Intergovernmental Immunities - Essay Example

Intergovernmental Immunities Introduction The existence of intergovernmental immunities emanates mostly from the form of government adopted by a bodypolitic. In Australia where the Commonwealth Government adopted the federal system, a good number of cases involve conflict in the relationship between the States and the Commonwealth. Most of these cases are related to the powers of taxation, banking and relations. The arguments have always been centered on the premise of separation of powers as provided for in the constitution and innate in the principles of federalism. To better understand how these conflicts are resolved by our Courts, let us first the nature of a federal government and the intent of the framers of the constitution. a. What is Federalism? The federal system of government comprise of macro-system and a micro-system of government. At the macro level, we have the national government while at the micro-level, we have the state or provincial governments. These levels of government co-exist with “an established division of governmental powers; legislative, executive and judicial.”1 Federal governments hinges on the idea involving “territorial divisions of authority, typically entrenched in the constitution which neither a sub-unit nor the center can alter unilaterally” (Follesdall 2003). This form of government is different and should be distinguished properly with the decentralized authority in unitary states where the central government has direct authority to revoked at will legislations governing the government. “What a legislature can do under a unitary system of government may be denied to either the central or regional governments and, sometimes as s 92 of our Constitution2 shows, to both the central and regional governments.”3 As Dicey pointed out, "The object for which a federal state is formed involves a division of authority between the national government and the separate States. 4 According to Dicey, the ceding of the some of the powers States to the national government created so many limitations upon the authority of the States. However, he also noted that such ceding of powers does not carry with it the right of the national government to “have the opportunity of encroaching upon the rights retained by the States.”5 It is therefore an acknowledged fact that the parameters of the powers given to he national government and those, which are retained by the States, should be subjected to “rigorous definition." Nontheless, separation of powers as what is espoused by the principles of federalism does not necessarily purport a total abdication of powers where there is total and complete immunity of intergovernmental sectors and its instrumentalities. Note that the intent of the framers of the constitution by following the federal nature of the United States of America where two houses of Parliament is established with one providing special representation for the regions. In construing intergovernmental immunities, we should always bear in mind that there are instances of centralization of legislations in a Federal Government due to the fact that there is a need for constitutional interpretations in settling of conflicts involving scopes of legislations and the authority of the Commonwealth and the States to enact such legislations (Follesdall 2003). In facilitating interpretations of the law and the authority from which it emanates, the constitutional convention in the 1890’s already provided strict limitations of powers. According to the classic statement of one of the convention members, “We should most strictly define and limit th powers of the central government and leave all other powers not so defined to the local legislatures.”6 The federal nature of the Commonwealth has been held to limit the capacity of the Federal parliament to legislate in a manner inconsistent with the constitutional role of the States. (New York v United States 505 US 144 (1992); Printz v United States 521 US 898 (1997). Intergovernmental Immunities The precepts of federalism tell us that the doctrine of intergovernmental immunities should be adhered to. According to this doctrine, the “Commonwealth (and its instrumentalities) was declared to be immune from any law passed by a State, and the States (and their instrumentalities) were immune from laws passed by the Commonwealth” (Aroney, 2006). This means that both the Commonwealth and the States (and its instrumentalities) shall have freedom to exercise legislative and executive powers within their jurisdiction, without undue interference from the other. Aside from the doctrine of intergovernmental immunities, federalism principles also tell us that the doctrine of “implied prohibition” should also be respected. Implied prohibition interprets the powers of heads of Commonwealth narrowly and provides that “specific areas of legislative competence were impliedly "reserved" to the States” and that by virtue of such reservation, it is deemed “ outside the legislative competence of the Commonwealth” (Aroney 2006). In other words, both sectors of government have implied restrictions in terms of legislations whereby the enactment of laws of the other should not interfere with the conduct of lawful operations of the other. For instance, there is an implied prohibition to enact laws, which would result to constraints in the exercise of a States jurisdiction over its subject. The landmark High Court decision in Amalgamated Society of Engineers v. Adelaide Steamship Co Ltd7, (1920) 28 CLR 129, directly challenged the doctrine of intergovernmental immunities and implied reservation of powers. Isaacs J in his statement delivered in the joint judgment of the case said "Where the affirmative terms of a State 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. ... [I]t is a fundamental and fatal error to read s. 1078 as reserving any power from the Commonwealth that falls