FEDERAL COURT OF AUSTRALIA CONSTITUTIONAL LAW - Commonwealth powers - Validity of a provision suspending unemployment benefits on moving to an area of lower employment prospects - Whether provision within the incidental aspect of s 51 (xxiiiA) only - Whether s 51 (xxiiiA) a purposive power - Whether provision fails requirement of reasonable proportionality. CONSTITUTIONAL LAW - Implied rights and immunities - Validity of a provision suspending unemployment benefits on moving to an area of lower employment prospects - Whether provision contravenes an implied freedom of movement - Whether provision fails requirement of reasonable proportionality - Social Security Act 1991 s 634 - Commonwealth Constitution s 51 (xxiiiA) - s 92. British Medical Association v The Commonwealth (1948) 79 CLR 201 (Applied) Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth (1987) 162 CLR 271 (Applied) Cunliffe v The Commonwealth (1994) 182 CLR 272 at 353 (Applied) Stenhouse v Coleman (1944) 69 CLR 457 (Applied) Leask v The Commonwealth (1996) 140 ALR 1 (Applied) Cole v Whitfield (1988) 165 CLR 360 (Applied) R v Smithers; Ex Parte Benson (1912) 16 CLR 99 (Considered) Lange v Australian Broadcasting Corporation (1997) 145 ALR 96 (Applied) Kruger v Commonwealth of Australia (1997) 146 ALR 126 (Considered) Edwards v California 314 US 160 (1941) (Referred to) Shapiro v Thompson 394 US 618 (1969) (Referred to) BARRY THOMAS PATRICK HIGGINS (Applicant) v THE COMMONWEALTH OF AUSTRALIA (Respondent) ACT G66 of 1996 FINN J CANBERRA 3 FEBRUARY 1998 IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY ACT G66 of 1996 BETWEEN: BARRY THOMAS PATRICK HIGGINS Applicant AND: THE COMMONWEALTH OF AUSTRALIA Respondent JUDGE: FINN J DATE OF ORDER: 3 february 1998 WHERE MADE: CANBERRA THE COURT ORDERS THAT: The application be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY ACT G66 of 1996 BETWEEN: BARRY THOMAS PATRICK HIGGINS Applicant AND: THE COMMONWEALTH OF AUSTRALIA Respondent JUDGE: FINN J DATE: 3 FEBRUARY 1998 PLACE: CANBERRA REASONS FOR JUDGMENT This proceeding falls somewhat short of raising a number of controversial constitutional questions. The applicant, Mr Higgins, seeks a declaration that s 634 of the Social Security Act 1991 (Cth) ("the Act") is invalid in that it is not supported by, or is otherwise prohibited by, the Constitution. Put shortly that invalidity is said to result from either of two causes: first, that s 634 does not satisfy the requirement of "reasonable proportionality" which it necessarily must do, so it is said, either because the head of power which alone could sustain the section - ie s 51 (xxiiiA) - is itself purposive or because the section only falls within the "incidental" aspect of the power; and secondly, that s 634 contravenes s 92 of the Constitution in that it impermissibly restrains interstate intercourse or else it impermissibly burdens a freedom of movement to be implied from the Constitution itself. The Factual Setting In early 1993 while residing in Katoomba, New South Wales, Mr Higgins was in receipt of a newstart allowance. This was a form of unemployment benefit provided under Part 2.12 of the Act. In March of that year he moved to, and took up residence in, Stanley, Tasmania. On 13 April 1993 a delegate of the Secretary of the Department of Social Security ("DSS") determined that in moving to a new place of residence, Mr Higgins had reduced his employment prospects. In the circumstances, and by virtue of the operation of s634 of the Act, his newstart allowance was not paid for a statutorily prescribed period of twelve weeks. Initially Mr Higgins sought to challenge this determination through the Administrative Appeals Tribunal. Finding no comfort in this, he then challenged the constitutionality of s 634 in proceedings in the High Court. Chief Justice Brennan remitted the action to this court. Section 634 and its Statutory Setting The current Part 2.12 of the Act (entitled "Newstart Allowance") in which s 634 finds its place was inserted in the Act by the Social Security (Job Search and Newstart) Amendment Act 1991. The second reading speeches to the Bill for that Act noted that the measures to be so introduced were a response to a concern for "the long-term unemployed". Central to the newstart allowance scheme was to be the agreement (the Newstart Activity Agreement) that a recipient of the allowance was required to enter into with the Commonwealth Employment Service. The price to be paid for the allowance was the incurring of "reciprocal obligations": see Hansard, Senate, 14 May 1991 at 3247. Described in broad terms Division 1 of Part 2.12 in Subdivision A and B prescribed eligibility criteria for the newstart allowance. I merely note in passing that these included satisfying an "activity test" requiring an applicant actively