Chapter 13 - Financial legislation

(i) appropriations

There has been general agreement that the expression charge or burden refers to appropriations of money (its supposed application to matters other than appropriations is dealt with below). An appropriation of money is a charge or burden on the people in the sense that it is a charge on the public funds. An amendment to a bill which would increase expenditure under a bill out of money proposed to be appropriated for that purpose is an amendment which would increase a proposed charge or burden on the people.

On the basis of this analysis, it would appear at first sight that the interpretation of the relevant provision is relatively easy: if a bill contains a proposed appropriation of money, and an amendment would have the effect of requiring increased expenditure under that appropriation, for example, by increasing the payments which are to be made under the appropriation, the amendment would need to be in the form of a request.

The question soon arose, however, of the application of the paragraph to an amendment to a bill which did not itself contain an appropriation but which amended an act which contained an appropriation in such a way as to affect expenditure under the appropriation. Should such an amendment which would increase expenditure under the standing appropriation be moved in the form of a request?

Strong arguments could be advanced, on the basis of the 1903 debate and previous authority, that the third paragraph did not apply to such an amendment. The bill would not of itself propose an appropriation. Moreover, such a bill could presumably be introduced in the Senate, and, as has already been noted, the application of the paragraph to a bill which may be introduced in the Senate undermines the only coherent purpose and rational application of the paragraph.

Unfortunately, when this question arose in the Senate in relation to the Surplus Revenue Bill 1910, it was not considered. A request was moved, and when the necessity for a request was questioned, the matter was brushed aside with the by then familiar remark: “What does it matter whether we proceed by way of request or amendment?” (Senator Pearce, SD, 25/8/1910, p. 2060). The request was then agreed to.

In this unsatisfactory way it was established that a request was required for an amendment to a bill which would increase expenditure under an appropriation in an act to be amended by the bill.

The situation could be rationalised by the thesis that such a bill contains an implied appropriation, but there is still the problem that such an amendment could be initiated by way of a Senate bill and could presumably be made by way of an amendment to a bill first introduced in the Senate. The case thereby extended the application of the third paragraph in a way which undermined its rationale as a safeguard of the initiative of the House of Representatives.

The interpretation of the provision has also been complicated in relatively recent years by certain unfortunate features of the framing of government legislation. These features are called unfortunate because, apart from complicating the interpretation of the relevant provision, they also amount to a removal of appropriation and expenditure from parliamentary control and supervision. These aspects of legislation are as follows.

Standing appropriations. The Parliament has agreed to many bills which contain standing appropriations, usually called special appropriations, that is, appropriations which, when they have been put onto the statute book, continue to authorise the expenditure of money for some years or until they are repealed, and do not have to be renewed by Parliament. Bills to amend those bills are then introduced, and the provisions of the amending bills affect the amount of expenditure to be made under the standing appropriations. It is then necessary to determine whether any particular amendment by the Senate of the amending bills will increase the expenditure under the appropriation. This determination is further complicated because these standing appropriations are often also appropriations of indefinite amount.

Indefinite appropriations. The Parliament has passed many bills which contain appropriations of indefinite quantity. The provisions in question usually state that the money required for the operation of the legislation is appropriated from the Consolidated Revenue Fund, without any specification of an amount. This drafting device is adopted because it is often not possible for the government to calculate with any degree of accuracy the amount of expenditure which will be required by the legislation concerned, because of uncertainty as to the impact of the legislation. This uncertainty also has the effect of making it difficult to determine whether any particular amendment of the legislation will require increased expenditure. If the government cannot determine how much expenditure will be involved in a piece of legislation, it is asking a great deal that the Senate should determine with certainty whether any particular amendment of the legislation will increase the expenditure. (The Financial Management and Accountability Amendment Bill 2000, which belied its title, and which was passed in connection with the government’s new tax scheme, added an indefinite amount to every annual and standing appropriation in every statute, but it was explained that this was a “bookkeeping” device not actually increasing expenditure.)

