Federated State School Teachers' Association of Australia v The State of Victoria (1929)

This is an Australian decision. It has no binding force in India, but Indian courts studied it closely when deciding what counts as an "industry" under the Industrial Disputes Act. In State of Bombay v The Hospital Mazdoor Sabha (1960) the Supreme Court discussed it: by majority, the educational activities of the State were held not to be an industry, the teachers' occupation not an industrial occupation, and the dispute not an industrial dispute.

Its value for you is the debate it contains. The majority limited "industry" to activity that resembles an ordinary trade or business. Isaacs J's dissent asked a different question — could the function be carried on by private enterprise? — and drew a line between the State's regal (inalienable governmental) functions and the non-regal functions it chooses to undertake. Learn both sides: the majority's narrow view and the dissent's wider test.

Victoria and Tasmania ran systems of public education paid for from money appropriated by their Parliaments. Primary education was free, secular and compulsory; fees could be charged in some special subjects and some classes of schools.

A large number of State school teachers formed an association and registered it as an organization under the Commonwealth Arbitration Act. In 1928 it filed a plaint in the Commonwealth Court of Conciliation and Arbitration, alleging an interstate industrial dispute over salaries and conditions of employment with the two States. In March 1929 it took out a summons under s. 21AA asking the High Court whether that was an industrial dispute extending beyond one State within the meaning of the Constitution and the Act.

It was not in doubt that the Commonwealth legislation could apply to the States. The Act's definition of industrial dispute expressly covered employment in an industry carried on by or under the control of a State.

1. Are the educational activities of a State an industry or industrial activity?
2. Is the occupation of State school teachers an industrial occupation?
3. Can the dispute therefore be an "industrial dispute" within s. 51(xxxv) of the Constitution?

By a majority of four to one, the questions were answered in the negative, with costs against the association.

The joint judgment (Knox CJ, Gavan Duffy and Starke JJ)

The Court surveyed the meanings of "industrial dispute" suggested in earlier cases and rejected the extremes. The economists' view, which would include the services of officials, doctors and lawyers, was too wide: "But the Constitution is not a thesis upon economics." The view that any employer-employee relation is enough was also too wide, because it "would bring within the range of the industrial power of the Commonwealth services of all kinds whatever."

Applying the remaining tests — co-operation of capital and labour, and connection with the production or distribution of wealth — the Court held that the educational activities of the States were not an industry. They "bear no resemblance whatever to an ordinary trade, business or industry." They "are not connected directly with, or attendant upon, the production or distribution of wealth", and there was no co-operation of capital and labour in any relevant sense, since public education was imposed on the community by law.

To the argument that a private schoolmaster would be carrying on a business, the answer was that "a private person could no more carry on this system of public education than he could carry on His Majesty's Treasury or any of the other executive departments of Government".

On the teachers' side, the definition of industry in s. 4 of the Act could not enlarge the constitutional phrase. The occupation took its character from the activity: "An occupation confined to teaching in the schools of the States has impressed upon it the character of the activity in which it is exercised." So the teachers were not engaged in an industrial occupation.

Rich J (concurring)

Rich J doubted that anyone would naturally call a teachers' wage dispute "industrial". The relation of the State to its teachers lacked the element of capital and labour co-operating to produce a result of their combined efforts. Unlike banking and insurance, teaching did not directly furnish an instrument of production: "This element is wholly lacking in the profession of teaching." It could not be said "that the industrial system could not exist without national education."

Isaacs J (dissenting)

Isaacs J would have held that there was an industrial dispute. His reasoning:

• The employers' theory — that only the production of tangible wealth is industrial — was "radically unsound". The community is organised industrially for services, of which material goods are only one species. He adhered to the formula he and Rich J had stated in 1919: "Industrial disputes occur when, in relation to operations in which capital and labour are contributed in co-operation for the satisfaction of human wants or desires, those engaged in co-operation dispute as to the basis to be observed by the parties engaged, respecting either a share of the product or any other terms and conditions of their co-operation".
• Regal and non-regal functions. Some functions are "the primary and inalienable functions of a constitutional Government" — legislation, administration of the laws, the judicial power — and these are outside industrialism. But functions ordinarily left to private enterprise, "and education is patently one of these", stand differently. When the State assumes them, "the State acts simply as a huge corporation, with its legislation as the charter."
• The test. The State's policy or motive is irrelevant; what matters is the nature of the function: "is it a service that the State could have left to private enterprise, and, if so fulfilled, could such a dispute be "industrial"?" He pointed to State railways, dredges, a free ferry, pilot boats and trawling, all held industrial.
• Private schools teach the same curriculum by employed teachers, and education is closely tied to industrial efficiency. He held education to be within the constitutional power in its own right, not merely as an adjunct of industry.

For the majority: the educational system run by a State is not an industry, because it bears no resemblance to an ordinary trade or business, is not connected with the production or distribution of wealth, and involves no co-operation of capital and labour in the relevant sense. An occupation confined to teaching in State schools takes its character from that activity and is not an industrial occupation. A dispute between the State and those teachers is therefore not an industrial dispute under s. 51(xxxv).

• Unit 4 — meaning of "industry": cite this case as the leading foreign authority considered in State of Bombay v Hospital Mazdoor Sabha (1960). Give the majority holding in one line, then Isaacs J's regal/non-regal distinction.
• Essay question: Are educational institutions an "industry"? Discuss with reference to foreign and Indian decisions. Contrast the majority (no resemblance to trade; no production of wealth) with Isaacs J (a service private enterprise could provide; the State acting as "a huge corporation").
• Sovereign functions: use Isaacs J's list of inalienable functions — legislation, administration of the laws, the judicial power — when a question asks which State activities fall outside "industry".
• Caution: always say it is a High Court of Australia decision, and that the majority's narrow test was built on the wording of the Australian Constitution.