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A Commonwealth challenge to South Australia’s Murray–Darling royal commission has become a state rights battleground with implications for the Constitution. By Karen Middleton.

High court challenge to Walker inquiry threatens federation

As he opened the first hearing of South Australia’s inquiry into the management of the Murray–Darling river system, royal commissioner Bret Walker, SC, was not hiding his annoyance with the federal government.

Trying to establish whether laws have been broken, Walker issued a series of summonses for current and former Commonwealth officials to appear, and for documents to be presented.

The Turnbull government has not only refused to comply, it has started proceedings in the High Court to challenge Walker’s legal authority to do so, naming the South Australian government as second defendant and Bret Walker first.

“We live in a federation,” Walker declared from the commissioner’s chair on June 18, five days after the Commonwealth launched its action.

“… We are not foreign country – the states to each other, let alone to the Commonwealth – and we are certainly not mutually hostile.”

But with the federal government’s court action, which advanced this week, hostility is creeping in, setting states against each other and against the Commonwealth with potentially wide-ranging implications for cooperative agreements in future.

Walker’s Murray–Darling Basin Royal Commission is established under SA legislation that includes the power to compel witnesses and punish recalcitrants, laying out penalty options including a $1000 fine and three months’ jail.

These are the particular powers the federal government is challenging.

On his first hearing day, the royal commissioner arranged his words to avoid accusations that he was telling the High Court what to do.

A highly regarded constitutional lawyer who served the Gillard and Abbott governments for three years as the country’s independent national security legislation monitor, Walker guided those at his hearing through the relevant sections of Australia’s founding document, pondering what the court might find.

Walker observed that, even considering section 109 of the Constitution, which says Commonwealth laws prevail wherever they clash with state laws, it “may well be” that there is “nothing in the Constitution permitting the Commonwealth to ignore the continuation or creation of powers at the level of the states – the former colonies”.

He pointed to the two sections – 106 and 107 – that protect the states’ ongoing existence and added: “I repeat, it is a federation.”

Walker suggested the case could form a precedent on the distribution of powers and answer questions the High Court had not ever resolved.

“It may well be that the nature of our federation is, in a sense, infirm,” he said. “And I don’t mean by that to raise a straw man argument. It may well be that it is infirm in this regard.”

The implications in the case of the Commonwealth v Walker – the potential that our federation may well be “infirm” – are not lost on the other states, either.

If the main Murray–Darling Basin states were exercised earliest, interest spread quickly across the country.

At the court’s first hearing in June, Queensland joined the case in support of SA, accompanied by Western Australia and Tasmania – neither of which has the Murray River system anywhere near it.

But they are wading in because broader principles are at stake.

A spokeswoman for WA Attorney-General John Quigley told The Saturday Paper that the state had joined because the case would traverse “constitutional law issues involving the executive and legislative powers of the states and the Commonwealth”.

“It is not unusual for states to intervene in such matters,” the spokeswoman said.

“WA will be intervening in support of the respondents and their arguments that the states have constitutional powers to enact legislation like the South Australian law. States other than South Australia also have royal commission legislation and therefore it is important that WA makes submissions to the High Court on these important issues.”

Only Victoria has chosen not to join the case, considering it not necessary because no Victorians have been summonsed. The territories are not included because they don’t have the constitutional status of a state.

New South Wales has joined the case partly in support of the Commonwealth and partly against. The state is supporting the Commonwealth’s broad arguments about the legal roles and jurisdictions of the High Court and the federal parliament and also those arguments that insist the court should rule invalid the sections of the SA Royal Commissions Act that confer powers to compel witnesses and dish out penalties.

The Commonwealth appears to be arguing that these are powers only rightly conferred on a court. But NSW has indicated it expects to oppose the Commonwealth’s other arguments – essentially those drawing on previous cases to insist it has the power to ignore state law.

NSW’s divided position may result from the fact that, as the High Court heard, one former Commonwealth employee summonsed to appear before the royal commission now works for the NSW government.

Also possibly relevant to the NSW position – though not featuring in the High Court case – is the pressure its government has been under over its handling of Murray–Darling water issues since ABC TV’s Four Corners aired secret recordings a year ago of a state water bureaucrat offering to share confidential internal documents on the Murray–Darling Basin plan with irrigators.

The program’s revelations prompted the state government to initiate an independent investigation. A week after the investigation’s findings were published, the senior officer in question, Gavin Hanlon, resigned. The NSW Labor Opposition had earlier referred Hanlon and former state water minister Kevin Humphries to the Independent Commission Against Corruption.

The ABC program also prompted the federal auditor-general to extend an existing audit of the system of national partnership agreements to look specifically at water.

The South Australian royal commission is proceeding separate from all of this.

Even without the Commonwealth witnesses and documents it seeks, the royal commission is asking uncomfortable questions about the amount of water successive governments have allowed to be released for farm use and the amount they kept back for the environment.

This line of inquiry prompts more questions: why is the federal government going to so much trouble – and risking having the High Court rule once and for all that the states can compel the Commonwealth all they like – to stop a handful of officials appearing and some documents being handed over?

