LLB203 Study Guide - Final Guide: Scripture Union, Natural Person, Plenary Power
Grants to States
During a period of ten years after the establishment of the Commonwealth and thereafter
until the Parliament otherwise provides, the Parliament may grant financial assistance to
any State on such terms and conditions as the Parliament thinks fit.
Constitution s 96
Introduction
While the opening words suggest a transitional operation, the concluding words suggest a
broad meaning.
A broad, literal reading has prevailed.
As a consequence of this interpretation, s 96 has contributed to financial dominance of
Commonwealth and allows influence over State activities.
Interpretation of s 96
HC has accepted a broad and literal reading of s 96 (to extend its influence beyond s 51)
Victoria v Commonwealth (the Federal Aid Roads case)
FACTS: Commonwealth legislation authorised the execution of a road aid
agreement between the Commonwealth and the States under which money was
made available to the States for road construction and reconstruction. The
agreement provided the types of roads that could be built and provided that future
payments were dependent on the Commonwealth being satisfied that the roads
were properly maintained by the States.
HELD: valid. Act warranted by s 96 and not affected by s 99 or any other provision.
It is plainly warranted by the provisions of s 96 and not affected by those of s99 or any
other provisions of the Constitution so that exposition is unnecessary
Action is dismissed
The power cannot be used to pass coercive laws (consider whether there is any legal
compulsion)
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South Australia v Commonwealth (First Uniform Tax case)
FACTS: s 4 of the State Grants Income Reimbursement Act 1942 provided
that the Commonwealth will provide grants to the States every year, largely
replacing their previous takings from income tax, on condition that they did
not impose their own income taxes.
Commonwealth was providing incentive to the States not to impose their
own income tax
HELD: s 96 was a power to give “assistance” and not a power to pass
coercive laws. The whole scheme was valid because it was an inducement
not to exercise the power to impose income tax (that is, there was no legal
compulsion to yield): Latham CJ at 417.
The power must involve a voluntary agreement (can extend to matters outside the powers of
the Cth)
Victoria v The Commonwealth (Second Uniform Tax case)
FACTS: The States challenged the Uniform Tax Scheme on the grounds that, by
effectively removing from the States the power to levy income tax, this
discriminated against the States and threatened their capacity to function as
independent governing entities. (An intergovernmental immunity argument.)
HELD: as long as the terms and conditions of assistance provided by the
Commonwealth under s 96 are voluntary, the Commonwealth enjoys a plenary
power to grant money to the States which can be used in a way which circumvents
the restrictions which might operate in respect of its other heads of power.
DIXON CJ: Power is well exercised although
(1) States bound to apply the money specifically;
(2) the object is outside the powers of the Commonwealth;
(3) payment left to discretion of the Cth Minister;
(4) money provided as Cth contribution to object for which State is also to
contribute funds.
WEBB J: terms an conditions of the grant must be consistent with the nature of
the grant. Meaning they must not be such as would make the grant the subject of a
binding agreement an not leave it the voluntary arrangement that s 96
contemplates
Not only can s 96 be used so as to tell the States exactly how to spend the money, but it
can instruct the States to pass the money on to others, who will also be told how to spend it
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Document Summary
During a period of ten years after the establishment of the commonwealth and thereafter until the parliament otherwise provides, the parliament may grant financial assistance to any state on such terms and conditions as the parliament thinks fit. While the opening words suggest a transitional operation, the concluding words suggest a broad meaning. As a consequence of this interpretation, s 96 has contributed to financial dominance of. Hc has accepted a broad and literal reading of s 96 (to extend its influence beyond s 51) Victoria v commonwealth (the federal aid roads case) Facts: commonwealth legislation authorised the execution of a road aid agreement between the commonwealth and the states under which money was made available to the states for road construction and reconstruction. The agreement provided the types of roads that could be built and provided that future payments were dependent on the commonwealth being satisfied that the roads were properly maintained by the states.
