§ 362.

"The Commonwealth may Acquire any Property not Exclusively Used."

The Commonwealth has a general power (sec. 51-xxxi.) to make laws for the acquisition of property on just terms from any State for any purpose in respect of which the Parliament has power to make laws. Legislation under that section would--assuming legislation to be necessary-apply to acquisitions for the purpose of this section; except as to the ascertainment of value and the mode of compensation, for which special provision is here made. If the Commonwealth and the State are agreed as to the property to be transferred, it appears that this section of itself is sufficient authority for the transfer, without any federal legislation; but if there is any dispute, legislation will be necessary to prescribe the mode of acquisition.

$363. "The Commonwealth shall Compensate the State." The following returns of the value of the property of the chief departments proposed to be transferred are taken from Papers on Federation circulated by the Government of Victoria, 1897, p. 296 :—

ESTIMATED PRESENT VALUES OF PROPERTY OF CHIEF DEPARTMENTS PROPOSED TO BE TRANSFERRED TO A FEDERAL GOVERNMENT. (a) Distinguishing Departments.

NOTE.-The above figures must be regarded only as a rough approximation, in the absence of definite information on the subject, which has been applied for but not yet received.

Colony.

Lands.

(b) Distinguishing Colonies, and showing also Cost of Maintenance and Interest.

§ 364. "The Mode of Compensation."

These words were inserted at the Melbourne Convention (see Debates, pp. 1001-7) To carry out, with a somewhat wider scope, a suggestion of the Legislative Assembly of South Australia that payment might be made by taking over an equivalent part of the public debt of the State. The amount of compensation is arrived at under subs. ii., and subs. iii. then provides that the mode of compensation may be determined by Parliament. It seems that it will be open to the Parliament under this section to provide that compensation may be made in cash, or in instalments, or by an annual rental, or by issuing debentures, or by taking over an equivalent part of the public debt, or in any other way which will give to the State the value agreed upon or ascertained. $365.

"The Current Obligations of the State in Respect of the Department."

The transfer of the property used in connection with the departments having been provided for, it was necessary also to provide for the transfer of claims against the departments. This provision is intended to meet the case of current contracts with the department, by requiring that the obligations under them should be taken over by the Commonwealth. The word "current was inserted by the Drafting Committee to meet a criticism that the words might be construed to extend to loan moneys spent in connection with the department. (See Conv. Deb., Adel., pp. 920-2; Melb., p. 1902.) It is quite clear that the words refer only to the "current" obligations incurred in the course of departmental business, and have no reference whatever to capital invested by the State in departmental works, or the obligations which the State may have incurred in raising such capital-obligations which cannot be said to be incurred "in connection with" the department on which the money is afterwards spent.

It was also suggested (Conv. Deb., Melb., pp. 1905-6) that contracts of service entered into by the department with its officers might be held to be included; but seeing that these are expressly dealt with in the preceding section, this construction would be superfluous as well as forced.

86. On the establishment of the Commonwealth, the collection and control of duties of customs and of excise360 and the control of the payment of bounties, shall pass to the Executive Government of the Commonwealth.

HISTORICAL NOTE.-In the Commonwealth Bill of 1891, this provision, in substantially the same words (except that "the payment of bounties," not "the control of the payment of bounties," passed to the Commonwealth) stood as a paragraph of Clause 4, Chap. IV. (Exclusive power over customs, &c.) There were also provisions (clauses 7, 9) that until the uniform tariff, bounties payable in the several States should be paid by the officers of the Commonwealth, and charged against the States.

At the Adelaide session, 1897, the provision, following the draft of 1891, still stood part of the "exclusive power" clause. The debate, which turned entirely on bounties, is summarized in Historical Note to sec. 90, Conv. Deb., Adel., pp. 835, 838-66.

At the Melbourne session the paragraph was struck out, and re-inserted as a new clause. An amendment by Sir George Turner, excepting State bounties consented to by the Federal Parliament, is noted under sec. 91, Conv. Deb., Melb., pp. 964-5, 990, 2343-65.

