The federal government has no explicit authority in the area of industrial matters, and has tried to pass referendums in the past to gain control over these areas. The referendums failed. However in 2006 the federal government legislated into this area.

The Labor Party does not like it as the Workchoices legislation effectively bans collective bargaining of any sort. The Australian states are all headed by Labor governments, so in the principle of federation, hands-off, and party-machine "oh god!" they headed to court. The Australian Worker's Union joined them.

The argument for hinged on the Corporations Power;

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

(xx.) Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth:

This clause, s51xx, has been expanded mightily by past constitution decisions, so much so, that it cannot be read explicitly and understood. It has got to the point that Corporation's Power is often used as a term for federal expansion.

The Workchoices legislation defines an employer as a 'constitutional corporation'. This is language that appears in past decisions on this clause and has been approved as being inside the realm of federal power. So it hinges on prior court decisions rather than explicit constitutionality. There was also a statement by a judge in a previous case, Pacific Coal, that the corporations power included the authority to regulate industrial matters.

Commentary

I have discussed the issue on South Sea Republic from the referendum viewpoint but there has been no shortage of discussion. This is a quick round up of the commentary on the decision as it was discussed widely and voraciously soon after being passed out, partly because the austlii database published the decision so quickly too, enabling immediate dissemination (congrats austlii).

Tim Dunlop; The states are dead. Tim writes;

No matter what you think of the IR laws that were the basis of the High Court case decided today, the ruling is a blow to anyone who believes in the Australian Federation and the liberal principle that government power should be as dispersed as possible.

The problem is Federation has been out of vogue since Isaac Isaacs ran the High Court (after Griffith retired). The Parliament has constantly coveted state responsibilities since 1901. In the 1960s John Gorton was comfortable claiming that the federal government should raise all moneys, determine all policy and the state can act as administrative offices to disburse funds in pursuit of those policies.

In the last federal election the Greens and Democrats had formal policies of abolishing the states. Labor has an informal policy in that respect, and John Howard was quoted as saying that if he did Australia over again we wouldn't have the states.

One of the arguments for a homogenous federal government over the states is that Australian's discovered nationalism, I suspect it was the High Court that did - the decisions in constantly expanding central power, starting the Engineers case - is an activist form of judicial nationalism. Federalism was dead in Australia long before this case.

Ken Parish, a lawyer, discusses the case and then warns that the death of federalism are over-stated. He is right that the States often don't want to assert themselves federally as it is politically convenient to blame Canberra, as it is for Canberra to constantly blame the states. But it has been a two way process, weak states and an aggressive federal government backed by the High Court.

For instance the 1992 case when NSW aggressively saw an opportunity with a new High Court bench to redefine excise into its accepted meaning, a tax on production, the High Court passed a judgement that made the constitutional definition of excise something just short of a sales tax - effectively expanding its meaning in favour of the federal government. It is likely that the GST, an anti-federalist policy, was a response to this.

Ken's discussion of the case is a good run-down;

Nevertheless, although the judgments are long, their essence can be summarised in short detail. The majority (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ) essentially adopted the reasoning of Justice Gaudron in Re Pacific Coal as to the ambit of the corporations power* :

I have no doubt that the power conferred by s 51(xx) of the Constitution extends to the regulation of the activities, functions, relationships and the business of a corporation described in that sub-section, the creation of rights, and privileges belonging to such a corporation, the imposition of obligations on it and, in respect of those matters, to the regulation of the conduct of those through whom it acts, its employees and shareholders and, also, the regulation of those whose conduct is or is capable of affecting its activities, functions, relationships or business.

Hence the Work Choices legislation is constitutionally valid in directly regulating the employment terms and conditions of employees of foreign, trading and financial corporations. That doesn’t come as any surprise to most constitutional lawyers. Like many others, it’s exactly what I predicted here at Troppo.

As he mentioned, that middle paragraph popped up in a previous court decision, which is probably why the federal government felt confident legislating in this area and that they would be backed up by the High Court.

Andrew Leigh commented on the decision with;

Bottom line: the corporations power in the Constitution (section 51(xx)) is now broad enough to drive a truck through.

The Australian Constitution is getting to the point, between convention and High Court expansion of constitutional meaning, that it cannot be read explicitly or cleanly for Australians to understand how their federal government operates.

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