to seek, and willingly to undertake, work suitable for him or her. In s 597 it imposed a temporary disqualification for eligibility which, as I later indicate, matched the temporary suspension provisions of s634. Subdivision C of Division 1 imposed the requirement of the newstart activity agreement and specified its terms. Subdivision D prescribed a variety of general situations in which the allowance would not be payable to an otherwise qualified (ie eligible) person. Subdivision E prescribed waiting periods for eligibility. Subdivision F specified situations where the allowance would not be payable because of breach of the activity test. Finally Subdivision H set out the circumstances in which an allowance would not be payable for reasons of "other recipient non compliance". It is in this subdivision that s 634 is to be found. It provides as follows: "Move to area of lower employment prospects 634. (1) Where, in the opinion of the Secretary, a person has reduced his or her employment prospects by moving to a new place of residence without sufficient reason, a newstart allowance is not payable to the person for 12 weeks. 634 (2) Subsection (1) does not apply to a person: (a) who has started: (i) formal vocational training in a labour market program approved by the Employment Secretary; or (ii) a rehabilitation program approved by the Employment Secretary; and (b) who has been exempted from the application of that sub-section by the Employment Secretary. 634 (3) For the purposes of subsection (1), a person has a sufficient reason for moving to a new place of residence if and only if the person: (a) moves to live with a family member who has already established his or her residence in that place of residence; or (b) moves to live near a family member who has already established residence in the same area; or (c) satisfies the Secretary that the move is necessary for the purposes of treating or alleviating a physical disease or illness suffered by the person or by a family member. 634 (4) The Secretary may determine in writing the day on which the period of non-payment imposed by subsection (1) commences and that day may be before the day of the determination." I earlier referred to s 597 of the Act. Here I merely note by way of elaboration that it imposes a parallel bar to qualification for the allowance that s634 imposes by way of disqualification. Section 597 is not challenged in this proceeding. The Grounds of Alleged Invalidity These can be dealt with under two rubrics. The first is the alleged lack of a head of power capable of supporting s 634. The second is the alleged contravention of an express or implied constitutional right or freedom. (1) Lack of power The issue here is whether s 634 can be supported by s 51 (xxiiiA) of the Constitution. That provision, the result of a constitutional amendment in 1946, empowers the Parliament to make laws with respect to (inter alia) - "The provision of ... unemployment ... benefits." The applicant's challenge to the sufficiency of this particular head of power is twofold. First, it is claimed that the power itself is purposive and as such attracts the filter of proportionality as a test of constitutional validity through which it is claimed s 634 does not pass. Secondly, and to a like end, it is alleged the section falls only within the implied incidental aspect of the power and for that reason is likewise subject to, and fails to satisfy, the proportionality constraint. There is no merit in either of these challenges. I will refer briefly to each in turn. (a) A purposive power? The reed grasped by the applicant in submitting the subsection is purposive is the prefatory formula - "the provision of" - used in s 51 (xxiiiA). It clearly is the case that that formula effects a restriction on the legislative power of the Commonwealth in relation to the various types of social service specified in the subsection, including unemployment benefits. As was held in British Medical Association v The Commonwealth (1948) 79 CLR 201, that formula limits the legislative power of the Commonwealth to the provision of those services by the Commonwealth: see also Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth (1987) 162 CLR 271; cf s 51(xxiii). But the power so limited is not for that reason purposive. The presently relevant terms of the subsection are, in my view, apt to describe an activity in relation to which the Commonwealth has legislative power. As such it takes its place among some number of similarly cast subsections of s 51. I refer, for example, to borrowing money (s 51(iv)), the service and execution of process (s 51(xxv)) and the acquisition of property (s 51(xxxi)). Doubtless, it can properly be said that the power itself has a purpose. But such is the case of all of the powers enumerated in s 