New South Wales v Commonwealth (Workplace Relations Challenge)
Encyclopedia
In New South Wales & Ors v Commonwealth, a majority of the High Court of Australia
held that the federal government's WorkChoices
legislation was a valid exercise of constitutional power. In essence, the majority (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ) found the Constitution's
corporations power capable of sustaining the legislative framework, while the conciliation and arbitration and Territories powers were also seen as supporting parts of the law. Further, the majority also held that the legislation permissibly limited State powers and did not interfere with State constitutions or functioning. A minority (Kirby and Callinan JJ) dissented.
The case attracted considerable attention before, during and after the High Court decision was delivered on 14 November 2006. As a legal precedent, it may signify a shift in the distribution of power from the States to the Federal Parliament. Thus, the decision could well be regarded by historians of Australian federalism as an important legal landmark.
Another important historical fact of note is that for much of the 20th Century, the States and Territories had their own workplace relations legislation setting terms and conditions for employees not affected by the arbitration of interstate industrial disputes.
A legal challenge to the constitutional basis of WorkChoices followed in short order. The plaintiffs were States of New South Wales
, Western Australia
, South Australia
, Queensland
, Victoria
, and the Australian Workers' Union
and Unions New South Wales. The defendant was the Commonwealth of Australia. Attorneys-General for the State of Tasmania
, the Northern Territory
and the Australian Capital Territory
intervened in support of the plaintiffs. The Full Court of the High Court hearing the case comprised Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ.
Hearings of substantial matters began on 4 May 2006, and concluded on 11 May. The outcome of the challenge was the High Court decision of New South Wales & Ors v Commonwealth, delivered on 14 November 2006.
The principal argument of the Government of Australia
is that the legislation is supported by Section 51(xx) of the Australian Constitution
, commonly known as "the corporations power", which gives the Parliament of Australia
the power to make laws with respect to "foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth."
Some sections of the legislation are also based on other powers in the Constitution, for example the territories power, insofar as the laws apply to territories, and sections relating to employees of the Government of Australia. Generally speaking, those sections were not challenged by the states and the unions.
The states and trade unions involved in the case divided the issues between themselves, with the lawyers for each party arguing a particular part of the overall argument.
The challengers argued that the legislation was not a valid law under the Constitution of Australia
, because it is not supported by any of the heads of power granted to the Parliament of Australia
by Section 51 of the Australian Constitution
. Their principal argument was that the corporations power did not extend far enough to support the legislation.
They distinguished the WorkChoices legislation from other laws which rely on the corporations power (such as the Trade Practices Act 1974
) on the basis that those other laws are "manifestly laws with respect to... corporations" because they have "a structure whereby the corporation is a relevant actor and the activities in question are to be in trade or commerce." That is, those other laws were aimed directly at corporations, and more specifically at their trading and commercial activities. They argued that the WorkChoices legislation was really directed at industrial relations, and was only remotely connected with corporations.
The challengers argued that the limits of the corporations power had not really been tested, since the vast majority of the case law was focused on determining to which corporations the power applies.
The states also argued that since the time of Federation
, the industrial relations system in Australia had been largely state run. The Commonwealth's conciliation and arbitration power is specifically limited to interstate disputes, and does not extend to disputes existing entirely within one state.
Their Honours also rejected other arguments of the plaintiffs that parts of the WorkChoices legislation
The significant reasons put forward by the majority include:
, heard 86 years ago)
It has also been described as potentially one of the most important cases in the history of the Court.
Some feel that this media coverage may be slightly overstated, but it is generally agreed that the case is the most important case regarding the scope of the Federal Parliament's power since the Tasmanian Dams Case in 1983.
The case is also significant because of the politics surrounding it. Underpinning the challenge is a major political rift in Australian politics between the two major political forces: the Australian Labor Party
(ALP) and the Liberal/National Coalition
.
