Australian Education Union And Others; Ex Parte State Of Victoria And Another

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(Judgment by: Mason CJ, Brennan J, Deane J, Toohey J, Gaudron J, McHugh J)

Australian Education Union And Others
v Ex Parte State Of Victoria And Another

Court:

Judges:
Mason CJ
Brennan J
Deane JDawson J

Toohey J
Gaudron J
McHugh J

Hearing date: 7-9 June 1994
Judgment date: 7 April 1995

Canberra

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Judgment by:
Mason CJ
Brennan J
Deane J
Toohey J
Gaudron J
McHugh J

These 15 matters initiated by the prosecutor, the State of Victoria, were heard together. They arise indirectly out of budgetary policies pursued by the State of Victoria which entail a considerable reduction in the size of its public sector and the number of its public sector employees, and the introduction of the Employee Relations Act 1992 (Vic) (the ER Act) and the Public Sector Management Act 1992 (Vic) (the PSM Act). A major purpose of the ER Act was to make fresh provision with respect to the law relating to employee relations in Victoria. ^[1] And one of the expressed objects of the ER Act was to establish an employee relations system which facilitates the freedom of employers and employees to choose how they regulate their own affairs. ^[2] Section 179 of the ER Act, which came into operation on 1 March 1993 subject to certain exceptions not presently material, repealed the Industrial Relations Act 1979 (Vic). That Act had established a system of compulsory arbitration by which terms and conditions of employment could be determined by an arbitral body by compulsory arbitration or ascertained by an employment agreement. By virtue of the operation of s 172(6) of the ER Act, all awards in force under the 1979 Victorian Act expired on 1 March 1993 and, from that day, unless a new award was made or the employee and the employer made an employment agreement, employers and employees who had been bound by awards became bound by individual employment agreements incorporating the same terms and conditions as those contained in the relevant expired awards. ^[3] By virtue of the ER Act, the system established by the 1979 Victorian Act, to which we have referred, no longer exists.

Regulations under the Public Service Act 1974 (Vic) (the Victorian PS Act) had also established a similar system. ^[4] By s 109 of the PSM Act, which came into operation on 24 November 1992, the Victorian PS Act was repealed. By the operation of s 83(1) of the PSM Act, which came into operation on 27 November 1992, the ER Act applies to officers and temporary employees in the Victorian Public Service. The effect of certain provisions of the PSM Act was to bring about the expiration on 1 March 1993 of awards made under the Victorian PS Act and to replace them with individual employment agreements incorporating the terms and conditions of relevant provisions of regulations made under the Victorian PS Act. ^[5]

Following the enactment of the PSM Act, voluntary separation packages were offered to government school teachers in Victoria on 23 November 1992. These packages offered ordinary severance conditions relating to accumulated leave entitlements and an additional sum of money as an inducement to acceptance of the offer. The purpose of making the offer was to reduce the number of teachers. It seems that the offer was accepted by some thousands of teachers. A similar offer of voluntary separation was made to public service health workers in Victoria.

One consequence of these developments was that unions whose members' terms and conditions of employment were previously governed by State industrial awards decided to seek for their members the coverage and protection of federal awards. The 15 matters now before the court are the outcome of decisions of that kind. These matters raise important constitutional questions not previously determined by this court because, for the most part, the terms and conditions of employees of State governments have been regulated by State industrial awards.

Apart from Matter M30 of 1994, to which reference will be made shortly, each matter in this court relates to a proceeding in the Australian Industrial Relations Commission (the Commission). In each proceeding, a federal union of employees registered under the Industrial Relations Act 1988 (Cth) (the Act), having served a demand on States and Territories relating to the terms and conditions of employment of employees of government and government agencies, applied to the Commission for the making of a finding of dispute and of a federal industrial award. In all those proceedings, the Commission made a finding of dispute under s 101 of the Act. In nine of the proceedings, ^[6] the Commission went on to make an award under s 111 of the Act.

Matter M30 of 1994 stands apart from the other matters in that it relates to an application to the Commission, pursuant to s 204 of the Act, by the Australian Federal Police Association for alteration of its rules relating to eligibility for membership to enable members of police forces of the States to become members of the organisation.

Orders nisi for prohibition and certiorari have been made in eight matters. ^[7] In the remaining seven matters, McHugh J directed that the applications for orders nisi be argued before a Full Court and, in conformity with those directions, notices of motion were filed.

The prosecutor's case is that the Commission has no power to make any of the findings of dispute or awards or to grant the application for alteration to the rules of the Australian Federal Police Association. According to the prosecutor, the disputes are between on the one hand the State of Victoria and its agencies in the exercise of their governmental functions and on the other hand their respective employees, and s 51(xxxv) of the Constitution does not authorise the exercise of power by the Commission in respect of such matters. That submission, which relates to all matters before the court, was put forward on two grounds:

(1)

the exercise of power by the Commission is precluded by the implied limitation on the exercise of Commonwealth legislative powers which prohibits interference with or curtailment of the governmental functions of the State, or with its capacity to function as a government; and

(2)

the industrial disputes in question are not disputes extending beyond the boundaries of any one State.

The prosecutor further submitted in Matter M21 of 1993 that it is entitled to rely on s 111(1)(g)(iii) of the Act and that s 111(1A) of the Act, which would (if valid) prevent the prosecutor from so relying, is not authorised by the Constitution because it discriminates against the State of Victoria and its agencies and employers in Victoria. The prosecutor also submitted in Matters M8 and M11 that the awards made in those matters discriminate against the State of Victoria and its relevant agencies and are therefore ultra vires s 51(xxxv) of the Constitution.

In support of its first submission, the prosecutor contended that, if awards were to be made by the Commission in conformity with the logs of claims, non-acceptance of which has given rise to the findings of dispute, the whole or substantially the whole of the State's workforce would be subject to federal awards. Further, the prosecutor's capacity to determine the terms and conditions of its workforce would be transferred to the Commission as the logs of claims are comprehensive in their terms. The outline of the various proceedings in the Commission which follows vindicates those contentions on the part of the prosecutor. There is before the court a volume of material which serves to indicate that, in various ways, the awards sought, if made, would have a marked impact on the financial management of the State and restrict in various respects options that otherwise would be available to it in relation to the engagement of staff, termination of employment and the manner in which services are to be provided both to the government and to the public. According to the prosecutor, the conclusion to be drawn from all this is that the exercise by the Commission of the powers sought to be exercised will impair the governmental functions of the State and its capacity to function as a government. Whether the making of findings of dispute, as distinct from the making of the awards sought, has such an effect is a substantial question for decision.

Outline of the various matters

It is unnecessary to set out in detail the history and the evidence that has been adduced in relation to the various matters before the court. A brief sketch will suffice, except in relation to Matters M8 and M24 of 1993 where a little more detail is required. In M8 (and M11) an interim award was made preventing the State from giving effect to its offer to teachers (and nurses) of a voluntary redundancy or departure package. The interim award in M8 has been replaced by a final award. In M24 the log of claims seeks a comprehensive award in relation to virtually all persons employed by the State and its agencies.

