Chapter 13 - Financial legislation

Section 53 of the Constitution

The term financial legislation refers to the two categories of proposed laws or bills which are distinguished by section 53 of the Constitution and which have different procedures applied to them by the provisions of that section.

The rationale of these provisions is to reserve to the executive government the initiative in proposing appropriations and impositions of taxation, without affecting the substantive powers of the Senate.

Because of the central importance of section 53 to the subject of this chapter, it is here reproduced in full:

53. Proposed laws appropriating revenue or moneys, or imposing taxation, shall not originate in the Senate. But a proposed law shall not be taken to appropriate revenue or moneys, or to impose taxation, by reason only of its containing provisions for the imposition or appropriation of fines or other pecuniary penalties, or for the demand or payment or appropriation of fees for licences, or fees for services under the proposed law.

The Senate may not amend proposed laws imposing taxation, or proposed laws appropriating revenue or moneys for the ordinary annual services of the Government.

The Senate may not amend any proposed law so as to increase any proposed charge or burden on the people.

The Senate may at any stage return to the House of Representatives any proposed law which the Senate may not amend, requesting, by message, the omission or amendment of any items or provisions therein. And the House of Representatives may, if it thinks fit, make any of such omissions or amendments, with or without modifications.

Except as provided in this section, the Senate shall have equal power with the House of Representatives in respect of all proposed laws.

Section 53 thus provides that the two Houses of the Parliament have equal powers in relation to all proposed laws except as provided by the section. The categories of proposed laws to which exceptions apply are proposed laws imposing taxation and proposed laws appropriating revenue or moneys. Section 53 provides that:

  • bills to appropriate money or to impose taxation may not originate in the Senate
  • the Senate may not amend a bill for imposing taxation
  • the Senate may not amend a bill for appropriating money for the ordinary annual services of the government
  • the Senate may not amend a bill so as to increase any proposed charge or burden on the people.

The section further provides that where the Senate may not amend a bill, it may at any stage request the House of Representatives to do so. This provision of section 53 refers to a bill which the Senate may not amend, but has always been interpreted as applying to a bill which the Senate may amend where an amendment would be contrary to the provision relating to proposed charges or burdens, the view being taken that the section does not prevent requests in that circumstance. The provision also refers to the Senate requesting “the omission or amendment of any items or provisions” in a bill which is not amendable by the Senate. This has been interpreted as not authorising a request for the insertion of a completely new item in such a bill (ruling of Chairman of Committees, 5/5/1936, J.186). This supposed implied limitation, however, was not observed in the early years of the Senate (for example, in relation to the Customs Tariff (British Preference) Bill 1906, 5/10/1906, J.190), and has also not been observed in recent times (8/11/1985, J.570-1; 7/4/1989, J.1522-4; 22/6/1992, J.2545). As with requests for amendments to bills which are amendable by the Senate, the view is taken that section 53 does not prevent requests being made other than in the circumstances listed in the section.

The provisions of section 53 are usually described as limitations on the power of the Senate in respect of financial legislation, but they are procedural limitations only, not substantive limitations on power, because the Senate can reject any bill and can decline to pass any bill until it is amended in the way the Senate requires. In particular, the distinction between an amendment and a request is purely procedural: in one case the Senate amends a bill itself, in the other it asks the House of Representatives to amend the bill. In both cases the bill is returned to the House of Representatives for its agreement with the proposed amendment. In the absence of agreement the Senate can decline to pass the bill.

The provisions of section 53 therefore have a purely procedural application, to determine whether amendments initiated by the Senate should take the form of amendments made by the Senate or requests to the House of Representatives to make amendments. The only effect of choosing a request instead of an amendment is that a bill makes an extra journey between the Senate and the House (see under Procedure on financial legislation, below). On the procedural character of section 53, see the judgment of the High Court in Western Australia v Commonwealth 1995 183 CLR 373 at 482.

While appropriation bills and bills imposing taxation may not originate in the Senate, this does not mean that the Senate is not an equal partner with the House of Representatives in actually making appropriations. Thus the first Senate insisted that words be removed from the preamble of the Supply Bills 1901 implying that the granting of appropriations was the work of the House of Representatives, and required details of items of expenditure (14/6/1901, J.36; 20/6/1901, J.42). Similarly, the Senate caused to be removed from the Governor-General’s opening speech words implying that in the granting of appropriations the House of Representatives had some priority (14/4/1904, J.27).

The Senate has also exercised its right to decline to pass appropriation bills and items in such bills until relevant information is provided (20/5/1975, J.655-7; 28/5/1992, J.2349-50).

Section 53 contains a qualifying clause providing that a bill is not be taken to be an appropriation bill or to impose taxation “by reason only of its containing provisions for the imposition or appropriation of fines or other pecuniary penalties, or for the demand or payment or appropriation of fees for licences, or fees for services”. Thus bills containing such provisions may originate in the Senate and may be amended by the Senate (see ruling of President Baker, SD, 6/6/1901, p. 763). Bills imposing fees for licences or fees for services are therefore usually treated as amendable bills, but in recent times, having regard to the possibility of fees being held by the High Court to be taxes, some bills for imposing fees have been drafted as bills imposing taxation and have been treated as such by the Senate. (Air Caledonie v Commonwealth 1988 165 CLR 462; but see also Airservices Australia v Canadian Airlines 1999 167 ALR 392.)

Legislation which requires appropriations or the imposition of taxation for its operation may be introduced in the Senate with an indication that the necessary appropriation or imposition of taxation is to be inserted into the legislation in the House of Representatives (ruling of President Givens, SD, 10/12/1921, p. 14274; see also Aluminium Industry Bill 1960, Blowering Water Storage Works Agreement Bill 1963, Chowilla Reservoir Agreement Bill 1963, Scholarships Bill 1967, Compensation (Commonwealth Government Employees) Amendment Bill 1976, Liquor Education Fund Bill 1981 and Liquor Advertising Tax Assessment Bill 1981, Plastic Bag (Minimisation of Usage) Education Fund Bill 2002 and Plastic Bag Levy (Assessment and Collection) Bill 2002). (See Supplement)

On occasions the Senate has made requests for the insertion of appropriation provisions in bills originating in the House (4/10/1984, J.1153; 18/10/1995, J.3958-9; 18/6/1996, J.327). The better view, however, is that such amendments may not be moved in the Senate at all, in that, by turning a bill into an appropriation bill, they are contrary to the initiation provision of the first paragraph of section 53 of the Constitution (statement by President Calvert, SD, 16/9/2003, p. 15275).

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