In July this year NSW Premier Mike Baird called a press conference where he and the Minister for Racing Troy Grant announced that the NSW greyhound racing industry will be shut down on 1 July 2017. 

Not long afterwards the greyhound industry stated that they might take a case all the way to the High Court to challenge the legislation that will close their industry. It sounds like something straight out of the movie ‘the Castle’. The little guys are taking on the might of the Government to seek justice and fairness. Darryl Kerrigan even had greyhounds.

The reason the Government has given for shutting down greyhound racing is that the Special Commission of Inquiry into the industry found overwhelming evidence of systemic animal cruelty, including mass greyhound killings and live baiting.

The greyhound industry and others speaking up for them have stated that they should be given time to clean up their industry. Others have also stated that this is some kind of a class war. For some it seems like the inner city elites are closing down an activity that working class people love and that many rely on for their income.

So what section of the Australian Constitution does the greyhound racing industry believe might have been breached by this legislation?

Section 92

The greyhound racing industry is looking to Section 92 of the Constitution to try and stop the ban of the sport. Here is the relevant part of that section of the Constitution:

Section 92 Trade within the Commonwealth to be free
On the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free….

You might look at this text and wonder how this section could possibly have anything to do with greyhound racing.

Let’s go back and take a look at why we have this section of the Constitution and what the intentions of the people who wrote our Constitution were.

At the time of Federation

We tend to think that the Liberal/Labor two party domination of parliaments that we currently experience has been around forever. But this is not the case. Around the time that the people from the six Australian colonies were drafting our Constitution two of the major parties were the Free Traders and the Protectionists. At the first federal election in 1901 the Protectionist Party gained the most seats in the House of Representatives and formed a coalition with Labor. The Free Traders were our first Opposition.

We highlight this to show you that at the time of federation the discussion about free trade was high on the agenda and so Section 92 of the Constitution was written. It was intended to prevent the States from prohibiting interstate free trade. The people who wrote our Constitution did not want the States to be able to impose customs taxes, tariffs, etc on each other.

At the 1897 Constitutional Conventions Isaac Isaacs, who had been elected as a Victorian delegate, stated that he thought that the proposed Section 92 was unnecessary and dangerously wide. He believed that all that was needed was the prohibition of interstate duties, which was already provided for in the Constitution. Despite losing his argument about this section, in 1901 Isaacs was elected to the seat of Indi. He later went on to become a Justice of the High Court and then Chief Justice, where he made judgements upon this section of the Constitution.

The High Court’s interpretation of Section 92

As Isaacs had predicted (and probably somewhat contributed to once he became a judge), Section 92 of the Constitution was interpreted with changed meanings throughout the decades.

By about 1915 it had been interpreted by the High Court that this Section meant that the States couldn’t make legislation on the subject of interstate trade. This was clarified about five years later when it was determined that Section 92 only applied to the States and not the Federal Government. This gave the Federal Government greater power. However in 1936 the Privy Council quashed that meaning, so then Section 92 applied to the State and the Federal Governments. By about the 1930’s Section 92 started to take on the meaning of protecting free enterprise with cases judged in the High Court about banking and airline monopolies. This section had assumed an ‘individual right’ meaning.

It wasn’t until 1988 in the Cole v Whitfield case about the prohibition of undersized Tasmanian crayfish that a clearer understanding of this section was made. The High Court decided to take the meaning back to what the framers of our Constitution intended when it was written. It was found that the principle of this section was only infringed by the imposition of discriminatory burdens of a protectionist kind.

What does that mean in normal language? If a law is implemented that helps to protect an industry in one state and discriminates over the same or equivalent industries in other states, it might be unconstitutional.