Separation of appropriations. The use of standing and indefinite appropriations and bills which amend the legislation containing those appropriations means that appropriations are separated from the provisions that affect the expenditure which may be made under them. It may be argued, as indeed it was argued during the 1903 Senate debate, that, on a strict interpretation of the relevant provision in section 53, if a bill does not contain a specified appropriation there can be no question of any amendment to it increasing a proposed charge or burden. This interpretation, while probably strictly correct, has not been followed, and it has been accepted that a bill proposes a charge or burden if it amends other legislation which contains an appropriation. This is a very loose interpretation which could, if carried to its logical conclusion, lead, as was pointed out in the 1903 debate, to virtually every amendment becoming a request, because virtually every amendment has an impact on an appropriation which exists somewhere. Fortunately the interpretation has not been carried to that logical conclusion, but it does indicate the difficulty of drawing clear lines in the application of the relevant provision of section 53 if a direct connection between an amendment and increased expenditure is not required as a condition for a request.

Complex provisions. Many bills passed by the Parliament in recent years contain complex provisions which determine whether expenditure is to occur. Usually these provisions take the form of providing that expenditure may occur if certain factors apply, and the expenditure will occur only if the factors apply and relate in a certain way. Specific examples of these types of provisions are referred to in relation to the particular cases described below. These kinds of provisions often make it difficult to determine whether there is going to be any expenditure under a bill at all, and, if so, how much, and thereby make it doubly difficult to determine whether particular amendments will have the effect of increasing expenditure.

Discretion conferred on officials. Many bills passed by the Parliament confer discretions on ministers and other office-holders to determine whether payments are made and therefore to determine whether expenditure occurs. In many cases these discretions are not governed by any objective factors. Many appropriations authorise expenditure which is not statutorily required, as it is, for example, by provisions which create entitlements to payments. Expenditure under such appropriations depends on the decisions of officials in the sense that it may be decided to make savings by not spending up to the authorised level, or not spending at all. This is quite different, however, from provisions which explicitly empower ministers and other officials to determine whether payments are made, and if so in what amounts. As will be seen in the following analysis of past cases, these sorts of provisions provide a basis for an argument, which was advanced by the Senate in 1981, that an amendment which merely affects such a discretion need not be a request.

Appropriations of these kinds have been used (or abused) to such an extent in recent times that only about 20 percent of total government expenditure is now subject to annual parliamentary scrutiny and approval in the annual appropriation bills. The remaining 80 percent of government expenditure has escaped from parliamentary control through the use of these types of provisions. The following figures, extracted from the annual budget documents, show the growth of standing appropriations as a percentage of total government expenditure:

1909-10 10%

1929-30 38%

1949-50 49%

1969-70 56%

1992-93 74%

2002-03 80%

Had the Parliament not fallen into the habit of passing these kinds of provisions (and, it is submitted, it is a very bad habit from the standpoint of parliamentary control and supervision of expenditure), the interpretation of the relevant provision of section 53 would be relatively straightforward. It is because of these kinds of provisions that difficulties of interpretation have arisen.

Proper parliamentary supervision and control of expenditure, and the proper application of section 53 of the Constitution, require that all government expenditure be approved annually in specified amounts by Parliament, with additional and supplementary appropriations when required, and that expenditure of appropriated funds be governed by objective conditions rather than discretions vested in officials. There is no reason for this situation not being achieved, except an executive desire to avoid unwelcome parliamentary attention. (A bill to abolish standing appropriations and to make all appropriations subject to annual renewal was introduced in the Senate in 1986 by Senator Vigor: 24/9/1986, J.1229.)

A report of the Auditor-General presented in 2004 (Report No. 15, 2004-05, PP 240/2004) found widespread illegalities, lack of information and absence of accountability and control in the administration of special appropriations. It was pointed out that the nature of special appropriations (“bottomless buckets of money”) encourages these problems. (29/11/2004, J.122; SD, 29/11/2004, pp 74-8) The problems posed by special appropriations were subsequently taken up in debate on bills containing new provisions for such appropriations and by the Scrutiny of Bills Committee (SD, 10/10/2005, pp 16-17; Fourteenth Report of 2005, Accountability and Standing Appropriations, PP 461/2005). The committee adopted the practice of reporting on provisions for such appropriations.

Other reports by the Auditor-General disclosed lack of proper control and accountability in other areas of the public finance system where annual appropriations are by-passed (Reports Nos 24 of 2003-04, 28 of 2005-06, 31 of 2005-06).