Re Australian Education Union and Others (M8 of 1993)

The union served a demand that:

[n]o teacher employed by you shall be terminated from his or her employment, whether by way of voluntary redundancy or otherwise except with the consent of the Australian [Education] Union.

The demand was served on the Minister for Education for Victoria and the responsible minister in Tasmania. The demand was not accepted. The demand, in its application to Victoria, related to persons providing educational services employed by the Directorate of School Education in that State. After finding that there was a dispute between the union and the ministers in the two States "in respect of teachers, their security of employment and rights of termination of such employment", Senior Deputy President Riordan made an interim award requiring the Victorian employer of teachers to take no further steps to process voluntary separation packages offered to government school teachers on 23 November 1992, not to dismiss any teacher otherwise than in accordance with certain provisions of the Teaching Service Act 1981 (Vic) and to comply with certain conditions. The award was expressed to come into operation on 30 November 1992 and to remain in force until 22 December 1992.

On 24 December 1992, the Full Bench of the Commission found that there was an industrial dispute extending beyond the limits of one State. On the same day, the Full Bench made an interim award entitling an employee who had accepted a voluntary separation package to withdraw his or her acceptance and requiring the employer not to terminate the employment of a government teacher otherwise than in accordance with the provisions of the Act referred to in the earlier interim award. However, on 27 October 1994, the Full Bench of the Commission set aside that interim award and made a final award, the Victorian Teachers Redundancy Award 1994. The award is subject to proceedings instituted by the prosecutors in Matter M100 of 1994, which is not presently before the court.

On 20 April 1993 and 22 June 1993, comprehensive logs of claims were served in all States and Territories on authorities responsible for the employment of school teachers. The terms and conditions sought in the logs relate to all aspects of employment. On 26 October 1993, the Commission found that an interstate industrial dispute existed arising from non-acceptance of the log of claims served on 22 June 1993. On 16 December 1993, an interim award was made. The Full Bench dismissed an appeal against the finding of dispute and made an interim award in substitution for that made by Senior Deputy President Riordan. The main effect of the new interim award was substantially to preserve the terms and conditions of employment which prevailed at 20 October 1993. The interim award continues in operation by reason of s 148 of the Act.

Re Australian Nursing Federation and Others (M10 of 1993)

The respondent union served a comprehensive log of claims on the relevant employer authorities in Victoria, Queensland and Tasmania. The log was not accepted. In relation to Victoria, the log of claims relates to nurses who are employed full-time in more than 100 community health centres. The prosecutor is the major source of income of the Victorian community health centres. On 3 June 1991, Commissioner Turbet made a finding of dispute. The prosecutor and the Victorian community health centres have sought a revocation of that finding. Deputy President MacBean rejected the application so far as it related to the Victorian community health centres. The union has served a new log of claims and has sought a variation of the finding of dispute or, alternatively, a new finding. The applications are part heard. The application for an award has been heard by the Full Bench but no decision has been given.

Re Health Services Union of Australia and Others (M11 and M156 of 1993)

The respondent union served a comprehensive log of claims on the Crown in right of the States of Victoria, Western Australia and Tasmania, as well as other employers. The log was not accepted. The log of claims related to the terms and conditions of employment of persons engaged in the provision of nursing and other services to those who are mentally ill or intellectually disabled. On 14 December 1992, Deputy President MacBean made a dispute finding and an interim award similar to that first made in Matter M8 of 1993 requiring the employer to take no further step to process the voluntary departure package. On 23 December 1993, Deputy President MacBean made an interim order, the effect of which was to freeze the terms and conditions of employment of relevant employees as they stood at 2 December 1993, and to require that all persons employed after 23 December 1993 be employed on the terms and conditions of employment in force on 17 November 1992. On 22 January 1993, the 1992 interim award was varied by consent to become the Victorian Public Service Health Workers Voluntary Departure Package Interim Award 1993. The varied award enabled the Victorian Government to process voluntary departure packages in accordance with certain agreed procedures.

Re Australian Nursing Federation and Others (M12 of 1993)

The respondents, the Australian Nursing Federation (the ANF) and the Health Services Union of Australia (the HSUA), each served a comprehensive log of claims on the Crown in right of the States of Victoria and Queensland and on employers of nurses and other persons working in private and public hospitals, nursing homes, community health centres, and in psychiatric, mental health and similar public institutions. The second respondent served a log in similar terms on the Commonwealth. The logs were not accepted. The logs cover registered nurses (ANF) and enrolled nurses (HSUA), in total the equivalent of 18,000 full-time employees. The Commission made an award and the Full Bench dismissed an appeal against the making of the award.

Re Health Services Union of Australia and Others (M15 of 1993)

The respondent union served a comprehensive log of claims on employers in 3630 public and private hospitals, nursing homes and health care facilities in Victoria and Tasmania. The log was not accepted. The log covers persons employed in administrative and professional (non-nursing) classifications. The log of claims and that served by the HSUA in M17 of 1993 together cover 19,000 equivalent full-time employees. The latter log of claims relates to different classifications in what are essentially the same institutions. On 10 January 1992, Commissioner Turbet made a finding of dispute. On 23 December 1993, Senior Deputy President Riordan made the Health Services Union of Australia (Victoria -- Public Sector) Interim Award 1993 which requires that Victorian employers afford their employees the terms and conditions of employment prescribed by earlier awards of the Victorian Industrial Relations Commission.

Re Health Services Union of Australia and Another (M17 of 1993)

The log of claims, which was served by the respondent union on employers in 3191 hospitals, community health centres and other institutions in Victoria, Tasmania, Western Australia and the Australian Capital Territory, is that referred to in the preceding paragraph relating to Matter M15 of 1993. It covers employees being food and domestic service workers, cleaners, laboratory assistants, gardeners and others. On 11 December 1992, Senior Deputy President Riordan made a finding of dispute. An appeal to the Full Bench of the Commission was heard but not determined before McHugh J made an order nisi in relation to further proceedings on the finding of dispute. On 23 December 1993, Senior Deputy President Riordan made an interim award in terms relevantly identical to the award made in Matter M15 of 1993.

Re Australian Liquor, Hospitality and Miscellaneous Workers Union and Others (M20 of 1993)

The respondent union served a comprehensive log of claims on relevant government employers in Victoria, Western Australia and Queensland. The log was not accepted. The log of claims relates to cleaners. Three hundred cleaners approximately are employed by the Victorian Government in the domestic arts field. On 18 December 1992, Deputy President Hall found the existence of an industrial dispute, but on 21 December the Deputy President declined to hear the matter further and refused an application for an interim award. As the Victorian Department of School Education no longer employs cleaners, the proceeding in the Commission has not been taken further.

Re Australian Liquor, Hospitality and Miscellaneous Workers Union and Another (M21 of 1993)

The log of claims referred to in the preceding paragraph was also served on five State schools in Victoria, other Victorian Government agencies, and kindergartens and child care centres in Victoria, the Australian Capital Territory and the Northern Territory. The relevant part of the log of claims covers employees in the child care industry. The employers proposed to make an application that the Commission refrain from dealing with the matter but Vice-President Moore found that s 111(1A) of the Act precluded the making of an application under s 111(1)(g)(iii) and, on 13 May 1993, found the existence of an industrial dispute arising from non-acceptance of the log of claims. On 24 November 1993, the Kindergarten and Play Centre Assistants (Victoria) Interim Award was made. It reintroduced 17.5% annual leave loading and obliged employers to afford to their employees terms and conditions existing as at the date of the making of the award.