In 2006 not only did the Coalition
hold the Federal Government of Australia but they also held a majority in the Senate allowing them to completely dominate the Federal Parliament
. Federal Labor's poor result at the 2004 federal election provided the Coalition with control of the Senate
for the first time since 1980. http://www.aph.gov.au/library/pubs/rb/2004-05/05RB11-6.HTM This gave the Coalition complete Federal legislative freedom. Conversely, Labor
governments have been elected in all six states and two territories.
The Workplace Relations WorkChoices
Act
is itself politically contentious and perceived by some as an attack on both the Union and Labor movements, and the minimum wage
setting system as a whole. The Coalition (inspired by conservative think tank the H. R. Nicholls Society
) believe the step to have "bravely taken advantage of...new found legislative freedom and have created a substantially different and national industrial relations system". The ALP have been aggressive critics of the new laws. On the day the Bill was introduced into the Australian House of Representatives
11 members of the ALP were ejected during heated debate over the Bill. In this context the creation of "one national system" is seen by some as a sensible step to modernise Australia's industrial relations regime. Others see it as a coup d'état
of the Labor Party's power to create union
friendly legislative regimes through their respective State Parliaments.
The political (and party political) dimension has led commentators to draw comparisons between this case and two others: the Bank Nationalisation Case
and the Communist Party Case, because in those cases the High Court was the final arbiter of divisive political issues.
The Case is also significant in that it had the most lawyers to ever appear in the High Court at one time, outstripping Wik Peoples v Queensland
for the title. A picture of the proceedings has been placed on the High Court of Australia
's website for this reason. http://www.highcourt.gov.au/about_03.html
Queensland Premier Peter Beattie
has said that if the Commonwealth were successful in the case, it would pave the way for the Commonwealth to use the corporations head of power to move into other areas of law traditionally within the purview of the States, such as transport, education and health. He has stated that this "would leave the federation in confusion" and has suggested that a Constitutional Convention
would be necessary if that situation arose.
High Court of Australia
The High Court of Australia is the supreme court in the Australian court hierarchy and the final court of appeal in Australia. It has both original and appellate jurisdiction, has the power of judicial review over laws passed by the Parliament of Australia and the parliaments of the States, and...
held that the federal government's WorkChoices
WorkChoices
The Workplace Relations Act 1996, as amended by the Workplace Relations Amendment Act 2005, popularly known as Work Choices, was a Legislative Act of the Australian Parliament that came into effect in March 2006 which involved many controversial amendments to the Workplace Relations Act 1996, the...
legislation was a valid exercise of constitutional power. In essence, the majority (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ) found the Constitution's
Constitution of Australia
The Constitution of Australia is the supreme law under which the Australian Commonwealth Government operates. It consists of several documents. The most important is the Constitution of the Commonwealth of Australia...
corporations power capable of sustaining the legislative framework, while the conciliation and arbitration and Territories powers were also seen as supporting parts of the law. Further, the majority also held that the legislation permissibly limited State powers and did not interfere with State constitutions or functioning. A minority (Kirby and Callinan JJ) dissented.
The case attracted considerable attention before, during and after the High Court decision was delivered on 14 November 2006. As a legal precedent, it may signify a shift in the distribution of power from the States to the Federal Parliament. Thus, the decision could well be regarded by historians of Australian federalism as an important legal landmark.
Background to the case
From at least 1904 through to the last decade of the 20th Century, the constitutional basis of most Australian federal industrial relations legislation was the conciliation and arbitration power. In general, the Federal Parliament would exercise this power to establish an independent tribunal to set minimum terms and conditions of employment by the compulsory conciliation and arbitration of interstate industrial disputes.Another important historical fact of note is that for much of the 20th Century, the States and Territories had their own workplace relations legislation setting terms and conditions for employees not affected by the arbitration of interstate industrial disputes.
