An Essay in Comparative Constitutional Law 14-10-2005 (Complete)

7/27/2019 An Essay in Comparative Constitutional Law 14-10-2005 (Complete)

1/49

Faculty REsource CentreLevel 1, Co/in Clark Building (39) DATE RECEIVED

_4;:"?FOR OFFICE USE ONLYLAWS CODESmember nominated to submit andlor collect the assignment on behalf of a group.DUE DATE /Y 2 L'(. iEXTENDEDDUE DATEWORD COUNT

4

Familv Name (please print clearlv) Given Names-r'" *_ .-''ii;irrifr, iJffu'Student lD Number Sionatufe {see statement below )IT J-Email Address VPhone Number-

*All sections below must be completed.Course Code {prin1 clearly) LAWS ^I'i 7,,1 Course Name 1in tutt; L( t"i I 4tt.llJ I ! [ r-'4 -\ | I i t-; I i.-,tr,-tAssignment Number Assignment Title LdL,Tutorial Day (it applicable)Tutorial Time (if applicable) Name of Lecturer ii-' iExtension granted (Ptease circle): Yes No Name of TutorCopy of written approval is attached: Yes No Extension granted by:Group assignments are held under one group member's name. The group must nominate a group member to submit andcollect the assignment which will only be returned to that group member. All other group members must complete thefollowing section. Do not complete andior sign on behalf of any other group member.

Family Names of Other GroupMembers (olease orint clearlvl Given Names Student lD Number Signature (see statement below)

PLAGIARISM: Plagiarism is the action or practice of taking and using as one's own, the thoughts or writings of another without acknowledgement. When a deliberate aclof plagiarism is proven, the results of the assignment, exercise or procedure concerned may be annulled and such other action may be iaken as Senate may considerappropriate in the circumstances of the case. This may result in loss of credit in a subject and/or suspension of enrolment at the University.

Student's StatementI declare that I am the student whose name appears above and that this is my own original work. lt does not contain any plagiarised material and hasnot previously been submitted for assessment. Text that is not my own has been quoted and attributed appropriately in the rLferences. I declare thatI hat$} retained a copy of this work. ln accordance with my lecturer's instructions, I confirm that this assignment is to be submitted at the BEL FacultyResolrce Centre, and that I understand and will abide by the conditions on the reverse of this cover sheet pertaining to results, assignmentpresentaiion, submission and collection.


2/49

LAWS 7939COMPARATIVE CONSTITUTIONAL LAW

Word Count:The body of the text contains 8,312 words including hyphens and dot points butexcluding footnotes. The 7,500 word limit expires at the end of the phrase "from theperspective of any individual State, the . . ." on page 24. Appendix I is submitted asoptional extra material.


3/49

INTRODUCTIONThis assignment is the compulsoryComparative Constitutional Law. research assignment for Course 7939,

Consistent with the assignment instructions I have chosen the following topic:Choose . . . freedom of religiLon . . . and compare the treatment of this right inAustralia (with no bill of rig.hts) to its treatment in . . . a jurisdiction with anentrenched, constitutionalise,d bill of rights, like . . . the US.

I have undertaken Course 7939 as a non-award course within Program [Post GradMisc - BEL] as preparation for a possible future thesis in the held of constitutionalpolitical economy on the topic of "sovereignty markets".In light of my specific objectives in undertaking the course, I have used thisassignment as an opportunity to develop and apply some concepts of constitutionalpolitical economy that I am hoping to elaborate in the future. Specifically, I amattempting to develop a value-neutral theory of law based only upon Coase'sTheorem, and to specify the institutional arrangements (a "sovereignty market")which could implement such a model of law.For the purposes of this assignment I have dealt only with one aspect of this largerprogram: a description of the "market failure" which attends existing constitutionalsystems, how the various mechanism for handling market failure can be mapped on toexisting constitutional mechanisms (including bills of rights), and how bills of rightsinteract with the other mechanisms for handling market failure.OVERVIEWI submit that constitutional law is lraw concerned with the structure and operation ofgovemment.I propose to analyse the "government industry" as if it were any other utility industry.Like any other industry it comprises a number of utility-maximising participantsoperating within u tyti.- of rules to achieve their objectives.lThe government industry provides'ogovernmental services." Its output compriseslegislation, administration, and arbitration (both between customers and thegovernment provider, and between different customers), as well as other specificservices which vary from community to community.I submit that the government industry is subject to two forms of market failure:

a very high degree of monopolisation; and

I It is not necessary to assume that the participants are "self-interested" in the common meaning of theword. They may be altruistic. But, provided that they are pursuing goals which they regard asimportant, they will be maximising their utilify.


4/49

various principal-agent failures.In relation to monopolisation, I observe that:

governmental services are provided by states;. traditionally, states are highly integrated providers of governmentalservices: all govemmental services are provided by the same sovereign state(or, in the case of federations, by one of two sovereign states - the central andthe provincial - each operating within its fixed jurisdictional limits);. traditionally, states are organised throughout the world as regionalmonopolies.' For any region, only otreitut" (or, in the case of federations, oneof two states operating within different fixed jurisdictions) may provide anygovernmental service; ando most regional monopoly states participate in an informal market sharingagreement under which each supplier commits not to offer, or attempt to offer,govemmental services within the franchise area of another supplier.In relation to principal-agent failure, i observe that:

traditionally, states typically operate on a very large scale exceeding in size allbut the largest non-government firms;. the large scale of states necessitates extensive delegation of responsibilities

with multiple levels of principal-agent relationships; andthe integrated provision of governmental services results in states having avery broad scope of operations. This makes it all but impossible to specifrprincipal-agent contracts in detail.

In non-government industries, various methods have been devised to address theproblems of monopoly power and principal-agent failures. I shall briefly discussthese.I shall then map these methods onto the govemment industry to provide a model foranalysing various constitutional arrangements.I shall then discuss entrenchment in terms of Coase's Theorem.Finally, I shall discuss the specific matter of freedom of religion in Australia and theUnited States using this model.

2 In discussing the government industry it is conventional to use terms derived from the Latin unusrather than the Greek monos. Thus, a "monopoly state" is conventionally called a "unitary state." The"European Monopoly" is invariably referred to as the "European Union."


5/49

While concentrating on Australia and the United States, I shall at various points alsodraw comparisons with the Swiss system of direct democracy.HANDLING FAILURE IN NON.GOVERNMENT INDUSTRIESOverviewCommon methods of handling the problems of monopoly power and principal-agentfailure in industries other than the government industry are:. structural regulation:o conduct regulation;. franchising;o cooperative structures;

"competition by comparison"; and. fully competitive restructuring.These methods are not mutually exclusive.Structural RegulationStructural regulation aims to structure an industry in such away that conflicts ofinterest do not arise. This may be used to prevent monopolisation, limit monopolypower, or reduce the likelihood of principal-agent failures.Examples of structural regulation include:. structural separation of the natural monopoly components of various utilityindustries to prevent owners extending their monopoly power into otherwisecompetitive areas. Well-known examples include separation of electricitydistribution and generation;. mandatory independent auditing of company accounts to ensure that the

functions of managing a company and auditing its accounts on behalf ofshareholders and creditors are undertaken by different people; and. separation of investment banking and funds management (to prevent insidertrading) in the finance industry.The advantage of structural regulation is the relative ease of defining structuralboundaries and monitoring breaches.However, structural regulation is a blunt instrument which may prevent the efficientorganisation of firms. The separation of computer operating systems from computer


6/49

applications (a possibly remedy against Microsoft) might have led to inefficiencies insoftware development.Conduct regulationConduct regulation is widely used not only to remedy monopoly power but also tohandle other market failures such as external costs. For the purpose of this analysis,only conduct regulation relevant to monopolies is relevant.Examples include:. regulated tariffs in utility industries to prevent abuse of monopoly power;o prescribed standards of service in utility industries, with financial penalties forfailure to meet standards; and. in some cases, non-discriminatory treatment of different customers or classesof customers.At first sight the advantages of conduct regulation may appear to be self-evident: regulation can be tailored to target the specific conduct deemed undesirablewithout the inefficiency of blunt structural separations.However, conduct regulation has its own problems. These include:

difficulty in specifying precisely the undesirable conduct;. strategic responses by monopolists to the regulatory rules, and otherunintended consequences; and

"regulatory capture."The problem of specification may be seen in the setting of utility tariffs. Ideally,regulated tariffs would be set just high enough to generate a "reasonable" rate ofreturn on capital. Unfortunately, because the "reasonable" rate of retum depends onfactors - such as risk - which are impossible to quantify objectively, there remains asignificant degree of subjectivity in setting tariffs.Strategic response to conduct regulation is typified by the "Averch-Johnson effect."3Because regulators cannot monitor every decision of a regulated utility, and becausethey will tend to eff on the high side in setting rates of return (to avoid bankruptingthe firm), regulated utilities have an incentive to over-invest in order to earn theregulated rate ofreturn on as large a capital base as possible.