$366.

"The Collection and Control of Duties of Customs and of Excise."

COLLECTION. By sec. 69 the departments of customs and excise become transferred to the Commonwealth on its establishment, and by this section the collection of the duties also passes at once to the Executive Government of the Commonwealth. That is to say, the duties continue to be collected by the same departments as before, but on behalf of the Commonwealth instead of the several States.

Until the imposition of the federal tariff (sec. 89) customs and excise duties will continue to be collected in the several States, according to their respective tariffswhich do not "cease to have effect" until then (sec. 90). During this period, customs duties will of course be collected on intercolonial trade as well as on imports from abroad. As long as the medley of tariffs remains, it would obviously be impracticable to allow the free passage of goods across the borders, and therefore intercolonial freetrade is postponed until the uniform tariff is in force (sec. 92).

Meanwhile, though the duties themselves are collected and controlled by the Commonwealth, the tariff of each State remains alterable by the Parliament of the State. The power to impose duties of customs and excise does not become exclusive with the Commonwealth until the first federal tariff is imposed (sec. 90); and until it becomes exclusive, the concurrent power of the State Parliament continues (sec. 107).

CONTROL.-By "control" of the duties is meant the disposal of them after collection. That "control" is of course subject to the provisions of the Constitution. The duties collected, instead of being paid into the Treasuries of the respective States, are paid into the Consolidated Revenue Fund of the Commonwealth (sec. 81) to be dealt with as the Constitution provides.

$ 367. "The Control of the Payment of Bounties."

The Bill of 1891 provided (chap. IV., secs. 4, 7, 9) that “the payment of bounties" should pass to the Commonwealth; that until the imposition of uniform duties the bounties payable in each State should be "paid by the officers of the Commonwealth; " and that the amount so paid on behalf of any State should be deducted from its share of the surplus. In the Adelaide draft of 1897 these provisions were all omitted, and nothing but "the control of the payment of bounties" passed to the Commonwealth.

What passes to the Executive Government of the Commonwealth by these words is not a liability, but a right of control. "Control" means regulation, government. direction; it is a matter of authority, not of obligation. To interpret the somewhat vague words of this provision, it is necessary to refer to the other sections of the Constitution dealing with bounties.

Sec. 51-iii. empowers the Federal Parliament to make laws with respect to "bounties on the production or export of goods, but so that such bounties shall be uniform throughout the Commonwealth."

Sec. 90 provides that on the imposition of uniform duties, the power of the Commonwealth to grant bounties shall become exclusive; that thereupon all laws of the States offering bounties shall cease to have effect; but that " any grant of or agreement for any such bounty" shall be good if made before 30th June, 1898. It follows from that section, read together with sec. 107, that until the imposition of uniform duties the States may make laws offering bounties; but that when the uniform tariff begins the laws so made must cease to have effect and the bounties so offered (unless granted or contracted for before the date named) must cease also.

Sec. 90 declares that nothing in the Constitution prohibits a State from granting any bounty for mining for metals, or from granting, with the consent of both Houses of the Federal Parliament, any bounty whatever.

The Constitution therefore refers to two kinds of bounties-Federal bounties and State bounties. With regard to Federal bounties, the words of this section raise no difficulty; whenever such bounties have been authorized by the Parliament the Federal Executive will control their payment as it controls every other part of the federal administration.

With regard to State bounties, it is hard to see what control the Federal Executive can exercise over payments, beyond seeing that the requirements of the Constitution are complied with. State bounties may come under four heads: (1) Before the uniform tariff each State may, as before, grant what bounties it pleases. (2) After the uniform tariff, there may be (a) State bounties to the extent of grants made, or binding agree ments entered into, before 30th June, 1898; (b) State bounties on mining for metals; (c) any State bounties granted with the consent of both Houses of the Federal ParliaAs to grants and agreements made before 30th June, 1898, see Notes, § 383, infra. With respect to State bounties on mining for metals, or given with the consent of the Federal Parliament, the powers reserved to the States leave little room for federal control. Such bounties are arrangements between a State and its producers ; they are granted by the State, and payable by the State, and involve no obligation on the part of the Commonwealth.

ment.

