 'single out' the

States so as to impose some special burden or

disability upon them, unless the nature of a

specific power otherwise indicates, and will not

inhibit or impair the continued existence of the

States or their capacity to function".

5. Plainly, the reservation has a distributive application and applies in respect of the use or exercise of legislative or executive power to discriminate, in the relevant sense, against a particular State (cf. per Mason J., the Franklin Dam Case, 57 A.L.J.R., at p.487, 46 A.L.R., at p.694). Indeed, the preclusion of discrimination against a particular State is arguably a fortiori in that discrimination is likely to be most damaging if directed against a particular State alone and in that such discrimination against a particular State or its instrumentalities would also be within the preclusive scope of a related, or perhaps comprehensive, restraint upon Commonwealth powers which is arguably implicit in the written words of the Constitution. That other arguable restraint would arise as an implication of the underlying equality of the people of the Commonwealth under the law of the Constitution. Its effect would be that the use or exercise of Commonwealth legislative or executive power to single out some of those people or their institutions for discriminatory treatment can only be justified if the nature of the relevant legislative power is such as to authorize the actual discriminatory treatment. The question of the possible existence and scope of such an implication was not explored in argument. It need not be pursued here since any such further implication would do no more than provide either a further or a more widely based foundation of the prima facie preclusion of the use or exercise of legislative or executive power to discriminate, in the relevant sense, against a particular State.

6. The implication precluding discrimination in the relevant sense against the States or a particular State extends to preclude such discrimination against the agencies through which the States discharge particular governmental functions. As has been said, the foundation and rationale of the implication are, respectively, the federal system itself and its preservation. That federal system involves the existence and discharge of the governmental functions of both the Commonwealth and the States. Those governmental functions have, in this country, traditionally been discharged both by the Commonwealth and the States themselves (i.e. the Crown) and through instrumentalities and agencies established and acting for public purposes. To confine the application of the reservation to the States themselves and thereby exclude from its protection the discharge of governmental functions carried out on behalf of a State by an agency established for public purposes would be to distort that foundation of the implication and to discount that rationale.

7. The fact that a general law imposes a particularly onerous burden upon the States (or upon a particular State) does not necessarily mean that the law relevantly discriminates against them (or it). To be caught by the reservation, the law must, as has been indicated above, discriminate in the sense that its operation involves a singling out of the States to make them "the objects of special burdens or disabilities" (cf. Melbourne Corporation, at p.81). That is not to say that a law cannot discriminate against the States in the relevant sense if it is cast in general terms and is of apparently general application. Quite apart from the case where such a general law applies to the States in a way which would prevent them from performing their essential functions or which would impede them in so doing (cf. per Rich J., Melbourne Corporation, at p.66; per Walsh J., the Pay-roll Tax Case, at p.411), a general law may operate in the context of particular circumstances to single out the States for discriminatory treatment. The character of a law as a law of general application is ordinarily a factor, and sometimes a conclusive factor, militating against the conclusion that it discriminates against the States or a State in the relevant sense. The question whether a law does so discriminate against the States or a particular State is however, for the purposes of the law of the Constitution, a question of substance which is not susceptible of being resolved by the mere inquiry whether, as a matter of form, the law is a general or a special one. The point may be conveniently illustrated by reference to the Pay-roll Tax Case. The decision in that case was that Commonwealth legislation imposing a general pay-roll tax to be paid by employers on wages paid to their employees validly applied to the States and their agencies. The fact that the States' pay-rolls were particularly large no doubt meant that the effect of the legislation was particularly onerous in its application to them in the sense that they paid more tax than all or most other employers. That did not, however, mean that the legislation was discriminatory against the States in the sense that it singled them out to be made objects of special burdens or disabilities. On the other hand, if the legislation had been confined to the imposition upon all employers other than the Crown in right of the Commonwealth of liability to pay-roll tax upon wages paid to "public servants", it might still properly have been seen, as a matter of form, as a law of general application. Such confined legislation would, nonetheless, have discriminated against the States in the relevant sense for the reason that, as a matter of substance, its operation would have been, in circumstances where the States and State instrumentalities were the only non-Commonwealth employers of "public servants", to single out the States for the imposition of a special burden.