3 Described in most standard economics textbooks. See, for example, Frank, 2003. pp 442'443 .


7/49

Given the problems of specification and strategic response, it is far from clear thatconduct regulation creates a net benefit:Whether these interventions [i.e. tariff regulations] do more good than harm,in purely economic terms, remains an unseffled question. But they clearlyseem to serve an important psychological function on behalf of a public thatfeels understandably uncomfortable about not having a buffer between itselfand the sole supplier of a critical good or service.a

The preceding arguments presuppose that the regulator is diligently and impartiallyattempting to pursue the "public interest" (however that might be defined) byweighing up the competing interests of monopoly suppliers and customers. Analternative theory of conduct regulation questions the-motives of regulatorsthemselves and their susceptibility to interest groups.) In particular, regulators maybe become captive to one or other groups.

Some of the interest group pressures on regulators . . . are clearenough: consumers benefit from lower prices and producers favor higherprices . . . fT]rade unions may align themselves with management on thepricing issue, hoping to appropriate some of the monopoly returns in the formof higher wages . . .; consumers tend to be less well organised as a lobbygroup than either management or labor; the greater frequency of contactbetween management and regulators could, over a period, make the lattermore receptive to the firms' arguments; regulators may be influenced by theprospect of remunerative employment in the industry once their public servicedays are oue..6

FranchisingFranchising (or o'concessions" or "exclusive contracting") seeks to overcome theproblem of monopoly by granting a franchise or concession over it, for a limitedperiod, to an operator selected through a process of competitive bidding. In this waycompetition within a market is replaced by competition for a monopoly.Common examples of franchising include the contracting out of garbage collection,toll road concessions, and leases over airports.Several problems of franchising can be identified:. lack of competition in bidding for, or awarding of, a franchise:

collusion;incumbency advantage;principal - agent failure;

a Frank,2003. p444.5 A quick summary of this economic theory of regulation may be found in Vickers and Yarrow. 1988.ppl07-110.uVickersandYarrow. 1988. p 108.


8/49

costs offranchise transfer; anddifhculties of contract specification, and exploitation.

If bidding costs are high, the number of bidders is likely to be low. With few bidders,there may be collusion not to engage in competition which would reduce profits forall.An incumbent franchisee may have an advantage when the franchise comes up forrenewal. An incumbent will generally have a better idea of costs than outsiders andwill therefore be able to bid the keenest price. Likewise, an incumbent may haveaccess to information on such things as price elasticity or the popularity of differentservices which enable it to submit a more attractive bid for renewal.The final customers are often not responsible for awarding a franchise directly. Theymust engage agents whose interest may not coincide with their own. Because theincumbent must often liaise closely with the agents responsible for renewing thefranchise there is an opportunity for capture.Delivering a franchised service often requires specialised equipment as well asspecialist knowledge and skills. Transferring physical assets and skills gives rise tocosts of franchise transfer, and a possible loss of skills upon transfer.The more complex a business, the more difficult it is to speciff in a contract all thepossible contingencies which might arise and how they are to be dealt with. This canhave a perverse result in the form of exploitation: however a contract is specified, thefranchise will tend to be worth most to the bidder who has devised the best way ofexploiting it, often to the detriment of the customer.T Thus, in one sense, franchisestend to be awarded to the least suitable bidder.Cooperative structuresAnother method of dealing with monopoly is to align the interests of supplier andcustomer by establishing a cooperative structure in which the customers become jointowners of the monopoly. Typical examples include agricultural cooperativecompanies such as sugar mills and tramways, dairies and cotton gins.Cooperatives are typically run by full time managers who report to a board ofdirectors elected by the customer/owners. In this respect cooperatives aresuperficially similar to franchised monopolies because control of the monopoly ishanded to a set of managers for a period of time.

7 A recent local example involves the lease over Brisbane Airport where the winning bidderimmediately placed a toll gate across the taxi stand and prohibited taxis from picking up arrivingpassengers elsewhere. This particular exploitation hadn't been foreseen when speci$ing the franchisecontract.


9/49

However, especially when constituted under corporations law, cooperatives differfrom a pure franchise in that:. membership of the corporation may be limited to customers to ensure that the

classes of customers and owners remain roughly aligned; ando managers have no security of tenure and are accountable to thecustomer/owners continuously rather than periodically:

members of the board of directors resign in rotation and must bereappointed by the members voting in general meeting;certain matters must be approved directly by members of thecorporation voting in general meeting. These fall into three categories:

regular and routine matters such as adoption of the annualaccounts which must be approved by ordinary resolution of themembers;extraordinary matters such as changes to the company'sconstitution which must be passed by a special resolution ofmembers; andother matters which the constitution or corporations law requireto be approved by either ordinary or special resolution such as,for example, proposals to sell a significant portion of thecompany's assets; and

members of a corporation have a right to initiate policy through thecalling of a general meeting at which to debate and approve ordinary orspecial resolutions, including proposals to remove directors. Athreshold test is generally applied to prevent this right being abused.The shortcomings of cooperatives include:. difficulties in handling divergent interests of members. This may occur when,for example, a member ceases to be a customer and wishes to sell his or her

shares; and. possible principal-agent failures if customer-members fail to monitor thecompany' s management diligently.Competition by comparisonThe term "competition by comparison" is used here to refer to the industry structurewhich comprises a number of adjacent regional monopolies, usually operating under asingle regulatory umbrella. The archetypal examples are the 12 regional electricitycompanies and the 10 regional water companies of England and Wales, established atthe time of their privatisation.


10/49

The benefits of competition by comparison are twofold:. some customers (typically larger ones and the more mobile) may enjoy actualcompetition through their ability to move from one region to another; and. the existence of several similar suppliers operating on close proximity allowsboth quantitative and qualitative comparisons of performance.The shortcomings of competition by comparison are:. the inability of immobile customers to benefit from actual competition;. the difficulty of drawing useful comparisons when suppliers face differentconditions (typically different costs); and. the possibility that maintaining several smaller monopolies may require an

inefficiently small scale of production compared with a single larger one8.Fully competitive restructuringFully competitive restructuring involves:. identiffing and separating those components of the industry which areineducibly monopolistic (e.g. dispatch and transmission in the electricityindustry) and handling them as monopolies using one of the methodsdescribed above;. allowing the remaining components (e.9. generation and supply in theelectricity industry) to be restructured as competitive markets; and. using "vesting contracts" to create temporary "virtual monopolies" to handletransitional risks during the transition from monopoly to market system.Examples of this approach include the restructuring of the United States telephoneindustry in 1984, and the restructuring and privatisation of the electricity industry ofEngland and Wales from 1988 to 1991.

8 For example, the seven former regional electricity distributors of Queensland have been consolidatedinto two larger firms.


11/49

METHODS FOR HANDLING GOVERNMENT INDUSTRY MONOPOLIESgOverviewEach of the methods of handling monopolies and principal-agent failure in non-government industries may be mapped onto the govemment industry as shown below:

Non-sovernment industrv Government industrvStructural regulationConduct regulationFranchisingCooperativesCompetition by comparison

Comoetitive restructurins

Separation of powers and other similar measuresBills of rights and similar measuresRepresentative government with periodic electionsDirect democracyFederalism

Sovereisntv marketsStructural regulation: regulatory captureBefore examining each of the methods it is necessary first of all to consider a criticalfeature of the govemment industry which distinguishes it from other industries: thescope for regulatory capture.All states employ at least some regulation. Representative government, directdemocracy and federalism all require some regulatory oversight by the judiciary.There is, therefore, a need for a regulator or regulators who will inevitably be part ofthe government industry itself. This raises the problem of reguiatory capture.Although judges serving on constitutional courts are structurally separated both fromthe government provider and from customers or classes of customer, the possibility ofcapture still arises from several quarters:. aPPointment ofjudges. Several cases can be identified:

- unitary states (including the central govemment of some federations).There are few mechanisms available to prevent capture in theappointment process;- federal states. At the sub-national level there is the possibility of aregulator appointed entirely from outside the provincial state;

e'A more extensive treatment of this subject is included at Appendix [. To remain within the requiredword limit, I have presented only a summary of the arguments here.


