§ 425. “As the Parliament Deems Necessary.”

The Constitution, though it requires an Inter-State Commission to be established, does not itself endow the Commission with any powers—though some of the powers of the Parliament (see sec. 102) cannot be carried into effect except with the help of the Commission. The Commission can only have “such powers of adjudication and administration as the Parliament deems necessary” for the execution and maintenance of the trade and commerce provisions of the Constitution and of federal laws made thereunder. The power thus given to the Parliament is a very wide one. The extent of the power of the Parliament to make laws with respect to trade and commerce has already been discussed (sec. 51—i.); and the Parliament itself is the sole judge of the extent to which it is necessary to vest in the Inter-State Commission the power of adjudicating upon and administering such laws. Practically the whole administration of the law upon this vast subject, and a great part of the judicial work in connection therewith, could be entrusted to the Commission. The only express limitation upon the power of the Parliament in this respect is in the provision (sec. 73) that there is an appeal from the Inter-State Commission to the High Court on questions of law; and even this right of appeal is subject to exceptions and regulations prescribed by the Parliament. (See Notes, § 307, supra.)

The general functions which may be assigned to the Inter-State Commission are defined in this section; whilst certain special judicial functions with regard to preferences and discriminations on State railways are referred to in secs. 102, 104. It is perhaps unnecessary to repeat that the latter functions, though the Convention Debates concerning the Commission are almost wholly occupied with them, are only a part of the wide powers which can be conferred under this section.

Parliament may forbid preferences by States.

102. The Parliament may426 by any law with respect to trade or commerce427 forbid428, as to railways429, any preference or discrimination430 by any State, or by any authority constituted under a State, if such preference or discrimination is undue and unreasonable, or unjust to any State431; due regard being had432 to the financial responsibilities incurred by any State in connexion with the construction and maintenance of its railways. But no preference or discrimination shall, within the meaning of this section, be taken to be undue and unreasonable, or unjust to any State, unless so adjudged by the Inter-State Commission433.

HISTORICAL NOTE.—The only provision in the Bill of 1891 against preferences by States was a clause empowering the Parliament to annul any State law or regulation “having the effect of derogating from freedom of trade or commerce between the different parts of the Commonwealth.” Upon the “trade and commerce” sub-clause the question arose in the Sydney Convention of 1891 whether there was power to regulate railway rates on intercolonial lines; and upon the sub-clause dealing with “control of railways with respect to transport for the purposes of the Commonwealth,” Mr. Gordon moved to add “and the regulation of traffic and traffic charges upon railways in any State in all cases in which such regulations are required for freedom of trade and commerce, and to prevent any undue preference to any particular locality

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within the Commonwealth or to any description of traffic.” The proposal was criticized as being too wide, and was negatived by 21 votes to 11. An amendment by Mr. Inglis Clark, for the prevention of discriminating rates giving any preference or advantage, was also negatived. (Conv. Deb., Syd., 1891, pp. 662–70, 692–8.)

Adelaide Session, 1897.—In the Bill as drafted at Adelaide there was added to the “preference” clause (see Hist. Note to sec. 99) a prohibition of State laws or regulations having the effect of derogating from freedom of inter-state trade. Mr. Gordon moved to add to this “or having the effect of inducing trade or commerce in any particular direction within the Commonwealth unfairly, and in particular by one part of the Commonwealth offering greater inducements than other parts wherever the inducement offered returns no direct profit as regards the particular trade or commerce induced to that part of the Commonwealth offering the inducement.” This he afterwards withdrew. (See pp. 178–180, supra; Conv. Deb., Adel., pp. 1070–85, 1103–13, 1117–40.)

The clause dealing with the powers of the Inter-State Commission (see Hist. Note to sec. 101) provided, as originally drafted, that the Commission should have “no powers in reference to the rates or regulations of any railway in any State, except in cases of rates or regulations preferential in effect and made and used for the purpose of drawing traffic to that railway from the railway of a neighbouring State.” Sir Geo. Turner feared that these words would check Victoria's “short haul” competition, but leave New South Wales absolutely untouched, and they were struck out. (See pp. 178–180, supra.)

Melbourne Session, 1898 (Debates, pp. 1250–1506, 1510–12, 2390–1).—Mr. Barton moved a comprehensive clause forbidding all preferences by the Commonwealth or a State (see notes to sec. 99). A long debate followed (see pp. 199–200, supra), in which distinctions were drawn between obstructive rates, which derogated from freedom of trade; unfairly attractive rates, which derogated from equality of trade; and fair development rates, which might be differential, but whose object was to promote trade, not to divert it. The problem was to prevent preferential or differential rates of an unfederal character, whilst allowing such differential rates as were necessary to an effective railway policy. Mr. Higgins (Debates, p. 1270) moved an amendment to prohibit rates made “with the view of attracting trade to ports of one State against ports of another State;” but this was negatived. A suggestion by the Legislative Council of South Australia (identical with Mr. Gordon's Adelaide amendment) was also negatived.

Finally the clause was struck out (Debates, p. 1335), and Mr. Barton proposed to substitute a simple prohibition of Commonwealth preferences (see Hist. Note to sec. 99).

An amendment by Sir John Downer, to extend the clause to preferences by States, was negatived. An amendment by Mr. Higgins, to prohibit rates made with a view of attracting trade, was carried by 18 votes to 15. Mr. Higgins' object was to prevent rates which, though not “preferential,” were unfairly differential; but the New South Wales representatives complained that the words were far too wide, and Mr. Reid moved an amendment to prevent interference with rates arranged “so as to secure payment of working expenses and interest upon the cost of construction.” The debate became heated, and the Convention found itself in a difficulty. Mr. Reid's amendment was negatived; but the proposition carried by Mr. Higgins caused so much dissatisfaction that it was decided to reconsider the whole question.

The clause was postponed, and Sir Geo. Turner (Debates, p. 1372) came to the rescue with a new clause empowering the Parliament to execute the trade and commerce provisions upon State railways, “and particularly to forbid such preferences and discriminations as it may deem to be undue and unreasonable, or unjust to any State.” A long debate ensued, chiefly on the question whether Parliament was a suitable tribunal to decide this matter (see p. 200, supra); but eventually the clause—with the omission of the word “particularly”—was carried, by 25 votes to 16. Mr. Barton's clause was

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then reconsidered, and the amendment carried by Mr. Higgins—being now superseded by Sir Geo. Turner's clause—was struck out. A series of amendments were then moved (see pp. 200–202, supra) which, after long discussion, were withdrawn to be proposed as separate clauses. Mr. Grant's “Development” clause (see Hist. Note to sec. 104) was carried; and then (Debates, pp. 1510–2) the following clause by Mr. Reid was agreed to:—

“Due consideration shall be given to the financial responsibility incurred in connection with the construction and working expenses of State railways.”

On the second recommittal, Mr. Barton brought up a redraft of the clauses, practically in their present form. Mr. Glynn (for Mr. Higgins) moved to add “or differential rate” after “preference or discrimination,” contending that “discrimination” applied only to persons and things; but Mr. O'Connor argued that it covered localities also, and the amendment was negatived. Sir Geo. Turner proposed to substitute “the Parliament” for “the Inter-State Commission,” but this also was negatived by 22 votes to 15, and the clause was agreed to.