8. Nor is the question whether an impugned law relevantly discriminates against the States or a particular State susceptible of resolution merely by reference to whether the formal criterion of its operation satisfies the requirements of some formularized test. The fact that the formal operation of a law is to impose a burden or disability upon the States or State instrumentalities by reference to their character as such will ordinarily suffice to establish that, as a matter of substance, the law relevantly discriminates against the States. The failure of a law to operate by reference to such a formal criterion of liability will not, however, preclude a conclusion that, as a matter of substance, the law relevantly so discriminates. That question of substance must ultimately be resolved by reference to the actual operation of the law in the circumstances. If, as a matter of substance, the actual operation of the law is to discriminate against the States or a particular State in the relevant sense, it will be within the scope of the reservation regardless of how disguised the substance may be by ingenious expression or outward form (see per Rich J., Melbourne Corporation, at p 67; and, generally, Hematite Petroleum Pty. Ltd. v. Victoria [1983] HCA 23; (1983) 57 ALJR 591, at p 615, [1983] HCA 23; 47 ALR 641, at pp 685-686).

9. The nature of the reservation as a general implication of the words of the Constitution makes it subject to being overridden by the express words or plain intendment of a specific provision of the Constitution. It is unnecessary to consider whether, particularly in the context of the introductory words ("subject to this Constitution"), any of the specific grants of legislative power in s.51 could properly be construed as intended to countervail against the reservation to the extent to which it precludes the use or exercise of Commonwealth powers to destroy the States or inhibit their continued existence or capacity to function. As has been said, it is the operation of the reservation to preclude discriminatory treatment, in the relevant sense, of the States which is in point in the present case. It is clear that the nature or subject matter of a specific grant of legislative power can, in appropriate circumstances, countervail against that operation of the reservation.

10. The decision in Melbourne Corporation establishes that the characterization of a law as a law with respect to a subject matter of Commonwealth legislative power will not, of itself, remove it from the reach of the overriding restriction precluding the use or exercise by the Commonwealth of its legislative powers to single out the States or their instrumentalities to place upon them special burdens or disabilities. That overriding restraint will be defeated only in the exceptional case where the relevant legislative power appears, "from its content, context or subject matter", to be intended to authorize the discriminatory operation of the particular law (cf. per Dixon J., Melbourne Corporation, at p.83). Put differently, the singling out of the States for the imposition of some special burden or disability must itself have such a real and close connection with the subject matter of legislative power as to warrant the positive conclusion that the grant of legislative power was intended to authorize such discrimination against the States in the context of such a law. An example of such an exceptional case is where the nature of the subject matter of legislative power is such that the discriminatory operation of a law may do no more than reflect a necessary ingredient of what gives the law its character. Thus, to take the most obvious illustration, a law providing for the acquisition of property on just terms from a particular State (Constitution, s.51(xxxi)) will discriminate against that State if the acquisition is against its will. Another example of such a case is where a particular exercise of the relevant legislative power necessarily involves distinctions between different geographical areas: defence (s.51(vi)), quarantine (s.51(ix)) and medical services such as immunization (s.51(xxiiiA)) may provide illustrations. Yet another example of such a case is where the relevant legislative power authorizes the singling out of a particular identified object, activity or situation for special legislative treatment and a State or State agency is affected by reason of its relationship with that object or involvement in that activity or situation. It is argued, on behalf of the Commonwealth, that the present case falls within this category.