12/49

confederal systems. Where members of the highest court are appointedby the member states of a confederal system there is the possibility of aregulator independent of the central government. The EU is anexample; andhybrid systems. The German Federal Constitutional Court comprisesjudges appointed half by the Bundestag and half by the Bundesrat.l0Judges of the Swiss Federal Supreme Court are elected by the FederalParliament;11

. removal ofjudges:basic tenure:

for life, for example the United States Supreme Court;12for a fixed and uniform period, for example the EuropeanUnionl3 and Switzerland;la andfor fixed but not uniform period, for example the High Court ofAustralia (where appointment to the age of seventy allows theexecutive to select, to a degree, the period ofservice ofanominee);1s

tenure conditional upon good behaviour (and in some casesincapacity), with good behaviour or capacity determined by:. the Court itself;16 or. the legislature;t1 and,availability of informal inducements to retire, such as promotion toother office; and

. other influences:size of the bench. A large bench reduces the chance that a single"renegadejudge" acting out ofcharacter will produce unexpectedresults;

to German Basic Law, para94(1).rr Federal Constitution of the Swiss Confederation, Article 168. Article 148 provides that the twochambers of the Swiss parliament have equal powers.'' United States Constitution, Article III, Section 1.r3 Treaty of Rome, Article 167.ro Swiss Constitution, Article 145.15 Australian Constitution, Section 72, amended 1977.16 Protocol on the Statute of the Court of Justice of the European Economic Communiry as amended byCouncil Decision of 24 October 1988.r? Australian Constitution, Section 72. rJnited States Constitution, Article II, Section 4. See Tribe.1988. Footnotep64.

10


13/49

- the ability to enlarge the bench;- siting of court in the political capital (Australia and the United States),or elsewhere (Luxembourg for the European Court of Justice); and- the ability to limit the court's jurisdiction, and control of the court'sbudget and increases injudges salaries.ls

The mandatory retirement of Australian judges at the relatively young age of seventyyears reduces the capacity of any particular government to entrench its appointeesunless it is prepared to nominate quite young candidates. For example, for a judge toserve as long as William Rehnquist (34 years) he or she would need to be appointed atthe age of 36 (Rehnquist was 47). I submit that young judges may not have firmlysettled opinions and are therefore less reliable for a government seeking to entrenchits constitutional doctrines.Using these criteria it is possible to compare the scope for regulatory capture inAustralia and the United States.

Taking all these factors together, I submit that:. compared with the United States Supreme Court, the Australian High Court ismore likely to be captive of the Australian central govemment. This is duemainly to the appointment process;. capture manifests itself most clearly in conflicts between the centralgovernment and the States governments where the Australian High Court has

11

Australia United StatesAppointment

TenureConditional uponAs determined bySize of benchCourt sited in

7Political capital

9Political capital

By executive' of central By directly elected executive'government with no formal of central government, subjectreview. to the consent of the Senate.To age 70 LifeCapacity and good behaviour Good behaviourBoth houses of legislature Both houses of legislature

Note: 1 It is relevant that the directly elected executive of the United States isdrawn from a wide range of communities. Since 1949, US presidentshave come from Missouri, the military, Massachusetts, Texas,California, Georgia, and Arkansas; all Australian prime ministers inthat period have come from Victoria or Sydney.

" Baum. 1939. pp 227 -229.


14/49

consistently held for the central government. The United States SupremeCourt has oscillated between centralism and particularism; and. on other matters the doctrines of the Australian High Court may from time totime diverge from those of the central government, but the combination ofmandatory retirement and absence of Senate approval ensures that anygovernment that remains in power for a decade or more will be able to reshapethe bench to its own liking. The United States Supreme Court may be at oddswith the central government and the State governments for decades at a time.Structural regulation: separation of powersThe best known system of structural regulation of states is the "separation of powers"model which involves (actual or purported) structural separation of executive,legislative and judicial functions.As discussed above, both Australia and the United States employ structural regulationofjudicial functions.Structural separation of the United States executive and legislature is effected in twoways:. Article I, Clause 6(2) of the Constitution which provides that o'no personholding any office under the United States shall be a member of either Houseduring his continuance in office". This prevents the President from "bribing"legislators with the promise of cabinet or other appointment during their termofoffice; and. Article I, Sections 2 and 3 which fix the terms of legislators (to 2 years for theHouse and 6 years for the Senate). This prevents the President from"blackmailing" legislators with the threat of election at an inconvenient time,

and the possible loss of party support at any election that is suddenly called.It is worth noting that structural separation of legislature and executive does not implythe need for a directly elected president. Appendix I describes separation of powersunder the Swiss constitution which does not involve a directly elected president.In contrast to either of the United States and Swiss systems, structural separation ofexecutive and legislature in Australia appears nominal in respect of the House ofRepresentatives and marginal in respect of the Senate:. in relation to cabinet appointments, members of either chamber may becomeministers of state:

in the House of Representatives, the existence of a voting system thatalmost always produces a clear majority ensures that a majority oflegislators will be eligible for cabinet appointment or some otherrewards of office; and

I2


15/49

- in the Senate, the existence of a voting system that produces a majorityor a near-majority ensures that (at worst) a near-majority of legislatorswill be eligible for rewards, and the balance of power will be held by afew independents who may be "bought off in other ways; andin relation to the calling of elections:

the Govemor-General may dissolve the House of Representatives atany time;le andthe terms of senators are fixed at approximately three years for half theSenate and six years for the other half. However, the Govemor-General may dissolve the House of Representatives and the Senatesimultaneously at any time once the conditions of Section 57 of theConstitution have been met.

Taking these features into account, an Australian Prime Minister may expect almostcomplete compliance from the House of Representatives and, at worst, a tolerableworking relationship with the Senate.The lack of effective structural separation in Australia between executive andlegislature will be relevant when considering the effectiveness of franchising as ameans of handling monopoly power.Conduct regulation: bills of rights and similar measuresEarly conduct regulationIn addition to structural regulation, most states are subject to at least some conductregulation.In the Anglo-Saxon tradition, conduct regulation may be traced back at least as far asthe coronation charter of Henry I in 1 100. In order to secure the support of theChurch and the baronage, the king agreed with them to subordinate his sovereignpower in certain matters affecting them. Although the coronation charter was nothonoured, the same principle of restraint on conduct reappears a century later in theMagna Carta. King John agreed to be bound by a body of rules including not toproceed against any freeman "except by the lawful judgment of his peers or by thelaw of the land",20 an early concept of "due process".

le Australian Constitution. Section 5.'o Jones. 1971. p 137.

I3


16/49

Other early forms of conduct regulation include:2l

United States Bill of RightsThe best known modern example of conduct regulation is to be found in the UnitedStates. Both the federal state and the States are subject to a wide range of conductregulation. Article I of the United States constitution regulates the conduct of thefederal legislature, and consequently the federal state, in such matterc as suspendinghabeas co{pus, passing bills of attainder or ex post facto laws, and granting titles ofnobility.The first ten amendments constituting the United States Bill of Rights greatlyextended the range of conduct regulation applying to the federal state into religion,speech, press and assembly; the bearing of arms; quartering of soldiers; searches andseizures; due process of law; bail conditions; and cruel and unusual punishment.Following the Civil War, the Thirteenth Amendment and Fifteenth Amendmentsought to regulate the conduct of the States in relation to race. The Nineteenth,Twenty-fourth and Twenty-sixth Amendments regulate the conduct of both thefederal state and the States concerning age, sex and racial discrimination in relation toelections or primary elections.A case study in conduct regulation: the Fourteenth AmendmentThe Fourteenth Amendment did not seek to introduce new conduct regulation butrather to apply the federal conduct regulation to the States. The amendment wasdrafted in 1866 and adopted in 1868. The probable intention of the legislators was toextend the scope of the Bill of Rights to cover actions by State governments as well asthe United States federal government and to provide a constitutional basis fordiscrimination against newly freed slaves.Appendix I sets out a brief history of the Fourteenth Amendment from 1868 to T937.This describes how, in the thirty years after ratification, the Supreme Court:. read down each and every one of the "privileges and immunities clause",'odueprocess clause", and "equal protection clause" to render them inapplicable toindividual rights. This culminated in 1896 in the infamous o'separate but equaldoctrine" of Plessy v Ferguson; and

Enslish Act DateCriminal and Civil Justice ActDue Process of Law ActDue Process of Law ActPetition of RightHabeas Corpus ActHabeas Corpus ActBill of Riehts

13s l1 3551 368r627r6401679I 688

First reference to "due process" by name.Claiming parliamentary supremacy

ttFllmn. 2003. p249.

t4


17/49

created a novel new doctrine ("substantive due process") which allowed theCourt to overtum economic regulation of corporations and business which thej udges found disagreeable.