Re Australian Liquor, Hospitality and Miscellaneous Workers Union and Others (M22 of 1993)

Again, this matter concerns the log of claims referred to in the last two preceding paragraphs. The relevant part of the log relates to approximately 3500 teacher aides in Victoria, Western Australia and Queensland, that is, persons who assist teachers in State primary and secondary schools. On 6 November 1992, Commissioner Frawley found the existence of a dispute between the union and the Western Australian and Queensland employers and, on 13 January 1993, the Commissioner varied this finding of dispute to include the Victorian employers. On 12 April 1994, Commissioner Frawley decided to make an interim award and on 5 May 1994 the Teacher Aides (Victorian Government Schools) Interim Award 1994 was made.

Re Australian Liquor, Hospitality and Miscellaneous Workers Union and Others (M23 of 1993)

Again, the log of claims served in this matter was that referred to in the preceding three paragraphs. The relevant part of the log relates to approximately 50 persons employed in cleaning and security duties in Victorian Government departments, statutory authorities and schools. The log was also served on the South Australian Department of Housing and Construction, the Minister for Defence and the Commonwealth Treasurer. A finding of dispute was made. The Full Bench dismissed an appeal and recorded a finding itself. On 11 August 1993, Deputy President Acton refused an application for an interim award.

Re State Public Services Federation and Another (M24 of 1993)

In late 1991, the respondent union (the SPSF) served a comprehensive log of claims on public sector bodies in all States (the 1991 log). The 1991 log relates to the employment of approximately 33,000 public sector employees and office holders. The persons covered perform a wide range of clerical, administrative and professional duties. There is nothing in the 1991 log to suggest that employees at the highest levels of government service are excluded from the ambit of the claims. Further, the provisions in the 1991 log relating to terms and conditions of employment and termination of employment draw no distinction, except as to financial remuneration and allowances, between ordinary employees and those serving at the highest level of government and office holders.

Altogether, 191 Victorian ministries and departments, tribunals, authorities, commissions and other agencies of the State of Victoria are affected as employers to be bound by any award made. The employers who would be so affected include 20 ministries and departments, 40 courts, tribunals, commissions and boards having disciplinary or regulatory functions and 36 statutory and other offices. Among the employers named are "Parliament House" (and parliamentary officers, including the Chief Hansard Reporter and the Chief Parliamentary Counsel's office), the County Court (but not the Supreme Court), the office of Governor, the office of Solicitor-General and the Queen in right of the State of Victoria.

On 8 April 1992, the Commission made a finding of dispute and an interim award entitled the State Government Schools Professional, Administrative, Clerical, Computing and Technical (PACCT) Vic (Interim) Award 1992. ^[8] This court subsequently handed down its decision in Re State Public Services Federation;Ex parte Attorney-General (WA) (the SPSF case), ^[9] as a result of which the SPSF served another log of claims on the public sector bodies (the 1993 log). The terms of the 1993 log differed in a number of respects from those in the 1991 log, but they were similarly comprehensive. The 1993 log was not acceded to and the Commission found the existence of an industrial dispute. On 18 February 1994, the SPSF sent a letter of demand entitled "The Amended Demands" to the public sector bodies (the 1994 claims). The terms of these claims differed in a number of respects from those in the 1993 log, but they were similarly comprehensive.

On 9 May 1994, Commissioner Bacon made an interim order "in respect of all employees of the Crown in right of the State of Victoria eligible to be members of the [SPSF] who are employed at Her Majesty's prisons". The order prevents the operation of s 29 of the Public Sector Management (Amendment) Act 1993 (Vic). That section allows for the transfer of designated employees to designated employers, or the termination of their employment if they refuse a transfer in certain circumstances.

On 12 September 1994, some months after argument was heard in this court, a Full Bench of the Commission found that the claims in the 1991 log were abandoned by the service of the 1993 log and, accordingly, revoked the 1992 dispute finding from the date of the 1993 log. The PACCT interim award seems to have remained untouched by the decision. The Commission also found that the 1993 log was abandoned by the making of the 1994 claims but did not revoke the dispute finding because the relevant matter was not before it.

Re State Public Services Federation and Others (M25 of 1993)

This matter concerns the dispute arising from the non-acceptance of the SPSF log of claims referred to in M24 of 1993 and the log of claims served by the respondent union (the ASU) on the Metropolitan Fire Brigades Board and the South Australian Metropolitan Fire Services. The ASU log, and the SPSF log so far as it is relevant, concern approximately 172 professional, clerical and administrative employees of the Metropolitan Fire Brigades Board and the Country Fire Authority. As noted in the previous matter, Deputy President MacBean found the existence of an industrial dispute in relation to the SPSF log on 8 April 1992. This finding, however, was subsequently revoked from the date of the SPSF's 1993 log. The Commission did not make any relevant awards or orders based upon this dispute finding before that revocation took place. On 26 June 1992, Deputy President Polites found the existence of such a dispute in relation to the ASU log. The ASU dispute finding remains unaffected by the revocation of the SPSF dispute finding.

Re Printing and Kindred Industries Union of Australia and Another (M26 of 1993)

The respondent union served a comprehensive log of claims on the prosecutor and a number of employers in the printing industry. The log of claims relates to the employment of persons engaged in printing and publishing of whom 80 are employed by the prosecutor, 49 being eligible to be members of the respondent union.

On 25 November 1992, the Commission made a finding of dispute. However, Printing and Publishing Services Victoria (previously known as the Victorian Government Printer) was excepted from the finding. On 11 February 1993, the exception was amended so as to substitute the Crown in right of the State of Victoria. On 18 May 1993, Commissioner Merriman found that the State Government of Victoria was a party to the dispute.

Re Australian Federal Police Association and Another (M30 of 1994)

The respondent union made an application pursuant to s 204 of the Act for consent to alterations to its industry and eligibility rules which are presently expressed so as to confine the relevant industry to the Australian Federal Police and confine membership to the members of that body. The alteration sought would extend the industry to the police force or service of any State or Territory or the Commonwealth of Australia and extend membership to the members of any such force or service and certain other classes of person. On 15 November 1993, Deputy President Williams consented to the alteration sought.