The Finance and Public Administration Committee presented a report in March 2007 on the appropriations and funding system and its effect on parliamentary accountability. The committee recommended significant changes not only to the system of appropriations but to other features of public finance introduced during the previous ten years which maximised flexibility for government but reduced transparency and accountability and hampered parliamentary scrutiny (Transparency and accountability of Commonwealth public funding and expenditure, PP 47/2007; response by the Chairs’ Committee, 21/6/2007, J.4028).

It is no answer that other countries have extensively used standing appropriations. This means only that other countries have made the same mistake. Generally speaking they have not made the same mistake to the same extent. In the United Kingdom standing appropriations account for only 25 percent of government expenditure.

The following are four cases in which there was significant disagreement between the two Houses (in reality between the Senate and the government’s advisers) in relation to amendments and requests affecting appropriations, and they illustrate some of the issues of interpretation.

States Grants (Tertiary Education Assistance) Bill 1981. This bill contained a provision empowering a minister to make certain determinations which could have the effect of reducing the payments otherwise authorised to be made to the states under the bill. A Senate amendment removed the relevant provision. The Senate passed a resolution declaring that it was in accordance with section 53 of the Constitution to amend the bill in that way. The principle which may be drawn from that resolution is that a request is not required for an amendment which removes a ministerial power which may be exercised in such a way as to reduce expenditure under a bill (see also statements by Chair of Committees, SD 20/3/1997, p. 1820; 25/9/1997, p. 6961; 2/12/1997, pp 10130-31; the same principle applies to an amendment which would empower a minister to make determinations which could be exercised to increase expenditure otherwise to be made under the bill: statement by Chair of Committees, 21/6/2007, J.4043).

States Grants (Technical and Further Education Assistance) Bill 1988. Under this bill a minister was empowered to authorise payments to a state in respect of expenditure of certain institutions. The minister was not to authorise the payment of an amount that exceeded a prescribed maximum. That maximum was determined by multiplying a certain sum of money by the number of students receiving instruction in the relevant institutions. In calculating the number of students, certain categories of students were to be disregarded. A Senate amendment had the effect of removing the reference to one of the categories of students to be disregarded. The belief that the amendment did not require a request was based on an assessment that the effect of the amendment on the expenditure under the bill would not be sufficiently direct or certain to require a request. Whether the amendment increased expenditure would be determined by whether, because of students falling into the relevant category, the number of students would be thereby increased (this would depend on numbers of students in the other relevant categories), whether the maximum amount payable would thereby be increased and whether the minister would therefore authorise an increased payment. It appeared on the face of the provisions that the connection between the amendment and an ultimate increase in expenditure involved too many links in the chain of causation and would be simply too indirect and uncertain to warrant the amendment taking the form of a request.

Social Security Legislation Amendment Bill (No. 4) 1991. The Social Security Act 1991 and its predecessor statute is a frequently-amended act which contains a standing and indefinite appropriation, and amendments to amending bills have given rise to difficult questions of interpretation. To this bill the government moved in the Senate a number of amendments, one of which created a category of potential recipients of benefits in respect of whom a certificate could be issued by state or territory authorities. The payment of funds therefore depended upon the exercise of a power conferred not on a Commonwealth official but on state and territory officials. It was not known whether any certificates would be issued by the relevant authorities or whether any benefits would be paid, and subsequent publicity surrounding the bill indicated that the matter was still in doubt for some time after its passage. The view was therefore taken that the effect of the amendment on total expenditure under the bill was uncertain. After the amendments had been passed by the Senate and agreed to by the House of Representatives, a statement was made by the Speaker indicating a belief that the amendment in question should have been a request.

Local Government (Financial Assistance) Amendment Bill 1992. A provision of this bill empowered the relevant minister to determine a figure which, multiplied by a separately determined factor, produced an amount of a payment to the state of Tasmania, and a ceiling was prescribed for the figure to be determined by the minister. A Senate amendment had the effect of altering that ceiling. The view was taken that the amount actually expended under the bill would not necessarily be affected by the alteration of the ceiling by the Senate’s amendment. Moreover, it was made clear that, if the ministerial power under this bill were exercised in such a way as to increase the payment to Tasmania, payments to the State under other legislation, also determined by ministerial determination, would be reduced by a corresponding amount. It was clear, therefore, that in practice the amendment would not result in additional expenditure. In this case the effect of the amendment was influenced by two different statutory ministerial discretions. Although, as the Speaker suggested in a statement to the House of Representatives, it is somewhat anomalous to be interpreting the question with reference to a ministerial undertaking, it is also highly anomalous to argue that a request is required when it is known that there will be no increase in expenditure.