WorkChoices legislation
In December 2005, the WorkChoices reforms were passed by Federal Parliament. There were many elements in the reforms, including some which elicited political and social controversy and consternation. In a legal sense, perhaps the two most fundamental changes were (1) the purported elimination of State and Territory workplace relations legislation from the federal industrial landscape and (2) the attempt to rely almost completely on the corporations power directly to prescribe minimum terms and conditions of employment regardless of the existence of an intrastate industrial dispute. This unprecedented (but not novel) use of the corporations power to enact federal industrial legislation was accompanied by claims that 85% of the Australian workforce would be covered by WorkChoices.A legal challenge to the constitutional basis of WorkChoices followed in short order. The plaintiffs were States of New South Wales
New South Wales
New South Wales is a state of :Australia, located in the east of the country. It is bordered by Queensland, Victoria and South Australia to the north, south and west respectively. To the east, the state is bordered by the Tasman Sea, which forms part of the Pacific Ocean. New South Wales...
, Western Australia
Western Australia
Western Australia is a state of Australia, occupying the entire western third of the Australian continent. It is bounded by the Indian Ocean to the north and west, the Great Australian Bight and Indian Ocean to the south, the Northern Territory to the north-east and South Australia to the south-east...
, South Australia
South Australia
South Australia is a state of Australia in the southern central part of the country. It covers some of the most arid parts of the continent; with a total land area of , it is the fourth largest of Australia's six states and two territories.South Australia shares borders with all of the mainland...
, Queensland
Queensland
Queensland is a state of Australia, occupying the north-eastern section of the mainland continent. It is bordered by the Northern Territory, South Australia and New South Wales to the west, south-west and south respectively. To the east, Queensland is bordered by the Coral Sea and Pacific Ocean...
, Victoria
Victoria (Australia)
Victoria is the second most populous state in Australia. Geographically the smallest mainland state, Victoria is bordered by New South Wales, South Australia, and Tasmania on Boundary Islet to the north, west and south respectively....
, and the Australian Workers' Union
Australian Workers' Union
The Australian Workers' Union is one of Australia's largest and oldest trade unions. It traces its origins to unions founded in the pastoral and mining industries in the 1880s, and currently has approximately 135,000 members...
and Unions New South Wales. The defendant was the Commonwealth of Australia. Attorneys-General for the State of Tasmania
Tasmania
Tasmania is an Australian island and state. It is south of the continent, separated by Bass Strait. The state includes the island of Tasmania—the 26th largest island in the world—and the surrounding islands. The state has a population of 507,626 , of whom almost half reside in the greater Hobart...
, the Northern Territory
Northern Territory
The Northern Territory is a federal territory of Australia, occupying much of the centre of the mainland continent, as well as the central northern regions...
and the Australian Capital Territory
Australian Capital Territory
The Australian Capital Territory, often abbreviated ACT, is the capital territory of the Commonwealth of Australia and is the smallest self-governing internal territory...
intervened in support of the plaintiffs. The Full Court of the High Court hearing the case comprised Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ.
Hearings of substantial matters began on 4 May 2006, and concluded on 11 May. The outcome of the challenge was the High Court decision of New South Wales & Ors v Commonwealth, delivered on 14 November 2006.
Commonwealth
The Commonwealth argued the WorkChoices legislation was constitutionally valid. It said the corporations power supported any law that directly created, altered, or impaired the rights, powers, duties, liabilities or privileges of a corporation. Further, it was said that the power was validly exercised by any law:- relating to the conduct of those who work for corporations
- relating to the business functions, activities or relationships of corporations
- protecting corporations from loss or damage, and
- otherwise materially affecting a corporation.
The principal argument of the Government of Australia
Government of Australia
The Commonwealth of Australia is a federal constitutional monarchy under a parliamentary democracy. The Commonwealth of Australia was formed in 1901 as a result of an agreement among six self-governing British colonies, which became the six states...
is that the legislation is supported by Section 51(xx) of the Australian Constitution
Section 51(xx) of the Australian Constitution
Section 51 of the Australian Constitution, is a subsection of Section 51 of the Australian Constitution that gives the Commonwealth Parliament the right to legislate with respect to "foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth"...