The implied limitation on the exercise of the legislative powers of the Commonwealth

(a)The meaning of the expression "industrial dispute" in s 51(xxxv) and its application to disputes between a State and its employees engaged in administrative services

The unanimous decision of the court in R v Coldham;Ex parte Australian Social Welfare Union (the Social Welfare Union case) ^[10] established that the expression "industrial dispute" in s 51(xxxv) of the Constitution bears its popular meaning rather than the narrow meaning "dispute in an industry". The adoption of the popular meaning meant that disputes between a State or a State agency and its employees were capable of falling within s 51(xxxv) except perhaps disputes between a State or State agency and employees engaged in the administrative services of the State. ^[11] That class of public servant had been thought to stand outside the conception of industry in the context of the narrow meaning of "industrial dispute". ^[12] In the Social Welfare Union case,the court did not consider whether employees engaged in the administrative services of a State stood outside the reach of s 51(xxxv), though the chain of reasoning in the case eroded the basis on which the administrative services exception had been maintained. However, the court specifically reserved the question whether the exception could be supported by reference to the implied limitations on the exercise of Commonwealth legislative power. ^[13] Referring to earlier cases, the court observed: ^[14]

If at least some of the views expressed in those cases are accepted, a Commonwealth law which permitted an instrumentality of the Commonwealth to control the pay, hours of work and conditions of employment of all State public servants could not be sustained as valid.

In the SPSF case, ^[15] Dawson J observed:

[T]here is an argument, to say the least, that an award or awards of the Commission made with the purpose of covering all the public servants of a State would so hamper the State in the exercise of its constitutional functions that it would be beyond the power of the Commonwealth Parliament to authorise or to give legislative force to such an award or awards. No government can function effectively otherwise than through its public servants and if another agency can impose upon a State government the terms and conditions of employment of its public servants... including restrictions upon engagement and dismissal, that government's capacity to exercise for itself its constitutional functions may be impaired [emphasis in original].

On the other hand, in Re Lee;Ex parte Harper ^[16] Mason, Brennan and Deane JJ considered that there is:

much to be said for the proposition that, assuming that there is no discrimination against a State or singling out, such as occurred in Queensland Electricity Commission v Commonwealth, the exercise of the arbitration power in the ordinary course of events will not transgress the implied limitations on Commonwealth legislative power. The exercise by the Commission of its authority with respect to the employment relationship between a State and its employees in the course of settling an interstate industrial dispute appears to fall within s 51(xxxv).

Their Honours went on to express a view about the relationship between the implied limitations and the specific legislative powers, which has been the subject of further elucidation and to which reference will be made shortly. Their Honours then said: ^[17]

On the view which we are presently inclined to take of the implied limitations, they do not protect the States from the consequences of the exercise by the Commonwealth of the powers granted to it by the Constitution which contemplate their application to the States.

Underlying the statements quoted above is an acceptance of the basic proposition that s 51(xxxv) empowers the parliament to make laws which apply to the States. ^[18] So much had been accepted in the Engineers' case, ^[19] where it was held that the arbitration power extended to a dispute between an organisation of employees and employers who included the Minister for Trading Concerns (WA), the State Implement and Engineering Works, and the State Sawmills. Likewise, in Ex parte Professional Engineers' Association , ^[20] this court held that there was an interstate industrial dispute between the Association of Professional Engineers on the one hand and, on the other hand, the State of New South Wales, its agencies (including the Public Service Board, the Department of Public Works and the Department of Main Roads) as well as other parties. And, in Re Lee;Ex parte Harper, the court held that the power conferred by s 51(xxxv) could extend to an industrial dispute to which an organisation representative of State school teachers was a party.

These authorities did not contradict the administrative services exception or the possibility that it could be supported by the implied limitation on the exercise of Commonwealth legislative power. Nor do these authorities refute the principal submission put forward by the prosecutor, namely, that the implied limitation protects from an exercise of the arbitration power a State's "operations of government". The prosecutor argued that this expression included the administration of the affairs of the State, the provision of services internally in order to enable the government to function and the provision of services for the public.

(b)The relationship between the limitation and the specific legislative powers of the Commonwealth

It is convenient to examine first the relationship between the limitation and the power conferred by s 51(xxxv) of the Constitution, leaving the scope and content of the limitation for later consideration. In Re Lee;Ex parte Harper, Mason, Brennan and Deane JJ stated: ^[21]

Although the purpose of the implied limitations is to impose some limit on the exercise of Commonwealth power in the interest of preserving the existence of the States as constituent elements in the federation, the implied limitations must be read subject to the express provisions of the Constitution. Where a head of Commonwealth power, on its true construction, authorises legislation the effect of which is to interfere with the exercise by the States of their powers to regulate a particular subject matter, there can be no room for the application of the implied limitations.

In the SPSF case,the relationship between the implied limitation and the power was expressed in slightly different terms. Mason CJ, Deane and Gaudron JJ said: ^[22]

[W]e should point out that the statement made in Re Lee;Ex parte Harper , ^[23] that the implied limitations must be read subject to the express provisions of the Constitution, should not be understood as excluding consideration of implications derived from the Constitution until the scope of s 51(xxxv) is ascertained by reference to its terms alone. Rather, the scope of that provision must be ascertained by reference not only to its text but also to its subject matter and the entire context of the Constitution, including any implications to be derived from its general structure.

Brennan J said: ^[24]

The passage [in Re Lee;Ex parte Harper] should not be read as suggesting that the scope of a State immunity implied by the general provisions of the Constitution can be ascertained by considering the overriding effect of a valid Commonwealth law on an inconsistent exercise of State power. The tentative view was expressed in that case that the implied limitations "do not protect the States from the consequences of the exercise by the Commonwealth of the powers granted to it by the Constitution which contemplate their application to the States". ^[25] So much must be accepted. But the critical question is the scope of the relevant Commonwealth power. The true construction of s 51(xxxv) would have to be ascertained before the effect of that provision on any countervailing implication could be determined.

His Honour continued: ^[26]

It is clear that implications derived from the general structure of the Constitution may qualify express provisions conferring legislative power. ^[27] Thus in Queensland Electricity Commission v Commonwealth, it was held that a law enacted under the power conferred by s 51(xxxv) was invalid for conflict with an implied limitation. The proposition that "implied limitations must be read subject to the express provisions of the Constitution" does not in terms acknowledge that the construction of a head of legislative power is itself ascertained by reference to the entire context of the Constitution and that its scope may be limited by implication ... The construction of s 51(xxxv) or, for that matter, the construction of any other legislative power in s 51, calls for a consideration of the text of the power, its subject matter and the general constitutional context. None of these factors can be considered in isolation, nor is there a sequence to be followed in considering one factor before another.

The correct approach to the question is that stated in the passages just quoted.

(c)The scope and content of the implied limitation

The implied limitation on the exercise of Commonwealth legislative powers has been expressed in various ways. It is convenient to begin discussion of the implied limitation with the statement of principle, based on the rule of interpretation adopted in th eEngineers' case,by Dixon J (with whom Rich J agreed) in Australian Railways Union v Victorian Railways Commissioners : ^[28]

[E]very grant of legislative power to the Commonwealth should be interpreted as authorising the parliament to make laws affecting the operations of the States and their agencies, at any rate if the State is not acting in the exercise of the Crown's prerogative and if the parliament confines itself to laws which do not discriminate against the States or their agencies.

After expressing the view that the arbitration power authorises the making of laws which apply to the States and to the State Commissioners for Railways, his Honour cautioned that the Engineers' case should not be understood as saying that: ^[29]

over a State the power of the Parliament is as full and ample as over the subject and allows the same choice of remedies, measures and expedients to secure fulfilment of the legislative will.