369

87. During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides 368, of the net revenue of the Commonwealth from duties of customs and of excise not more than one-fourth shall be applied annually by the Commonwealth towards its expenditure370.

The balance shall, in accordance with this Constitution, be paid to the several States, or applied towards the payment of interest372 on debts of the several States taken over by the Commonwealth.

HISTORICAL NOTE. -The Commonwealth Bill of 1891 contained no guarantee to the States, though the desire for some guarantee was prominent throughout the financial debate. It was specially emphasized by Sir John Bray in his proposal to make the Commonwealth liable for the public debts of the States. (Conv. Deb., Syd., 1891, pp. 836-49.)

In the Finance Committee appointed at the Adelaide Session of the Convention of 1897-8 to frame financial resolutions for submission to the Constitutional Committee the guarantee question was raised at once, and various forms of guarantee were suggested. Almost the first of them was the following, moved by Mr. Holder:-"That, until a uniform tariff has come into force, each State . . . . shall receive from the federal authority, in monthly instalments, a return of 70 per cent. of the customs and excise duties contributed by the State." (Minutes of Committee, p. 5.) Mr. Holder's proposal, which was almost identical with this section, was negatived, and the guarantees resolved on by the Committee, and agreed to by the Convention, were a limitation of federal expenditure, and a provision for the return of a minimum aggregate surplus (see p. 170, supra). (Conv. Deb., Adel., pp. 889, 1053-67.)

At the Sydney session, 1897, in the general financial debate (p. 176, supra) the question of guarantees was prominent, but no definite proposition was made.

At the Melbourne session (Debates, pp. 2378-9, 2422-31, 2456-7), on the discussion of the Finance Committee's report, which recommended the omission of the Adelaide guarantees, Mr. Holder again (pp. 890-3) suggested a return of a fixed proportion of the revenue, stating that he had put it before both Finance Committees, and now wished to put it before the Convention. He read a clause which he had drafted to carry out his views, and discussed the objections which had been raised. The proposal was referred to by Mr. Solomon (pp. 1056-7), by Mr. Reid (p. 1070), by Sir John Downer (p. 1074), and by Mr. Lyne (p. 1082). The Adelaide guarantees were excised; but various substitutes were unsuccessfully proposed. First came Mr. Henry's "financial assistance" clause (see Historical Note to sec. 96). Then, on the discussion of the West Australian clause (guaranteeing to Western Australia a subsidy which would equalize the "proportionate net loss" of that colony with the "average proportionate net losses" of the other colonies), Sir John Forrest moved an amendment to make the clause apply to all the States--which he afterwards withdrew in favour of a clause of Sir George Turner's, guaranteeing to each State a return equal to its so-called "net loss," calculated on the customs and excise revenue collected in the State under the federal tariff and the amount which would have been collected on the same trade under the superseded provincial tariff. This also was withdrawn, but Mr. Isaacs afterwards brought it up again in a modified form, and it was finally negatived. (Conv. Deb., Melb., pp. 1122-90, 1244-9.) At last, on the second recommittal, Sir Edward Braddon brought forward and carried the first draft of the "Braddon clause," which, after being twice recommitted, was ultimately agreed to (p. 198, supra). (Conv. Deb., Melb., pp. 2378-9, 2422-31, 2456-7.) After the fourth Report it was verbally amended.

After the failure of the Convention Bill to secure the statutory majority in New South Wales, both Houses of the New South Wales Parliament asked for the omission of the clause (see p. 216, supra). This would have been agreed to by the Premiers' Conference, 1899, if another form of guarantee could have been suggested which would have been equally satisfactory; but all alternative suggestions were thought by Mr. Reid to be more objectionable than the clause itself. By way of compromise, the words "During a period of ten years, and thereafter until the Parliament otherwise provides" were inserted.