fairly within the explicit terms of an express grant in s. 519, as that grant is reasonably construed, unless that reservation is as explicitly stated".10 In other words, in this case, the High Court decided to overturn the immunity of State instrumentalities from federal laws. Clearly, in this case, the count put the burden of proof on those who will challenge the power of the Parliament to issue laws and regulations, which have consequential impact on the States. Thus, by implication of such decision, the long established doctrine of intergovernmental immunities is therefore undermined. What really happened in the case of the Engineers? There were two main points, which we should focus out attention in the decision of this case. First the Court enunciated that "one clear line of judicial inquiry as to the meaning of the Constitution must be to read it naturally in the light of the circumstances in which it was made, with knowledge of the combined fabric of the common law, and the statute law which preceded it"11. Therefore, one of the aspects that must be looked into in the interpretation of this case is the interpretation of the intent of the Constitution. The Constitution clearly stated that only the Commonwealth should exercise those powers explicitly granted unless there is explicit reservation as to the exercise of implied powers. The qualifying statement of reserved powers12 therefore opens up different interpretations of the law. Let us discuss these different interpretations thoroughly in the preceding parts of this paper. The second point, which must always be remembered, in this case is the rejection of the doctrine of “immunity of governmental instrumentalities that had prevailed up to that time”.13 Under that doctrine, the federal and State governments were seen as sovereign within their respective spheres of power and entitled to carry out their operations without legislative or executive interference from each other. This had been clearly followed up until the High Court’s decision in the Engineers’ case which was then used as basis for arguments and decisions until the latest case of Austin v the Commonwealth of Australia (2003) HCA 3. Although there were qualifications made regarding the High Court’s decision in the Engineers as noted in the case of Austin v Commonwealth, up until now have not been specifically and explicitly revoked thereby continued to cast shadows on High Court decisions regarding the doctrine of intergovernmental immunities. We now ask the question, as to what extent should the powers of the parliament be exercised in relation to the States and how should such powers be properly delineated? What are the limitations of such powers of the parliament to enact legislations, which may affect the States? It must be noted that under the principles of federalism, the Commonwealth and the State are immune from each other, whereby one should not interfere in the affairs of the other except in the exercise of powers specifically granted under the constitution14. It is therefore of utmost importance that boundaries of powers should be known in order to facilitate proper applications thereof and to resolve disputes in a lawfully correct manner. Limitations of Intergovernmental Immunities and the Doctrine of Implied Reservation "[T]he very concept of an immunity (as reflected in the intergovernmental immunity doctrine) is more than a claim to equal treatment” (Tribe 2000).15 Special treatment of certain States and its instrumentalities is clearly outside the ambit of the spirit of the law and the principles of federalism as it will create undue oppression in case of negative treatment and undue favors in case of positive singling out. The decision of Pirrie v McFarlane (1925) 36 CLR 170 stressed that as a fundamental principle of federalism “separate and exclusive governmental powers have been allotted to two distinct organisms”.16 These powers are not intended “to destroy or weaken the capacity or functions expressly conferred on the other".17 The principles of federalism which promotes separation of powers between the Commonwealth and the States does not purport to give each sector any ascendancy over the other as to kill or put the other in a disadvantageous position. As most cases on intergovernmental immunities emanates from conflict in the power of taxation, the popular statement that “the power to tax is the power to destroy” should be interpreted with caution. To destroy is not the intent of the separation of powers between the Commonwealth and the States. For instance, let us take a hypothetical case where the parliament would legislate a law, which would reduce the federal tax rates of New South Wales, but such law will not apply to the other States. Such singling out of the State of New South Wales is prohibited, as it will prejudice the interested of the other States. Similarly, taking the same hypothetical example in the reverse, where the Parliament would enact a law, which would increase the federal tax rate for new South Wales, and other States will not be affected is also prohibited as it will create prejudice against New South Wales. The idea of non-discrimination therefore hinges in the principles of fairness where those who are similarly situated should be treated in the same manner. Now going back to our discussion on the doctrine of intergovernmental immunities and the doctrine of implied reservation, note how these doctrines evolved over time. In cases decided after the Engineers, the High Court gave out “qualified decisions” which have some bearing on the legal precedence established by the Engineers’ case. The decision of the case of the Engineers surfaced in the case of Melbourne Corporation v Commonwealth (1947) 74 CLR 31 when the Court declared invalid a law passed by the Parliament, which was enacted pursuant to its power to make laws with respect to banking. Under this law in question, banks and