His Honour suggested that s 106 of the Constitution might provide the restraint upon the legislative power over States and might have the effect "that no law of the Commonwealth can impair or affect the Constitution of a State". ^[30]

The first reservation mentioned in the first passage quoted above relating to the exercise of the prerogative has been displaced by judicial decisions. ^[31] The second reservation relating to discrimination was much discussed in Melbourne Corp v Commonwealth ^[32] and Victoria v Commonwealth (the Payroll Tax case). ^[33] The underlying basis for that reservation, or implication as it is now described, was stated by Dixon J in Melbourne Corp in these terms: ^[34]

The foundation of the Constitution is the conception of a central government and a number of State governments separately organised. The Constitution predicates their continued existence as independent entities.

His Honour went on to say: ^[35]

[T]he efficacy of the system logically demands that, unless a given legislative power appears from its content, context or subject matter so to intend, it should not be understood as authorising the Commonwealth to make a law aimed at the restriction or control of a State in the exercise of its executive authority.

His Honour described s 48 of the Banking Act 1945 (Cth) as a "law directly operating to deny to the States banking facilities open to others, and so to discriminate against the States or to impose a disability upon them". ^[36] In so describing s 48, Dixon J ^[37] found it to infringe the prohibition to be implied from the Constitution against:

a law which discriminates against States, or a law which places a particular disability or burden upon an operation or activity of a State, and more especially upon the execution of its constitutional powers.

Although the comments of Dixon J were couched principally in terms of discrimination against States and the imposition of a particular disability or burden upon an operation or activity of a State or the execution of its constitutional powers, his Honour clearly had in mind, as did Latham CJ, Rich and Starke JJ, that the legislative powers of the Commonwealth cannot be exercised to destroy or curtail the existence of the States or their continuing to function as such. ^[38] Whether this means that there are two implied limitations, two elements or branches of one limitation, or simply one limitation is a question which does not need to be decided in this case. However, for convenience, we shall proceed on the footing that the limitation has two elements, the non-discriminatory element having a particular relevance to the argument now being considered.

In th ePayroll Tax case, ^[39] Walsh J and Gibbs J agreed with Dixon J's view i nMelbourne Corp and Menzies J appears to have been of a similar opinion. ^[40] Although it has been suggested that a Commonwealth law cannot curtail or interfere in a substantial manner with the exercise of constitutional power by the States, it is not easy to give any precise meaning to that proposition. The decision in th ePayroll Tax case is inconsistent with the notion that any interference with a State or any impairment of the exercise of its functions is a violation of the implied limitation. Subsequently, in Commonwealth v Tasmania (the Tasmanian Dam case) , ^[41] Mason J, Brennan J and Deane J considered that the prohibition, in its relevant aspect, was directed against the exercise of Commonwealth legislative powers in a manner which would be inconsistent with the continued existence of the States or their capacity to function. ^[42] Mason J and Brennan J considered that this aspect of the limitation is directed against the impairment of the capacity of a State to function as a government, rather than against interference with or impairment of any function which a State government undertakes. ^[43]

The foregoing discussion, brief though it is, conveys some impression of the difficulty which the court has experienced in formulating with a sufficient degree of precision the implied limitation on the exercise of Commonwealth powers. That is not the only difficulty. The decided cases in which the implication has been invoked offer little guidance, except in cases of discrimination or singling out, as to its application, in particular what it is that constitutes an impairment or curtailment of the capacity of a State to function as a government.

(d)The prosecutor's argument that the limitation protects government functions

The prosecutor submitted that the statements in the Tasmanian Dam case,when they refer to impairment of a State's capacity "to function as a government", extend to any impairment of capacity to exercise government functions. The prosecutor's submission is not in accordance with the natural meaning of the words used. Nor does it accord with the substance of the views expressed in a number of judgments in which the implied limitation has been discussed. Thus, in Melbourne Corp , ^[44] Latham CJ, with reference to functions or activities essential to the existence of government, said that:

the raising of money by taxation [and] provision for the custody, management and disposition of public revenue moneys are activities which are essential to the very existence of a government.

His Honour referred also to the power of borrowing money, of providing for the custody and expenditure of loan moneys and making provision for the custody and expenditure of public moneys by using a bank. All these activities were, in his Honour's view, essential to the existence of a State government ^[45] or, as we would put it, to its capacity to function as a government.

It was also recognised in Re Tracey;Ex parte Ryan ^[46] that State courts are an essential branch of the government of a State and that their continuance by s 106 of the Constitution precludes an exercise of Commonwealth legislative power prohibiting them from exercising their functions.

In the Payroll Tax case, ^[47] Menzies J referred to the implied limitation in the context of interference with a State carrying out "its constitutional functions of government", a narrower expression than "governmental functions". Gibbs J referred to a law which curtailed or interfered with "the exercise of constitutional power by the States", but left open the question of what is the constitutional power that is protected. ^[48] Windeyer J was not prepared to accept that there was a satisfactory distinction between essential functions of government and other functions undertaken by government, ^[49] a view which was shared in that case by Barwick CJ, Walsh J and Gibbs J ^[50] and which has been reflected in other judgments of this court. ^[51]

In our view, the prosecutor's submission on this point is against the weight of modern authority and draws a distinction which is unsatisfactory. To say that the limitation protects the existence of the States and their capacity to function as a government is to give effect more accurately to the constitutional foundation for the implied limitation identified by Dixon J in the passages earlier quoted from Australian Railways Union,including s 106 of the Constitution. To press the limitation as far as the prosecutor seeks to take it would travel beyond the language of s 106 and would confer protection on the exercise of powers by the States to an extent which is inconsistent with the subordination of those powers to the powers of the Commonwealth through the operation of s 109 of the Constitution. And the argument, if successful, would protect a substantial part of a State's workforce from the impact of federal awards, notwithstanding that the operation of those awards in relation to school teachers, health workers and other categories of employees would not destroy or curtail the existence of the State or its capacity to function as a government.

The fact is that the existence of the States and their Constitutions and their capacity to function as governments would not be impaired by the operation of federal awards made in respect of the vast majority of the employees sought to be covered by the logs of claims, at any rate if the award provisions were confined to minimum wages and working conditions which take appropriate account of any special functions or responsibilities which attach to them. The freedom of State governments to determine terms and conditions of employment of employees would be restricted but that is a consequence of the application of the arbitration power to States. Whether the making of a comprehensive award would result in a relevant impairment is another question which we leave for later discussion.

We are unable to accept the distinction which the prosecutor drew between "governmental functions" and trading functions. The argument was that States function as a government when carrying out public functions for a public purpose. On this view, health, education and police functions are governmental functions. Indeed, it is difficult to see why, on this view, trading functions are not governmental, if they are undertaken by government in the public interest. The distinction is unsatisfactory for that reason.