51 (whatever the difficulty there be in ascertaining that purpose in a given instance: cf Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 27). Having a purpose does not of itself make a power purposive. To use an analogy, it is trite that because an express private trust has a purpose (eg to make provision for a family member) does not thereby render it a purposive (and invalid) trust. Few of s 51's enumerated powers are purposive: cf Cunliffe v The Commonwealth (1994) 182 CLR 272 at 353. Commenting on the defence power in Stenhouse v Coleman (1944) 69 CLR 457 at 471, Dixon J observed: "... unlike most other powers conferred by s. 51 of the Constitution, it involves the notion of purpose or object. In most of the paragraphs of s. 51 the subject of the power is described either by reference to a class of legal, commercial, economic or social transaction or activity (as trade and commerce, banking, marriage), or by specifying some class of public service (as postal installations, lighthouses), or undertaking or operation (as railway construction with the consent of a State), or by naming a recognized category of legislation (as taxation, bankruptcy)." The provision of unemployment benefits is, in this taxonomy, properly to be seen as an activity of the Commonwealth - cf the British Medical Association case, above - in respect of "some class of public service". As such, it is not a purposive power. (b) The Implied Incidental Aspect of the Power? This matter can be dealt with shortly. As a matter of characterisation, it is not open to serious argument that s 634 is a law with respect to the provision of unemployment benefits. The "sufficiency of [s 634's] connection" with the head of power - cf Leask v The Commonwealth (1996) 140 ALR 1 at 33 - is incontrovertible. The power to provide such benefits must, I consider, include at its "core" - cf Cunliffe v The Commonwealth, above, at 317-318 - powers (a) to stipulate qualifications for entitlement to, and for continuing entitlement to, unemployment benefits; and (b) to impose disqualifications (temporary or permanent) on entitlement to (cf the Act, s 597), or continuing entitlement to (cf the Act, s634), unemployment benefits. Provided the criteria adopted do not otherwise offend a constitutional provision or limitation, the "justice and wisdom" of the criteria so selected are matters for the legislature not the courts: cf Burton v Honan (1952) 86 CLR 169 at 179. Whether or not it is appropriate at all to resort to the concept of "reasonable proportionality" to determine the validity of legislation claimed to be justified as incidental to a "non-purposive" head of power - on which see Leask v The Commonwealth, above - is not an issue that need be canvassed here. Section 634 is, manifestly, a law with respect to the provision of unemployment benefits. (2) Infringing Constitutional Limitations The applicant claims, in the alternative, that s 634 infringes the freedom of interstate "intercourse" guaranteed by s 92 of the Constitution or else that it violates an implied constitutional "freedom of movement". (a) Section 92 In Cole v Whitfield (1988) 165 CLR 360 at 393 the High Court, in distinguishing s 92's freedom of interstate trade and commerce from that of "intercourse", observed that: "A constitutional guarantee of freedom of interstate intercourse, if it is to have substantial content, extends to a guarantee of personal freedom 'to pass to and fro among the States without burden, hindrance or restriction': Gratwick v Johnson: (1945) 70 CLR 1 at 17." Whatever the range of actions and activities that may be encompassed by the term "intercourse", it is sufficient here to say that it extends to movement and communication across state borders: cf Cunliffe v The Commonwealth, above, at 366. While it is the case that s 634 does not "burden, hinder or restrict" interstate movement as such, nor does it seek so to do - its focus is on the consequence of movement, ie, taking up residence, rather than on movement itself - I am prepared to accept for present purposes that its practical operation can have the effect of hindering such movement because of the consequences that can, though need not necessarily, flow from taking up residence in another State. This, of itself, its not fatal to the validity of the section. As Dawson J noted in Cunliffe's case above, at 366: "The freedom guaranteed by s. 92 is freedom of movement, including communication, across State borders. But it does not confer immunity from all regulation. In pursuit of an object which is not the erection of State borders as barriers against freedom of intercourse, a law may incidentally restrict movement interstate, provided the means adopted are neither inappropriate nor disproportionate. The means adopted will be inappropriate or