high court that motor-spirit rationing could not be done by the states. The only argument against control by the states was that certain and uniform control was essential and that the level of rationing should be immediately controllable by the government which had the task of dollar budgeting.
Postwar reconstruction suggested an argument in the high court containing four main points: that the dollar shortage in the sterling area was due to the war; that the sterling area was in a transitional period which, given favourable conditions, might end in 1952; that until then imports from the dollar area had to be confined to essential goods; and that the gentleman’s agreement between Australia and the United Kingdom gave Australia sterling-dollar convertibility privileges only if the Australian government maintained import controls comparable with the United Kingdom’s. So far the argument extended to the necessity of the Commonwealth government restricting petroleum imports. The next step in the argument was to say that if the Commonwealth government could not control rationing, this would result in a glaring breach of the gentleman’s agreement, and a hindrance to the sterling area’s economic recovery. The argument, in brief, was that petrol rationing was an essential adjunct to import control, which was in turn essential for recovery from the disruptions of war. 49
The high court’s judgement was that the liquid fuel regulations dealt only with the distribution and disposition of fuel after it had been imported into Australia. They did not profess to deal with the amount of petrol imported into Australia. While rationing might reduce consumption of petrol and thus lessen the need for a greater quantity of petroleum imports, the high court was not convinced that this had any connection with the defence power.
49 ‘National security (liquid fuel) regulations - relationship to the defence power’. Notes on lines of argument. PWR division of economic policy, 15 February 1949, CP 286/3/1 Bun6/1533 Part 1 AA;
The high court did not demand the cessation of all laws under the defence power immediately hostilities ceased. It allowed the Commonwealth to legislate in peacetime for problems obviously created by the war - such as the rehabilitation of soldiers and the rebuilding of cities. Moreover it agreed that the very fact that controls or regulations already established might create a situation which had to be maintained for a reasonable time while some other legislative provision was made. But it applied the general rule that the ‘court must see with reasonable clearness how it is incidental to the defence power to prolong the operation of a war measure dealing with a subject falling within the exclusive province of the states and unless it can do so it is the duty of the court to pronounce the enactment beyond the legislative power.’50
At the London finance ministers’ conference in July, the British minister for fuel and power, Hugh Gaitskell, confirmed the need to continue petrol rationing in the sterling area. Dedman explained to him the difficulty which the Australian government would have in rationing petrol after the high court’s decision, and predicted that the government would have severe difficulties if, at the end of a given period, and in the absence of any rationing scheme of the state governments, it found that no more petrol was left. 51
Dedman was right in predicting that the task of convincing the states to agree to petrol rationing would be a hard one. In the interval between the high court’s rejection of petrol rationing in June and an agreement between Commonwealth and states, Chifley was relying on the oil companies to control distribution. At a conference of Commonwealth and state ministers in August the liberal premier of Victoria, T. Hollway, tried to suggest that there was no need for the reintroduction of petrol rationing since the increase in petrol consumption in June was entirely due to the coal
50 Commonwealth Law Reports, Vol. 79,1949. pp.56-67.
51 Oil discussions, Commonwealth finance ministers’ conference London, 14 July 1949, CP 286/2/1 5222, AA.
strike.52 Chifley refuted this argument by producing figures showing that the extra consumption of fuel owing to the strike was 5,230,000 gallons, whereas the total extra consumption above the amount that would have been available had rationing been continued, was 21,000,000 gallons.53 Chifley reported that the oil companies had made a gentleman’s agreement with the Commonwealth to try to draw from bond only the quantities that they would have drawn under petrol rationing. But the oil companies had no control over the way petrol was distributed once it went out of their centres.54 He was adamant that he could not offset the increase in this additional consumption, because he could not draw on the sterling area reserves for more dollars. Indeed he advised the premiers that the situation might worsen in the near future: Australia might be forced to live on the dollars which she earned, because she would be unable to earn them from the British treasury.55 The president of the Liberal party privately supported Chifley’s arguments. He wrote to^EarfPage on 14 July that T am quite convinced that we cannot get more petrol in Australia without further eating into the Empire dollar pool. I have kept in touch with the chairmen of the two biggest oil companies in this regard over the last 12 months, and my definite information from them is as I have said’. 56
The premiers then proceeded to argue the merits of different rationing systems. The premier of Queensland, E.J. Hanlon, argued that the rationing of petrol by uniform state legislation might prove inequitable. Motorists in New South Wales, for example, might exhaust the quota of petrol allocated to Queensland. Hanlon suggested that the Commonwealth still had the power to buy all the petrol imported into Australia and to distribute the supplies itself. 57 Attorney-general Evatt replied that this could
52 Conference o f Commonwealth and state ministers held at Canberra, 16 and 17 August 1949, pp.7-8,