11. The legislative power of the Parliament (s.51(xxxv)) with respect to conciliation and arbitration for the prevention and settlement of inter-State industrial disputes "necessarily and by reason of the subject matter" extends "to all parties, States as well as persons, engaged in industrial disputes extending beyond the limits of any one State" (per Starke J., R. v. Commonwealth Court of Conciliation and Arbitration; Ex parte Victoria [1942] HCA 39; (1942) 66 CLR 488, at p 515). It is not, in my view, confined to the enactment of legislation establishing conciliation and arbitration procedures for the prevention or settlement of disputes generally. It extends to authorize legislation making specific provision for conciliation and arbitration for the settlement of a particular identified inter-State industrial dispute. In such a case, the legislative power obviously encompasses the enactment of some provisions which discriminate against parties to the particular dispute by, for example, subjecting them to compulsory conciliation or arbitration proceedings. If the parties to the relevant dispute include a State or State instrumentality, the legislative power will be seen as necessarily intended to authorize such discriminatory treatment of it in its character as a party to the relevant industrial dispute. Moreover, the particular circumstances of the involvement of a State or State instrumentality in a particular industrial dispute might be such that the power to legislate with respect to conciliation and arbitration for the settlement of that dispute might arguably be seen to authorize discriminatory treatment of it vis a vis the other parties to the dispute. Such a singling out of a State or a State instrumentality for discriminatory treatment would, however, only be within the intended scope of the legislative power with respect to conciliation and arbitration if it can be seen to be justified as an integral part of a coherent legislative provision with respect to conciliation and arbitration for the prevention or settlement of the particular dispute.

12. The impugned legislation in the present proceedings is the Conciliation and Arbitration (Electricity Industry) Act 1985 (Cth) ("the Act"). Its provisions are set out or summarized in other judgments and it is unnecessary that I repeat them. Its purported effect is to establish, within the context of the Conciliation and Arbitration Act 1904 (Cth), a special regime in relation to the industrial disputes to which it applies. The differences between that regime and that applicable to other industrial disputes are largely procedural. To the extent to which they were intended to be of more than cosmetic significance, they would seem to be directed towards ensuring that the industrial disputes to which the special regime is applied should be dealt with expeditiously by a Full Bench of the Australian Conciliation and Arbitration Commission ("the Commission"). From the point of view of a party to a dispute however, the application of the special regime to the dispute plainly involves some disadvantage or disability since the main point of the special regime appears to be to deprive the Commission of some of the discretionary powers which a party to the dispute might otherwise invoke.

13. The electricity authorities of Queensland to which the Act refers ("the electricity authorities") are the agencies through which the State of Queensland discharges its traditional governmental function of supplying electricity to its residents. They are properly to be seen, for the purposes of the reservation, as agencies of that State. An analysis of the provisions of the Act discloses that, as a matter of substance, the Act has a discriminatory operation at three distinct levels in relation to those agencies. At one level, it applies the special regime to the particular dispute identified in s.6(1) and thereby subjects the parties to that dispute, including the electricity authorities, to any disadvantage or disability involved in the special regime. At the second level, it confines the s.6(2) class of dispute (as distinct from the particular s.6(1) dispute) to disputes which could result in the making of an award that would be binding on, and would establish terms or conditions of employment of employees of, such an authority. At the third level, the Act discriminates against those electricity authorities in relation to the operation of certain of the provisions which constitute that special regime. In particular, s.8(1) prevents the Commission, "in so far as the industrial dispute exists between an organization of employees and one or more electricity authorities of Queensland", from dismissing a matter or part of a matter or refraining from further hearing or from determining the industrial dispute notwithstanding that it appears to the Commission that the industrial dispute has been, is being, or is proper to be, dealt with by a State Industrial Authority of Queensland or that further proceedings are not necessary or desirable in the public interest. Section 9(6) has the effect that the requirement that a Full Bench of the Commission itself deals with an industrial dispute to which the Act applies is, if the hearing of the dispute is split, confined only to the part of the industrial dispute that involves an electricity authority. The critical question is whether the discriminatory treatment of the electricity authorities under the Act can properly be seen as authorized by s.51(xxxv) of the Constitution.