disproportionate, having regard to s. 92, if the impediment to freedom of interstate intercourse is greater than is reasonably required to achieve the object of the legislation which is otherwise within power." See also at 308 per Mason C J; at 333 per Brennan J; at 346 per Deane J; at 384 per Toohey J; at 396 per McHugh J. Cf J Kirk, "Constitutional Guarantees, Characterisation and the Concept of Proportionality", (1997) 21 Fed L Rev 1. Considered in this light, s 634 of the Act is inoffensive. First, it cannot be said to pursue an object which erects "State borders as barriers against freedom of intercourse" although, as I have accepted, it may incidentally restrict movement interstate. Without attempting to describe in any comprehensive way the object of the newstart scheme, it represented a distinctive initiative to assist long-term unemployed persons to re-enter the workforce and by the adoption of expedients which, in seeking to maximise their chances of such occurring, sought also to guard against certain actions that might jeopardise this. Section 634 is a provision having this latter function. It is designed to withdraw a benefit where, by change of residence, a person reduces his or her chances of finding employment. It is immaterial whether that reduction in employment prospects results from an intrastate or an interstate movement. For this reason the section's effect on interstate movement can properly be said to be adventitious and not designed. Secondly, is the disqualification imposed inappropriate or disproportionate? As both the scheme of Part 2.12 and the second reading speeches make plain, the legislation balances the community's obligation to the unemployed with reciprocal obligations in the persons receiving the allowance positively to act to promote their hoped for re-entry into the workforce. An action taken which has the perceived effect of reducing employment prospects (such as is envisaged by s 634), is an appropriate subject of regulation in such a legislative scheme. The period of disqualification it imposes, though significant, is not excessive. While it is the case that, save for the narrow exceptions it admits in its subsection (3), the section pays no regard to a person's reason for moving to a new place of residence, such an effects-based approach to disqualification is not in itself objectionable given the particular ameliorative purpose of the newstart allowance scheme i.e. alleviating long term unemployment. Nor is it made objectionable because of alleged parsimony of the exceptions subsection (3) admits. The section doubtless has some coercive effect, some limiting effect. But these would appear to be but aspects of the philosophy of reciprocal obligation the legislation designedly imposed on a newstart recipient as a condition of participation in the scheme. Having regard to the social need the legislation seeks to address and to its purely adventitious effect on interstate intercourse, it is not the case in my view that such hindrance as s 634 poses to interstate intercourse is greater than is reasonably required to achieve the object of Part 2.12 of the Act. Accordingly I reject this basis of challenge to the section. (b) The Implied Freedom of Movement An appreciation that the Constitution creates some species of implied freedom of movement (both intrastate and interstate) beyond that guaranteed by s 92 is not new: see eg R v Smithers; Ex parte Benson (1912) 16 CLR 99 at 109 per Griffith C J; at 109-110 per Barton J. Both the provenance and the content of this freedom - if today it has independent existence beyond what is encompassed within, and justified by, the implied freedom of communication on government and political matters (the "freedom of political communication"): cf Lange v Australian Broadcasting Corporation (1997) 145 ALR 96; and on the possible relationship between these two "freedoms", see Kruger v Commonwealth of Australia (1997) 146 ALR 126 per Toohey J at 175 ff; per Gaudron J at 195 ff - remain problematic: see eg the views of Murphy J in Buck v Bavone (1996) 135 CLR 110 at 137 and contrast those expressed in Miller v TCN Nine Pty Ltd (1986) 161 CLR 556 by Mason J at 615, Brennan J at 615, and Dawson J at 636; see also the observations of Gummow J in Kruger's case, above, at 229. For present purposes it is unnecessary to enter significantly upon the controversies besetting this alleged freedom. The applicant, wisely, has not sought to assert an implied freedom of a general and unlimited character. The constitutional justification for such a freedom is distinctly lacking. It is inconceivable in my view that the Constitution implicitly puts at risk (subject to considerations of proportionality, etc) a significant range of routine Commonwealth and State laws merely because in particular ways, they