Conduct regulation: regulatory captureThe Supreme Court's doctrines, and others which limited legislative and executivepower at both the state and federal level, continued until the 1930s when they wereoverfurned in response to the Roosevelt's "court-packing" plan. Having secured aSenate majority, the President proposed to increase the size of the bench to secure aCourt majority in favour of his policies.22 This is, I submit, an example of regulatorycapture: the combined force of the President and the Senate was sufficient to forcethe Court to change its opinion.Franchising: representative governmentIn the govemment industry, franchising corresponds to the system of "representativegovemment": representatives are selected through a competitive process for the rightto administer the monopoly state for a limited time.Various forms of government industry franchising are described at Appendix I.Although the introduction of franchising was an important advance in constraining themonopoly power of the state, franchising in the government industry suffers from thesame shortcomings as in non-government industries.In general there will be lack of competition in bidding for the franchise, especially ifbidding costs are high. In practice, government franchises (being largely designed bythe suppliers themselves) are usually tendered in such a way as to reduce the scope forcompetition:

all positions in the legislature are usually tendered on the same day. Thisensures that only candidates affiliated with a well organised and well fundedpolitical party have any realistic change of winning; andsingle member constituencies where only one member can be returned alsoconfer a benefit on major parties.

Lack of competition typically manifests itself through the development of a duopolyor oligopoly of political parties.

22 Advocates ofconduct regulation are inclined to portray the court-packing plan as a failure because itwas never enacted. In fact, a close examination suggests the very opposite. Although the legislation toincrease the bench was defeated in the Senate in June 1937 , the Court had by that time already reversedits position and Justice van Devanter had announced his retirement, changing the majority on thebench. The legislation was defeated because the victory had already been won.

15


18/49

Lack of competition has two consequences:. collusion: political parties which are the favoured tenderers typically agree onmany, if not all, of the most important policies. This avoids competition in

areas which would be detrimental to them all; and. incumbency advantage: unless an incumbent franchisee is particularly inept, itis often difficult for a competitor to displace it in re-tender;Principal-agent failure manifests itself in the failure of legislative franchisees to acton behalf of their principals. In parliamentary systems it is almost unknown forlegislative franchisees of the winning party to cross the floor in such a way as to bringdown the government. In this case a tender which is in form being conducted only forthe legislature is in substance being conducted for both the legislature and executive.The cost of ranchise transfer may manifest itself in different ways:. in a typical parliamentary system, talented potential administrators sit in"opposition" for years on end; and' in a typical presidential system, an incoming administration must fill dozens oreven hundred of positions, often with people of little skill who are owedpolitical favours.Franchises suffer from difficulties of contract specification. If it is diffrcult tospecifying the franchised operation of something simple like garbage collection or atoll road or an airport, then specifying how a tenderer is to administer a sovereignstate is quite impossible. Prospective franchisees can and do tender on the basis ofundertakings which are never fulfilled.Cooperatives: direct democracyIn the government industry, cooperatives conesponds to direct democracy: thecustomers of the government industry jointly control the supplier and exercisecontinuous rather than period control over elected managers.The mechanisms of direct democracy include the following:. recall provisions which can require elected managers to re-contest theirposition before the normal expiry of their term. This is analogous to calling ameeting to vote on the removal of a director;. mandatory voter approval for certain types of government action such as the

amendment provisions of Section 128 of the Australian Constitution;two forms of direct legislation:

popular veto, which allows a specified number of voters to call areferendum to veto legislation which has been enacted by thelegislature but which has not yet taken effect; and

t6


19/49

- legislative initiative, which allows a specified number of voters topropose new legislation or a change to the state's constitution; andnon-binding indicative referendums and citizens indicative referendums.

Appendix I includes more detail on the operation of Swiss democracy.As with cooperatives, the main shortcoming of direct democracy is its inability toreconcile divergent interests of citizens. The double majorities required under Article140 of the Swiss Constitution go some way to preventing a simple "tyranny ofmajority", but neither this mechanism (nor indeed any of the mechanisms discussedso far) solve the problem of how to reconcile irreconcilable groups of citizens.Competition by comparison: federalismIn the government industry, competition by comparison corresponds to the system offederalism.Federalism allows:

irreconcilable groups of citizens to adopt different policies in differentjurisdictions;some customers (typically the more mobile) to enjoy competition through theirability to move from one jurisdictions to jurisdictions; andcomparisons of performance of the government industry in differentiurisdictions.

Precisely because federalism does allows competition, it may be expected to meetopposition from those participants whose interest are best promoted by lack ofcompetition. Accordingly, federal structures - if they are to survive - requireextensive structural regulation to prevent their being dismantled by governmentservices providers keen to establish, or re-establish, a government industry monopoly.As discussed above, structural regulation to prevent regulatory capture is poorlydeveloped in Australia. I submit that, as a result of regulatory capture, effectivefederalism in Australia has been largely dismantled.The shortcomings of federalism mirror those of competition by comparison:

the inability of immobile customers to benefit from actual competition; andthe possibility that maintaining several smaller monopolies may require aninefficiently small scale of production compared with a single larger one.

These shortcomings may be handled though the more elaborate system of asovereignty market.

I7


20/49

Competitive restructuring: sovereignty marketsEssential elements of a sovereignty market are outline at Appendix I. Most importantis the right of citizens to incorporate new states to provide full competition in thesupply of governmental services.Freedom of religion within the framework of market failureWe may now assess how the protection of freedom of religion fits within theframework of handling market failure.In a hypothetical perfectly competitive sovereignty market, the problems of freedomof religion would be solved by market forces. Individuals seeking freedom of religioneither:. would move to a jurisdiction which applied freedom of religion in a manner

agreeable to themselves; or. in the absence of such a jurisdiction, and if they satisfied the requirement forincorporation of a new state, would incorporate a new state to supply religiousfreedom in a manner agreeable to themselves.If neither of these remedies were available (i.e. there is no suitable existing state, andthe individuals do not satisfu the requirements for incorporating a new state), then Isubmit that they would have no right to freedom of religion in the form they envisageit.Stepping back from this hypothetical model, we first acknowledge that there aresignificant transaction costs involved in incorporating a new state or attempting tosecure supply from a competing existing state. Various treason statutes enforced bythe existing monopoly suppliers provide for death or lengthy imprisonment to anycustomers attempting to secure competitive supply.Competition by comparison (federalism) might provide accommodating jurisdictionsto those who are dissatisfied with their original state. However, federalism is unableto handle either:. the demands of religious minorities for whom no existing State provides

acceptable accommodation; or. clashes between religious minorities and the demands of the centralgovemment.Cooperative structures (direct democracy) provide no certainty of relief for a religiousminority.Likewise, franchising (representative government) provides no certainty of relief for areligious minority.

18


21/49

Conduct regulation (bills of rights) may or may not provide relief to religiousminorities depending on the attitudes of the regulator(s). Centrally administeredconduct regulation can actually operate to remove religious freedoms that mightotherwise be available in some States of a federal system.23Structural regulation is not directly applicable to this matter, although it will influencehow effectively each of the other remedies operate.ENTRENCHMENTI would like to discuss the principle of entrenchment in terms of constitutionalpolitical economy. This will give an important insight into the real significance ofentrenched bills of rights.In the introduction I mentioned Coase's Theorem. This theorem states that in theabsence of transaction costs it does not matter - in terms of economic efficiency -which of two parties is the initial o'owner" of a right. Provided that the initialownership can be unambiguously determined and there are no transaction costs, theparties will trade the right so that it is applied to the use which has the greatestvalue.2a Going beyond rights which have a commercial value, it might be arguedthat - provided the two conditions are satisfied - rights would be distributed andredistributed in a way which achieves a pareto-optimal outcor.r".ttWhile Coase's paper targeted the problem of "externalities" (pollution and the like), itmight also be applied to the problem of monopoly. In the absence of transactioncosts, customers of a monopoly would either organise to establish an alternativesupplier or negotiate to pay their monopoly supplier a lump sum to refrain fromabusing its monopoly power.As noted earlier, the government industry typically imposes very high transactioncosts to prevent customers achieving this type of remedy. In the presence oftransaction costs, govemment suppliers (or particular factions within the governmentindustry) may perpetuate practices which would - in the absence of transactioncosts - be negotiated away, possibly to the detriment of the incumbent monopolist (orfaction).Thus, transaction costs allow an allocation of rights to persist, even if it is pareto-suboptimal and would otherwise be negotiated out of existence.Entrenchment is the process of deliberately creating transaction costs to lock in placea particular distribution of rights. How large those transaction costs are will dependon the constitutional structure.

