On 26 June 1908 the High Court decided by a majority of three to two that Groom's argument was not valid and
rejected the whole New Protection scheme as unconstitutional. Barton, Griffith and O'Connor all held the Excise
Tariff Act ultra vires and invalid because, while it purported to exercise the Commonwealth's undoubted powers of excise
taxation, it effectively aimed at regulating the internal trade and industry of a state, a right the Constitution
2
expressly reserved for the states.
Though Higgins and Isaacs predictably dissented from the majority ruling, there were still some obvious technical faults in Groom's argument. In retrospect it was not hard to see that the Excise Tariff Act was an experiment in which
Jo
the Liberal Protectionist and Labor parties tried to/covertly and indirectly do. what the Constitution expressly forbade them to do directly. When the Constitution was framed it was
1.
2 .
Age, 12 and 13 March 1908. ibid., 27 June 1908.
clear certain functions were reserved for the states'
exclusive control, one of which was their internal industry and trade. While the Commonwealth was given limited powers of levying taxation for the "peace, order and good government" of the Australian people, the constitutional fathers never construed that the Commonwealth's taxation powers be allowed to infringe on the rights deliberately and exclusively left to the states.^ Combined with a further and similar High
2 Court ruling in the "Union Label" case some months later, the judgement dealt a severe blow to part of the programme Groom supported and for which he was partly responsible.
Nevertheless, the defeat was not entirely disastrous since alternative procedures achieved some of the results he originally desired. The doctrine of a fair and reasonable return to the worker was too important a part of Australian
sentiment to be thwarted by technical limitations of powers. Indeed, its practical implementation was already partly
ensured with the Harvester Judgement. Deakin repeatedly emphasized that, whatever the verdict of the Barger and McKay case, his ministry was committed to New Protection.
"It was only", he asserted, "a question of the particular 3
way they should proceed."
1. For evidence on this point see J. A. La Nauze, The
Making of the Australian Constitution, Melbourne, 1972,
p p . 55- 56 , 63 and 215.
2. (High Court of Australia), "Attorney-General for N.S.W.
v Brewery Employees Union of N . S . W . " , in C.L.R., Vol. 6, 1908, pp. 469-617.
3. C.P.D., Vol. XLV, 3 April 1908, p. 10132, Vol. XLVI ,
Groom, though disappointed at his failure, defended his stand and planned in what ways the Court’s decision could be by-passed. One way out, later suggested, was the formal amendment of the Constitution by referendum. This, however, was a complex -hu-fe— one-e-- 1r 1 ed procedure and Deakin and Groom were reluctant to use it. Immediately after the High Court verdicts the two men held several discussions on the
I
subject. Finally, at the end of October Deakin placed a memorandum before the House of Representatives which adopted the expedient of expanding the functions of the/lnter-State Commission by a far more simple constitutional amendment than that desired by Labor. Among other things, it was
proposed to authorize legislation concerning "the employment and remuneration of labour in any industry, which in the
opinion of the Interstate Commission is protected by duties
_ ?
of Customs."“
The Labor Party, on the other hand, was dissatisfied with this formula, seeing the failure of the New Protection
legislation in the context of the general deficiencies of Commonwealth power under the Constitution. The result was that after it came to power in 1910 it twice sought and was refused far more extensive additions to federal control
over commerce, employment, labour and trade than either Deakin or Groom had felt necessary.
Far more general agreement existed on another proposal
1. Age, 13 August 1908.
2. "New Protection. Memorandum relating to the Proposed Amendment of the Constitution", in C.P.P., Vol. II, Session 1908.
connected with the general philosophy of the New Protection, the Commonwealth's provision of invalid and old age pensions. It was, indeed, an example of the changing climate of opinion on the State's welfare function that the Constitution
empowered the Commonwealth to legislate here. Most
parliamentarians supported the adoption of a federal scheme but it was not until 1904 that practical steps were taken with the appointment of a select committee,^ and a Royal Commission appointed early in 1905 with the specific aim of examining the New South Wales and Victorian systems with a view to recommending a plan for the Commonwealth to continue its work. With the Commission's report in favour of the
rapid establishment of a national scheme, its recommendations largely followed the New South Wales system and became the
7
basis of legislation Groom drafted and introduced in 1908. But the agreement to pay the states three quarters of customs returns as well as any surplus revenue frustrated the government in its implementation of the plan. Several devices to overcome this difficulty were suggested yet none had so far proved acceptable to the upholders of states
rights who resisted any encroachment of the share of revenue allocated to the states. Ultimately, on 13 March 1908