14. The discriminatory operation of s.6(2) of the Act cannot be justified as itself coming within the intended scope of the grant of legislative power contained in s.51(xxxv). The disputes mentioned in s.6(2) are not existing disputes. They could relate to a wide diversity of matters. The involvement of the electricity authorities in them could be central or peripheral. They could be centred or have their origins in Queensland or in some other State. There is nothing in their designated character which could warrant the conclusion that the discriminatory treatment of the electricity authorities in relation to them was a necessary or integral part of a coherent scheme of conciliation and arbitration for their settlement. There is nothing in the nature of that discriminatory treatment which could properly be seen as bringing it itself within what can be seen, from the content, context or subject matter of s.51(xxxv), to be the intended scope of that grant of legislative power.

15. Section 6(1) of the Act stands in contrast to s.6(2). It applies the provisions of the Act to a particular identified inter-State industrial dispute (see Reg. v. Ludeke; Ex parte Queensland Electricity Commission, High Court of Australia, 5 September 1985). Of itself, s.6(1) makes no distinction between the parties to the dispute. The electricity authorities are not affected by s.6(1) by reason of their being singled out for the imposition of special burdens or disabilities. They are affected by s.6(1) by reason of the fact that they are parties to the particular industrial dispute to which the legislation applies. The same comment can be made of the provision of s.7 of the Act requiring the Commission to endeavour to settle the dispute as expeditiously as is appropriate. It affects the parties to the dispute only by reason of their involvement in it. In my view, any discriminatory treatment of the parties to the dispute, including the electricity authorities, which is involved in the provisions of ss.6(1) and 7 of the Act is a necessary ingredient of a coherent legislative provision with respect to conciliation and arbitration for the prevention or settlement of the particular inter-State industrial dispute and itself comes within the scope of the grant of legislative power contained in s.51(xxxv). In contrast, ss.8 and 9 relevantly discriminate against the electricity authorities vis a vis any other parties to the dispute. Those two sections do that by singling out, for restrictive treatment, the dispute or a part of the dispute by reference to whether an electricity authority remains or is a party to it. That discrimination is superimposed upon any discriminatory treatment of the parties to the dispute by reason of their character as such. It cannot, in my view, properly be seen, on the material before the Court, as itself coming within the intended scope of s.51(xxxv). Consequently, it is struck down by the relevant reservation upon the use or exercise of Commonwealth legislative powers. That discriminatory treatment of the electricity authorities is central to the operation of ss.8 and 9 and the effect of its invalidity is that both those sections are wholly invalid.

16. In the result, I am of the view that s.6(2),(3),(4) and (5), s.8 and s.9 of the Act are all invalid. With some doubt, I have come to the view that ss.6(1) and 7, while left with little real function to perform, can be severed and do not fall with the invalid sections. The provision of s.7 requiring the Commission to proceed as expeditiously as is appropriate would seem to be a pious admonition which adds little, if anything, to the provisions of s.39(1) of the Conciliation and Arbitration Act. The section can, however, stand without ss.8 and 9 and I am prepared to accept the Parliament's enactment of it as adequate to establish that it is of some independent significance in its application in respect of the particular dispute identified in s.6(1).

17. I would overrule the demurrers so far as they assert the validity of s.6(2),(3),(4) and (5), s.8 and s.9. Otherwise, I would allow them.

DAWSON J.: In Queensland, electricity, with some relatively minor exceptions, is generated by the Queensland Electricity Commission and distributed by it to Electricity Boards which in turn distribute it to consumers within their respective regions. Both the Electricity Commission and the Boards are electricity authorities of the State under the Electricity Act 1976 (Q.). I am able gratefully to adopt the examination of that legislation made by the Chief Justice in his judgment which shows that, although the Electricity Commission alone represents the State in right of the Crown, both that body and the Electricity Boards operate under substantial governmental control and are the agencies whereby the State carries out the function which it has undertaken of supplying electricity to the public in Queensland. To the extent that electricity is generated privately and supplied to Electricity Boards, neither the quantity involved (some 3% of the total amount) nor the arrangements under which it is supplied would make any less obvious the conclusion that both the Electricity Commission and the Boards are instrumentalities of the State which operate for the purpose of providing an essential service within the State, namely, the generation and supply of electricity.