tt For example, Reynolds v United States (1878) outlawing polygamy.2a Coase. 1960.25 There is no trade which could take place which would benefit one individual without harminganother. In other words, no further voluntary trades could take place.

t9


22/49

Let us consider four methods of entrenchment.26

It can be seen that not all entrenchment is the same. The Swiss Constitution containsa vast number of entrenched rights and freedoms (covering life, privacy, marriage,religion, opinion, language, science, art, property, and unionism) as well asconstitutional guarantees to promote sport and manage hiking trails! However, for thecitizens the cost of unentrenching is low. Assuming that they actually want a right tobe unentrenched, they need only collect the petitions and hold the referendum.The application of Coase's Theorem to Australia and the United States is diffrcultbecause traditional states are not designed to define the "initial ownership" of rights.However, whatever the initial ownership might be, it can be seen that very hightransaction costs create a situation where a sub-optimal allocation of rights can bepreserved. If a bill of rights were entrenched in Australia, it could remain entrenched,even if that were an inefficient allocation of rights, simply because of the hightransaction costs involved in unentrenching it. It would require both an act ofparliament (requiring the consent of one of the two parties) and a double majority inreferendum.Of course, for supporters of an entrenched bill of rights, that is precisely theobjective: to transfer significant powers to the regulator and then raise a high wall oftransaction costs to ensure that they cannot be removed even if they prove to beinefficiently allocated. In such a system, the regulator would acquire its own mini-monopoly within the overall monopoly of the state. For anyone whose interests aretu This is not intended to be an exhaustive list. For example, a form provision such as a"notwithstanding" clause could impose a political transaction cost much lower than that of a mannerprovision such as a referendum.2i The convention method has been used only once, to repeal Prohibition. Congress feared thatconservative (and often malapportioned) State legislatures would not approve the amendment.Pritchett. 1977.p27.

20

Method Entrenchins UnentrenchinsSwiss referendum 50,000 petitioners anddouble majority in

popular referendum

50,000 petitioners anddouble majority inpopular referendum

Manner and form (in theabsence of direct democracy) Act of parliament Act of parliament and(typically) referendumAustralian constitutionalamendment Act of parliament anddouble majority inreferendum

Act of parliament anddouble majority inreferendumUS constitutional amendment Two-thirds of both

houses ofCongress, andthree-quarters of Statelegislatures orconventions in three-quarters of states2T

Two-thirds of both housesof Congress, and three-quarters ofStatelegislatures orconventions in three-quarters ofstates


23/49

likely to be aligned with those of the regulator such a system would be veryappealing.The difficulty for supporters of entrenchment in Australia is that the cost ofentrenchment (act of parliament and referendum) is also high, higher than they cancurrently afford. It is perhaps for this reason that some supporters of bills of rightshave proposed using relatively low-cost manner and form legislation to entrench theirsystem but then demanding a high-cost referendum to unentrench it.28It is worth noting that these arguments also apply to the entrenched system offranchising (representative government) which perpetuates the legislative/executivemonopoly of parliament and cabinet. We have already seen that collusive tenderingby political parties makes it difficult to implement popular policies which woulddisadvantage the two-party duopoly. This includes any policy to break the partyduopoly itself. Supposing, for example, that Australian citizens wanted to introducedirect democracy, the transaction costs of overthrowing the two-party duopoly wouldprobably be too high to make it achievable.Therefore I submit that anyone who opposes entrenched bills of rights because oftheir high transaction costs should logically also support direct democracy because ofits low transaction costs.2eFREEDOM OF RELIGIONGeneral principlesIn both Australia and the United States, provisions to ensure the free exercise ofreligion are joined to provisions preventing the establishment of any religion.In both jurisdictions it is rare to encounter state activity directly targeted at restrictingreligious freedom. Rather, laws having a secular purpose are found to impingeindirectly on religious freedom.As a result, in both jurisdictions experience has shown the two principles of freeexercise and non-establishment to be both complementary and antagonistic:

the establishment of any one religion would inevitably limit the freedom topractice other religions; butgranting any one religion exemptions from generally applicable secular lawson the grounds of religious freedom can itself amount to favoured treatmentand claims of establishment.

In all cases there will be an inevitable practical conflict between how broadly'oreligion" is defined and how much freedom can be given to it. A wide definition of

28 Winterton 1980.2e I note that most of the arguments presented by Posner (Posner. 2001. ppl6-19) against judicialreview can be equally applied against representative government.

21


24/49

religion inevitably means a commensurately narrow definition of freedom if all lawsare not to be invalidated by it.The historical backgrounds to the provisions in Australia and the United States aresignifi cantly different :

in Australia, the historical purpose appears to have been to assure the Statesthat the Commonwealth woul4^ not legislate on the matter of religion, whileleaving the States unaffected;" whereasin the United States, there are two schools of thought, at least in regard to theestablishment clauses, both of which claim historical backing:31

Australia32

a non-discrimination principle, that state involvement in religion isacceptable provided that there is no discrimination betweendenominations; anda strict separation principle, that there should be no entanglement ofstate and church.

Even though Australia has no entrenched bill of rights, freedom of religion happens tobe one of the few rights which the Australian Constitution does entrench, at least atthe federal level. There is no entrenched freedom of religion at the State level.However, the supremacy of Commonwealth law over State law would in principleallow a Commonwealth statutory guarantee of religious freedom to be effectivelyentrenched against the States.Thus freedom of religion in Australia may be considered under the followingheadings:

the Commonwealth in its own right;the States in their own right; and

. Commonwealth law entrenched against the States.Section 116 of the Australian Constitution provides that:

"The Commonwealth shall not make any lawfor establishing any religion, or

'owilliams. 2002. pp 35-36, 110.'' Pritchett. 1977. p 401 presents the strict separation school as a settled matter, citing the threeunsuccessful drafts of the First Amendment which attempted to adopt the non-discrimination approach.ButthemorerecentTribe.1988. pp 1158-ll66presentanextensivereviewofbothpre-adoptionandpost-adoption history which leaves the question open." This entire section draws extensively from Williams. 2002. pp l0-15, I l0-l l9 and265-269.

22


25/49

for imposing any religious observance, orfor prohibiting the free exercise of any religion, and

no religious test shall be required as a qualification for any office or publictrust under the Commonwealth."Five significant cases concerning Section 116 have come before the High Court:

Krygger v Williams (1912) concerned a refusal to perform compulsorypeacetime military training on the grounds that it would therefore prohibit thefree exercise of religion. The Court dismissed the claim on the grounds thatthe law was of general application, did not target religion, and therefore didnot come within the prohibition of Section 116;Adelaide Company of Jehovah's ll/itnesses Inc v Commonwealth (1943)sought to invalidate a declaration made under National Security (SubversiveAssociations) Regulations 1940 that the Adelaide Company of Jehovah'sWitnesses was an unlawful body prejudicial to the defence of theCommonwealth or the efficient prosecution of the war. The Court invalidatedthe declaration on the grounds that it was beyond the scope of theCommonwealth's defence powers, but took the opportunity to dismissunanimously the claim that it was invalid under Section 116. In doing so, theCourt chose to define "religion" very widely with the consequence that anyprotection of religion must be correspondingly narrow. Significantly,Latham CJ relied on United States doctrines to dismiss claims under Section116 unless they "unduly" infringed freedom of religion;Church of The New Faith v Commissioner of Pay-Roll Tax (Vic) (1983),although not directly involving Section 116, gave the Court an opportunityonce again to give "religion" a very broad meaning;Attorney-General (Vic); Ex rel Blackv Commonwealth (DOGS case) (198I)concerned the validity of Commonwealth funding to the States under Section96 which was used to fund church schools. The case was dismissed, largelyon the basis that comparable United States doctrines prohibiting governmentfunding of church schools were not applicable to Australia. Much play wasmade of the distinction between the wording of Section 1 16 "for establishingany religion" and that of the First Amendment "respecting an establishment ofreligion"; andKruger v Commonwealth (1997) concerned the forced removal of aboriginalchildren in the Northern Territory. The Court was divided on the matter ofwhether Section 116 applied to laws made the Commonwealth's territoriespower. The actions were held not to infringe Section 116 on the grounds thatthe relevant law was for the protection of aboriginal people and not for thepurpose of achieving an objective which Section 116 forbids.