limit either freedom of movement or else the making of choices within that freedom. I instance criminal laws authorising or requiring incarceration, curfew provisions, some forms of town planning and road traffic legislation, and statutes which exclude or regulate entry on real property, public transport etc. As I understand the applicant's case in light of his "Further Submissions" (esp para 19), the freedom advanced is of a limited and purposive character. To the extent that it has vitality beyond the freedom guaranteed by s92 it is said to be based upon (a) the "national citizenship" arising from the mere fact of federation: see R v Smithers; Ex parte Benson, above, per Griffith C J and Barton J: see also Pioneer Express Pty Ltd v Hotchkiss (1958) 101 CLR 536 at 549-550; or (b) the implied freedom of political communication; see Kruger's case, above, per Toohey and Gaudron JJ. I merely comment in passing that, on re-examination, the first of these may well be found today to be subsumed by the second. Be this as it may, I am prepared for present purposes to assume a freedom so alternatively premissed as the applicant propounds. I note that the respondent's position on this is that, to the extent any such implied freedom exists, it is confined to matters incidental to the freedom of political communication. The reason I make the assumption I do without expressing a concluded view on it is that this freedom, no less than that expressly given by s 92, is not an unlimited one. Even if s 634 burdened it in some way, that section's constitutional validity would nonetheless depend on whether the test of reasonable proportionality was satisfied in the circumstances: cf Lange v Australian Broadcasting Corporation, above; and I have concluded that it is so satisfied. The section does not as such seek directly to burden political communication or movement related to such purpose. As I earlier indicated, its object is differently directed. It nonetheless is conceivable that a disincentive to change residence - hence the electorate or place of political activity within which an unemployed person may reside - could in quite distinctive circumstances burden freedom of movement for the purposes of political communication. I am for this reason prepared to accept that s 634 could incidentally burden the freedom so conceived. Insofar as the freedom may separately be based on national citizenship arising from the fact of federation, I have real difficulty in apprehending what it would add in a case such as this to the express freedom allowed by s 92. Section 634 is a Commonwealth law which does not discriminate on any federal basis or, for that matter, by reference to criteria inconsistent with the enjoyment of national citizenship, as between unemployed Australian citizens: compare the possible situation of a State law so seeking to discriminate against residents of another State; Edwards v California 314 US 160 (1941); Shapiro v Thompson 394 US 618 (1969). Neither does it burden their access to the nation's institutions or their due participation in national activities: cf R v Smithers; Ex parte Benson, above, at 109-110. The statute, in short, is a national one treating the residents of this country nowise other than as "national citizens" for its purposes. Section 634 incidentally burdens the implied freedom in the manner I have found above. But bearing in mind the dependence of this freedom upon its "parent freedom" of political communication, s 634 should, in my view, be subjected to a like test of validity to that applied to the parent freedom: see Lange's case, above, at 112. I have already indicated both the object of Part 2.12 of the Act and s 634's place in it. That object (or "end") is a legitimate one. Furthermore, s 634 itself is, I consider: "reasonably appropriate and adapted to serve [that] end the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government and the procedure prescribed by s 128 for submitting a proposed amendment of the Constitution to the informed decision of the people": Lange's case, above, at 112. For my own part I can see no basis here for finding that incompatibility required by Lange for invalidity. Neither has particular reason been suggested in the applicant's submissions. Accordingly I also reject this basis of challenge to the legislation. Conclusion In the result, finding no basis for impugning the provision in question, I dismiss the application. I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn Associate: Dated: 2 February 1998 Counsel for the Applicant: G Corr with G Williams Solicitor for the Applicant: S Langman Counsel for the Respondent: H Burmester Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 2 June 1997 Date of Final Written Submissions 15 December 1997 Date of Judgment: 3 February 1998