Fees and charges imposed by State or Territory governments on
government-owned corporations are unlikely to fall foul of section
90 of the Constitution.
In Queanbeyan City Council v Actew Corporation Ltd  HCA 40
the High Court held that fees imposed by a government on a
government-owned corporation were not a tax but an "internal
financial arrangement". The decision has implications not only
for governments' fees and charges on their own corporations but
also generally for the status of government-owned corporations.
The water supply from the ACT to Queanbeyan
Queanbeyan City Council (QCC) obtains water supplies from ACTEW
Corporation Ltd, a territory-owned corporation.
The Australian Capital Territory imposed a "water licence
fee" and "utilities networks tax" on ACTEW. These
charges were passed on to QCC through arrangements that enabled
ACTEW to recover its costs for supplying the water.
QCC challenged the constitutional validity of the charges that
were being passed on to it on the basis that they constituted
"duties of excise". Under section 90 of the Constitution,
the Commonwealth Parliament has the exclusive power to impose
duties of excise.
Neither a tax nor an excise
The High Court dismissed QCC's appeal and found that neither
charge was a tax or excise.
The High Court reasoned that a "tax" was an exaction
in the exercise of the power of the government lawfully to take
from the governed. A charge imposed by a government entity on
another government entity, being part of the internal financial
arrangements of government would therefore not constitute a
"tax" or "excise".
ACTEW was a territory-owned corporation. In accordance with the
Territory-owned Corporations Act, ACTEW had the following
all shares in ACTEW were held on trust for the Territory;
all voting shares in ACTEW must be held by a Minister; and
the wishes of the voting shareholders (ie. the Minister) were
to take precedence, even where the directors advised that it would
not be in the best commercial interest of ACTEW to act as the
voting shareholders wish.
On the basis of these features and the control exercised by the
Territory over ACTEW, the High Court concluded that ACTEW and the
Territory were indistinct entities. A charge imposed by the
Territory on ACTEW was therefore not a "tax" or
"excise" but rather an "internal financial
The High Court reached this conclusion despite a provision of
the Act which states that a territory-owned corporation is not
"the Territory". The Court held that this provision could
"not deny the consequences which flow from the substantive
provisions of the Act".
Implications for government
The decision has two key implications for government.
The first is that fees and charges imposed by State or Territory
governments on government-owned corporations are unlikely to fall
foul of section 90 of the Constitution.
More generally however, the decision may have implications in
determining the status of government-owned corporations. Statutory
provisions which declare that government-owned corporations do not
constitute "the State" or "the Territory" will
not necessarily preclude such a finding. The issue will be
determined by consideration of the statute as a whole.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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