- The Court argues that the federal structure of the Australian Constitution has important implications that limit Parliament’s ability to legislate under the heads of power in Section 51.

- Development of a ‘two-limbed’ principle which prohibited Commonwealth laws that 
- (1) involve discrimination against a particular State or the States as a group; or
 - (2) ‘destroy or curtail the continued existence of the States or their capacity to function as governments’. 

- In order for the Executive to spend, there must be an appropriation, and the subject matter of the spending must fall within Cth power

HELD: Payments upheld as valid on 2 grounds:

- There was an appropriation

- The payments were upheld by the nationhood power (implied incidental power based on s 61 and s 51(xxxix))

- Could also rely on the ‘grants power’ in s 96 to give the money to the states. 

- Can grant money to the States on such terms and conditions as it sees fit

Statute is not required for Executive to spend for:

-  Administration of a department of state (ss 61, 64)

-  Carrying out of ordinary and well recognised functions of government

-  Exercise of power conferred or derived from an Act of Parliament

-  Execution and maintenance of the laws of the Commonwealth

-  Activities that fall within the Commonwealth executive’s prerogative powers; and

-  Activities that fall within the scope of the Commonwealth executive’s nationhood power

- A grant law cannot coerce states to abandon or deprive states of their power, but it can provide an inducement for states to abstain from exercising their power

- This is so even if the conditions are such that states in effect have no choice but to accept the inducement (‘temptation is not coercion’), or the Cth creates the need for a grant

- Court endorsed Vic v Cth on acceptable features of a grant:

   1.  Binds state to apply money specifically to a Cth-defined object

   2.  The object is outside the power of the Cth

3.  Payments are left to the discretion of the Cth Minister and

4.  Money is provided as the Cth’s contribution for an object for which the State will also contribute

5.  Grant conditions can include that the State make payments to be made to third parties

Grants can be made for purposes other than supplementing the state treasury 

2.     Religious Establishment: s 116 (DOGS Case) - note that s 116 has been interpreted narrowly

3.     Discrimination: s 51(ii), s 99 (Moran)

4.     Acquisition of Property: s 51(xxxi) (ICM Agriculture)

·      A compulsory exaction

·      By a public authority (But not essential)

·      For public purposes - Includes ‘public interest’ (Aus Tape)

·      Revenue raising = core concept (But can have other functions)

·      A fine or penalty

·      A licence fee

·      A fee for services (NB: Proportionality requirement – fee must reflect the cost of service (Air Caledonie))

       But: Exceptions, noting the special factual situation re. monopoly etc. – (Airservices)

·      A mechanism to enforce private rights (Luton v Lessels)

·      A royalty (Australian Tape Manufacturers)

- The power has been given to a judicial body (Brandy)
- The enforceability of decisions (Brandy)
NB: A body’s decisions are enforceable if they are automatically enforced by another body

- Finding a violation of the law (Alinta)