Ideas@TheCentre
Government too big for its boots
The rule of law stands as a bulwark against the arbitrary exercise of power by government. As such it is fundamental to fairness, the freedom of the governed, and the success of the liberal market economy – but it is frequently under attack, sometimes from unexpected quarters. Two recent examples spring to mind.
Retrospective legislation is antithetical to the rule of law. It is like changing the rules of the game after it has been played. But governments sometimes resort to it, citing extraordinary circumstances as the justification.
The freshly minted O’Farrell government in NSW is planning to tear up contracts entered into by its predecessor, which had promised to pay participants in the solar energy scheme a very generous 60 cents per kilowatt hour for electricity generated (the ‘feed-in tariff’). It plans retrospective legislation to invalidate the old contracts, cut the price paid, and deny participants in the scheme any legal recourse against the government.
The solar scheme was an atrocious act of public policy, adopted by the previous government in the expectation that the nasty fiscal consequences would be someone else’s problem.
But can an action of one government be so bad that it justifies retrospective legislation by a successor government? Opinions will differ on this, but the avoidance of retrospectivity is such an important principle that the justification should be very strong indeed, and in my opinion stronger than in this case.
In the other example, the Commonwealth government is undermining property rights by requiring that cigarettes only be sold in plain packages, without the distinctive adornments associated with tobacco companies’ valuable brands. Branding is a competitive strategy that is as central to cigarette marketing as the Coca Cola brand is to beverages.
The freedom to market and compete cannot, of course, be totally unfettered in any industry, but the Commonwealth’s action in this case raises heavy-handed regulation to new heights. Does the (undoubted) harm done by smoking justify this act of harm to the rule of law? Those who respond in the affirmative should explain where the line should be drawn and according to what objective principles. Soft drinks and beer are also harmful in excess, but does that mean Coca Cola and Fosters should be required to go the same way as ‘cleanskin’ wine? The issue isn’t whether plain packaging will be effective in reducing harmful smoking, but whether this assault on property rights would be justified even assuming it will substantially cut the consumption of cigarettes.
These are just two more examples of how government has become too big for its boots. The objectives are not in dispute, but the means being adopted by these governments – one state, one Commonwealth; one Labor, one Coalition – raise serious concerns about erosion of the rule of law.
Robert Carling is a Senior Fellow at The Centre for Independent Studies.
