Melbourne Corporation Principle

INTRODUCTION

In the early years since federation, the majority of the Australian High Court had inferred from the language and nature of the Australian Constitution a prohibition against the exercise of Federal legislative power that would affect State governmental bodies. In D'Emden v Pedder,[1] the High Court's constitutional approach to the issue of federalism was to establish an implied immunity of instrumentalities, so that at least in the exercise of their 'governmental' functions, neither the Commonwealth nor State executive governments could be affected by the laws of the other.

The decision in Engineers',[2] as expressed by Barwick CJ,“exploded' this doctrine,[3] and rejected the doctrine of the reserved powers of the States. However, it also “left open the possibility that different considerations may apply to discriminatory laws”.[4] These considerations are that the Commonwealth may not discriminate against the states, and that it may not exercise its powers so as to impact upon the continued existence of the states or their capacity to function. These intergovernmental immunities doctrines were introduced and successfully argued in the State Banking case,[5] which introduced the Melbourne Corporation Principle.

This paper will trace the history of the Melbourne Corporation Principle from the State Banking case,[6] through it's subsequent development in the cases of : Queensland Electricity Commission v Commonwealth,[7] and Austin v Commonwealth.[8] It will also assess the effectiveness of this principle in protecting the states from encroachment by the Commonwealth in these cases, including reference to some of the subsequent cases that successfully or unsuccessfully relied on this principle.

HISTORY

The State Banking case arose from a law,[9] passed by the Labor government of that time to nationalise the Australian banking system. This law relied on the banking power set...