Australian Constitutional Law

Rob is a successful entrepreneur who owns a factory dating from the 1970s in Oberon, New South Wales that manufactures chemicals for use in industrial processes. These chemical products are sold and transported to factories in Sydney, other states in Australia, and New Zealand.

Distribution of Rob’s chemical products is mostly handled by his brother Steve’s transportation firm, Outback & Beyond, which owns a fleet of trucks but has a poor safety record and is highly reliant on Rob’s business for its survival. Both the factory and transportation firm comply with New South Wales legislation.

However, following a major industrial accident in Queensland, the safety of the chemical manufacturing industry becomes a matter of political controversy. The newly elected Commonwealth Government comes to office partly on an undertaking to address the issue, and the Minister for Industry and Innovation (‘the Minister’) declares that Commonwealth legislation will be introduced to regulate ‘the entire process whereby chemicals are manufactured and distributed, from initial production to transportation and end use.’

To this end, the Commonwealth Parliament enacts legislation in the form of the (fictional) Safety of Industrial Chemicals Act 2013 (Cth) (the ‘Act’). The Act establishes a licensing scheme for persons involved in the manufacture, distribution, and use of industrial chemicals. To obtain such a licence, Rob must demonstrate that his factory meets certain work health and safety requirements that are set out in the Act. His brother Steve is likewise required to obtain a licence and must demonstrate that his transportation firm meets the relevant standards. The Act is considerably more stringent than the New South Wales legislation.

The Act also establishes a ‘Commission for Chemical Products’ with responsibility for issuing licences, repealing licences, investigating complaints that licence holders are not complying with the standards contained in the Act, and imposing financial penalties where appropriate. In terms of the Act, the Commission is required to observe standards of procedural fairness in respect of each of these issues, such as giving affected parties notice of any allegations and ensuring that decisions are preceded by hearings at which the affected parties can make representations. The Commission must, however, report to the Minister and its decisions are potentially subject to Ministerial override. The Act also establishes that the Commission will consist of two experts and be headed by ‘a Judge of the Federal Court of Australia’ who is ‘nominated by the Minister’ and ‘consents to the nomination in writing.’

The Commonwealth scheme has widespread public support but newspaper stories quickly allege that the Commission has insufficient capacity to ensure that persons engaged in the chemicals business are complying with the conditions in the Act. To this end, the Minister hastily concludes a series of contracts with private security firms to conduct inspections on behalf of the Commission. The Minister claims to be relying on section 32B of the (actual) Financial Management and Accountability Act 1997 (Cth) and Schedule 1AA of this Act is amended accordingly.

Rob is concerned that his ageing factory and his brother’s chaotic transportation business may not meet the conditions in the Act. He seeks your advice about the constitutionality of the Act and the system of inspections established by the Minister.

Please note that in answering this question you do not need to address the issue of inconsistency under section 109 of the Constitution, or the Corporations power under section 51(xx) of the Constitution.

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