Treasurer Lyne introduced a Surplus Revenue Bill. This
forc$h«i©iA/ta Die
eventually successful measure'terminated J;he temporary clauses
1. C.P.D., V o l . XXII, 20 October 1904, p. 5861.
2. "Report from the Royal Commission on Old Age Pensions; Together with Proceedings, Minutes of Evidence,
Appendices and a Synopsis of the Evidence", C.P.P.>
Vol. i n , Session 1906, and T. H. Kewley, Social
in the Constitution for the distribution of surplus revenue through the substitution of a new basis for the cdJculQfrrOn & deb>K
inj trcd itS
/among the states. It also allowed the Treasurer to withdraw from the consolidated revenue and pay to trust account moneys appropriated by the federal parliament for any special
purpose. Such payments would be counted as "expenditure” and the appropriation was not to lapse until the end of the
financial year or any other stated period.^
It was not hard to detect Groom's influence on the
measure and he took a leading part in its defence. He replied to charges that the bill was unfair to the states and
unconstitutional with the argument that, "Possibly we have erred in going too slowly, and in failing to realise that the people of Australia created the Commonwealth Parliament as a national Parliament and vested it witli national powers to be
exercised for their good."123 Under the Constitution, he further explained, "we have clearly the power to pass this Bill, and it is necessary to pass it to enable us to carry on the great work entrusted to us. The Constitution having endowed us with national powers, they carry with them the right to appropriate moneys, without which such endorsement would be futile."**
The Surplus Revenue Act behind him, on 3 June 1908 Groom moved the second reading of the Invalid and Old Age
1. C.P.D., Vol. XLV, 31 March 1908, p. 9848. 2. See Cook's speech in ibid., p. 9869.
3. ibid., Vol. XLVI, 29 May 1908, p. 11724. ibid., p. 11727.
Pensions Bill. A pension, he said, of £26 per annum was to be paid to every male citizen over the age of sixty five and every female over sixty, whose income did not exceed £52 a year, or whose accumulated property was valued at no more
than £310. The pension's annual rate was to be reduced by the amount of any income above £26 a year, and also by £l for every £10 of property above £50 in value. Where the property included a home in which the pensioner permanently resided, and which brought in no income, the deduction on account of property was to commence at £100 instead of £50. In the case of a husband and wife, even if only one of them was a
pensioner, the income and property of each was deemed to be half the total income and property of both. An applicant for a pension was required to have resided continuously in
Australia for at least twenty five years. The provisions for invalid pensions were added at the last minute as the measure was actually being drafted. Unlike old age pensions they only became operative when financial circumstances permitted. The bill recognized, Groom argued, "that our citizens must
frequently move from State to State in pursuit of their various callings, and that it is unjust to base the right of a pension on continuous residence on one State." "This
Parliament", he went on, "if the scheme be successfully brought into operation, will be able to look back at this as one of the greatest measures passed here." He asserted that in modern civilization countries were beginning to realize "the sense of deep national responsibility to every single unit in the community and, to feel that, if any single person in the great industrial army meets with disaster in the course
of his work, a duty is owing to him."^ As expected, all parties in parliament supported the proposal and it became law with only a few amendments.
But it also indirectly illustrated both the measure of agreement between the Liberal Protectionists and Labor and the differences in their outlooks on social questions. While many Labor members saw the legislation as only an unduly
cautious beginning on the road to social advancement, Groom's speech indicated the Liberal Protectionists' concern that costs be limited, thrift encouraged and relations share a
measure of responsibility. Whatever their radical inclinations were, their essentially bourgeois values inhibited Groom and his party colleagues from going any further than they did.
It was perhaps symbolic that the act rounded off the
reformist programme to which the Liberal Protectionist and Labor parties were alike committed.
A tailpiece to the reform in which Groom was involved was a New South Wales challenge to the validity of the Surplus Revenue Act on which the pensions plan depended. The state claimed £160,000 as its share of the amounts appropriated under the Act. Groom again appeared for the Commonwealth, argument being heard by the High Court on 13, 14 and 15 of October and the judgement being read on 21 October. He
concentrated on the meaning of "expenditure" and on the very great difficulty of the Commonwealth parliament in exercising its powers effectively when it was /able to lay aside large sums of money for future expenditure. The monthly payments
of ’’surplus revenue" mentioned in Section Ninety Four of the Constitution, he argued, did not mean payments of actual monthly cash balances but only the estimated balances after providing for all eventualities. Against this the New South Wales counsel urged that though the Commonwealth should
possess large spending powers, as large balances as possible should also be paid over to the states. The provision for monthly balances, they continued, ought to be taken literally, the mere fact of appropriation not creating expenditure.^
In contrast to his earlier rebuffs at the hands of the Court, Groom won a handsome victory in the case. Every one of the five justices read a separate judgement but all concurred in upholding the Commonwealth's right to make
appropriations which could be regarded as expenditure for the purpose of distribution of surplus to the states. They
2
accepted Groom's arguments on all points.
It was his last appearance as Attorney-General before the High Court. Already the Labor conference held in Brisbane in July that year prohibited the parliamentary Labor party from entering into any alliance or granting or promising
3
immunity from opposition in elections. Though Labor unrest was kept in check until the completion of the tariff revision, there was now little possibility of any long term understanding with Deakin's followers. The largest single party in the
House of Representatives, Labor was tired of using its votes
1. (High Court of Australia), "The State of New South Wales v the Commonwealth", in C.L.R., Vol. 7, 1908-9, p p . 179-185 2. ibid., pp. 186-206.
3. Official Report of the Fourth Commonwealth Political Labor Conference, Brisbane, 1908, p p . 26-28.
to keep the second smallest in office. The Liberal Protect ionists could not attain an electoral majority on their own, some of them being in danger of losing their seats to Labor precisely because they agreed with that party on many points and had been able to attract working class support at
elections. In some areas of policy they reached constitutional limits while in others dislike of Labor's "socialism" and
union attachment restricted them. The rest of the government's 1908 programme consisted of defence measures, which Labor
could just as easily carry out, and technical legislation to regulate and simplify business operations, in which Labor
was generally uninterested. The government was left in office just long enough to conduct a ballot of parliamentarians that bowed to New South Wales and defied Groom by fixing Canberra as the federal capital site.1 23 Then, on 5 November the Labor
2