HISTORICAL NOTE -At the Sydney Convention, 1891, the clause as framed and passed was substantially to the same effect, except that the exclusive power over excise was limited to excise " upon goods for the time being the subject of customs duties;" and also that the particular provision as to "grants of or agreements for bounties" was not there. An amendment by Colonel Smith, to postpone intercolonial free-trade until "twelve months after" the imposition of uniform duties (with a view to prevent "loading up" (see Note, § 390, infra) was negatived. An amendment by Mr. Dibbs, to provide that the Victorian tariff should be the tariff of the Commonwealth until the Parliament should otherwise provide, was negatived. (Conv. Deb., Syd., 1891, pp. 789-801.)

Adelaide Session, 1897.-The 1891 draft was followed almost verbatim. On Sir George Turner's motion, the words "upon goods the subject of customs duties" were omitted.

Upon the clause dealing with the control of customs, &c., there was much debate on the subject of bounties. Sir George Turner wished to protect existing arrangements and existing contracts-and also future arrangements which might be made before the Bill became law. He also questioned the necessity of prohibiting State bounties on exports. Other members objected to future arrangements being protected, at least unless a definite near date was fixed. Everyone agreed that existing contracts ought to be protected; but Mr. McMillan, Mr. Symon, Mr. Reid, Mr. Barton, and others protested against any further exceptions to intercolonial free-trade. Mr. Deakin and Mr. Cockburn argued that bounties - especially on exports-did not necessarily interfere with internal free-trade, and ought to be allowed to the States subject to the constitutional restriction that trade shall be absolutely free." Mr. Trenwith suggested that State bounties should be allowed with the consent of the Federal Parliament. It seemed to be the general opinion that aids to gold-mining ought not to be prevented, though some members suggested that the clause was wide enough to cover them; and Mr. Barton suggested adding the words, "wares and merchandise " after "goods," to narrow the meaning. Amendments were proposed to protect contracts "for the discovery of gold or minerals," and also contracts entered into before 31st March, 1897 (the date of this debate being 19th April, 1897). The legal members thought that the clause in its then form would not invalidate contracts made before the commencement of the Act; and Mr. Isaacs proposed an amendment to place this beyond doubt. Mr. Grant and Dr. Cockburn submitted amendments to preserve bounties which did not interfere with freedom of trade. Finally all amendments were withdrawn and the clause passed provisionally. (See Hist. Note to sec. 91. Conv. Deb., Adel., pp. 835-66.)

Melbourne Session, 1898.—An amendment of the Legislative Assembly of Victoria was discussed, to omit mention of bounties. Sir Geo. Turner thought that the States ought to have power to grant bounties which were not unfederal-which he afterwards defined as "bounties for the promotion of agricultural, horticultural, viticultural, or dairying interests "—subject to such bounties being annulled at any time by the Federal Parliament. Mr. O'Connor objected that any State bounty interfered with equality of intercourse. Dr. Cockburn would limit the provision to bounties on exports, which he thought could not affect any other State; but Mr. McMillan replied that a bounty on export was practically an import duty. Mr. Deakin suggested a veto by the Federal Executive. Mr. Reid objected to all State bounties, saving existing obligations. Mr. Isaacs wanted State freedom in primary production, subject to the paramount rights of the Federal Parliament. Mr. Trenwith argued that State money could develop industries in many ways without injuring the federal principle. Mr. Higgins suggested the assent of the Inter-State Commission, as a compromise-Parliamentary assent involving too much delay. The Victorian amendment was negatived. The proposal of the Finance Committee, to except "any grant of or agreement for any such bounty made by or under the authority of the Government of any State before the 30th day of June, 1898," was then carried. (Conv. Deb., Melb., pp. 909-64.)

The first paragraph of this section provides that on the imposition of uniform duties of customs, the power of the Parliament to impose duties of customs and of excise, and to grant bounties on the production or export of goods, shall become exclusive. Three questions have to be considered in connection with this grant of power-(1) what are duties of customs? (2) what are duties of excise? (3) what is the meaning of exclusive?