2. It is also unnecessary for me to set out the operative provisions of the Conciliation and Arbitration (Electricity Industry) Act 1985 (Cth) ("the Act") which may be found in other judgments. I am able, therefore, to turn immediately to those considerations which to my mind bear upon the validity of that enactment.

3. The first observation which I would make is that the Act, although it is incorporated, and to be read as one, with the Conciliation and Arbitration Act 1904 (Cth), is not an amendment of the latter Act. The Conciliation and Arbitration Act provides, of course, a machinery, as part of a general system of conciliation and arbitration, employing the Australian Conciliation and Arbitration Commission ("the Commission"), for the prevention and settlement of industrial disputes extending beyond the limits of any one State. The effect of the Act in relation to those industrial disputes to which it applies, and to the extent that one or more of the electricity authorities of Queensland is involved, is to deny certain choices which would otherwise be available. I shall return to this in a moment. It is first necessary to observe, subject only to minor qualification, that one of the necessary parties to a dispute to which the Act applies is the State of Queensland itself or the State in the guise of an electricity authority of that State.

4. In the first instance this flows from the application of the Act to the industrial dispute between the Electrical Trades Union of Australia and certain authorities which was, on 18 April 1985, found by a Commissioner to exist. That was a dispute which was the subject of the decision of this Court in In the Matter of an Application for Writs of Prohibition and Certiorari against the Honourable Mr Justice Ludeke; Ex parte Queensland Electricity Commission (unreported, delivered 5 September 1985). It arose out of the service of a log of claims by the Union upon the Queensland Electricity Commission and seven Electricity Boards together with electricity authorities in other States.

5. It also flows from the other application of the Act, which is to industrial disputes which could result in the making of an award that would be binding upon an electricity authority of Queensland and would establish terms or conditions of employment of employees of that authority. There is a qualification to this application of the Act in that it is not to apply if an award made in settlement of such a dispute would establish terms or conditions of employment of employees of an electricity authority of Queensland who are members of an organization which is a party to the dispute and there is already an award in operation establishing such terms or conditions. This qualification may be excluded by proclamation.

6. An authority is defined by the Act to include the "Government" of a State and thus includes the State of Queensland as well as the Electricity Commission and the Electricity Boards, which are clearly Queensland authorities. The small amount of electricity privately supplied to Electricity Boards is generated by persons who would not appear to come within the description of authorities and whose existence, in any event, would not alter the thrust of the Act. A reference in the Act to an electricity authority of Queensland also includes a reference to a person engaged (otherwise than as an employee) to carry out work on behalf of an authority engaged in the electricity industry in Queensland to carry out work in connexion with that industry, but this extended definition does not, I think, in its practical effect require any modification of the observation that a necessary party to a dispute to which the Act applies is the State of Queensland or one of its electricity authorities. Any person engaged to carry out work on behalf of an authority becomes an electricity authority itself only as an adjunct to an electricity authority in the ordinary sense.

7. The first disability which the Act imposes in relation to the scheme generally provided by the Conciliation and Arbitration Act is that in a dispute to which the Act applies the powers of the Commission must be exercised by a Full Bench. In relation to disputes generally, a power of the Commission is, except as otherwise provided, exercisable by a single member of the Commission: Conciliation and Arbitration Act, s.22(1). Certain matters are, under s.31(1) of that Act, required to be dealt with by a Full Bench of the Commission but they are matters of a general nature and that sub-section has a general application. Certain matters may, in the public interest, be referred to a Full Bench under ss.34 and 34A but again those sections have a general application. A right of appeal to the Full Bench of the Commission is given by s.35 of the Conciliation and Arbitration Act from an award made by a member of the Commission otherwise than under s.28, which deals with certified agreements and consent awards, but an appeal does not lie unless, in the opinion of the Full Bench, the matter is of such importance that, in the public interest, an appeal should lie.

