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COMMONWEALTH POWERS (STATE BANKING) BILL 1992
NEW SOUTH WALES
EXPLANATORY NOTE
(This Explanatory Note relates to this Bill as introduced into Parliament)
The object of this Bill is to empower the Commonwealth Parliament to make laws
with respect to State banking within New South Wales (but only in so far as it applies in
relation to State Bank Limited) by referring the power to the Commonwealth Parliament
under section 51 (xxxvii) of the Commonwealth Constitution. That provision authorises
the Commonwealth Parliament to make laws with respect to:
"(xxxvii) Matters referred to the Parliament of the Commonwealth by the Parliament
or Parliaments of any State or States, but so that the law shall extend only
to States by whose Parliaments the matter is referred, or which afterwards
adopt the law".
This referral is necessary to overcome constitutional restrictions which prevent the
Commonwealth Parliament from legislating with respect to State banking within the
limits of a State. Section 51 (xiii) of the Commonwealth Constitution -contains the
banking power and authorises the Commonwealth Parliament to make laws with
respect to:
"(xiii) Banking, other than State banking; also State banking extending beyond the
limits of the State concerned, the incorporation of banks, and the issue of
paper money".
The High Court has considered the meaning of "State banking" for the purposes of
section 51 (xiii). It decided in the case of Melbourne Corporation v. The Commonwealth
(1947) 74 CLR 31 that "State banking" is the business of banking engaged in by a State
as banker and does not include transactions between a State as customer and a bank
In the later case of Bourke and Ors v. State Bank of New South Wales (1990) 170
CLR 276, the High Court further decided that "State banking" is the business of
banking conducted by a bank owned or controlled by a State. The Court concluded in
Bourke's case that the banking operations of the State Bank amounted to State banking.
(State Bank Limited is a continuation of and the same legal entity as the State Bank)
The effect of this Bill will be to enable State Bank Limited to be brought within the
legislative scheme that regulates private banks in Australia.
Excluded from the referral is the power to legislate with respect to the licensing or
authorising of State Bank Limited to carry on banking business. However, this has been
included as a transitional measure and provision is made for the State to terminate this
exclusion on a day appointed by proclamation.
The Bill provides that the State may at any time terminate the referral on a day
appointed by proclamation.
Clause 1 specifies the short title of the proposed Act.
Clause 2 provides for the commencement of the proposed Act on a day to be
appointed by proclamation.
Clause 3 specifies the object of the proposed Act.
Clause 4 defines certain terms used in the proposed Act.
Clause 5 makes the referral described above.
Clause 6 makes the exclusion described above.
Clause 7 enables the referral to be terminated by proclamation.
Clause 8 declares that the proposed Act will bind the Crown.