Aidul Fitriciada AzhariParticipant of Visiting Scholar in CDU

2011

�Constitutionally, Indonesia and Australia are the welfare states

�The welfare state : � the government plays the primary role � the government plays the primary role

in the protection and promotion of the economic and social well-being of its citizens

� the government has power to control and intervene in economic activities

�The 1945 Constitution –art. 33 & 34 gives power to government to promote national economicy and social welfaresocial welfare

�The Commonwealth Constitution –s. 51 gives powers to the Parliament to control economic and social activities

� The more limited the role of the state, the greater the benefit for its citizens

� Causes :

� The experience of authoritarian in the twentieth century, century,

� The dramatic growth of bureaucracy over the last hundred years,

� The emergence of economic rationalism (especially market fundamentalism)

� Financially welfare state becomes a burden to the national budget

� Indonesia has all of reasons to reduce the role of government :

� the experience of authoritarianism during the New Order era

the growth of corrupt bureaucracy � the growth of corrupt bureaucracy

� the emergence of economic rationalism since the New Order with its development program

� consequently, the welfare state has no relevance with the development of the state and global reality

Indonesia should be learned from the Australian experience in maintaining the values of the welfare state, while achieving high economic growth.

That is a reason for make a comparison between the Australian and Indonesian constitutional law regarding control of economic activities

� Neighboring countries

� A long time relationship, since Indonesia under domination of the Netherlands-Indie

� Australia’s support for independence of Indonesia:

� Boycott of harbor-worker in Darwin, who denied to load the weapon for the Dutch army

� Australia is member of the Committee of Good Offices for Indonesia, which had the duty to mediate between Indonesia and the Netherlands

�A monarchy constitutional

�Federal division of power

�Parliamentary system of government :the Queen of the UK at its apex as the � the Queen of the UK at its apex as the Queen of Australia

� the Queen is represented at federal level by the Governor-General

�6 State, 3 Territory

� The federal government is separated into three branches:

� The legislature: the bicameral Parliament, comprising the Queen (represented by the Governor-General), the Senate, and the House of Representatives (s.1) ;

� The executive: the Federal Executive Council, in � The executive: the Federal Executive Council, in practice the Governor-General as advised by the Prime Minister and Ministers of State (ss. 61-62);

� The judiciary: the Federal Supreme Court, to be called High Court of Australia, and other federal courts, whose judges are appointed by the Governor-General on advice of the Executive Council (ss. 71-72(i)).

Source: http://www.peo.gov.au/teachers/holp/holp09.html

6 state governments

&

3 territory governments

6 state governments

&

3 territory governments

� Republic � Unitary state� Presidential system of government :

President as head of government and shall President as head of government and shall be assisted by the Vice President

� 29 province, 3 special territory, 1 special capital territory

� Historically, Indonesia adopted the Netherlands-Indie system of government

� Under the Third and Fourth Amendment are separated into three main branches:

� The legislature: the People’s Consultative Assembly (MPR), the House of People Representatives (DPR) and the House of Regional Representatives (DPD). and the House of Regional Representatives (DPD).

� The executive: The President

� The judiciary: The Supreme Court and The Constitutional Court

� But there are independent bodies, i.e. the State Audit Board (BPK),the Judicial Commission and central bank

KROON

Gouverneur

-Generaal

Raad van

IndiëHoogerechtshof Volksraad

Algemene

Rekenkamer

Algemeen

Bestuur

Kroon : Crown; Gouverneur Generaal : Governor-General

Volksraad : House of Representatives

Raad van Indie: Council of State

Alegemene Rekenkamer : General Court of Audit

Hoogerechtshof : Supreme Court

Algemeen Bestuur :General Administration

MPR

PresidentDPAMA DPR BPK

Administration

MPR = People’s Consultative Assembly (Majelis Permusyawaratan Rakyat) MA = Supreme Court (Mahkamah Agung); DPA = Supreme Advisory Council (Dewan Pertimbangan Agung); DPR = House of Representatives (Dewan Perwakilan Rakyat); BPK = State Accounting Board (Badan Pemeriksa Keuangan)

THE 1945 CONSTITUTION

JC

PRESIDENTVICE

PRESIDENT

MPR

DPR DPD

CCSCBPK

LEGISLATURE EXECUTIVE JUDICIAL

GC AC RC MC

� S. 51 – (i) and (xx)

� The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to :respect to :

(i) Trade and commerce with other countries, and among the States; …

(xx) Foreign Corporations, and trading or financial Corporations, formed within limits of the Commonwealth.

� ‘Trade and commerce’ is “perhaps the greatest legislative power and is at the heart of the federal system. It is the first legislative power in the Constitution and is necessary for the national government of our national government of our federation“(Murphy J, Attorney General (WA)Case, 1976)

� Historically, the commerce power was adopted from the United States Constitution.

� Yet, “The scope of the Australian power to make laws "with respect to" trade and commerce among the States is at least as wide as, if not wider than, the United States power "to regulate" commerce among the States.” "to regulate" commerce among the States.” (Murphy J, Attorney General (WA) Case, 1976)

� The phrase “with respect to” in s. 51(i) enables the Commonwealth has power to both regulate and participate in trade and commerce.