(See Supplement) An issue which has arisen from time to time relates to Senate amendments which remove proposed restrictions on entitlements to payments. The principle has been followed that where a bill proposes to restrict eligibility for payments under an act which contains a standing appropriation, and the Senate’s amendments remove or liberalise the restrictions, those amendments do not need to be requests, although their effect is to increase the total of expenditure which would otherwise have occurred had the bill been passed without amendment. This principle appears to have been accepted by the government. (See government amendments moved in the Senate to the Social Security Legislation Amendment Bill 1990, 18/12/1990, J.633-7; statements by the Chair of Committees, SD, 26/11/1996, p. 5968; 29/11/1996, p. 6379; 13/12/1996, p. 7490; 12/2/1997, p. 539; for acceptance by the government, see HRD, 2/12/1996, p. 7454.)

In relation to a Senate amendment to the Social Security Amendment Bill 1993, it was conceded by the government that it was not possible to determine the effect of the amendment on expenditure (HRD, 26/5/1993, pp 904-6).

In 1997 government amendments to a bill dealing with veterans’ affairs were circulated as requests even though the explanatory memorandum accompanying the amendments stated that they did not have any financial impact. The Chairman of Committees stated that he was at a loss to understand why the amendments had been framed as requests (SD, 12/2/1997, p. 539). See also the statements by the Chair of Committees in relation to the Taxation Laws Amendment Bill (No. 1) 1997, SD, 27/6/1997, p. 5456; the Child Support Legislation Amendment Bill 1998, SD, 30/11/1998, p. 910, 7/12/1998, p. 1328; New Tax System Bills, SD, 30/4/1999, p. 4657; 24/6/1999, p. 6252; 25/6/1999, p. 6465; Telecommunications Bills, SD, 27/5/1999, p. 5549. (See Supplement)

Amendments which may result in increases of expenditure from funds not yet appropriated or which authorise ministers to take action which may result in increased expenditure are not treated as requests (statements by Chair of Committees, SD, 20/3/1997, p. 1820; 25/9/1997, p. 6961; 2/12/1997, pp 10130-31).

Where amendments are purely consequential on amendments which are properly framed as requests, the consequential amendments may also be framed as requests (statement by Chair of Committees, A New Tax System (Family Assistance and Related Measures) Bill 2000, SD, 11/4/2000, p. 13807). On occasions government drafters have attempted to have groups of government amendments all treated as requests on the basis that some of them should be requests and they are related. The Senate has not accepted this distorted application of the constitutional provisions. (Statement by Chair of Committees, Further 1998 Budget Measures Legislation Amendment (Social Security) Bill 1999, SD, 20/9/1999, p. 8438).

In debate in the House of Representatives on the States Grants (Technical and Further Education Assistance) Bill 1988, the responsible minister quoted an opinion by a government adviser which indicated that the amendment to the bill was one which required a message under section 56 of the Constitution (HRD, 21/12/1988, pp 3777-8; the opinion was also quoted in the Senate p. 4809). In other cases in the past where there has been dispute about whether an amendment moved in the Senate infringed the rule concerning a proposed charge or burden on the people, the government has sought to establish that the amendment should take the form of a request by advising that a Governor-General’s message would be necessary if the amendment were passed by the House of Representatives.

In debate on the Trade Practices Revision Bill 1986, Senator Macklin pointed out that a message had been brought into the House of Representatives in connection with the bill. The bill did not contain any appropriation of money, and nor did the Trade Practices Act which it amended; the money necessary for expenditure under the Trade Practices Act is appropriated by the annual appropriation bills. There was a clause in the bill which enlarged the category of proceedings in respect of which, under the principal act, financial assistance might be granted by the Attorney-General. The funds necessary for this assistance were not appropriated by the bill or the Act, but were contained in annual Appropriation Bill (No. 1), and when the relevant section of the principal act was passed no message was produced. It was clear, therefore, that a Governor-General’s message should not have been brought into the House of Representatives in respect of the bill. In response to Senator Macklin, Senator Evans, the Minister representing the Attorney-General, said that the introduction of the message represented an “abundance of caution” on the part of the Office of Parliamentary Counsel (the government drafting office). Senator Macklin asked why any caution at all was required, since the requirements of sections 53 and 56 of the Constitution are not justiciable. Senator Evans then conceded that the bill was not an appropriation bill and that the message should not have been produced (SD, 30/4/1986, p. 2072).