DUTIES OF CUSTOMS.-Customs duties are duties or tolls imposed by law on the importation or exportation of commodities. Such duties have been levied by commercial communities from the earliest periods of recorded history. The Athenians imposed a tax of 20 per cent. on corn and other merchandise imported from abroad. In republican Rome, duties paid on exports and imports constituted an important part of the public revenue. Duties of customs were levied in England long before the conquest. They derived their name from having been customarily charged on certain articles, when carried across the principal bridges and ferries within the kingdom, and on other productions when exported or imported. The articles which were first and principally the subjects of these customs or duties were wool, skin, and leather. Duties of tonnage were duties paid on wine by the tun, and duties of poundage were the ad valorem duties of so much per pound on other commodities. These duties, when granted to the Crown, were called subsidies.

DUTIES OF EXCISE.-The definition of the term excise is not so clear and well established as that of customs. Excise duties were first introduced into England in the year 1643, as part of a new scheme of revenue and taxation devised by Pym and approved by the Long Parliament. These duties consisted of charges on beer, ale, cider, cherry wine and tobacco, to which list were afterwards added paper, soap, candles, malt, hops, and sweets. The only excise duties now surviving in England, similar to those of the original list, are duties on beer, spirits, chicory, imitations and substitutes of chicory and coffee, and chicory mixture. The basic principle of excise duties was that they were taxes on the production and manufacture of articles which could not be taxed through the customs house, and revenue derived from that source is called excise revenue proper. In the course of time licenses were required from the makers of and the dealers in excisable commodities, and these license fees acquired the name of “duties of excise." The next step was to require persons to take out licenses, who neither produced nor manufactured nor disposed of excisable commodities, and these license fees also became known as 66 duties of excise." Thus the list of excise licenses, which at first included only brewers, beer-dealers, beer-retailers, distillers, spirit-dealers, spiritretailers, tobacco and snuff manufacturers and dealers, wine-dealers, and wine-retailers, was expanded by English usage until it embraced auctioneers, owners of armorial bearings, owners of dogs, owners of game, gun-dealers, persons entitled to carry guns, hawkers, house agents, patent medicine sellers, owners of carriages, pawnbrokers, platedealers, refiners of gold and silver, refreshment house keepers, and carriers.

Such was the primary meaning of "excise," and such the secondary and enlarged use of the term. The fundamental conception of the term is that of a tax on articles produced or manufactured in a country. In the taxation of such articles of luxury, as spirits, beer, tobacco, and cigars, it has been the practice to place a certain duty on the importation of these articles and a corresponding or reduced duty on similar articles produced or manufactured in the country; and this is the sense in which excise duties have been understood in the Australian colonies, and in which the expression was intended to be used in the Constitution of the Commonwealth. It was never intended to take from the States those miscellaneous sources of revenue, improperly designated as "excise licenses" in British legislation. It was considered essential that the two correlative powers over customs and excise, properly so called, should run together and be exclusively vested in the Federal Parliament. It was not contemplated that the

Federal Parliament, in acquiring the necessary power to provide uniformity of commercial laws, should absorb the absolute and exclusive control of so wide an area of inland taxation as would be covered by licenses similar to those enumerated in the above list, such as auctioneers and pawnbrokers.

MEANING OF "EXCLUSIVE."-The term "exclusive" does not mean unlimited It means that the power to impose customs and excise is, subject to the Constitution, wholly vested in the Federal Parliament as against the States. It means that the power, being granted to the Federal Parliament, is from the moment of the imposition of uniform duties-taken once and for all from the States; and that the States can thenceforth not legislate for that purpose in any way whatever, even in the absence of Federal legislation. If, for instance, the Federal Parliament imposed uniform customs duties without making any provision for excise, the States would still be powerless to impose excise duties.

This gift of exclusive power is supplemented by an express provision that all laws of the States imposing duties of customs or excise, or offering bounties, shall, from the moment when the exclusiveness attaches, "cease to have effect;" so that the existing laws of the States, as well as their power to make future laws, will be absolutely superseded. (For further notes on the meaning of "exclusive power," see § 234, supra.)

$382. “Shall Cease to have Effect.”

