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Goodbye to states' rights

By George Williams - posted Thursday, 16 November 2006

The WorkChoices case is a comprehensive legal victory for the Howard Government. A majority of the High Court rejected every challenge by the states and unions. It is a decision that would have shocked the framers of our 1901 constitution.

The constitution was drafted to establish strong states to work with a weaker central government. This held true for the first two decades of our Federation as the High Court favoured state power and protected state responsibility over areas such as industrial relations.

For the states, the WorkChoices case was lost as far back as 1920. In that year the High Court in the engineers case swept aside the earlier decisions and discarded any idea of a balance between federal and state power. The idea of "federal balance", like "states rights", became a constitutional heresy. Today, they are nothing more than political slogans.


Applied over decades, the engineers’ case has led to a steady increase in Commonwealth power. This has been punctuated with landmark decisions that have marked a greater than normal shift. One example is the 1983 decision in the Tasmanian dams case, another is the decision handed down yesterday.

In one sense, the WorkChoices case is exactly what was expected and is far from radical. It fits neatly into a long line of decisions. To the extent that it breaks new ground, it is in the judgments of the dissenters, Justices Michael Kirby and Ian Callinan, who unsuccessfully sought to break the grip of engineers on the court.

On the other hand, the long-term political and policy implications of the decision are enormous and far-reaching. The case brings into question whether there are real limits to the ability of the Commonwealth to regulate areas now in state control. Where limits do exist, they will now be less due to the constitution than to a lack of political will or a self-imposed desire to protect the states.

The decision leaves the states more vulnerable to federal intervention and more dependent on the goodwill of the prime minister of the day. As Kirby stated, the decision runs the risk of "destabilising the federal character of the Australian constitution" and further reducing the states to the service agencies of the Commonwealth.

Justice Henry Higgins of the High Court warned of this as far back as 1909. Then, as in WorkChoices, a Commonwealth government argued for a wide reading of the federal corporations power. Higgins responded that if this were right "the results are certainly extraordinary".

He went on to suggest that if the Commonwealth argument was correct, the corporations power might be used for education, defamation law, liquor licensing, banking and even to "enact that no officer of a corporation shall be an atheist or a Baptist, or that all must be teetotallers". He recognised that even then corporations were so involved in everyday life that if they could be regulated generally, there would be no effective limit to federal power.


Nearly a century later, Higgins' fears have been realised. In the WorkChoices case, the key finding of the majority was that a federal law regulating the activities, functions, relationships and the business of any constitutional corporation, that is a trading, financial and foreign corporation, is valid under the constitution.

The judges also found that such laws are permissible where they control the people through whom such corporations act, such as their employees. Outsiders to these corporations can also be the subject of federal law where their conduct might affect the corporations in practically any way.

With such a broad view taken of the power, it clearly extended to a law such as WorkChoices. After all, WorkChoices sets down a new national regime to govern the relationship between corporations and their employees.

The High Court's reasoning extends equally to any other area in which corporations are engaged. In practical terms, the power could be used to directly regulate corporations that run schools and hospitals or that control the use of water or manage land. The possibilities are as endless as the work of corporations, which are the normal way of carrying on a business in Australia. As Callinan warned, "the reach of the corporations power, as validated by the majority, has the capacity to obliterate powers of the state hitherto unquestioned".

John Howard's Government, as well as that of any future prime minister, has a new tool to expand the reach of federal power. Areas that are now run by the states might in the future fall into federal hands.

History shows that this will occur. Gough Whitlam and John Howard have been two of the great centralists of our history. Others will follow this path. With High Court recognition of greater federal power, the political opportunities will prove too hard to resist.

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First published in The Age on November 15, 2006.

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About the Author

George Williams is the Anthony Mason Professor of law and Foundation Director of the Gilbert + Tobin Centre of Public Law at the University of New South Wales.

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