� The core of the trade and commerce power in s.51(i) is a considerable spectrum to the Commonwealth to develop and implement regulatory policies concerning acts of interstate or overseas trade and commerce.

� Murphyores Inc case (1976), which upheld the power � Murphyores Inc case (1976), which upheld the power or Parliament “to prohibit and regulate the exportation of goods from Australia, necessarily comprehends the power to select and identify the person who engage in, and the goods which may become the subject, that activity.”

� Trade and commerce powers allow the Commonwealth to regulate ancillary and incidental matter

� Huddart Parker case (1931), the Commonwealth could use the trade and commerce power in order to give preference to union member for employment to loading or unloading ship involved in interstate and international trade.ship involved in interstate and international trade.

� R v Wright case (1955), the Commonwealth has power to regulate the condition of employment in the stevedoring industry

� R v Foster case (1959), gives the power to regulate condition of work of persons working on board ships engaged in Australia interstate or overseas trade.

� S 51(i) also provide he power of the Commonwealth to participate directly in trade and commerce activities.

� Australian National Airways case (1945), established a statutory commission with power to established a statutory commission with power to operate airline services between the States.

� Australian Coastal Shipping Commission case (1962), the Parliament has authority to set up a government-owned shipping line, which was engaged in the interstate and overseas carriage of freight.

� Under the phrase ‘with other countries, and among the States’ the Court divides trade and commerce activities in Australia into two branches:

(1) International and intestate trade and (1) International and intestate trade and commerce; and

(2) Intrastate trade and commerce

� Dixon C.J., Wragg v NSW case (1953), “the distinction which the Constitution makes between the two branches of trade and commerce must be maintained”

� Some intrastate trade and commerce are integrated with interstate/foreign trade and commerce so its regulation should become Commonwealth’s responsibility.

� R v Burgess; Ex parte Henry (1936), “the legislative power is to make laws with respect to … the domestic commerce of a State … in relation to commerce among the States.”of a State … in relation to commerce among the States.”

� Airlines of NSW (No. 2), the Commonwealth makes laws “… include within their operation intra-State air navigation”

� Western Australian Airlines (1976), “authorize laws dealing not only with trade and commerce among the States but with intrastate trade and commerce…“

� In Huddart Parker (1909), the Commonwealth has power only to control the legal capacity of corporations to legitimate enter a field or area of operationlegitimate enter a field or area of operation

� Since Concrete Pipes (1971), the Commonwealth uses corporations power to regulate the activities, functions, relationships, and business of corporations.

� Concrete Pipes (1971), defines “the outer limit of the reach of the [corporations] power”

� The narrow view : power to regulate and control of specific activities that have sufficient connection to the trading activities of trading corporation and the trading activities of trading corporation and the financial activities of financial corporation.

� The broad view : as long as a corporation satisfied identification as a foreign, trading and financial corporation formed within the limits of the Commonwealth, all of its activities may be subjected to the Commonwealth’s regulation and control.

� Gibbs C.J., Tasmanian Dam case (1983), a trading corporation “could apply … only in relation to such of its activities as a properly regarded as trading activities.”

� Gibbs C.J., Actors Equity case ( 1982), “the nature of the corporation to which the laws relate must be significant as corporation to which the laws relate must be significant as an element in the nature or character of the law.”

� Dawson J, Re Dingjan; Ex parte Wagner (1995), “a law to be a valid law with respect to a trading or financial corporation, the fact that it is a trading or financial corporation should be significant in the way in which the law relates to it.”

� Murphy J, the Actors Equity case (1985), “The power is, of course, plenary; it enables Parliament to make comprehensive laws covering all internal and external relations of foreign, trading and financial corporations.” corporations.”

� Gaudron C.J., Re Dingjan; Ex parte Wagner ((1995), “it is clear that, at the very least, a law which is expressed to operate on or by reference to the business functions, activities or relationships of constitutional corporations is a law with respect to those corporations.”

� Three types of constitutional corporations under s 51(xx):

(1) Foreign corporation

(2) Trading corporation

Financial corporation(3) Financial corporation

� The last two being corporations formed within the Commonwealth

� The corporations that are not within these categories lie outside the scope of s 51(xx)

� Is a corporation formed outside the limits of the Commonwealth or a corporation formed outside Australia that carries on business in Australia

� Murphy J, WA Football League (1979), stated a broad sense: “foreign corporations may include syndicates or sense: “foreign corporations may include syndicates or joint ventures, common in European and other legal systems whose law of incorporation is based on principles different from those of Australian States and England.”

� At least three senses of ‘trading corporation’ :

1. Determined by examining the purposes for which the company was established (the St George County Council, 1974)George County Council, 1974)

2. Determined by the activities or functions of the corporation (WA Football League, 1979)

3. When “its trading activities form a sufficiently significant proportion of its overall activities “ (WA Football League, 1979)

� Determined by the corporation’s activities, but in the case of inactive corporation is determined by its purposes and objects for which it was established

� Re Ku-ring-gai case (1978), “financial corporation is a composite one. … [a]n obvious reference point is to the activity of commercial dealing in finance”activity of commercial dealing in finance”

� State Superannuation case (1982), “a financial corporation because it deals in finance for commercial purposes, whether by way of making loans, entering into hire purchase agreements or providing credit in other forms, and this activity is not undertaken for the purpose of carrying on some other business.”

