§ 384. “Shall be Taken to be Good.”

EFFECT OF THE RESERVATION.—What then is the effect of a grant or agreement being “taken to be good?” A survey of all the “bounty” provisions leads to two possible interpretations.

(1.) One view is that these words must be read subject to the provision that all State laws offering bounties shall “cease to have effect.” In that view, the appropriation by the Parliament of a State is no longer an authorization for the expenditure of any balance remaining unexpended at the imposition of uniform duties. The grant or agreement is good, but the State law under which it can be effectuated has ceased to have effect. This difficulty can only be met by sec. 86, which gives the Federal Executive “the control of the payment of bounties,” and it is argued that by virtue of

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this control the Federal Government can pay the amount of the State bounties itself, and debit the so amount so paid to the account of the State, under sec. 89, sub-sec. ii. (a).

(2.) The other view is that the words “but any grant or agreement,” &c., are an exception to the words immediately preceding—“shall cease to have effect.” In this view, though State laws offering bounties are declared, generally speaking, to cease to have effect, yet the subsequent saving of certain grants and agreements means that the State laws by which those grants or agreements are made or effectuated are excepted from the rule of annulment. The grants or agreements which are “taken to be good” are good against the State which made them, and must be fulfilled by that State. The “control” of the Federal Executive is in that case merely a right of supervision, to see that the provisions of the Constitution are complied with.

RESTRICTIVE EFFECT.—This section not only saves grants or agreements made before 30th June, 1898, but invalidates (by the words “not otherwise”) every grant or agreement made on or after that date. Technically speaking, therefore, the provision is retrospective, because it invalidates not only contracts made after the commencement of the Act, but contracts made at any time after a date previous to the passing of the Act. Looking, however, at the time at which the clause was actually framed, and the fact that it was publicly framed by the representatives of the parties interested, all objection to it on the ground of its retrospective character vanishes.

This particular provision has been assailed as affording a loop-hole for permitting the evasion of the provision for the termination of bounties. Looked at closely, however, it is restrictive rather than permissive. In the absence of any such provision, it is clear that the repeal of laws offering bounties would not operate retrospectively to invalidate agreements made under such laws. (See Maxwell, Interpr. of Statutes, p. 192; cited Conv. Deb., Adel., p. 848.)

As regards grants made after 30th June, 1898, they are only invalidated to the extent of moneys remaining unexpended at the imposition of the uniform tariff, and similarly agreements are only invalidated to the extent of bounties promised but not paid at that date. “Laws offering bounties” remain in force until the imposition of the uniform tariff; and there is nothing in the Constitution which interferes with payments actually made before that date.

Exceptions as to bounties385.

91. Nothing in this Constitution prohibits a State from granting386 any aid to or bounty on mining for gold, silver, or other metals387, nor from granting, with the consent of both Houses of the Parliament of the Commonwealth expressed by resolution388, any aid to or bounty on the production or export of goods.

HISTORICAL NOTE.—For the earlier discussions of the bounty question, see Historical Note, sec. 90. At the Adelaide Session, 1897, on recommittal, Mr. Higgins added (to what is now sec. 90) a new paragraph:—“This section shall not apply to bounties or aids to mining for gold, silver, or other metals.” (Conv. Deb., Adel., p. 1203.)

At the Melbourne session Sir Geo. Turner moved to omit (from Mr. Higgins' paragraph) all words after “mining”—so as to include coal and other non-metallic minerals. He argued that aids to the development of natural resources could not interfere with free trade, though bounties to manufacturers might; but Mr. O'Connor, Mr. Higgins, and Mr. McMillan differed from him, on the ground that coal is as much

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an article of inter-state commerce as any other product. The amendment was negatived. Sir Geo. Turner then proposed an amendment to allow “any bounty or aid granted by any State with the consent of the Governor-General in Council or the Parliament of the Commonwealth.” The words “Governor-General in Council” were strongly objected to on the ground that they excluded the corporate influence of the States—the Ministry being responsible only to the House of Representatives. Sir Geo. Turner and Mr. Isaacs, however, insisted that without these words the provision would be useless, as the assent of Parliament would involve too much delay. Mr. Dobson moved to omit the words “Governor-General in Council” but this was negatived on division by 26 to 21— several members voting to retain the words and afterwards voting against the whole provision, which was then negatived by 27 to 19. (Conv. Deb., Melb., pp 965–90.)

In the second recommittal, Sir Geo. Turner moved his amendment again. Sir John Downer, by way of compromise, proposed to omit both Governor-General and Parliament, and substitute the assent of “both Houses of Parliament expressed by resolution.” Sir Geo. Turner and Mr. Isaacs thought this no better than Act of Parliament, and secured its rejection by 22 votes to 19. Thereupon an amendment was moved to add a condition that the bounty should not derogate from inter-state free-trade. Sir Geo. Turner complained that this made the whole clause useless, as any bounty might be set aside by the High Court, and therefore no one would venture to invest capital; but it was carried by 29 to 12. Sir Geo. Turner then asked the Convention to assist him out of his difficulty by retracing their steps, and allowing him to accept Sir John Downer's amendment; and this was done. (Conv. Deb., Melb., pp. 2343–65.)

After the fourth report the clause (which up to then had formed part of preceding clause) was redrafted as a separate clause.