This incident demonstrated some of the issues of interpretation referred to, and also demonstrated that an opinion by government advisers that an amendment should have been a request cannot be taken as an infallible answer to the question.

In framing government amendments to be moved in the Senate the government drafters have occasionally suggested that such amendments should be made as requests if they make expenditure “legally possible”; in other words, section 53 of the Constitution should be read as if it referred to notional charges or burdens rather than real charges or burdens. This suggestion has not been accepted by the Senate. (Statement by Chair of Committees, Indirect Tax Legislation Amendment Bill 2000, SD, 26/6/2000, p. 15556; see also below under Procedure Committee’s proposals.)

In the course of consideration of cases of disagreement, various papers were tabled in the Senate. In papers prepared by the Clerk of the Senate, it was suggested that an amendment to a bill relating to a standing or indefinite appropriation should not be regarded as increasing a proposed charge or burden unless the amendment would clearly, necessarily and directly cause an increase in expenditure under the appropriation. The contrary view appears to be that amendments have to be considered on a case-by-case basis without the application of any such general principle. (The various papers are collected in a volume entitled Constitution, Section 53: Financial Legislation and the Houses of the Commonwealth Parliament, Papers on Parliament No. 19, Department of the Senate, March 1993. These papers refer only to the question of the effect of the provision on appropriation bills; for the effect on taxation bills, see below. See also below under Procedure Committee’s proposals.)

In relation to an appropriation bill which appropriates a definite sum and which is not for the ordinary annual services of the government, although the Senate may not amend the bill to increase the amount of the appropriation, it is clear that the Senate can alter such a bill to change the allocation of proposed expenditure and the purposes for which money is to be appropriated, provided that the total proposed expenditure of the bill is not increased (Appropriation (Works and Buildings) Bill 1910-11, 15/9/1910, J.98; see also J. Quick and R.R. Garran, Annotated Constitution of the Australian Commonwealth, 1901, p. 671; cf ruling of President Gould, 3/10/1907, J.134, in relation to an amendment widening the scope of a bounty but subject to a limited total appropriation: this ruling was clearly in error). Thus the Higher Education Legislation Amendment (2005 Budget Measures) Bill 2005 was amended to reallocate appropriations within the same total (8/11/2005, J.1363; SD, 9/12/2005, p. 45). In the case of the States Grants (Primary and Secondary Education Assistance) Bill 2000, although the total effect of the Senate’s amendments was probably to reallocate the funds to be appropriated, the effect of amendments which would have reduced grants for some private schools was not sufficiently clear to conclude that the reductions would have funded amendments to increase grants in respect of children with disabilities. The latter were therefore moved in the form of requests. (9/11/2000, J.3549-50; 10/11/2000, J.3555-68)

In its judgment in 1995 in the proceedings relating to the Native Title Act 1993 (Western Australia v Commonwealth 1995 183 CLR 373), the High Court dealt with a submission that the Native Title Act was invalid because the amendments made to the Native Title Bill in the Senate were contrary to section 53 of the Constitution. The Court rejected the submission. In finding that the provisions of section 53 are not justiciable, the Court observed: “Section 53 is a procedural provision governing the intra-mural activities of the Parliament” (emphasis added). More significantly, the Court made the following observation: “In any event, the submission of want of conformity with s. 53 appears to be without merit. None of the Senate amendments appears to increase a ‘charge or burden on the people’ ” (at 482). This confirmed the treatment of the amendments by both Houses at the time. They were moved in the form of amendments and not as requests because they did not directly increase expenditure under any appropriation contained in the bill or in any act amended by the bill. One of the Senate’s amendments to the bill, however, established the Parliamentary Joint Committee on Native Title. This caused increased expenditure from a standing appropriation contained in the Remuneration Tribunal Act 1973, as modified by the Remuneration and Allowances Act 1990, in respect of remuneration of the chair of the committee and travelling allowances for members of the committee. The increased expenditure was automatic; no action by the Remuneration Tribunal was necessary. This suggests that the High Court took a view of the third paragraph of section 53 similar to that expounded here: only a very direct effect on an appropriation is regarded as an increase in a charge or burden.

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