To pass the Work Choices legislation, the Howard government was forced to be creative. It did not have at its disposal a general power in the Constitution over industrial matters. Instead, it had to legislate indirectly by using the corporations power in section 51(20). It makes no mention of workplace issues in conferring power only over 'Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth'.
The majority decision of the High Court in the Work Choices case held that this power can be used to enact a federal law regulating the activities, functions, relationships and business of a constitutional corporation (that is a trading, financial or foreign corporation). It was further held that the power may support laws that control the people through whom such corporations act, such as its employees. Outsiders to these corporations can also be the subject of federal law where, through their conduct, they might affect such a corporation. With such a broad view taken of the power, it clearly extended to a law like the amended Workplace Relations Act that sets down a national regime to govern the relationship between constitutional corporations and their employees.
Central to the High Court's reasoning is a general statement about the scope of the corporations power, especially the finding that it can be used for a law regulating the activities, functions, relationships and business of a constitutional corporation. This finding was applied in the specific industrial context to uphold the Work Choices law, but could equally be applied elsewhere in the future. It is certainly not limited to any one context, there being nothing in the words of the power that could justify this.
"The corporations power says nothing about whether the law should tilt towards employers or employees or achieve a fair compromise between the two."
p>According to Justice Kirby, the States had 'correctly in my view, pointed to the potential of the Commonwealth's argument, if upheld, radically to reduce the application of State laws in many fields that, for more than a century, have been the subject of the States' principal governmental activities'. He nominated many areas, including education, health, town planning, local transport, energy, environmental protection, aged and disability services, land and water conservation, agricultural activities, corrective services, gaming and racing, sport and recreation services, fisheries and many Aboriginal activities. He found that: 'All of the foregoing fields of regulation might potentially be changed, in whole or in part, from their traditional place as subjects of State law and regulation, to federal legal regulation, through the propounded ambit of the corporations power.' This list is far from exhaustive. The possibilities for Commonwealth regulation are as wide and varied as the work of corporations, which are the normal way of carrying on a business in Australia. As Justice Callinan warned: 'The reach of the corporations power, as validated by the majority, has the capacity to obliterate powers of the State hitherto unquestioned.' In these and many other areas, the Work Choices case gives Prime Minister John Howard a tool with which to expand the reach of the federal government. So far the corporations power has been applied to override State industrial laws. In the future, many other areas now run by the States could fall into federal hands.
On the day of the High Court decision, Howard rejected such uses of the power. But he and his successors will find the power hard to resist. In battles with the States over history teaching and report cards in schools or over hospitals or universities, it will take self-restraint to ignore a power that could ensure that, wherever a corporation is involved, the will of the Prime Minister will prevail over that of State governments.
Where Howard believes that his vision for Australia is correct and thinks that the policies of the States are wrong, he is unlikely to let the Premiers have their way. Howard acknowledged this in his response to the High Court. He said: 'We will not interpret this decision as being any kind of constitutional green light to legislate to the hilt. We have no desire to extend Commonwealth power, except in the national interest.'
In other words, Howard has accepted that he will use the power where it is in the national interest to do so. He obviously believed this was the case in the field of industrial relations, and may form the same view about other important areas. Might it not, in his view, be in the national interest in the future to extend federal laws into education to ensure a national high school curriculum, or more effective teaching of history? And what about new federal laws to create a national plan to combat the projected shortage of water?
In regard to these and other areas, the High Court has given legal recognition to a federal power that will prove hard to resist. Prime Ministers Gough Whitlam and John Howard have been two of the great centralist leaders in our history. Their experience as well as that of other governments since Federation suggests that they will not be the last. Where the 'national interest' is at stake, we can expect that the corporations power will be used. Even if Howard does not use the corporations power again as Prime Minister, it will be available to any future government. This includes in the field of industrial relations. After all, while the corporations power can be used to enact a national workplace law, the power is silent on the content of the law. It says nothing about whether the law should tilt towards employers or employees or achieve a fair compromise between the two.
The power cuts both ways. What the Howard government might use for its own industrial laws, a future Labor government could apply for industrial laws to the opposite effect. Just as the Howard government has relied on the corporations power to set out the conditions of employees working for corporations in Australia, so might a future Labor government use the power to set out a different set of conditions. It might, for example, repeal the Work Choices law and use the power to enact a scheme guaranteeing that the employees of constitutional corporations have a right to collective bargaining.
The Work Choices case brings into question whether there are real limits left to the ability of the Commonwealth to regulate areas currently in State control. Combined with federal dominance over the raising of taxation revenue, and the ability to use this money to secure State compliance with federal policies, the limits that remain are less a constitutional impediment than a lack of federal political will.
Some have recognised in the wake of the Work Choices case that reform of federation has been put off for too long. While we have achieved profound changes in the economy and social policy, we have not applied the same energy and commitment to improving our system of government. South Australian Premier Mike Rann has called for a constitutional convention in 2008 on the future of the federation. This echoed an earlier call by Queensland Premier Peter Beattie, and has received support from leaders in other States. Federally, Treasurer Peter Costello has also talked about the need for federal reform, as have bodies like the Business Council of Australia.
Constitutional conventions were the way that the Constitution and Australian system of federalism were drafted in the first place. After the Work Choices case a convention might be the way to revisit these same issues by bringing together a wide range of interests and perspectives from both within and outside of government. It might be the place to ask: what should be the role of the States in Australia today?
Professor George Williams is Director of the Gilbert + Tobin Centre of Public Law at the University of New South Wales. This paper is the basis of his presentation at the Evatt Foundation's Sunset Seminar on the 'New' Corporations Law, convened on 7 December 2006 at the LHMU Auditorium in Sydney. With Professor Andrew Stewart, Professor Williams is the author of a forthcoming book entitled Work Choices: What The High Court Said, to be published in early 2007 by Federation Press.