prohibited from conducting banking transactions and businesses with the State or its instrumentalities/agencies without prior consent from the Federal Treasurer. Various reasons were presented in this case and the concept of discrimination of application of laws was concluded in the statement of Latham J when he defined the concept of discrimination "singling out another government and specifically legislating about it”.18 In exercising the separate powers of the State and the Parliament, there are generally accepted rules emanating form case laws. In discussing these rules, let us take the non-discrimination principle. a. Laws that Discriminates on States Singling out a State and “legislating about it” is one of the areas where the limitations of the exercise of the Parliament can be invoked. Dixon J in his statement in the case of Melbourne Corporation states, “the Commonwealth cannot, in the exercise of its legislative powers, enact a law which discriminates against or singles out a State”.19 This statement was reinforced in the case of Queensland Electricity Commission (1985) 159 CLR 192 by Mason J in saying, "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."20 Clearly, the decisions of these cases protect the rights of the States against discriminatory legislations where its interest will be affected either directly or indirectly. The case of Australian Railways Union v Victorian Railways Commissioners (1930) 44 CLR 319, further concretized the interpretation of the non-discrimination principle. Under this case, it was clearly manifested by the Court that save any instances where it is explicitly stated in the Constitution, or in the nature, subject matter of the power being exercised, “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.”21 However, this grant shall be limited to and should “confines itself to laws which do not discriminate against the States or their agencies."22 This ruling of the case was also adopted in the recent case of Austin v. Commonwealth where the Court reiterated the fact that the parliament is prohibited from enacting any legislation, which are discriminatory in nature. b. Laws that Limits the Capacity of States to Run its Affairs According to the case of Melbourne Corporation v Commonwealth (1947) 74 CLR 31 of which this portion of the ruling is adopted in the case of Austin v Commonwealth, a federal law may be held to invalid in two instances. These two classes of cases are as follows: (a) where the “Commonwealth singles out the States or agencies to which they have delegated some of the normal and essential functions of government” and (b) where the Commonwealth imposes on the State “restrictions which prevent them from performing those functions or impede them in doing so” regardless of whether such restrictions are discriminatory in nature or universal in relation to other States, provided that such applications of restrictions would “so prevent or impede them" from performing its functions as a State. In this discussing the Melbourne23 case, Dixon J referred to the use of interstate commerce power and the postal power in the United States where he compared it to the doctrine accepted in Australia. According to the accepted Australian standards, it is enough for validity that a federal law has an actual and immediate operation within a field assigned to the Commonwealth. However, according to Dixon, "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." Although this statement may not be the ratio decidendi of the case, it is worthwhile to note that this gives a clear demarcation as to the limits of the powers of the Parliament to enact legislations, which would put burden on the States that will directly or indirectly affect its government functions. This is particularly true with reference to banking laws where in the act of the Parliament in issuing a legislation, which will curtail banking operations and relationships with the State would definitely affect the performance of the State of its government functions.24 Using the words of Starke J in the Melbourne case "in the end the question must be whether the legislation or the executive action curtails or interferes in a substantial manner with the exercise of constitutional power by the other". Conclusion Intergovernmental immunities are not absolute but rather a progressing system where the interpretations thereof evolved with the times. From the enactment of the Constitution in 1901 where the doctrine of immunities is held inviolable to the setting side thereof in the case of Amalgamated Society of Engineers v Adelaide Steamship in 1920 and the ruling of the recent case of Austin v the Commonwealth of Australia, we witnessed the shifting Court rulings on the interpretation of intergovernmental immunities. However, there are two constant rules, which are universally accepted when looking into the validity of the legislations. One is whether or not such legislation is within the ambit of the provisions of the Constitution and is not discriminatory to the States and the other is whether or not such legislation creates a restriction which would impede the State’s exercise of its functions regardless of whether such legislation is discriminatory or not. In our discussion on immunities and implied restrictions, we established some areas where the Court ruled that the even though the Parliament is legislating within its jurisdiction as provided for in the constitution, where its effect is an indirect curtailment of the rights of the State to self-determination, such law may be held invalid. The States are immune to the interference and have the right to be left alone to run its own operations. Thus, where in the case of banking and taxation, although the Commonwealth have the right to impose laws and regulations within this sphere, it cannot impose upon the private and public entities such regulations as may interfere with State operations and will