Fortescue Metals Group Ltd announced that on Fri 22.6.2012, it had lodged a challenge in the High Court against the Federal Government’s Minerals Resource Rent Tax (MRRT) on constitutional grounds.
Fortescue Chief Executive Officer: Nev Power said Fortescue had taken legal advice and was challenging the tax on the grounds that the MRRT:
- discriminates between the States contrary to s 51(ii) of the Constitution;
- curtails State sovereignty contrary to the Melbourne Corporation principle;
- gives preference to one State over another contrary to s 99 of the Constitution; and
- restricts a State’s ability to encourage mining contrary to s 91 of the Constitution.
Source: Fortescue announcement, 22 June 2012
[LTN 119, 22/6]
Australian Constitution
51.The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: –
(i.) …
(ii.) Taxation; but so as not to discriminate between States or parts of States:
91. Nothing in this Constitution prohibits a State from granting any aid to or bounty on mining for gold, silver, or other metals, 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.
99. The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof.
Melbourne Corporation case (Wikipedia)
Melbourne Corporation v Commonwealth (1947) 74 CLR 31; [1947] HCA 26 (13 August 1947), also known as the Melbourne Corporation case or the State banking case, is an important case in Australian constitutional law. It stands for the proposition that there are limits on the scope of express Commonwealth legislative powers which can be implied from the federal character of the Constitution.
The Melbourne Corporation principle is an implied limit on Commonwealth legislative power under the Constitution of Australia. This is due to the express federal nature of the governmental structure described by the Constitution in having a federation of states combine into one Commonwealth.
The principle renders constitutionally invalid any Commonwealth law that is otherwise valid under a head of power in s51 or some other part of the Constitution if it:
- Denies the existence or ability of a State to govern itself or the federal structure of the Commonwealth; and
- Singles out States.
A recent case of Austin v Commonwealth (2003) conflated the original 2 limbed test of the original case into an expanded 1st limb so that a commonwealth law that affects a state’s ability to administer itself is constitutionally invalid.
This constitutional protection is one of the few reliable protections in the Australian Constitution against legislative and executive power, the other main protection being the Chapter III Separation of Powers Doctrine.
Austin v Commonwealth (2003) 215 CLR 185, is a High Court of Australia case that deals with issues of intergovernmental immunity and discrimination of states against Commonwealth power.
Austin was a judge of the Supreme Court of New South Wales who was challenging a Commonwealth law which imposed a superannuation contributions surcharge on judges. The Commonwealth law was part of a wider scheme imposing a superannuation charge on higher income earners, equalising the tax burden on judges vis-a-vis other high income earners. (The surcharge was not imposed on states directly as employers because it could have infringed s114 of the constitution which outlaws taxation of state property). If a person was a judge since before 1987, the charge was not imposed as the liability to pay the charge could have run to hundreds of thousands of dollars.
Overall, the court confirmed its interpretation of the Melbourne Corporation principle, that it is a one-limbed principle concerning the structural integrity of the states and their ability to exercise their functions.