, commonly known as "the corporations power", which gives the Parliament of Australia
Parliament of Australia
The Parliament of Australia, also known as the Commonwealth Parliament or Federal Parliament, is the legislative branch of the government of Australia. It is bicameral, largely modelled in the Westminster tradition, but with some influences from the United States Congress...
the power to make laws with respect to "foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth."
Some sections of the legislation are also based on other powers in the Constitution, for example the territories power, insofar as the laws apply to territories, and sections relating to employees of the Government of Australia. Generally speaking, those sections were not challenged by the states and the unions.
States and unions
Shortly put, the plaintiffs argued the WorkChoices legislation was constitutionally invalid. They said that the corporations power did not support the legislative framework. In this regard, the plaintiffs argued there were three alternative limitations on the corporations power:- the power was limited to regulation of corporations' external relationships, and/or
- the power was limited to laws in which the nature of the corporation was significant, and/or
- the power was limited by the existence of the conciliation and arbitration power.
The states and trade unions involved in the case divided the issues between themselves, with the lawyers for each party arguing a particular part of the overall argument.
The challengers argued that the legislation was not a valid law under the Constitution of Australia
Constitution of Australia
The Constitution of Australia is the supreme law under which the Australian Commonwealth Government operates. It consists of several documents. The most important is the Constitution of the Commonwealth of Australia...
, because it is not supported by any of the heads of power granted to the Parliament of Australia
Parliament of Australia
The Parliament of Australia, also known as the Commonwealth Parliament or Federal Parliament, is the legislative branch of the government of Australia. It is bicameral, largely modelled in the Westminster tradition, but with some influences from the United States Congress...
by Section 51 of the Australian Constitution
Section 51 of the Australian Constitution
Section 51 of the Constitution of Australia grants legislative powers to the Australian Parliament only when subject to the constitution. When the six Australian colonies joined together in Federation in 1901, they became the original States and ceded some of their powers to the new Commonwealth...
. Their principal argument was that the corporations power did not extend far enough to support the legislation.
They distinguished the WorkChoices legislation from other laws which rely on the corporations power (such as the Trade Practices Act 1974
Trade Practices Act 1974
The Competition and Consumer Act 2010 is an act of the Parliament of Australia. On 1 January 2011 the Trade Practices Act 1974 was renamed the Competition and Consumer Act 2010. The act provides for protection of consumers and prevents some restrictive trade practices of companies. It is the key...
) on the basis that those other laws are "manifestly laws with respect to... corporations" because they have "a structure whereby the corporation is a relevant actor and the activities in question are to be in trade or commerce." That is, those other laws were aimed directly at corporations, and more specifically at their trading and commercial activities. They argued that the WorkChoices legislation was really directed at industrial relations, and was only remotely connected with corporations.
The challengers argued that the limits of the corporations power had not really been tested, since the vast majority of the case law was focused on determining to which corporations the power applies.
The states also argued that since the time of Federation
Federation of Australia
The Federation of Australia was the process by which the six separate British self-governing colonies of New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia formed one nation...
, the industrial relations system in Australia had been largely state run. The Commonwealth's conciliation and arbitration power is specifically limited to interstate disputes, and does not extend to disputes existing entirely within one state.
The Judgment
The Court ruled 5:2 in favour of the Commonwealth (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ; Kirby and Callinan JJ dissenting). The full judgment can be read on Austlii.Majority Judgment
The majority of the High Court :- rejected the plaintiffs' argument that the corporations power was limited to external relationships. Their Honours said it was inappropriate and unhelpful to draw any distinction between external and internal relationships of a corporation.
- did not expressly accept the plaintiffs' argument that the nature of the corporation had to be a significant element in the law. Their Honours said that the corporations power was validly exercised if a law prescribed norms regulating the relationship between corporations and their employees.
- rejected the plaintiffs' argument that the corporations power had to be limited by the existence of the conciliation and arbitration power. Their Honours said, amongst other things, this contention was contrary to the Constitution's text and structure and High Court precedent since 1920.