These words operate as a repeal of all the customs and excise duty Acts of the States, and all Acts of the States authorizing bounties, from the time that the federal customs duties come into force. The imposition of the federal tariff is thus made contemporaneous with the sweeping away of the provincial tariffs; the border custom houses cease to exist, so far as the collection of duties is concerned; so that the establishment of uniformity for the whole Commonwealth is accompanied by the abolition of fiscal barriers between the States. This is the stage at which the Federation of Australia, as one commercial people, becomes complete. The Commonwealth is indeed established on the date fixed by the Queen's proclamation; but until the federal tariff is passed by the Federal Parliament, the Constitution is not in full working order; two of its most fundamental provisions-sections 90 and 92—being inoperative. With the imposition of a uniform tariff, the principle of inter-state trade and full commercial unity comes into play, and the last step is taken in the accomplishment of Federation.

It is clear that this annulment of State laws is only co-extensive with the exclusive power of the Federal Parliament, and therefore that it does not affect laws granting bounties on mining for metals, or granting any bounties with the consent of both Houses of the Federal Parliament.

$383.

"Any Grant of or Agreement for any such Bounty." The object of this provision is to protect existing obligations. Though, on the imposition of uniform duties, State bounties, generally speaking, are to end immediately, yet existing contracts, and grants already made, are to hold good. This question was first discussed at the Adelaide session of the Convention, when Sir Geo. Turner expressed some anxiety as to "contracts already in existence, or which may be in existence before this Act comes into force, or before the uniform duties of customs come into operation." (Conv. Deb., Adel., p. 833.) The provision as it now stands was framed by the Finance Committee of the Convention at Melbourne. (See Historical Note.)

Although the general aim of the "bounty" clauses of the Constitution is clear enough, their exact construction is a matter of some difficulty. To discuss the meaning of this provision as to "grants of and agreements for" bounties, it will be necessary to recapitulate the provisions of the Constitution which refer to bounties.

(1.) At the establishment of the Commonwealth, the Federal Parliament has power 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. 51-iii.) At the same moment, however, the control of the payment of bounties passes to the Executive Government of the Commonwealth. (Sec. 86.)

(2.) On the imposition of uniform duties, the power of the Parliament to grant bounties on the production or export of goods becomes exclusive. Thereupon all laws of the States offering bounties on the production or export of goods shall cease to have effect; but any grant of or agreement for any such bounty lawfully made by or under the authority of the Government of any State shall be taken to be good if made before 30th June, 1898, and not otherwise. (Sec. 90.)

(3.) Nothing in this Constitution prohibits a State from granting bounties on mining for metals, or from granting any bounty with the consent of both Houses of the Federal Parliament. (Sec. 91.)

Before the imposition of uniform duties of customs, therefore, the power of the Federal Parliament to grant federal bounties is accompanied by a power of the State Parliaments to grant State bounties; but though there is thus, in a sense, a concurrent legislative power, the executive control of the payment of bounties passes to the Federal Government. (See Note, § 367, supra.) On the imposition of uniform duties, the power of the State Parliaments to grant bounties is excluded, and State laws offering bounties are annulled; but certain "grants of or agreements for " bounties are to be taken to be good. And, lastly, an exception is made, by sec. 91, to both the exclusiveness of the federal power and the annulment of State laws. What, then, are "grants of and agreements for bounties," and how does the Constitution affect them?

AGREEMENT. —The phrase "agreement for any such bounty lawfully made by or under the authority of the Government of any State" clearly means a binding contract actually entered into between the Government and a producer or exporter. No mere political promise, or announcement of policy on the one hand, or public expectation on the other hand, can constitute an agreement; the word can only mean a definite and binding legal agreement. The word "lawfully" seems only inserted to prevent the section being construed to validate any agreements which, apart altogether from this section, might be invalid.

GRANT. The words "grant of" are not so easy to construe. They must, apparently--according to strict grammar -be read as any grant of any such bounty lawfully made by or under the authority of the Government of any State." The grant referred to cannot be the actual payment by the Executive Government of the State to the producer; because that would mean that such payments already made between 30th June, 1898, and the imposition of uniform duties of customs would, upon the latter event, become unlawfully made. It apparently means the appropriation of money to the purpose of the bounty-the actual setting aside of money, under Parliamentary authority, to that purpose.

§ 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

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.

386

Exceptions as to bounties 385.

91. Nothing in this Constitution prohibits a State from granting any aid to or bounty on mining for gold, silver, or other metals 387, nor from granting, with the consent of both Houses of the Parliament of the Commonwealth expressed by resolution, 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