(e)The argument that the implied limitation protects the administrative services exception

A long-standing problem with the administrative services exception is that it has always been difficult to define or describe what is meant by the expression "the administrative services of a State" and it cannot mean all employees of the State who do some administrative work. ^[52] The Solicitor-General for New South Wales, who argued that the exception was supported by the implied limitation, suggested that some guidance as to the meaning of the expression may be provided by the distinction between "policy" and "operational" decisions sometimes discussed in the law of torts in the context of government liability. The guidance, if it can be so called, is obscure. The Solicitor-General was on stronger ground in contending that the exercise of legislative, administrative and judicial power is, and has always been, regarded as governmental. But the correlation between the exercise of these powers and the exception is by no means apparent. What is more, the exception is not related in any way to the implied limitation or to the purpose which it serves. That purpose protects the State and its capacity to function as a government. The exception consists of a category of employees and is not directed to functions of government and even less to capacity to function as a government.

(f)The argument that the implied limitation protects the integrity or autonomy of a State

The Solicitor-General for South Australia contended that the implied limitation protects the integrity or autonomy of a State. In this respect he drew a distinction between external services (not protected) and internal services (protected). Internal services were said to include policy formulation, reporting to parliament, the collection and administration of government revenue and the provision of services to parliament and the judiciary. It was claimed that the protection would embrace, among others, the Treasury, the Attorney-General's Department, court staff and the police. It was conceded that the content of an award was a relevant consideration. Thus the Commission could regulate remuneration and disputes about remuneration and other payments to employees but it could not prescribe employment qualifications, eligibility and termination procedures. The latter, so the argument runs, would impair the integrity or autonomy of the State. It will be convenient to deal a little later with this argument which, in our view, has some force.

(g)Conclusion with respect to the scope and content of the implied limitation

Our rejection of the particular submissions made by the prosecutor and supporting interveners other than that advanced by South Australia as to the scope and content of the implied limitation leads us, subject to consideration of one gloss put forward by the prosecutor, to express the scope and content of the limitation in this way. The limitation consists of two elements: (1) the prohibition against discrimination which involves the placing on the States of special burdens or disabilities (the limitation against discrimination) and (2) the prohibition against laws of general application which operate to destroy or curtail the continued existence of the States or their capacity to function as governments. ^[53]

The prosecutor relied, in particular, on the formulation of the second element in the limitation which is to be found in the reasons for judgment of Deane J in Queensland Electricity Commission ^[54] where his Honour stated that its central operation is to preclude the exercise of Commonwealth powers "to control the States" or in a manner which would be inconsistent with the continued existence of the States as independent entities and their capacity to function as such. The exercise of Commonwealth power "to control the States" would be an exercise of power inconsistent with the continued existence of the States as independent entities and their capacity to function as such. So the correctness of the major proposition asserted by the prosecutor may be accepted.

In elaborating the concept of "control" for the purposes of the argument, the prosecutor drew attention to observations of Dixon J in Melbourne Corp ^[55] where his Honour, in the context of a law aimed at controlling some particular exercise of a State's exercise of its executive power, said:

Such a law wears two aspects. In one aspect the matter with respect to which it is enacted is the restriction of State action, the prescribing of the course which the Executive Government of the State must take or the limiting of the courses available to it. As the operation of such a law is to place a particular burden or disability upon the State in that aspect it may correctly be described as a law for the restriction of State action in the field chosen. That is a direct operation of the law.

But it is important to appreciate that, in his Honour's view, the implied limitation precluded the exercise of Commonwealth legislative power "for a purpose of restricting or burdening the State in the exercise of its constitutional powers". ^[56] To do so "brings into question the independence from federal control of the State in the discharge of its functions". ^[57]

At this point it is convenient to consider South Australia's argument based on impairment of a State's "integrity" or "autonomy". Although these concepts as applied to a State are by no means precise, they direct attention to aspects of a State's functions which are critical to its capacity to function as a government. It seems to us that critical to that capacity of a State is the government's right to determine the number and identity of the persons whom it wishes to employ, the term of appointment of such persons and, as well, the number and identity of the persons whom it wishes to dismiss with or without notice from its employment on redundancy grounds. An impairment of a State's rights in these respects would, in our view, constitute an infringement of the implied limitation. On this view, the prescription by a federal award of minimum wages and working conditions would not infringe the implied limitation, at least if it takes appropriate account of any special functions or responsibilities which attach to the employees in question. There may be a question, in some areas of employment, whether an award regulating promotion and transfer would amount to an infringement. That is a question which need not be considered. As with other provisions in a comprehensive award, the answer would turn on matters of degree, including the character and responsibilities of the employee.

In our view, also critical to a State's capacity to function as a government is its ability, not only to determine the number and identity of those whom it wishes to engage at the higher levels of government, but also to determine the terms and conditions on which those persons shall be engaged. Hence, ministers, ministerial assistants and advisers, heads of departments and high level statutory office holders, parliamentary officers and judges would clearly fall within this group. The implied limitation would protect the States from the exercise by the Commission of power to fix minimum wages and working conditions in respect of such persons and possibly others as well. ^[58] And, in any event, ministers and judges are not employees of a State.

The application of the implied limitation to the facts

The prosecutor relied on the argument based on the implied limitation for two reasons. The first was to challenge the findings of dispute made by the Commission, and the second was to challenge the interim awards that had been made. In relation to the challenge to the findings of dispute, the prosecutor sought to show that the Commission is precluded from exercising its award-making powers at all so as to bind the States in respect of their employees or at least a significant part of the workforce represented by the SPSF. If the prosecutor had been able to demonstrate -- and this it has demonstrably failed to do -- that the Commission lacks power to make any award binding the States in respect of the employment of any of their employees or any of the employees represented by the SPSF, then the prosecutor might have had a powerful case for holding that the Commission had no power to make the relevant dispute findings.

However, the rejection of the arguments put forward by the prosecutor and the intervening States -- arguments which would have given the implied limitation a wide-ranging operation -- means that the Commission has power to make awards binding the States and their agencies in relation to minimum wages and working conditions which take account of the special functions and responsibilities, if any, of a broad range of public servants and employees, including many members of the SPSF. On the other hand, as we have indicated, the operation of the implied limitation would preclude the Commission from making an award binding the States in relation to qualifications and eligibility for employment, term of appointment and termination of employment, at least on the ground of redundancy. It would also preclude the Commission from making an award binding the States in relation to the terms and conditions of employment or engagement of persons such as ministers, ministerial assistants and advisers, heads of department and senior office holders -- as well as parliamentary officers and judges. ^[59] What impact the implied limitation would have on the power of the Commission to make an award prescribing particular minimum terms and conditions of employment for particular classes of employees, eg, term of appointment, procedures and criteria for promotion and transfer, and termination on grounds other than redundancy, was a question which was not explored in detail in the arguments presented to this court. Obviously these are matters to be considered in the Commission if the proceedings are taken further in that tribunal.

For present purposes the important point which emerges is that the prosecutor has failed to demonstrate that the Commission is precluded from making awards of the kind sought, even though the Commission may not be able to make the awards sought in relation to all public servants and employees sought to be covered. But that does not mean that the Commission lacked power to make dispute findings. It is no objection to the validity of a finding of dispute that the Commission lacks power to make an award binding all the parties to a dispute. That point was clearly demonstrated by Dixon CJ in Ex parte Association of Professional Engineers, Australia. ^[60] Likewise, it is no objection to the validity of a finding of dispute that the Commission lacks power to make an award containing all the provisions sought in a log of claims, so long at least as it has the power to make part of what is sought.