Although the High Court action was initiated through the portfolio of the federal agriculture minister, David Littleproud, who refused to let officials from the Murray–Darling Basin commission – and the secretary of his department – comply with the summons, The Saturday Paper understands it was at the insistence of Attorney-General Christian Porter.

Officially, the federal government’s position is that the issue has less to do with water than with the principle that the Commonwealth will not accede to a state seeking to use coercive powers.

But evidence already presented to the royal commission suggests it may also be concerned about the potential consequences of cooperating with an inquiry that is considering whether unlawful decisions were made.

The royal commission continues to take that evidence while awaiting the High Court’s verdict.

On Monday, the court held its second hearing before a single judge, Justice Patrick Keane. Justice Keane has now referred the case to the full bench for a two-day hearing in October.

It will be the first case in 21 years to tackle the issue of states’ rights in the High Court. The previous case, in 1997, involved a landlord, Dr Henderson, who had leased a property to the Defence Housing Authority to accommodate defence personnel.

The case arose after Dr Henderson sought an order from a NSW tribunal to be able to both inspect his property and compel the DHA to give him a key. The DHA refused, arguing that as a Commonwealth agency it was not bound to obey state law.

Now known as Henderson’s case, the dispute ended up before the High Court. The court confirmed that the states did have the power to require the Commonwealth to do certain things – under certain circumstances. But the six-judges-to-one ruling – with Justice Michael McHugh dissenting – did not clarify fully the extent of those powers.

As legal analyst Mark Gladman wrote in the Federal Law Review following the case: “The High Court’s decision in Henderson appears to expand the states’ power to bind the Commonwealth, however, the precise scope of the power remains uncertain.”

This new case may clear up some of that uncertainty.

No judge on the current court was serving on it when Henderson’s case was decided, so it’s not clear which way it might rule.

Two constitutional experts, Sydney University’s professor of constitutional law Anne Twomey and the dean of the law faculty at the University of New South Wales, Professor George Williams, both say it’s an important and complex case.

Twomey says that while the states need to be able to require the Commonwealth to answer questions, those powers must also be protected from political misuse.

“There has always been reluctance within the federation to allow the executive of one jurisdiction to compel the production of government information from another jurisdiction or to compel oral evidence from the public servants or politicians of another jurisdiction,” Twomey says.

“This is for the obvious reason that, otherwise, a government of one political persuasion in a state could use a royal commission to compel the production of sensitive information from a government of another political persuasion in another state – or the Commonwealth – in order to embarrass it or obtain some kind of politically partisan advantage.”

Twomey notes a series of cases before lower courts have examined the extent to which one jurisdiction can forcibly extract information from another.

She says the case in the Commonwealth v Walker will likely canvass some issues that arose in those cases but also the question of whether a state’s jurisdiction extends beyond its own boundaries and whether parliamentary privilege protects a member of parliament from subpoena.

On the Murray–Darling and other agreements between the Commonwealth and the states, she can see both sides.

“In short, it’s a very complicated constitutional issue that has never been addressed head-on by the High Court,” Twomey says.

“It does raise important issues of federalism – but not just about the need for the states to be able to obtain access to information. It also raises the issue of a state or the Commonwealth being able to protect itself from interference by another jurisdiction where that other jurisdiction may be seeking to obtain confidential information for partisan purposes, rather than policy purposes. There is a difficult balance that needs to be struck and there are certainly two legitimate sides to the argument.”

Williams says the case represents “actually a very significant question that does go to the heart of our federation and the way in which our governments interact”.

“This will be a major test case,” he says.

Williams suggests there may be a range of reasons that a federal government seeks to avoid acquiescing to a state request. “It may wish to hide information, it may wish not to be embarrassed, or it may just wish to make life harder for a state,” he says. “This case is very significant because it’s a question of whether it can be compelled to do so.”

Williams points to the inquest into the 2014 Sydney Lindt cafe siege as an example of a state-based inquiry that sought to draw on federal information and showed the importance of it being shared.

He agrees with Walker’s proposition that in this new High Court case, the federation could be found “infirm”.

“I think it is infirm anyway,” Williams says. “This will raise further questions about that. What the community might see as the ability to ask reasonable questions could be stymied.”

The full details of the arguments to be put will be clear when submissions are lodged with the court later this month.

Commissioner Walker is among those likely to be poring over them with more than a passing interest. His relationship to the federal–state issue extends beyond his current South Australian circumstances. In a strange constitutional twist, when the High Court heard Henderson’s case back in 1997, the counsel representing Dr Henderson was one Bret Walker, SC.

Because of his position as royal commissioner as well as defendant in this new case, Walker has entered what’s known as a “submitting appearance” before the court, which means he’s standing back and allowing the SA government to run the case on behalf of them both.

That, in turn, means for all his involvement in the earlier chapter in the fate of federalism – and despite his own name being attached to the new one – he can do little but watch and wait.

And aside from his carefully crafted royal commission opening statement about what the court might decide, the sometimes outspoken barrister can’t say a word about it.

This article was first published in the print edition of The Saturday Paper on Aug 4, 2018 as "High court challenge to Walker inquiry threatens federation". Subscribe here.

Karen Middleton
is The Saturday Paper’s chief political correspondent.