Writing in the Federal Law Review, Eli Ball sums up the history of Section 92:

For the better part of nearly 90 years controversy abounded as the High Court and Privy Council grappled with the task of interpreting exactly what was meant by the phrase 'trade, commerce, and intercourse among the States ... shall be absolutely free.' A plethora of meanings have been cast upon s 92 since 1901, ranging from a free trade view of the section in the early days of the Federation to a laissez-faire endorsement by the mid to late twentieth century….Fortunately, much of what was said about s 92 prior to 1988 was reduced to little more than nostalgia, following the unanimous decision of the Mason Court in Cole v Whitfield. In an effort to resolve once and for all the issue of interstate trade and commercial freedom, the Court famously began by holding that it could consider the history of s 92's insertion into the Constitution.

The 1988 understanding of Section 92 was reinforced in 2008 when the Court found that Western Australian legislation that made it an offence for a person in WA to make a bet on the phone or internet using Betfair was invalid. It was found that the legislation that banned the use of Betfair in WA had the effect of protecting the WA wagering industry. As such it was discriminatory and protectionist. The High Court also made it clear that this legislation had restricted the operation of competition in the national market.  

It is now accepted that legislation may be found invalid if it imposes discriminatory protectionist burdens. However, if a law has a legitimate non-protectionist purpose and the legislation is necessary or 'appropriate and adapted' to achieving that purpose and the protectionist effect of the law is merely incidental and proportional it may not be invalid.

What does this mean for the greyhound industry?

Would you say that banning the greyhound racing industry in New South Wales imposes a discriminatory protectionist burden or that it might perhaps restrict the operation of competition in the national market?

Greyhound Breeders Owners and Trainers Association Chief Executive Brenton Scott has stated:

It is our view the greyhound industry trades on a national basis, across breeding, racing and wagering perspectives and the Constitution guarantees freedom of trade…. This change, this legislation restricts trade across those three disciplines and is in breach of fundamental rights as provided by the constitution.

Are the reasons the NSW Government has provided for implementing this legislation strong enough so that if the legislation is found to be protectionist, the protectionism is incidental, necessary and appropriate?

This could be why the greyhound industry has initiated a case in the NSW Supreme Court in an attempt to strike out the NSW Government report that was used to justify the ban. If the report is thrown out then the legislation for the ban might not be reasonable.

Constitutional expert Professor George Williams spoke on ABC NewsRadio on 20 September about the protectionist principle that might be required for a possible Constitutional challenge:

The Constitution says in section 92, that interstate trade and commerce must be absolutely free and that would suggest that any part of a ban that affects, for example, the breeding sale of greyhounds across state borders, could run foul of that provision….It will though be a tough fight, and that's because the High Court has interpreted that provision quite narrowly. It actually only applies where a state law may be protectionist in seeking to actually protect a local industry, as opposed to where they are actually banning it.

So one interpretation of Section 92 may mean that the banning of greyhound racing in NSW does not breach the Constitution because there is no attempt by the State to protect an industry. But could it be argued in Court that this ban will have an effect upon competition in the national market? Writing in the Monash University Law Review in 2010 High Court Justice Susan Kiefel states:

It has been suggested that the current test of discriminatory protectionism is not sufficient to protect the interests of free trade within the Commonwealth. The adoption of unreasonable measures by one state could have the practical effect of restricting its part of the national market to trade from other states, whether or not it receives any advantage from them. An example given of a measure discriminating against trade but without any protectionist effect is where a state halves the imports of another state of a product it does not produce. This would restrict the free flow in goods and services to the detriment of the national economy, but without providing any corresponding benefit to the legislating state. 

Could the shutting down of the greyhound industry in New South Wales have a detrimental effect upon the industry throughout Australia? At the moment dogs might be bred in one State and then sold to race in another state. After the ban, planned for 1 July 2017, NSW breeders of greyhounds will not be able to operate their businesses which could affect the industry in other States. And breeders in other States will no longer be able to sell their dogs to be raced in NSW. Could this have an effect upon competition in the national market?

We’ll have to wait and see whether the greyhound industry does take a case to the High Court. In the meantime watch out for the NSW Supreme Court Case that was filed on 29 July.