Tutorial Week 9





  1. Russell Mathews argues that the vertical fiscal imbalance that characterises Australia’s constitutional system breaks the link between spending and taxing decisions for both the Commonwealth and State governments and, accordingly, “there has been a loss of accountability and a weakening of democratic controls over all the governments concerned” (extracted in BW5, 1094). What does ‘vertical fiscal imbalance’mean in the Australian constitutional context? Critically evaluate Mathews’ comments about Australia’s vertical fiscal imbalance by considering the positive and negative aspects of the split accountability that it introduces.
  2. Discuss the role of at least two Commonwealth heads of power in the development of vertical fiscal imbalance in Australia.
  3. The scope of the power of expenditure was recently considered by the High Court in Pape v Commissioner of Taxation (2009) 238 CLR 1. What was the result in that case? Does this decision of the High Court expand or restrict the power of the federal parliament to appropriate and expend revenue?
  4. Has the High Court adopted a narrow or broad interpretation of the grants power in s 96 Constitution? How has this interpretation affected the “federal balance” in the Australian context?
  5. Explain how vertical fiscal imbalance has been enhanced by the High Court’s interpretation of the various spending powers, including sections 81, 96, 51 (ii), and 90.How did the introduction of the GST contribute to the problem of vertical fiscal imbalance?
  6. In Cole v Whitfield(1988) 165 CLR 360, what purpose did the Court say s 92 was intended to serve?How did the court use the Convention Debates in reaching this Conclusion? What is the test for the application of s 92? What kind of laws does it apply to?
  7. In the pre-Coleera there were two different interpretations of Section 92 of the Australian Constitution.Under the individual rights or laissez-faire theoretical approach, a law would be found violative of section 92 if the regulation directly restricted trade and commerce rather than indirectly.This became known as the ‘criterion of operation’ test.What criticisms were levelled against this approach to interpreting s 92 by the court in Cole v Whitfield?
  8. Why did the court say it would be rare for s 92 to invalidate Commonwealth, as opposed to State, legislation?
  9. In applying s 92, does the Court examine only the law’s direct legal effect, or also at the ‘factual operation’ of the law?What does the court mean by ‘factual operation’?
  10. What law was being challenged in Cole v Whitfield?Did this law directly discriminate against trade in an impermissible way?Did the ‘factual operation’ of this law discriminate against trade in an impermissible way? Why?Was the law protectionist? Why?Was the law valid or invalid?
  11. What was the law under challenge in Bath v Alston Holdings?
  12. Castlemaine Tooheysis a crucial case on the application of the Cole v Whitfieldtest for s 92.In general terms, how did the Court develop the idea of ‘protectionist discrimination’ as the touchstone for the application of s 92?
  13. Why did the majority in Castlemainesay the law failed the s 92 test?
  14. The High Court revisited s 92 in the 2008 case of Betfair Pty Ltd v Western Australia (2008) 234 CLR 418. How did the Court treat the earlier authorities of Cole v Whitfield and Castlemaine Tooheys?
  15. Does the decision in Betfair consider the contemporary economic climate? How did this influence the interpretation of s 92 Constitution?



[NB: Students should prepare a written answer to the following hypothetical before the seminar and be prepared to read and discuss your answer with the class]




Victoria runs one of the most exceptional global thoroughbred racing events annually. The Victorian Spring Horse Racing Carnival beginning in early September lasts 50 days. In 2006, approximately 800 000 people attended the Carnival. It has been estimated by the Premier of Victoria that the Carnival last year yielded a total economic benefit to the state of close to $630 million. In addition, interstate visitors spent close to $50 million on raceday packages organised by interstate horse owners.


In July 2007, there emerged an outbreak of equine influenza in Queensland and New South Wales but no reported cases in Victoria or in any other states. In August 2007, Victoria passed the Horse Flu Quarantine Act 2007 (Vic) to ban the movement of horses into Victoria from all other states in Australia unless certain protocols are followed. The protocols require that horses from interstate be administered a horses flu vaccine the cost of which is $ 3,500 per vaccination. Horses must be administered a course of three vaccinations over a three week period. In addition, interstate horses must be quarantined for two weeks after the administration of the last vaccine and undergo a health test establishing they are not carrying the equine influenza virus.  Interstate horses failing to provide proof of having followed this protocol are barred from entering Victoria to compete in this year’s annual Spring Horse Racing Carnival. After the Carnival ends, interstate horses will be allowed to enter Victoria. Because there is not enough vaccine in the country to vaccinate all of the potential thoroughbreds in the country, horses in Victoria will not be vaccinated until more vaccine arrives from overseas. This is estimated to be at least one month after the Racing Carnival ends.


Thoroughbred horse owners intending to compete in the 2007 Racing Carnival from all states (particularly Western Australia, Tasmania and South Australia) are angry about the legislation. During the fourth week of the Carnival, over 200 Victorian thoroughbred horses exhibited symptoms of the horse flu and one quarter of the horses who were to compete in the Carnival were infected with the virus and withdrawn from participation.


Discuss whether the Victorian Act is a valid exercise of state legislative power.




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