Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

Thisbill responds to the 2003 decision of the High Court in British American Tobacco v Western Australia. This case relates to the recovery of invalid taxes paid under Western Australian law. The High Court held that a limitation period and a related special notice requirement in Western Australian laws applicable to actions against the Crown in right of Western Australia were not applied by section 79 of the Judiciary Act 1903 where proceedings were in federal jurisdiction.

Cases challenging the constitutional validity of a tax, including a State tax, are, by virtue of section 76(i) of the Constitution, matters in federal jurisdiction.

Section 79 of the Judiciary Act applies State and Territory laws to proceedings in courts exercising federal jurisdiction in that State or Territory ‘except as otherwise provided by the Constitution or the laws of the Commonwealth’.

In the BAT case, the High Court held that a special limitation period applicable to actions against the Crown would be inconsistent with section 64 of the Judiciary Act as the limitation period would not apply as between subject and subject. As the law was inconsistent with section 64, it was ‘otherwise provided…by a law of the Commonwealth’ and so was not picked up by section 79 of the Judiciary Act.

It was also held that the right to proceed and related notice provision conferred by the State law was not picked up by section 79 of the Judiciary Act as it would have been inconsistent with section 39(2) of the Judiciary Act which implies a right to proceed.

All of the States and Territories have special limitation periods with respect to the recovery of taxes paid under a mistake of fact or law, including constitutionally invalid taxes. For example, Victoria, New South Wales, Queensland, Tasmania, and Western Australia impose a 12-month limitation period from the date of the payment of the tax. South Australia imposes a 6-month restriction, as do the Northern Territory and the Australian Capital Territory.

This is an example of the Rudd Labor Government’s commitment to co-operative Federalism. The bill assists in restoring the States and Territories to the position it was thought they were in before the BAT case. It does so by amending section 79 of the Judiciary Act to make clear that nothing in the Judiciary Act precludes State and Territory laws applicable to the recovery of invalid State and Territory taxes from applying where the relevant proceedings are in federal jurisdiction.

It is desirable that there be a special, short limitation period applicable to proceedings to recover invalid State and Territory taxes. Otherwise, claims could be made many years after a tax has been paid, with potentially far-reaching consequences for government budgeting.

The bill implements recommendations of the Standing Committee of Attorneys-General which have as their objective the protection of State and Territory revenue. I commend this bill.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

The Judiciary Amendment Bill 2008 amends the Judiciary Act 1903 to permit the states and territories to provide for time limitations and notice requirements in respect of actions for the recovery of constitutionally invalid taxes in the federal jurisdiction. The bill is a response to the decision of the High Court in 2003 in the case of British American Tobacco v Western Australia, which involved proceedings in the federal jurisdiction for the recovery of invalid taxes paid under Western Australian law. The court held that provisions in Western Australian law containing a special notice requirement and limitation period for actions against the Crown in right of the state of Western Australia were not applied in the federal jurisdiction by section 79 of the Judiciary Act. The bill amends the act to allow the states and territories to apply time and notice limitations in actions to recover amounts paid under an invalid tax and to bar suits on the ground that the person bringing the suit has charged someone else for the amount of the tax.

While one naturally sympathises with corporations and individuals who have been subjected to invalid state taxes and would not seek to impede the recovery of those amounts, the reality is that the scenario is usually one of an invalid excise. It is not unreasonable to expect that objections to these taxes would be brought promptly, and it would be unjust to require the refund of amounts that have been fully passed onto consumers. That would be tantamount to a double subsidy to claimants funded by the public, first as consumers and then as taxpayers.

The matter of bringing repeal legislation was agreed between the Howard government and the states through the Standing Committee of Attorneys-General. The bill is in identical form to one that was drafted under the previous government, and it accordingly has the support of the opposition.

Natasha Stott Despoja (SA, Australian Democrats) Share this | Link to this | Hansard source

As the Attorney-General spokesperson for the Democrats this time—for the penultimate time—I rise to speak on the Judiciary Amendment Bill 2008 and also to indicate the Democrats’ support for this bill. The bill responds to the High Court decision in British American Tobacco v Western Australia, which involved proceedings in the federal jurisdiction for the recovery of invalid taxes paid under Western Australian law.

The High Court held that provisions in Western Australian law containing a special notice requirement and limitation period for actions against the Crown in right of Western Australia were not applied by section 79 of the Judiciary Act 1903. Section 79 of the Judiciary Act currently provides that, ‘except as otherwise provided’ by the Constitution or Commonwealth laws, the laws of a state or territory are binding on all courts exercising federal jurisdiction in that state or territory.

In the British American Tobacco case, the High Court held that a Western Australian special limitation period applicable to actions against the Crown would be inconsistent with section 64 of the Judiciary Act as the limitation period would not apply as between subject and subject. As the law was inconsistent with section 64, it was ‘otherwise provided by a law of the Commonwealth’ and so was not picked up by section 79 of the Judiciary Act.

The bill seeks to restore the states and territories to the position it was thought they were in prior to the BAT case. It does so by amending section 79 of the Judiciary Act to ensure that nothing in the Judiciary Act prevents state and territory laws related to the recovery of invalid state and territory taxes from applying, as far as possible, to proceedings in the federal jurisdiction. In introducing the bill, the Attorney-General referred to the fact that it implements recommendations of the Standing Committee of Attorneys-General, SCAG, and that the bill seeks to protect state and territory revenue.

The Democrats consider that this bill provides sufficient clarity to the law in the light of the High Court decision in the BAT case, and for that reason we will be supporting it today.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

in reply—I thank Senator Brandis and Senator Stott Despoja for their contributions to the debate. The Judiciary Amendment Bill 2008 is the government’s response to the issues raised by the High Court’s 2003 decision in British American Tobacco v Western Australia. In that case, the High Court held that provisions in WA law containing a special notice requirement and limitation period for actions against the Crown in Western Australia were not applied by section 79 of the Judiciary Act 1903, when the proceedings were in the federal jurisdiction.

The Judiciary Amendment Bill 2008 responds to the High Court decision in the BAT case by amending section 79 of the Judiciary Act to ensure that, as far as possible, state and territory laws related to the recovery of invalid state and territory taxes apply in proceedings in the federal jurisdiction for the recovery of those taxes. Examples of the state and territory laws that may apply include special, short limitation periods, notice provisions and antiwindfall provisions. The purpose of these laws is to prevent claims for the recovery of invalid state and territory taxes being brought years after the tax has been paid. Such claims could have far-reaching consequences for state and territory government budgeting.

The Judiciary Amendment Bill gives increased certainty to state and territory governments in the management of their finances and is consistent with what was thought to be the situation prior to the High Court’s decision. By advancing this bill, the Australian government is implementing recommendations of the Standing Committee of Attorneys-General. It is an example of the Rudd Labor government’s commitment to working cooperatively with the states and territories through the SCAG process to achieve common goals. The previous government did not address the issues raised by the High Court’s decision in the British American Tobacco case, despite it being on the SCAG agenda for over four years. The Rudd Labor government has acted promptly to introduce these amendments, which resolve these serious issues for the states and territories, and I commend the bill to the Senate.

Question agreed to.

Bill read a second time.