23


26/49

Section 116 has never been successfully used to strike down a law.33 This behaviouris consistent with the hypothesis of regulatory capture of the High Court discussedearlier. However, given the historical purpose of Section 116 it seems reasonable forthe Court to have taken this path.Conceming the States in their own right, no State has entrenched freedom of religion,although Tasmania has unentrenched protection.3a Entrenchment in any AustralianState could be achieved using the manner and form provisions of Section 6 of TheAustralia Act 1986.Finally, we must consider Commonwealth law entrenched against the States. If theCommonwealth were to have the necessary legislative power to protect freedom ofreligion at the State level, then Commonwealth legislation would overrideinconsistent State law by virtue of Section 109 of the Constitution. This would createa quasi-entrenched bill of rights:. from the perspective of any individual State, the bill of rights would beentrenched because of the huge transaction costs involved in removing it (awar of secession or a prolonged political campaign); but. from the perspective of Australian as a whole, the bill of rights could beamended at relatively low cost by the federal parliament.In practice, the political costs of explicitly amending a Commonwealth bill of rightsmight be so high but as to make it impossible in all but the most important cases.In fact this system already operates in Australia in respect of anti-discriminationlaws." The Racial Discrimination Act 1975, the Sex Discrimination Act 1984 andtheDisability Discrimination Act 1992 draw upon the Commonwealth's own powers(Section 51(xxvi) in respect to race) or extemal affairs powers, in combination withSection 109, to implement anti-discrimination laws. None of these acts addressfreedom of religion, and although more comprehensive bills of rights have beendrafted from time to time,36 none has been enacted.United StatesFreedom of religion in the United States is derived:. in respect of the federal government from :

Article VI, Section 3: "no religious test shall ever be required as aqualification to any office or public trust under the United States"; andthe First Amendment: "Congress shall make no law respecting anestablishment of religion, or prohibiting the free exercise thereof'; and

" williams. 2002. p 11l.'o williams. 2002. p9.t5 williams. 2002. p 11-12.36 1974and 1983.

24


27/49

. in respect of the States, from the due process clause of the FourteenthAmendment.3TThe case law conceming freedom of religion and establishment of religion in theUnited States is vast and to alarge extent arbitrary.38 Significant cases to have comebefore the Court include:3e. free exercise cases:

Reynolds v United Stales (1878) upholding a law banning polygamyagainst challenge by a Mormon on the grounds of free exercise ofreligion;Cannwell v Connecticut (1940) overturning conviction of a persondistributing religious material contrary to State law;Minersville School District v Gobitis (1940) enforcing compulsorysaluting of the flag, even against Jehovah's Witnesses;40West Virginia State Board of Education v Barnette (1943) whicheffectively reversed Minersville School District v Gobitis in the face ofpress criticism by holding that all compulsory saluting to be invalid;alSunday Closing Cases (1961) upholding Sunday closing laws in faceof objections from Orthodox Jewish traders who were thereby forcedto close for two days a week;Sherbert v Verner (1963) free exercise case allowing unemploymentbenefits for a Seventh-Day Adventist who refused to work onSaturdays for religious reasons; andThomas v Review Board (1981) free exercise case allowingunemployment benefits for a Jehovah's Witness who refused to workin a weapons foundry for religious reasons;

. state aid cases:Eversonv Board of Education Q9al upholding publicly financedschool transport, even for children attending religious schools;Roemer v Board of Public Worl


28/49

Wolman v Walter (1977) upholding a State textbook loan scheme evenfor children at religious schools; andLynch v Donnelly (1984) permitting a Christmas crdche on publicproperty; and

. prayer and religious instruction cases:Illinois ex rel. McCollum v Board of Education (1948) striking down ascheme releasing children from class to attend voluntary religiouseducation on school premises on the grounds that it aided religion;Zorach v Clauson (1952) upholding a similar scheme allowingchildren to leave the school campus for religious education elsewhere;Engel v Vitale (1962) prohibiting a non-denominational school prayerto be recited each day in public schools;School District of Abingron Township v Schempp (1963) prohibitingBible verses read in school without comment. even if children couldbe withdrawn at request of parents; andWallace v Jaffree (1985) prohibiting silent prayer in public school onthe grounds that it served no secular purpose, while suggesting thatsilence in itself might be permissible.

From all of these, two matters are especially noteworthy.First, in 1966 a proposed amendment to overturn Engel and Schempp came withinnine votes of the required two-thirds majority in the Senate.a2 This suggest that alower "transaction cost wall" might well be breached. The allocation of rightsenforced by the Supreme Court might not be pareto-optimal.Secondly, in the difhcult free exercise cases, Tribe notes that the Court has tended tothrow some of them back to Congress and the States:

In practice, the Court has placed significant hurdles in the way of free exercrseclaimants. However, the Court has extended the principle of free exerciseneutrality to permit Congress and the states to carve out necessaryexemptions.a3

This suggests that the Court itself may recognize that resolving freedom of religionproblems is simply too big a job to be undertaken by the judiciary.

o2 Pritchett 1977. p 407.n' Tribe. 1988. p I 194.

26


29/49

APPENDIX IMETHODS FOR HAI{DLING GOVERNMENT INDUSTRY MONOPOLIES

OverviewEach of the methods of handling monopolies and principal-agent failure in non-govemment industries may be mapped onto the government industry as shown below:

Non-sovernment industry Government industryStructural regulationConduct regulationFranchisingCooperativesCompetition by comparison

Competitive restructuring

Separation of powers and other similar measuresBills of rights and similar measuresRepresentative government with periodic electionsDirect democracyFederalism

Sovereisntv marketsStructural regulation: regulatory captureBefore examining each of the methods it is necessary first of all to consider a criticalfeature of the government industry which distinguishes it from other industries: thescope for regulatory capture.Al1 states employ at least some regulation. Representative government, directdemocracy and federalism all require some regulatory oversight. There is, therefore,a need for a regulator or regulators who will inevitably be part of the governmentindustry itself.I submit that participants who are likely to benefit from regulatory capture will tend toplay down or deny the possibility of it occurring, will tend to portray governmentindustry regulation as an objective matter, and will advocate selection of regulators"on merit". However, several different types of evidence strongly suggest at leastsome subjective component in regulationl:. the writings and public statements of some judges reflect the same views that

their judicial opinions indicate;r some biographies ofjudges trace the ways in which their attitude towardpolicy is reflected in their behaviour in court;. atany one time most judges are consistent in the positions they take onparticular sets ofissues from case to case, even though a court collectivelymight be divided on the same issues. This consistency is commonly of a typewhich is difficult to explain except in terms of personal support of particularpolicies. For example, even though a court might be divided on civil libertiest Some of these are drawn from Baum. 1989. p 136.


30/49

cases, individual judges tend to be consistent in their views as reflected in theiropmrons-;judges are largely consistent in the positions they take on particular sets ofissues from year to year, even though a court collectively might change itsview over time. Again, this consistency may be of a type which is difficult toexplain except in terms of personal support of particular policies;some judges adopt attitudes in court which would be expected given theirbackgrounds3;judges sometimes state that their decision is based on personal experience;supposedly fundamental legal doctrines which apply in one country, or at onetime, are sometimes at odds with those that apply in another country, or atanother time, in ways which are difficult to explain except in terms ofdiffering personal preferences in the two countriesa or changes over times; andoccasionally decisions are overturned dramatically in response to observableoutside pressure on judges, or following the replacement ofjudges, in a waywhich indicates a change in preferences.6

I submit that the subjective nature of regulation is tacitly acknowledged in most statesby their adoption of some form of structural regulation that seeks to limit theopportunity for regulatory capture. Typically, judges serving on constitutional courtsare structurally separated both from the govemment provider and from customers orclasses of customer.Nevertheless, the possibility of capture still arises from several quarters:

appointment ofjudges. Several cases can be identified:unitary states (including the central govemment of some federations).There are few formal mechanisms available to prevent capture in the

t Baum. 1989. pp 138 - 143 illustrates the consistency of views of individual judges, and patterns ofagreement and disagreement between pairs ofjudges, in cases involving procedural due process andsubstantive civil liberties.3 For example, in 1986, Sandra Day O'Connor - then the only woman Supreme Court judge - was alsothe only judge to dissent from the Court's refusal to hear a sex discrimination case. (Baum. 1989.p 137.)a For example, the dramatically different application of the establishment provisions to the question ofschool funding in Australia and the United States.5 For example, substantive due process, which became a fundamental doctrine of the United StatesSupreme Court for over thirty years before vanishing again.6 For exampl e, Hepburn v Griswold (1870), which ruled Congress's legal tender acts unconstitutional,was overturned the following year inthe Legal Tender Cases (1871) in response to Congtessionalpressure and the following the appointment of two new judges. (Pritchett. 1977 . p 177.) Similarly, theSupreme Court reversed several doctrines in the space of only a few weeks in response to Roosevelt's"court-stacking" plan of 1931.