8. This right to an initial hearing with a limited right of appeal may or may not in a particular instance prove to be of importance but it is the denial of the procedure by the Act which is the significant thing in determining the character of that enactment. That is because, in denying that procedure, the Act singles out the State of Queensland or its electricity authorities as necessary parties to the disputes to which it applies. Not only that, but where a dispute is required to be heard before a Full Bench because it is a dispute to which the Act applies, the Full Bench may, if it thinks it appropriate, separate out that part of the dispute which involves one or more of the electricity authorities of Queensland and allow the remainder of the dispute to proceed before a single member of the Commission in accordance with the provisions of the Conciliation and Arbitration Act with a consequent limited right of appeal. The State and its electricity authorities are thus further singled out as the objects of the Act and subjected to the contracted procedure for which the Act provides.

9. Perhaps of more immediately obvious importance is the denial by the Act in those disputes to which it applies of the power which the Commission would otherwise have under s.41(1)(d)(ii) and (iii) of the Conciliation and Arbitration Act to dismiss a matter or part of a matter, or refrain from hearing or from determining a dispute, if it appears to the Commission that the dispute has been dealt with, is being dealt with or is proper to be dealt with by a Queensland industrial tribunal or if it appears to the Commission that further proceedings are not necessary or desirable in the public interest.

10. The denial of that power is, however, only in so far as the industrial dispute exists between an organization of employees and one or more electricity authorities of Queensland so that as between an organization of employees and another employer - an electricity authority of another State, for example - the powers given by s.41(1)(d)(ii) and (iii) remain available. Once again the State of Queensland is singled out and subjected to a reduced choice of the procedures otherwise available under the Conciliation and Arbitration Act. It is, of course, not exclusively in this position since any other party to that part of the dispute which involves an electricity authority of Queensland is similarly subjected to the reduced procedures. But that would appear to be merely a consequence of aiming the legislation at the State of Queensland. The result is quite striking in that, for instance, a Full Bench of the Commission is required to proceed to determine part of an industrial dispute involving one or more electricity authorities of Queensland even if it appears that further proceedings are not necessary or desirable in the public interest and notwithstanding that it may refrain for those reasons from further hearing other parts of the same dispute which do not involve an electricity authority of Queensland.

11. The point to these observations lies in the established doctrine that the legislative powers of the Commonwealth Parliament do not extend to interference with the manner in which the States may exercise their constitutional functions, be they legislative, executive or judicial. That is not to say that validly enacted Commonwealth legislation may not lay the ground upon which, or erect the framework within which, those functions must be exercised. But a Commonwealth law which seeks to control, not the setting in which a State must make its decisions in the exercise of its functions, but its very capacity to decide, will be beyond power. I put the proposition in this way conscious of the difficulties of expressing it in an abstract form. Notwithstanding those difficulties, however, the principle has found clear acceptance in the cases and it is unnecessary to trace its history other than in the briefest manner.

12. Since Amalgamated Society of Engineers v. Adelaide Steamship Co. Ltd. ("the Engineers' Case") [1920] HCA 54; (1920) 28 CLR 129 it has been recognized that each of the powers given to the Commonwealth Parliament to legislate with respect to a given subject enables the Parliament to make laws which, upon that subject, affect the operations of the States and their agencies. That, according to Dixon J. in Melbourne Corporation v. The Commonwealth [1947] HCA 26; (1947) 74 CLR 31, at p 78, is the effect of the Engineers' Case "stripped of embellishment and reduced to the form of a legal proposition". The Engineers' Case is, of course, not limited to denying the implied immunity of the States and their instrumentalities from Commonwealth legislation. It had something more to say about Commonwealth legislative powers in that it rejected the notion that those powers are to be construed with any preconception in mind of the extent of the States' residual legislative powers. It is, however, the first aspect of the Engineers' Case - the amenability of the States and their instrumentalities to Commonwealth legislation - which is presently of significance. It is to the constitutional limits upon the reach of Commonwealth legislation affecting the States and their instrumentalities to which I can now turn.