Their Honours also rejected other arguments of the plaintiffs that parts of the WorkChoices legislation
- which covered employers in Territories were an invalid exercise of the Territories power
- which removed State and Territory industrial laws from the new federal workplace relations system were an invalid exercise of the corporations power or curtailed or interfered with the capacity of States to function
The significant reasons put forward by the majority include:
- At paragraph 198: a law which regulates the relationship between a constitutional corporation and its employees or affects constitutional corporations in the manner upheld in Fontana Films is a law with respect to a corporation under the corporations power.
Kirby J (Dissenting)
The significant ideas put forward by Kirby J include:- At paragraph 481-3: it is unnecessary for this case to outline or define the scope of the corporations power. The corporations power is restrictions placed on laws regarding industrial disputes by s51(xxxv). What is forbidden is basing a law on one head of power (i.e. corporations power) when it is clearly a law with respect to another head of power (i.e. industrial disputes);
- At paragraph 607: laws with respect to industrial disputes must fit within the two safeguards in s51(xxxv) namely interstateness and independent resolution;
- At paragraph 609 (titled Preserving Industrial Fairness): the idea of a fair go that was at the heart of federal workplace laws is destroyed which has the potential to affect the core values that shaped the Australian Community and Economy; and
- At paragraph 613: the high court should be attentive to the federal character of the Constitution.
Callinan J (Dissenting)
Callinan J summarises his judgment at paragraph 913. Generally, the reasons set down in paragraph 913 include:- The Constitution should be read as a whole;
- The substance of the legislation in question is with regards to industrial affairs;
- The industrial affairs power includes the two safe guards;
- As much as the corporations power may purport to support the legislation, the power is still subject to the restrictions of the industrial affairs power for industrial affairs legislation;
- To affirm the validity of the Act would be to trespass on the functions of the states; and
- The validation of the Act would result in an unacceptable distortion of the federal balance.
Significance and controversy
Media coverage and commentary on the case has been significant. The case has been "hailed as the most important constitutional case in 80 years" (a probable reference to EngineersAmalgamated Society of Engineers v Adelaide Steamship Co. Ltd.
Amalgamated Society of Engineers v Adelaide Steamship Co Ltd 28 CLR 129 was a landmark Australian court case decided in the High Court of Australia on 31 August 1920...
, heard 86 years ago)
It has also been described as potentially one of the most important cases in the history of the Court.
Some feel that this media coverage may be slightly overstated, but it is generally agreed that the case is the most important case regarding the scope of the Federal Parliament's power since the Tasmanian Dams Case in 1983.
The case is also significant because of the politics surrounding it. Underpinning the challenge is a major political rift in Australian politics between the two major political forces: the Australian Labor Party
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
(ALP) and the Liberal/National Coalition
Coalition (Australia)
The Coalition in Australian politics refers to a group of centre-right parties that has existed in the form of a coalition agreement since 1922...
.
In 2006 not only did the Coalition
Coalition (Australia)
The Coalition in Australian politics refers to a group of centre-right parties that has existed in the form of a coalition agreement since 1922...
hold the Federal Government of Australia but they also held a majority in the Senate allowing them to completely dominate the Federal Parliament
Parliament of Australia
The Parliament of Australia, also known as the Commonwealth Parliament or Federal Parliament, is the legislative branch of the government of Australia. It is bicameral, largely modelled in the Westminster tradition, but with some influences from the United States Congress...
. Federal Labor's poor result at the 2004 federal election provided the Coalition with control of the Senate
Australian Senate
The Senate is the upper house of the bicameral Parliament of Australia, the lower house being the House of Representatives. Senators are popularly elected under a system of proportional representation. Senators are elected for a term that is usually six years; after a double dissolution, however,...
for the first time since 1980. http://www.aph.gov.au/library/pubs/rb/2004-05/05RB11-6.HTM This gave the Coalition complete Federal legislative freedom. Conversely, Labor
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
governments have been elected in all six states and two territories.