Accordingly, the prosecutor's challenge to the findings of dispute made by the Commission, at least in so far as it was based on the suggested operation of the implied limitation, is premature. The "interstateness" limb of the challenge will be dealt with shortly.

The prosecutor also sought to challenge the interim awards made by the Commission. In this way, the prosecutor attempted to distinguish this case from the SPSF case ^[61] in this court in which Toohey J said:

It would be premature for the court to intervene at this stage of the proceedings in the Commission unless it were quite clear that the Commission lacked jurisdiction to make an award based on the log of claims. That is by no means clear.

In that case, proceedings in the Commission had not advanced beyond a finding of dispute.

The mere making of interim awards as such does not bring the cases within the operation of the implied limitation. But, in the light of the operation of the implied limitation as we have explained it, the making of interim awards regulating or restricting the offer of voluntary departure packages to employees of the State and its agencies cannot be supported. Those interim awards purported to restrict the prosecutor's or its agencies' right to terminate the services of the employees on redundancy grounds. Accordingly, the interim awards made in Matters M11 and M156 cannot remain on foot.

Are the industrial disputes interstate disputes?

It is convenient to deal now with the prosecutor's submission, supported by the intervening States, that the disputes arising from the non-acceptance of the logs of claims are not interstate disputes. In essence, the argument is that an industrial dispute between a State and its employees engaged in the performance of the State's governmental functions cannot form part of an industrial dispute extending beyond the limits of one State within the meaning of s 51(xxxv) of the Constitution.

Some of the considerations urged in support of the prosecutor's argument seemed to go to a different question, namely, whether the disputes were properly characterised as industrial disputes but, as already mentioned, that question was not raised by the prosecutor. The matters on which the prosecutor relied were the limitation of a State's jurisdiction and activities within its own boundaries, the lack of a common interest as between States in the business of "State government", and the traditional autonomy that State governments and their colonial predecessors have enjoyed with respect to the engagement and termination of the services of public servants. Inevitably the argument rests rather heavily on the difference between private and public service employment. When all these matters are taken into account, it is suggested that two conclusions should be drawn: (1) that disputes of the kind in question necessarily remain at the level of intra-State disputes between a State and its public servants and do not merge into or become part of a wider interstate dispute; and (2) that disputes do not have an interstate quality as that requirement must be understood in the context of s 51(xxxv). The second suggested conclusion rests on the notion that it could not have been contemplated when the Constitution was adopted and enacted that s 51(xxxv) would apply to disputes between States and their employees.

The prosecutor's submission is inconsistent with the course of decisions in this court. Ever since the decision in the Engineers' case it has been consistently recognised that a dispute between an organisation of employees and a minister of the Crown for a State acting under the authority of a statute of that State as an employer can amount to an interstate industrial dispute within the meaning of s 51(xxxv). In that case, the court held that the dispute between the claimant Society on the one hand and, on the other hand, a large number of employers throughout Australia, including the Minister for Trading Concerns (Western Australia), the State Implement and Engineering Works and the State Sawmills, both of that State, was a dispute extending beyond the limits of one State. In Ex parte Association of Professional Engineers, Australia, to which we have previously referred, the court held that there was an interstate industrial dispute between the State of New South Wales and various government departments on the one hand and employed engineers on the other hand. Subsequently, in th eSocial Welfare Union case, where the narrow conception of "industrial dispute" was rejected and the popular meaning of the term adopted, the correctness of the decisions in the Engineers' case and in the Professional Engineers'case was accepted. And, in Re Lee;Ex parte Harper, the court held that the power conferred by s 51(xxxv) would extend to an interstate dispute to which an organisation representative of State school teachers was a party.

In the cases referred to in the preceding paragraph, the primary question for consideration by the court was not whether a relevant dispute had, or would have, the requisite interstate quality but, in the Engineers' case,whether the doctrine of implied intergovernmental immunity was to be accepted so as to impose limits on the power conferred by s 51(xxxv) and, in the other cases, whether the dispute was, or a relevant dispute would be, "industrial". However, in each of the cases, the court proceeded on the footing that a dispute between a State (or its agency) and its employees could give rise to an interstate industrial dispute. The acceptance by a unanimous court in the Social Welfare Union case of the popular meaning of the expression "industrial dispute" in s 51(xxxv) and the rejection of the narrow meaning based on the concept of a dispute in an industry does not affect the conclusion on "interstateness" reached in the cases. The reasoning to that conclusion is unaffected by that change.

The notion that interstate employers must have a common business or operate in a particular industry as a pre-condition of the existence of interstate industrial dispute has never been accepted. Although statements have been made which assert that the nexus or unifying factor which combines in a single industrial dispute a number of demands made on behalf of a number of employees is "the industry" itself, ^[62] the nexus may also be found in the calling or vocation in which the participants are engaged. Very recently, in Re Australasian Meat Industry Employees' Union;Ex parte Aberdeen Beef Co Pty Ltd ^[63] reference was made to the statement of Starke J in Burwood Cinema Ltd v Australian Theatrical and Amusement Employees' Association: ^[64]

An industrial dispute is constituted, both historically and in point of fact, where a difference exists between workmen themselves, or perhaps between employers themselves, or between employers or classes of employers, and workmen engaged in some common industry or calling, concerning industrial conditions affecting a class so engaged and not merely affecting individual and definite members thereof. An industrial relationship, and not a contractual relationship, is all that is necessary to constitute an industrial dispute. The nexus is to be found in the industry or in the calling or avocation in which the participators are engaged.

And, in the final analysis, the adoption of the popular meaning of "industrial dispute" and the rejection of the view that there must be a dispute in an industry, is fatal to the contention that the necessary nexus or unifying factor must be found in the industry.

In Aberdeen,the joint judgment stated: ^[65]

It is not of great significance that there was no exact coincidence between the activities carried on in the respective States in respect of which demands were made. It is of greater significance that those upon whom or in respect of whom the demands were made had a community of interest. That factor may exist because of the employers' or employees' participation in a single industry and is present here. A dispute involving parties having a community of interest is likely to be a single industrial dispute despite differences between the activities of those parties.

Whether such a community of interest exists in a particular case may depend upon a combination of industrial, economic and financial considerations. ^[66]

True it is that the functions and operations of the States and their agencies are confined very substantially, if not wholly, within the boundaries of the particular State and therefore the demand upon a particular State and its agencies is to observe the terms and conditions demanded within the State or very substantially so. As against that consideration is to be set the common interest which the State employees have in seeking and obtaining uniform terms and conditions across State boundaries as well as the common interest which the employers as public sector employers have in resisting the demands.

The same question arose in the SPSF case, ^[67] where a log of claims was served on three States and a wide range of public sector employers relating to the rates of pay and allowances of public servants generally. The court held that the log was not such as to be capable of giving rise to an industrial dispute. Consequently, it did not become necessary to resolve the question whether, assuming an industrial dispute to have come into existence, it was interstate in character. Nevertheless, Toohey J considered the question and said: ^[68]

Once it is accepted, as it must now be, that many, if not all, of the employees sought to be covered by the proposed award are engaged in an industry, ^[69] it is hard to resist the conclusion that there is "common cause" ^[70] made between SPSF and the three States in question. It is true that the log of claims cannot be treated as a demand for a national public service award as SPSF would have it, primarily because only three States are involved. But the relationship between the employers in those States and the various categories of employees employed by the States and their instrumentalities and the constitutional coverage of SPSF establish a sufficient degree of interstateness to satisfy that element of an industrial dispute within the meaning of the Act.