"The principle is that whenever the Constitution

confers a power to make laws in respect of a

specific subject matter, prima facie it is to be

understood as enabling the Parliament to make laws

affecting the operations of the States and their

agencies. The prima facie meaning may be displaced

by considerations based on the nature or the

subject matter of the power or the language in

which it is conferred or on some other provision in

the Constitution. But, unless the contrary thus

appears, then, subject to two reservations, the

power must be construed as extending to the States.

The first reservation is that in the Engineers'

Case the question was left open whether the

principle would warrant legislation affecting the

exercise of a prerogative of the Crown in right of

the States. The second is that the decision does

not appear to deal with or affect the question

whether the Parliament is authorized to enact

legislation discriminating against the States or

their agencies."

14. In Essendon Corporation v. Criterion Theatres Ltd. [1947] HCA 15; (1947) 74 CLR 1, at p 23, Dixon J. added a third reservation relating to the power of taxation. It is unnecessary to pause at this point except to say that the manner in which Dixon J. expressed himself - by making reservations to the general proposition for which the Engineers' Case stands - was very much dictated by the terms in which that decision was expressed. These terms were in turn fashioned by the need to overturn the mode of construction of the Constitution adopted by this Court in the early years of its history. But even so, it was from the beginning apparent that lying behind the reservations is a major premise which does not turn upon the prerogative or discrimination or the extent of a particular power such as the power to make laws with respect to taxation.

15. This emerges, I think, from the decision in Melbourne Corporation v. The Commonwealth. In that case it was held that s.48 of the Banking Act 1945 (Cth), which provided that, except with the consent of the Treasurer, a bank should not conduct any banking business for a State or for any authority of a State, including a local governing authority, was not a valid exercise of the power to make laws with respect to banking conferred by s.51(xiii) of the Constitution. An analysis of the individual judgments in that case has been rendered unnecessary by the performance of that task in the subsequent decision in Victoria v. The Commonwealth ("the Payroll Tax Case") [1971] HCA 16; (1971) 122 CLR 353, particularly in the judgments of Menzies J. and Gibbs J.

16. The view which was taken by the majority in the Payroll Tax Case was that the decision in Melbourne Corporation v. The Commonwealth was based upon an implication to be drawn from the guarantee afforded by the Constitution of the continued existence of the States. That implication is variously expressed in the judgments in Melbourne Corporation v. The Commonwealth and the individual expressions are examined in the Payroll Tax Case. It would not be profitable to repeat the examination here. It is sufficient to say that support may be found in various places in the judgments in Melbourne Corporation v. The Commonwealth for the proposition that, unless it is otherwise apparent from the nature of a Commonwealth legislative power or the language in which it is conferred, a Commonwealth law may not unduly interfere with the exercise by a State of its constitutional or governmental functions. To put the matter thus is not to avoid the difficulties inherent in any attempt to formalize the doctrine. The obvious questions have been and will continue to be asked. What, for example, constitutes undue interference and what are constitutional or governmental functions? These difficulties explain why there has been a preference to speak in terms of those aspects of legislation which may evidence breach of the doctrine rather than to generalize in terms of the doctrine itself. Discrimination against the States or their agencies may point to breach as may a special burden placed upon the States by a law of general application.

17. Be that as it may, a general proposition arises by implication from the federal structure of the Constitution that the Commonwealth Parliament cannot impair the capacity of the States to exercise for themselves their constitutional functions: that is to say, their capacity, as Gibbs J. put it at p.417 in the Payroll Tax Case, to function effectually as independent units.

