Section 51(xxxvii) of the Australian Constitution permits the Commonwealth to legislate on matters referred to the Commonwealth by any state. As Australia is a federation, both states and the Commonwealth have legislative power, and the Australian constitution limits Commonwealth power (see Section 51). Section 51(xxxvii) was therefore framed to allow a degree of flexibility.
In practice, the referral power has been quite important in allowing the Commonwealth to enact legislation.
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The text of Section 51(xxxvii) grants power regarding:
Uncertain issues regard:
There was ambivalence on these issues within the constitutional convention itself. The issue of revocability has not been clarified today. This explains why referrals of power are usually very narrow. Referrals usually include in their terms an expiry period, after which a further referral is required. Limitations of time were upheld as valid by the High Court in 1964,[1] although the general issue of revocability was not resolved. Uncertainty may lead to the use instead of mirror legislation (see below), in which the states retain their legislative power.
The issue of exclusivity seems to have been resolved in favour of the concurrent legislative power approach. That is, as with other powers in section 51, states can continue to legislate subject to inconsistency with Commonwealth legislation (Constitution s 109).[2]
This list is not comprehensive. Rather, this article intends to highlight some significant examples of referral of powers and demonstrate how and why the power is used.
The Australian Constitution confers legislative power to the Commonwealth over marriage (Section 51(xxi)) and matrimonial causes (Section 51xxii)). The Australian Commonwealth created the Family Court of Australia as a specialist court dealing with divorce, including custody of children. However, the custody of children born outside of a marriage was outside of the Commonwealth’s jurisdiction. As a result, these matters had to be litigated in non-specialist state courts.
Between 1986 and 1990 all states, except for Western Australia, referred the custody, maintenance, and access of ex-nuptial children to the Commonwealth. This referral excluded child welfare matters. Given that abuse of children is frequently a matter of contention in family law cases that reach litigation, this limitation is important in that it establishes a split system and creates bureaucratic hurdles. The referral also did not refer to property matters arising at the end of de facto relationships. As a result, maintenance orders are made in the Family Court and property settlements in state courts, although the matters may be inter-related. In 2003 Victoria, Queensland, and New South Wales referred financial settlements to the Commonwealth. However, the issue remains unresolved in relation to other states.
Western Australia has not referred powers, and has its own specialist court, the Family Court of Western Australia.
The corporations power, Constitution s 51(xx), empowers the Commonwealth to legislate with respect to "foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth". On the basis of this power, in 1989 the Commonwealth enacted comprehensive legislation on corporations in Australia, the Corporations Act 1989 (Cth).
The Act covered not only corporations already in existence but also processes of incorporation. Having different sets of rules in each jurisdiction for the establishment of companies, and different registers for the existence of companies, created red-tape and legal hurdles for business. However, in the Incorporation Case (1990),[3] the High Court held that "formed" related to corporations only after their creation and so did not support legislation prescribing incorporation processes. To that extent, the act was invalid.
The Commonwealth then obtained power to legislate with respect to incorporation processes by persuading the states to refer their powers over incorporation processes to the Commonwealth. The current Corporations Act 2001 (Cth) is supported by the combination of the corporations power with this referral of power. The referral also allowed the passage of the Australian Securities and Investment Commission Act 2001 (Cth).
In 1996 Victoria referred certain industrial relations matters to the Commonwealth, in the Commonwealth Powers (Industrial Relations Act) 1996 Vic. This allowed Commonwealth industrial relations law the Workplace Relations Act 1996 to have a broader reach in Victoria. The Workplace Relations Act is generally limited in operation by the corporations power and the conciliation and arbitration power.
Although the defence power, Constitution s 51(vi), allows the Commonwealth to legislate on military matters, it is unlikely that this power extends to laws regulating internal security.
In 2002-2003 all states referred a limited power to allow the enactment of the Criminal Code Amendment (Terrorism) Act 2003 (Cth). The referral required that that act not be amended without consultation with the states.
In 2009, the National Consumer Credit Protection Act (Cth) transfers regulatory responsibility for credit from the states and territories to the Commonwealth. This is one of the most broad reaching reforms in living memory of the regulation of the consumer credit in Australia. Previously, consumer credit was regulated at state level amongst each of the states but it was agreed at a COAG meeting that this area of the law should be reformed in the wake of the global financial crisis and on a constitutional level, this was made possible because of the referral power.
The referral power in section 51(xxxvii) should not be confused with the practice of ‘mirror legislation’. Mirror legislation occurs when state parliaments enact identical legislation to achieve consistency across the states. Such legislation may be led by the Commonwealth, perhaps through framework legislation of its own.[4] Nonetheless, the mirror legislation itself is state legislation, based on state powers. Mirror legislation may be preferred by the states as it gives them control over subsequent repeal and amendment. However, this can introduce inconsistencies when different amendments are subsequently made in different jurisdictions.
A ‘tiered grant’ is when the Commonwealth dictates state policy direction by granting funding to the states under section 96 of the constitution subject to the ‘terms and conditions’ that a certain policy be implemented. As with mirror legislation, the enacting legislation is state legislation and based on state legislative power, although the grant is made by the Commonwealth.
Tiered grants have often been ‘forced’ upon states due to the vertical fiscal imbalance between states and the Commonwealth. By contrast, the areas where s51(xxxvii) have been used generally reflect a consensus that differing state systems are undesirable.
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