� Article 33 of the 1945 Constitution:

(2)Production sectors that are vital to the state and that affect the livelihood of a considerable part of the population are to be considerable part of the population are to be controlled by the state.

(3) The land and the waters as well as the natural riches therein are to be controlled by the state to be exploited to the greatest benefit of the people.

The essential of the 1945 Constitution are :

1) Art. 27 : equality before the law and government

2) Art. 29 : the State based on the belief in 2) Art. 29 : the State based on the belief in the One and Only God, and freedom of religion and worship

3) Art. 33 : familial principle of the economy and ‘right of the State control’ (hakmenguasai negara) over economic activity

� The Annotation of the Constitution :

“Social prosperity is the primary goal, not individual prosperity … Therefore, economic sectors which are vital for the state and which affect the life of the people, must be controlled by the state. Otherwise the people, must be controlled by the state. Otherwise the control of production might fall in the hands of powerful individuals who could exploit the people. Hence, only enterprises which do not affect the life of the general population may be left to private individuals. “

� Mohammad Hatta (the founding father):

The State is not a merchant (entrepreneur or ondernemer), but has authority to regulate in order to smooth economic activities and also prohibit exploitation of the weak or poor by those who have exploitation of the weak or poor by those who have capital.

… the government builds from the top, performing big undertaking such as developing electric power, drinking water supply … administering various types of productions which affect the livelihood of the public. The ownership of those big companies must be in the hands of the government

� Mohammad Yamin (the founding father):

the State control is regulating and organizing, particularly in improving and enhancing production with emphasize in the cooperative

� BPUPKI :

� The areas of the State control : (1) the government should became a supervisor and regulator based on public safety; (2) the more companies and the more people depend their life; (3) land … should be under control of the State; and (4) large mining corporation should be managed as State enterprise

� Art. 2(2) of the Agrarian Act No. 5 of 1960 :

Right of the State control … give authority to :

a. Regulate and manage allocation, use, supply, and maintenance of land, water, and airspace;

Determine and regulate legal relationships b. Determine and regulate legal relationships between persons and land, water, and airspace;

c. Determine and regulate legal relationships between persons and legal actions concerned land, water, and airspace.

� Principally, the Agrarian Law of 1960 is a transformation of ‘hak ulayat’, the right of land in the Indonesian customary law (hukum adat)

� Hak is Right, Ulayat from arabic word is ‘a controlled or ruled area, territory, or jurisdiction’.controlled or ruled area, territory, or jurisdiction’.

� ‘Hak ulayat ‘ has the nature of collectivistic

� Based on ‘hak ulayat’, the State is not the owner, but the ruler that has authority to control and manage land use and ownership.

� The Oil and Natural Gas Act case (2003), the Constitutional Court rejects both view of the State control as ownership and as being limited authority to regulate. Thus, the Court rejects liberalization.

� The Court stated:

“The people as a collective is constructed by the 1945 Constitution as giving the mandate to the state to create policies (beleid) and acts of administration (berstuursdaad), regulation (regelendaad), management (behersdaad), and supervision (toezicthoudensdaad) for the greatest prosperity of the people.”

� The Electrical Power Act case (2003),

“Article 33 of the 1945 Constitution does not refuse privatisation … [and] the idea of competition among business actors, as long as it does not abolish control by the state including the authority to regulate, by the state including the authority to regulate, administer, manage and supervise production branches “

� The Water Resources Act case (2005),

“The Water Resources Law regulates the principal matters in the water resources management …. The state, in the exercising the right of water exploitation, conducts the following activities: (1) to formulate conducts the following activities: (1) to formulate policies (beleid), (2) to conduct acts of administration (bestuursdaad), (3) to regulate (regelendaad), (4) to manage (beheersdaad), (5) to supervise (toezichthoudendaad).”

�There is a tendency of power to control the economy in Australia and Indonesia have been interpreted increasingly more widely, along with the increasing affairs widely, along with the increasing affairs and responsibility of government to promote the general welfare.

� However, there is a difference between Australia and Indonesia concerning the using terms ‘trade and commerce’ in the Australian Const. and ‘production and exploitation’ in the Indonesian Const. Const.

� The Australian Const. was made by a ‘trading state’, while the Indonesian Const. was arranged by intellectuals, bureaucrats, and students, which most of them came from traditional aristocracy (priyayi)

� In the midst of the demand of liberalization and privatization, the is a tendency to give the government extensive powers to control the economy :

� The Australian Constitutional Commission (1998):

We are not, of course, suggesting that if our We are not, of course, suggesting that if our recommendations are accepted the Commonwealth should legislate with respect to all aspects of trade and commerce. Nor do we believe that that would occur. It has not occurred in relation to interstate trade or the trade of trading corporations. It has not occurred in the United States where the federal legislature has full power to deal with all business, commerce, and industry.