18. A law may fall within the subject matter of one of the enumerated heads of power conferred upon the Commonwealth Parliament but nevertheless fall foul of this limitation imposed by the federal structure. This was denied by Barwick C.J., with whom Owen J. agreed, in the Payroll Tax Case in an attempt to avoid recourse to implications. Their approach was at least countenanced by Latham C.J. in Melbourne Corporation v. The Commonwealth. They said that a law which attempts to direct or control the States in the exercise of their functions is a law upon that subject matter, namely, State functions, rather than upon the subject matter in respect of which the relevant State functions are or are not to be exercised. But such an approach cannot since the Payroll Tax Case be accepted because it is dependent upon the erroneous notion that a law cannot be upon more than one subject matter and thus cannot fall within one of the enumerated heads of power and at the same time be aimed at the States in the exercise of their functions. See the Payroll Tax Case, at pp.372-373 per Barwick C.J.; cf. Melbourne Corporation v. The Commonwealth, at p 61 per Latham C.J. and pp 78-80 per Dixon J ; Fairfax v. Federal Commissioner of Taxation [1965] HCA 64; (1965) 114 CLR 1; Actors and Announcers Equity Association v. Fontana Films Pty. Ltd. [1982] HCA 23; (1982) 150 CLR 169, at pp 192-195.

19. Unacceptable as that approach now is, it is not difficult to understand why for some it had its attractions. There was a certain simplicity in saying that s.48 of the Banking Act was not a law with respect to banking but rather a law with respect to the manner in which the States were to carry out their banking. In the present case the contention would be that the Act is not a law with respect to conciliation or arbitration for the prevention and settlement of industrial disputes but is a law with respect to the use by the State of Queensland in particular instances of the system of conciliation and arbitration set up by the Conciliation and Arbitration Act. The opposing contention would, presumably, be that the Act, at least in its application to the particular dispute, is a law with respect to conciliation and arbitration for the settlement of an industrial dispute within the relevant head of power because the particular dispute calls for particular legislation and it is mere coincidence that the State of Queensland is a party to that dispute and is therefore singled out for special treatment. But the matter cannot be approached in that way although the starting point must be that the Act falls within the Commonwealth head of power to make laws with respect to conciliation and arbitration. It flows from the Engineers' Case itself that the power extends to the States and their instrumentalities. See also Australian Railways Union v. Victorian Railways Commissioners [1930] HCA 52; (1930) 44 CLR 319; Ex parte Professional Engineers' Association [1959] HCA 47; (1959) 107 CLR 208.

20. The power does not, however, as I have pointed out, extend to interference with the manner in which the States may exercise their governmental or constitutional functions and such an interference may be indicated if the law discriminates against the States by singling them out and subjecting them to special treatment which forms no part of any system of law of general application.

" ... it is the contrary of this principle to

attempt to isolate the State from the general

system, deny it the choice of the machinery the

system provides and so place it under a particular

disability. Whether the right to exercise such a

choice is of great or of small importance to the

States is not a material matter for inquiry. It is

enough that it forms part of the functions of the

Executive Government of the States in administering

the finances of the States."

22. Clearly it cannot matter that one State rather than all the States is singled out by the Act. The principle may apply a fortiori when only one State is involved. What is important is that the Act places the State of Queensland in a different position in comparison with other employers coming before the Commission and it does so by narrowing the scope of the Conciliation and Arbitration Act in its application to that State, consequently reducing the range of choices available to it under that Act.

23. The point is not whether this undeniable discrimination is intended to place the State at a disadvantage so that the discrimination can be said to be discrimination against the State. The point is that to reduce the range of choices available to the State is to reduce its capacity to make its own decisions in the exercise of its governmental functions. This might occur as a result of a law of general application. But where, as here, the State's capacity to function is affected, not by reason of its place in the general legal system or as a necessary result of the exercise of a particular legislative power, but because it is singled out as a State, then its constitutional integrity is impaired in a manner which the federal structure does not permit, regardless of the extent of the impairment and however much the law may otherwise fall within a head of power.

24. I have pointed to those provisions of the Act which produce this result. They are essential to its operation and it follows, in my view, that the whole Act is invalid. I would overrule the demurrers.

ORDER

Demurrer overruled.

Declare the Conciliation and Arbitration (Electricity

Order that the defendant pay the plaintiffs' costs of