The Workplace Relations WorkChoices
WorkChoices
The Workplace Relations Act 1996, as amended by the Workplace Relations Amendment Act 2005, popularly known as Work Choices, was a Legislative Act of the Australian Parliament that came into effect in March 2006 which involved many controversial amendments to the Workplace Relations Act 1996, the...
Act
Act of Parliament
An Act of Parliament is a statute enacted as primary legislation by a national or sub-national parliament. In the Republic of Ireland the term Act of the Oireachtas is used, and in the United States the term Act of Congress is used.In Commonwealth countries, the term is used both in a narrow...
is itself politically contentious and perceived by some as an attack on both the Union and Labor movements, and the minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
setting system as a whole. The Coalition (inspired by conservative think tank the H. R. Nicholls Society
H. R. Nicholls Society
The H.R. Nicholls Society is an Australian think tank of the New Right on industrial relations. It was created in March 1986 after John Stone, Peter Costello, Barrie Purvis, and Ray Evans organised a seminar aimed at discussing the Hancock Report and other industrial matters.The Society is named...
) believe the step to have "bravely taken advantage of...new found legislative freedom and have created a substantially different and national industrial relations system". The ALP have been aggressive critics of the new laws. On the day the Bill was introduced into the Australian House of Representatives
Australian House of Representatives
The House of Representatives is one of the two houses of the Parliament of Australia; it is the lower house; the upper house is the Senate. Members of Parliament serve for terms of approximately three years....
11 members of the ALP were ejected during heated debate over the Bill. In this context the creation of "one national system" is seen by some as a sensible step to modernise Australia's industrial relations regime. Others see it as a coup d'état
Coup d'état
A coup d'état state, literally: strike/blow of state)—also known as a coup, putsch, and overthrow—is the sudden, extrajudicial deposition of a government, usually by a small group of the existing state establishment—typically the military—to replace the deposed government with another body; either...
of the Labor Party's power to create union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
friendly legislative regimes through their respective State Parliaments.
The political (and party political) dimension has led commentators to draw comparisons between this case and two others: the Bank Nationalisation Case
Commonwealth v Bank of New South Wales
Commonwealth v Bank of New South Wales 79 CLR 497; [1950] AC 235 - popularly known as the Bank Nationalisation Case - was a Privy Council decision that affirmed the High Court of Australia's decision in Bank of New South Wales v Commonwealth, promoting the theory of "individual rights" to ensure...
and the Communist Party Case, because in those cases the High Court was the final arbiter of divisive political issues.
The Case is also significant in that it had the most lawyers to ever appear in the High Court at one time, outstripping Wik Peoples v Queensland
Wik Peoples v Queensland
Wik Peoples v The State of Queensland is a decision of the High Court of Australia delivered on 23 December 1996 on whether statutory leases extinguish native title rights. The court found that the statutory pastoral leases under consideration by the court did not bestow rights of exclusive...
for the title. A picture of the proceedings has been placed on the High Court of Australia
High Court of Australia
The High Court of Australia is the supreme court in the Australian court hierarchy and the final court of appeal in Australia. It has both original and appellate jurisdiction, has the power of judicial review over laws passed by the Parliament of Australia and the parliaments of the States, and...
's website for this reason. http://www.highcourt.gov.au/about_03.html
Queensland Premier Peter Beattie
Peter Beattie
Peter Douglas Beattie , Australian politician, was the 36th Premier of the Australian state of Queensland for nine years and leader of the Australian Labor Party in that state for eleven and a half years...
has said that if the Commonwealth were successful in the case, it would pave the way for the Commonwealth to use the corporations head of power to move into other areas of law traditionally within the purview of the States, such as transport, education and health. He has stated that this "would leave the federation in confusion" and has suggested that a Constitutional Convention
Constitutional Convention (Australia)
In Australian history, the term Constitutional Convention refers to four distinct gatherings.-1891 convention:The 1891 Constitutional Convention was held in Sydney in March 1891 to consider a draft Constitution for the proposed federation of the British colonies in Australia and New Zealand. There...
would be necessary if that situation arose.