prejudice the delivery of the services thereof, then it is invalid.25 What then is the rule of the Engineers’26 case in the light of the new rulings set forth in the case of Austin27? Some authors say that the case of the Engineer is dead28 and that the doctrines thereof have been overruled by later cases including that of Austin. This I refuse to agree. Although the case of Austin have laid down some qualifications on the rulings of the Court in the case of the Engineers, the Austin case did not directly overruled the rulings thereof. Under the Austin case, the qualifications setout in the case of Melbourne was adopted and that does not necessarily mean replacing the rulings of the Engineers. Still there is that window for arguments where the rules only qualified the rules and not revoked the same. For instance, in the case of Austin, it was only cited that the enactment of the Parliament that affects the normal functions of the State causing prejudice thereof is invalid. Thus, where there is a showing that the law enacted by the parliament does not interfere with the regular functions of the State in a manner that it prejudices the interest thereof, and then such law may still be considered valid. This is clearly what is the case of the Engineers is all about, the validity of the enactments of the Parliament that has some impact on the States. 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." Bibliography Books and Articles 1. Aroney Nicholas Chapter two: The Ghost in the Machine: Exorcising Engineers. Retrieved April 23, 2006 from http://www.samuelgriffith.org.au/papers/html/volume14/v14chap2.html 2. Bakvis, Herman, and William M. Chandler, eds., 1987 Federalism and the Role of the State. Toronto: Toronto University Press. 3. Black, David. Federation Issues. Retried April 23, 2006 from http://www.ccentre.wa.gov.au/documents/fediss.pdf#search=define%20ceding%20of%20powers%20of%20States 4. Buchanan, James, 2001, Federalism, Liberty and the Law. Collected Works vol. 18. Indianapolis: Liberty Fund. 5. Dahl, Robert A., 1983, "Federalism and the Democratic Process." in J. R. Pennock and J. W. Chapman, eds., NOMOS XXV: Liberal Democracy. 95-108. New York: New York University Press. 6. Federal State Relations Committee Report Chapter 3 New Federalism and New Intergovernmental Bodies retrieved April 22, 2006 from http://www.parliament.vic.gov.au/fsrc/Report2/Body%5CChapter3.HTM 7. Federal State Relations Committee. Australian Federalism; the Role of States retrieved April 22, 2006 from http://www.parliament.vic.gov.au/fsrc/Report2/Appendices/App4.htm 8. Federal State Relations Committee. Report on the Federalism and the Role of the States: Comparisons and Recommendation retrieved April 22, 2006 from http://www.parliament.vic.gov.au/fsrc/report3/body/chapter10.htm 9. Fletcher, C and Walsh, C, Intergovernmental Relations in Australia: Managerialist Reform and the Power of Federalism, Discussion Paper No 4, Federalism Research Centre, Australian National University, Canberra, 1991 10. Follesdall, Andreas (2003). Fedralism. Retrieved April 21, 2006 from http://plato.stanford.edu/entries/federalism/ 11. Goodin, Robert, 1996, "Designing constitutions: the political constitution of a mixed commonwealth". Political Studies 44: 635-46. 12. Goss, W, Restoring the Balance: The Future of the Australian Federation, Federalism Research Centre, Australian National University, Canberra, 1995 13. Groenewegen, P, Public Finance in Australia (3rd ed), Prentice Hall, Sydney, 1990 14. Keohane, Robert O., and Joseph S. Nye, 2001, Power and Interdependence: World Politics in Transition. 3rd Edition. Longman. 15. Knop, Karen, Sylvia Ostry, Richard Simeon and Katherine Swinton, eds., 1995, Rethinking Federalism: Citizens, Markets and Governments in a Changing World. Vancouver: University of British Columbia Press. 16. Nicolaidis, Kalypso, and Robert Howse, eds., 2001, The Federal Vision: Legitimacy and Levels of Governance in the US and the EU. Oxford: Oxford University Press. 17. Saunders, C (ed), The Australian Constitution (Annotated), Constitutional Centenary Foundation, Melbourne, 1997 18. The Constitution (As in force on June 2003) retrieved April 22, 2006 from http://scaleplus.law.gov.au/docs/Constitution.pdf 19. Tribe (2000) American Constitutional law, 3rd ed., vol. 1 at 1233 20. Tully, James, 1995, Strange Multiplicity: Constitutionalism in an Age of Diversity. Cambridge: Cambridge University Press. 21. Tushnet, Mark, ed., 1990, Comparative Constitutional Federalism: Europe and America. New York: Greenwood Press. 22. Warden, J, “Federalism & The Design of the Australian Constitution”, Australian Journal of Political Science, Vol 27, 1992 23. Watts, Ronald L., 1998, "Federalism, Federal Political Systems, and Federations." Annual Review of Political Science 1: 117-37. 24. Wolff, R. P. 1990. The Conflict Between Authority and Autonomy. Oxford: Basil Blackwell. Cases 1. Airlines of new South Wales Pty ltd. v New South Wales (no. 2), (1965) 113 LCR 64, 79 2. Amalgamated Society of Engineers v. Adelaide Steamship Co Ltd, (1920) 28 CLR 129 3. Austin v the Commonwealth of Australia (2003) HCA 3 4. Australian Capital Television Pty. Limited and Others and the State of New South Wales v The Commonwealth of Australia and Another (1992) 177 CLR 106 5. Australian Railways Union v Victorian Railways Commissioners (1930) 44 CLR 319 6. Melbourne Corporation v Commonwealth (1947) 74 CLR 31 7. New York v United States 505 US 144 (1992) 8. Pirrie v McFarlane (1925) 36 CLR 170 9. Printz v United States 521 US 898 (1997) 10. Queensland Electricity Commission v. Commonwealth (1985) 159 CLR 192 11. R v. Barger, (1908) 6 CLR 41 12. Re The Residential Tenancies Tribunal of New South Wales v Henderson & Another; ex parte The Defence Housing Authority (1997) 13. The Commonwealth v Cigamatic Pty. Ltd. (in liquidation) (1962) 108 CLR 372 14. Victoria v The Commonwealth (1971) 122 CLR 353 Read More