31/49

appointment process, other than legislative approval of executivenominations in some cases;tfederal states. At the sub-national level there is the possibility of aregulator appointed entirely from outside the provincial state. InAustralia, the centrally appointed High Court has 'Jurisdiction . . . tohear and determine appeals from all judgements, decrees, orders, andsentences . . . of the Supreme Court of any State . . ."8 In the UnitedStates, the Supreme Court, appointed by the President "by and with theadvice and consent of the Senate,"e may determine cases from theStates "arising under this Constitution;"10confederal systems. Where members of the highest court are appointedby the member states of a confederal system there is the possibility of aregulator independent of the central govemment. For the time being,the EU is an example of this system; andhybrid systems. The German Federal Constitutional Court comprisesjudges appointed half by the Bundestag and half by the Bundesratrr,the members of the Bundesrat themselves being appointed andrecallable by the Liinder governments and casting only block votes fortheir Land t'. A similar hybrid system operated in the United Statesbefore IgI313 . Judges of the Swiss Federal Supreme Court are electedby the Federal Parliament:la

removal ofjudges:basic tenure:

for life, for example the United States Supreme Court;1sfor a fixed and uniform period, for example the EuropeanUnionl6 and Switzerland;l1 and,for fixed but not uniform period, for example the High Court ofAustralia (where appointment to the age of seventy allows the

7 Informal processes of approval appear to be ineffective. For example, after the American BarAssociation's Committee on the Federal Judiciary gave mixed ratings on two nominees in 1971 "theNixon adminishation immediately retracted its acceptance of the ABA committee's presecreening."Baum. 1989. pp 30-37.8 Australian Constitution, section 73.n United States Constitution, Article II, Clause 2[2].to United States Constitution, Article IIl, Clause 2[].tt German Basic Law, para94(l).t' German Basic Law, Article 51.t' At which time Article I, Clause 3[1] was superseded by the XVIIth amendment.la Swiss Constitution, Article 168. Article 148 provides that the fwo chambers of the Swiss parliamenthave equal powers.t' United States Constitution, Article III, Section l.16 Treaty of Rome, Article 167.tt Swiss Constitution, Article 145.


32/49

executive to select, to a degree, the period of service of anominee);18

tenure conditional upon good behaviour (and in some casesincapacity), with good behaviour or capacity determined by:. the Court itself;le or. the legislature;20 andavailability of informal inducements to retire, such as promotion toother office; and

. other influences:size of the bench. A large bench reduces the chance that a single"renegade judge" acting out of character will produce unexpectedresults;the ability to enlarge the bench (fundamental to the "court-stacking"plan 1937);siting of court in the political capital (Australia and the United States),or elsewhere (Luxembourg for the European Court of Justice). Itmight be expected that judges residing in the political capital - relyingon local media - might be expected to be more susceptible to capturefrom the centre than those living elsewhere; andthe ability to limit the court's jurisdiction, and control of the court'sbudget and increases in judges salaries.2r

Appointment for life gives sitting judges greater scope to maximise the chances thattheir replacement will be to their liking. I submit that the reluctance of "Republican"judges to resign from 2001 to 2004 may be explained by their desire to wait for aclear Republican majority in the Senate. Likewise, on this hypothesis, "Democratic"judges are likely to hold out until 2009 inthe hope that the new President will bemore to their liking.The mandatory retirement of Australian judges at the relatively young age of seventyyears reduces the capacity of any particular government to entrench its appointeesunless it is prepared to nominate quite young candidates. For example, for a judge toserve as long as William Rehnquist (34 years) he or she would need to be appointed atthe age of 36 (Rehnquist was 47). I submit that young judges may not have firmlysettled opinions, their opinions are less likely to be known, and over time they may be18 Australian Constitution, Section 72, anended 1977.le Protocol on the Statute of the Court of Justice of the European Economic Community as amended byCouncil Decision of 24 October 1988.20 Australian Constitution, Section 72. lJnited States Constitution, Article II, Section 4. See Tribe.1988. Footnotep64.ttBaum. 1989. pp 227 *229.


33/49

more susceptible to change under the influence of older judges on the bench. Theyare, therefore, less reliable for a government seeking to entrench its constitutionaldoctrines.Using these criteria it is possible to compare the scope for regulatory capture inAustralia and the United States.

Taking all these factors together, I submit that:. compared with the United States Supreme Court, the Australian High Court ismore likely to be captive of the Australian central government. This is duemainly to the appointment process;. capture manifests itself most clearly in conflicts between the centralgovernment and the States governments where the Australian High Court has

consistently held for the central government. The United Slates SupremeCourt has oscillated between centralism and particularism;22 and. on other matters the doctrines of the Australian High Court may from time totime diverge from those of the central govefilment, but the combination ofmandatory retirement and absence of Senate approval ensures that anygovernment that remains in power for a decade or more will be able to reshape

the bench to its own liking. The United States Supreme Court may be at oddswith the central government and the State governments for decades at a time.tt For example, the expansive interpretation of congressional power by the Marshall court in Gibbons vOgden (1824), the opposite extreme reached in Hammer v Dagenhart (1918), and the reversion tocentralism (in the face of the "court-stacking" plan) in NLRB v Jones & Laughlin Steel Corp (1937).Tribe. 1988. pp 301 - 309. Since the 1988 edition, the Court appears to have swung back in favour ofthe States once more.

Australia United StatesAppointment

TenureConditional uponAs determined bySize of benchCourt sited in

7Political capital

9Political capital

By executivet of central By directly elected executive'government with no formal of central government, subjectreview. to the consent of the Senate.To age 70 LifeCapacity and good behaviour Good behaviourBoth houses of legislature Both houses of legislature

Note: I It is relevant that the directly elected executive of the United States isdrawn from a wider range of communities. Since 1949, USpresidents have come from Missouri, the military, Massachusetts,Texas, California, Georgia, and Arkansas; all Australian primeministers in that period have come from Victoria or Sydney.


34/49

The capture of the Australian regulator is reflected in the factthat all members are ofmetropolitan origin and typically five of the seven come from metropolitan Sydney.Structural regulation: separation of powersThe best known system of structural regulation of states is the "separation of powers"model which involves (actual or purported) structural separation of executive,legislative and judicial functions.As discussed above, both Australia and the United States employ structural regulationofjudicial functions.Structural separation of the United States executive and legislature is effected in twoways:. Article I, Clause 6(2) of the Constitution which provides that "no person

holding any office under the United States shall be a member of either Houseduring his continuance in office". This prevents the President from "bribing"legislators with the promise of cabinet or other appointment during their termof office; andArticle I, Sections 2 and 3 which fix the terms of legislators (to 2 years for theHouse and 6 years for the Senate). This prevents the President from"blackmailing" legislators with the threat of election at an inconvenient time,and the possible loss of party support at any election that is suddenly called.

I submit that the effectiveness of structural regulation in allowing individualrepresentatives to vote independently is often underestimated. It is worth noting thatin the period 1994 to 2004, when Republicans had a majority in the House but not theSenate, every single bill passing through the United States Congress - other thanthose unanimously approved in both chambers - required, as a mathematicalnecessity, at least one Republican or one Democrat member to vote against themajority of his or her party. Even with the current makeup of the Senate, it stillrequires at least five Democrats to tacitly "cross the floor" to vote down any filibusterattempted by their party.It is worth noting that structural separation of legislature and executive does not implya directly elected president. The Swiss constitution provides that members of theHouse of Representatives, the Senate and the Federal Government may not bemembers of another of those bodies. However, the members of the FederalGovernment are elected for four years by the parliament "after each full renewal ofthe House of Representatives". Presidents are elected by the parliament for a term ofone year and are ineligible for election the following year. The parliament itself iselected for a fixed four year term.23

tt Swiss Constitution, Articles 144, 168, 175 and 176. The cabinet comprises seven members who, bya convention knorvn as "The Magic Formult', are selected to reflect as closely as possible theproportional representation of different parties in the parliament. The result is a permanent cross-partycabinet.