The submission that the disputes found by the Commission are not interstate disputes must be rejected.

Discrimination -- s 111(1A) of the Act

Section 111(1) of the Act has provided for some time past and still provides:

Subject to this Act, the Commission may, in relation to an industrial dispute:

...

(g)

dismiss a matter or part of a matter, or refrain from further hearing or from determining the industrial dispute or part of the industrial dispute, if it appears:

...

(iii)

that further proceedings are not necessary or desirable in the public interest.

The Industrial Relations Legislation Amendment Act (No 2) 1992 (Cth), which commenced on 21 January 1993, by s 5(b) inserted s 111(1A) in the Act. It provides:

Subparagraph (1)(g)(iii) does not apply to proceedings so far as they may affect terms and conditions of employment of a particular kind that are applicable to a particular class of employees, if:

(a)

at any time after 7 December 1992, terms and conditions of that kind and application have been regulated by an order, award, decision or determination of a State industrial authority (whether made before, on or after that date); and

(b)

terms and conditions of that kind and application:

(i)

cannot be dealt with by a State arbitrator by compulsory arbitration (but not merely because an order, award, decision or determination of a State arbitrator cannot be changed during a particular period); and

(ii)

are not regulated by an employment agreement; and

(iii)

are not regulated by an award under this Act.

The subsection defines the expression "employment agreement" in general terms but not so as to pick up employment agreements as provided for in the ER Act. The effect of s 111(1A) is to preclude the Commission from exercising the powers in s 111(1)(g) in relation to Victorian matters.

Section 111(1A) was introduced after the ER Act was enacted. By s 179, the ER Act repealed the Industrial Relations Act 1979 (Vic) which provided for compulsory arbitration. As stated at the commencement of these reasons, a system of individual employment agreements replaced the old system of compulsory arbitration in Victoria. Sections 109 and 113 and cl 22 of Sch 6 to the PSM Act achieved the same result in the public sector. The prosecutor submitted that s 111(1A) discriminates against Victoria and employers and employees in that State by denying them recourse to s 111(1)(g). The new provision is said to discriminate against Victoria and any other State that enacts similar legislation; alternatively, it is said that the legislation is aimed at Victoria.

No doubt the events which had recently taken place in Victoria, particularly the enactment of the Victorian legislation, were the occasion for the introduction of s 111(1A) but that is not enough to justify characterisation of the provision as one which is aimed at Victoria. The provision is framed in general terms and is capable of applying to any State which introduces a system similar to the Victorian system. The fact that Victoria is the only State presently affected by s 111(1A) is not a compelling consideration, though it could conceivably be so in the absence of a rational and relevant connection between the basis on which that provision denies access, the application of s 111(1)(g) and the exercise of the powers conferred by the last-mentioned provision.

Whether s 111(1A) discriminates against Victoria, its employers and employees in the sense of being aimed at them is not a question to be determined by reference to the subjective motives of the legislators; rather, it is a question of determining what was the purpose of the enactment, a matter which is to be ascertained by reference to the substance and actual operation of the law in the circumstances to which it applies. ^[71] That was the approach which the court adopted in Queensland Electricity Commission where the members of the court, as we understand the judgments, examined the substance and operation of the statutory provisions in reaching their conclusions with respect to the validity of the impugned provisions.

The prosecutor contended that there is no logical connection between refusing to make an award in the public interest pursuant to s 111(1)(g) and the absence of a system of compulsory arbitration in a State. That argument cannot be accepted. If the view be taken, as it has been taken by the Commonwealth Parliament that, in the public interest, industrial disputes should be resolved by means of compulsory arbitration, it is logical for the parliament to conclude that a power given to the Commission to refrain from proceeding where it is in the public interest to do so should only be exercisable when an alternative system of compulsory arbitration is available. Further, the introduction of s 111(1A) can be supported on the ground that it eliminated or alleviated problems that would arise once State compulsory arbitration was no longer available. Applications under s 111(1)(g) would involve delay, even if the Commission decided to proceed due to the absence of compulsory arbitration. And, if the Commission were to decline to proceed and leave the dispute to voluntary arbitration, interstate industrial disputes might not be resolved satisfactorily.

The prosecutor advanced a further argument that s 111(1A) discriminated against Victorian employers as compared with employers in other States. This argument was based on the implication of equal treatment discussed in the judgments in Leeth v Commonwealth. ^[72] This argument must also be rejected for the reasons given for the conclusion that the provision does not discriminate against the prosecutor. The existence of a rational and relevant connection between the two provisions, ss 111(1)(g) and 111(1A), is in itself an answer to the argument.

Discrimination -- Interim voluntary departure awards

The prosecutor's argument is that the interim awards in matters M8 and M11 of 1993 discriminate against it by depriving it of its rights to negotiate redundancy agreements and to terminate employment, rights which are enjoyed by all other employers. As we have already concluded that these awards infringe the implied limitation, this argument does not require consideration.

Australian Federal Police Association -- Amendment of rules

The prosecutor argued that the implied limitation precludes the exercise of the Commission's powers with respect to a dispute between a State and its police officers and that such a dispute cannot amount to an industrial dispute within the meaning of s 51(xxxv). The prosecutor's argument was an extension of its principal contention relating to governmental functions on the footing that the police discharge a primary and inalienable governmental function.

The short answer is that the granting of consent by the Commission to an alteration of the eligibility rules of the Australian Federal Police Association would not in itself work any impairment of the capacity of the prosecutor to function as a government. Further, having regard to conclusions earlier stated in these reasons, there is no basis for holding that the Commission is precluded from exercising some powers in relation to the fixing by award of minimum wages for State police officers. The fact that a log of claims seeks more than the Commission has power to award is not a ground for holding that there is no industrial dispute so long as the Commission has power to make an award in relation to something that is sought in the log. The application for relief, as with the prosecutor's challenge to the findings of dispute in the other cases, is premature.

Conclusion

The orders to be made will give effect to the conclusions we have reached on the arguments presented to us with respect to the jurisdiction of the Commission to make findings of dispute and to make the interim awards and orders in Matters M11 of 1993 and M156 of 1993 restricting the employer's right to terminate the employment of employees on the ground of redundancy. Those arguments extended to the validity of the interim award made by the Full Bench of the Commission in Matter M8 of 1993. However, that award was set aside by the Full Bench on 27 October 1994 when it made a final award, the Victorian Teachers Redundancy Award 1994, which is not presently before the court. In the absence of argument, we express no opinion about the validity of other awards and orders. If any question or questions arise with respect to such awards and orders, that question or questions can be raised in separate proceedings in the light of these reasons for judgment. In other words, the refusal of prerogative relief is without prejudice to the prosecutor's right to raise any such question or questions in separate proceedings.