6


35/49

In contrast to either of these systems, the structural separation of executive andlegislature in Australia appears nominal in respect of the House of Representativesand marginal in respect of the Senate:. in relation to cabinet appointments, members of either chamber may become

ministers of state:24in the House of Representatives, the existence of a voting system thatalmost always produces a clear majority ensures that amajority oflegislators will be eligible for cabinet appointment or some otherrewards of office; andin the Senate, the existence of a voting system that produces a majorityor a near-majority ensures that (at worst) a near-majority of legislatorswill be eligible for rewards, and the balance of power will be held by afew independents who may be "bought off in other ways; and

in relation to the calling of elections:the Governor-General may dissolve the House of Representatives atany time;2s andthe terms of senators are fixed at approximately three years for half theSenate and six years for the other half. However, the Governor-General may dissolve the House of Representatives and the Senatesimultaneously at any time once the conditions of Section 57 of theConstitution have been met. The minimum period for satisfyingSection 57 is three months.

Taking these features into account, an Australian Prime Minister may expect almostcomplete compliance from the House of Representatives and, at worst, a tolerableworking relationship with the Senate.As suggested above, the voting system plays a role in the structural separation ofexecutive and legislature. A system of proportional representation in the AustralianHouse of Representatives would increase structural separation as it has in the Senate.However, neither member of the two-party duopoly would have an interest inpromoting a change that would increase competition in the industry.It may also be seen that a bicameral system contributes to structural separation. Forexample, the voting system for the Australian Senate could easily be changed bysimple act of Parliament26 to effectively remove independent parties. Why has thisnot occurred? Once again, neither member of the two-party duopoly has an interest inpromoting a change that might produce a clear Senate majority for the opposition.The current voting system - which generally gives the balance of power to a smallnumber of biddable independents - may not be the major parties' preferred system2a Indeed, Section 64 of the Australian Constitution requires that ministers of state be members of theHouse or the Senate or become members within three months.2s Australian Constitution, Section 5.26 Australian Constitution , Section 9.


36/49

but, given a bicameral legislature. it is their most reliable strategy for ensuringconsistent legislative capture.''The lack of effective structural separation in Australia between executive andlegislature will be relevant when considering the effectiveness of franchising asmeans of handling monopoly power.Conduct regulation: bills of rights and similar measuresEarly conduct regulationIn addition to structural regulation, most states are subject to at least some conductregulation.In the Anglo-Saxon tradition, conduct regulation may be traced back at least as far asthe coronation charter of Henry I in 1 100. In order to secure the support of theChurch and the baronage, the king agreed with them to subordinate his sovereignpower in certain matters affecting them.28 Although the coronation charter was nothonoured, the same principle of restraint on conduct reappears a century later in theMagna Carta. King John agreed to be bound by a body of rules including not toproceed against qry freeman "except by the lawful judgment of his peers or by thelaw of the land" ,2e an early concept of "due process".Other early forms of conduct regulation include:30

An obvious conclusion to be drawn from these early forms of conduct regulation rsthat they were completely ineffectual. As a means of controlling a monopolygovernment, conduct regulation involves more than simply writing out a list ofdesirable behaviours: it depends on having an infrastructure to interpret and enforcethe regulations.

tt An obvious altemative - changing representation in the Senate to match representation in the Houseof Representatives - appears to be effectively ruled out by the final paragraph of Section 128 whichrequires each State to approve the reduction in its proportional representation. A further alternative -stripping the Senate ofits powers - appears unlikely to succeed at referendum at least for theforeseeable future. This has led some supporters of monopolisation to suggest that the FederalParliament should simply enact "manner and form" legislation to effectively strip the Senate of itspowers without a referendum. Winterton. 1980.28 Prohibitions on the sale or lease of church properfy, limitations on exactions on the transfer ofestates, and prohibition on payment for royal consent to marriage. Jones. l97l . p 1 17.tn Jones. 1971. p 137.'oFlynn. 2003. p249.

Enslish Act DateCriminal and Civil Justice ActDue Process of Law ActDue Process of Law ActPetition of RightHabeas Corpus ActHabeas Corpus Act

13511 3551368r627t640t679

First reference to "due process" by name.Claiming parliamentary supremacy


37/49

English Bill of RightsI submit that the English Revolution of 1688 represented a change in the enforcementinfrastructure - by creating an effective division of power - and it was this changethat gave the 1688 Bill of Righrs its longer term effect. Specifically:

the royal family's legitimacy henceforth depended on acts of parliament;parliament finally secured undisputed control of the taxing and appropriation,eliminating the ability of the monarch to act alone; andparliament itself comprised factions (reflecting factions within the state), andtogether with the monarch these created a three-way stand-off in which noparty could seize control without the consent of one other.

United States Bill of RightsThe best known modem example of conduct regulation is to be found in the UnitedStates. Both the federal state and the States are subject to a wide range of conductregulation. Article I of the United States constitution regulates the conduct of thefederal legislature, and consequently the federal state, in such matters as suspendinghabeas co{pus, passing bills of attainder or ex post facto laws, and granting titles ofnobility.The first ten amendments constituting the United States Bill of Rights greatlyextended the range of conduct regulation applying to the federal state into religion,speech, press and assembly; the bearing of arms; quartering of soldiers; searches andseizures; due process of law; bail conditions; and cruel and unusual punishment.Following the Civil War, the Thirteenth Amendment and Fifteenth Amendmentsought to regulate the conduct of the States in relation to race. The Nineteenth,Twenty-fourth and Twenty-sixth Amendments regulate the conduct of both thefederal state and the States concerning age, sex and racial discrimination in relation toelections or primary elections.A case study in condact regulation: the Fourteenth AmendmentThe Fourteenth Amendment stands alone because it did not seek to introduce newconduct regulation but rather to apply the federal conduct regulation to the States.3lThis amendment was drafted in 1866 and adopted in 1868. The probable intention ofthe legislators was to extend the scope of the Bill of Rights to cover actions by Stategovernments as well as the United States federal government. Given that theCongress was also formulating a federal civil rights act at the same time, it isplausible that its members were also seeking a constitutional basis for federal lawspreventing discrimination against newly freed slaves.

" ln Barronv Baltimore (1833) the Supreme Court held that the Bill of Rights applied only to theUnited States government, not the States, even where the wording did not expressly make this clear.Tribe. 1988p3n. Also,Pritchett. 1977. p289,9


38/49

Section 1 of the amendment provides that:all persons born or naturalized in the United States and subject to thejurisdiction thereof, are citizens of the United States and of the State whereinthey reside ["the citizenship clause"].No State shall make or enforce any law which shall abridge the privileges andimmunities of citizens of the United States ["the privileges and immunitiesclause"];nor shall any State deprive any person of life, liberty, or property, without dueprocess oflaw ["the due process clause"];nor deny to any person within its jurisdiction the equal protection of the laws["the equal protection clause"].

I submit that, by examining the Supreme Court's treatment of the FourteenthAmendment over the years, it can be seen that the outcome of conduct regulationdepends critically on the attitude of the regulators rather than on the wordsthemselves. First, the Court proceeded to read down each of the clauses of theFourteenth Amendment:

in the Slaughter-House Cases (1873), the Court restricted the privileges andimmunities clause to those privileges and immunities derived from UnitedStates citizenship, but not those derived from State citizenship, therebylimiting its use in State courts;32beginning with Hurtado v California (1884), the Court restricted the dueprocess clause by refusing to incorpor?.te into its meaning the specificprocesses set out in the Bill of Rights:"in the Civil Rights Cases (1883), the Court in effect restricted the equalprotection clause to cover only actions by a State, not by individuals, therebyii-iting its effectiveness in preventing discrimination by individuals3a. Finallyin Plessy v Ferguson (1896), the Court allowed the States to impose racial,.g..guiio.r by adopting a "separate but equal" doctrine.35

" Pritchen. 1977. p 417. Also Tribe. 1988. pp550-552, 555-556." Pritchett. 1971. pp 417-420. Requirement for indictment by grand jury (Hurtado), the right to trialby jury (excluded n Maxwell v Dow,l900), protection from forced self-incrimination (excluded inTwining v New Jersey, 1908), protection against double jeopardy (excluded tn Palko v Connecticut,1937 - on a capital charge!), and the right to have defence counsel appointed by the court (excluded inBetts v Bra$t,1942, ibid

Documents

An Essay in Comparative Constitutional Law 14-10-2005 (Complete)