House of Representatives Practice, 6th edition – HTML version

11 - Financial legislation

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Constitutional provisions

Parliament’s control of government finances by means of legislation

The Parliament has the ultimate control over government finances. This control is two-fold. First, taxes are imposed by legislation which must be agreed to by the Parliament. Secondly, government expenditure must also be authorised by legislation.

Section 83 of the Constitution states that ‘no money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law’. This means that however much money the Government has, whether raised by taxation or by loan or even by sale of government assets, the money cannot be spent unless the Parliament has authorised the expenditure by an Act of Parliament (an appropriation Act).[2]

The Consolidated Revenue Fund

Section 81 of the Constitution requires that all revenues or monies raised or received by the Executive Government of the Commonwealth must be paid into one Consolidated Revenue Fund (CRF). All appropriations are now made from the Consolidated Revenue Fund.[3] A Special Account may be established within the CRF, by determination of the Finance Minister or by legislation, which notionally sets aside an amount within the CRF to be spent for specified purposes.[4]

Financial initiative of the Executive

What is called the ‘financial initiative of the Executive’—that is, the constitutional and parliamentary principle that only the Government may initiate or move to increase appropriations or taxes—plays an important part in procedures for the initiation and processing of legislation.

The principle of the financial initiative may be paraphrased as follows:

  • The Executive Government is charged with the management of revenue and with payments for the public service.
  • It is a long established and strictly observed rule which expresses a principle of the highest constitutional importance that no public charge can be incurred except on the initiative of the Executive Government.
  • The Executive Government requests money, the Parliament grants it, but the Parliament does not vote money unless required by the Government, and does not impose taxes unless needed for the public service as declared by Ministers.[5]

The reference to ‘public charge’ in this context means a charge on public funds (an appropriation) or a charge on the people (a tax). The traditional position is expressed in May—‘A charge of either kind cannot be taken into consideration unless it is sought by the Crown or recommended by the Crown’.[6]

The financial initiative in regard to appropriation is expressed in, and given effect by, section 56 of the Constitution:

A vote, resolution, or proposed law for the appropriation of revenue or moneys shall not be passed unless the purpose of the appropriation has in the same session been recommended by message of the Governor-General to the House in which the proposal originated.[7]

The principle of the financial initiative is also expressed in, and given effect by, the constitutional restrictions on the powers of Senate to initiate and amend appropriation and taxation legislation, as outlined below.

The standing orders of the House in relation to financial legislation[8] reflect the principle of the financial initiative. In some matters the House has imposed on itself restrictions that appear to go beyond the letter of the Constitution, but which are based on constitutional convention.

Limits on the Senate’s powers in respect of financial legislation


The form of bills introduced into the Senate is governed by the limitations imposed by section 53 of the Constitution that ‘Proposed laws appropriating revenue or moneys, or imposing taxation, shall not originate in the Senate.’

According to Quick and Garran this part of the Constitution crystallises into a statutory form what had been the practice under the British Constitution for more than 220 years prior to 1901. This view is based on a resolution of the House of Commons in 1678 that:

…all bills for the granting of any such aids and supplies ought to begin with the Commons; and that it is the undoubted and sole right of the Commons to direct, limit, and appoint in such bills the ends, purposes, considerations, conditions, limitations, and qualifications of such grants, which ought not to be changed or altered by the House of Lords.[9]

However, section 53 goes on to state ‘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.’ In relation to these exemptions Quick and Garran states that a bill containing, inter alia, clauses authorising the imposition or appropriation of fines or other pecuniary penalties, when the object of those fines or penalties is to secure the execution of the proposed law, could be introduced in the Senate. Similarly, one dealing with a subject such as fisheries beyond territorial waters, and imposing or appropriating fees for licences to fish in such waters could be introduced in the Senate, as could a bill dealing with mining in Federal Territories and authorising the issue of licences to mine upon payments of fees. A bill relating to navigation, requiring the owners of ferry boats to take out licences and pay fees could, says Quick and Garran, be brought into the Senate.[10]

The Whaling Bill 1935 designed, inter alia, to regulate the whaling industry in the Australian Antarctic Waters by the issue and control of licences to whaling companies registered in Australia, originated in the Senate and was agreed to by the House, after amendment.[11]

In its 1995 report on the third paragraph of section 53 of the Constitution, the House’s Standing Committee on Legal and Constitutional Affairs recommended that bills which increase expenditure under a standing appropriation should not be originated in the Senate and that bills which affect the tax base or tax rates should be originated in the House of Representatives.[12]

In 2008 a bill was received from the Senate which, by increasing the rate of certain pensions, would have had the direct and intended effect of increasing expenditure under a standing appropriation.[13] The Speaker made a statement drawing attention to the issues involved and presented a copy of advice by the Clerk on the matter. In a motion declining to consider the bill, the House:

  • noted the statement by the Speaker concerning the constitutional issues associated with the bill;
  • expressed the opinion that such a bill should be introduced in the House of Representatives, and would require a message from the Governor-General in accordance with section 56 of the Constitution; and
  • stated its belief that it was not in accordance with the constitutional provisions concerning the powers of the houses in respect of legislation as they had been applied in the House for such a measure to have originated in the Senate.[14]

In 2011, for similar reasons, the House declined to consider a Senate bill which proposed to widen the category of persons entitled to an allowance funded by a standing appropriation.[15] It was noted that the standing orders contained no provision under which a bill received from the Senate which would be characterised under House practice as a bill appropriating revenue or moneys could be considered. Like the 2008 case, the impact on expenditure was not a possibility or incidental effect; it was intended and substantial. This distinguishes these cases from some which have concerned the third paragraph of section 53 (in relation to Senate amendments—see below), and where there has been room for different views about the directness of or necessity for an impact on expenditure.

In 2009 the High Court considered the case of an Act which had the effect of increasing and extending the objects or purposes of the amount which could be paid out of the Consolidated Revenue Fund under existing words of appropriation in a second Act. The majority of the High Court rejected the submission that taken by itself the first Act contained no appropriation. In so ruling the Court, while acknowledging that section 53 was a matter for the Parliament and not the Court, applied and endorsed the practice of the House of Representatives which categorises a bill which would become such an Act as a type of appropriation bill[16]—see ‘Bills containing special appropriation’ at page 423.

The House position reflects the principle of the financial initiative that is behind the constitutional provisions. In brief, a bill which if introduced in the House would require a Governor-General’s message recommending an appropriation, is a bill that should not originate in the Senate.


The second paragraph of section 53 of the Constitution provides that ‘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 third paragraph of section 53 provides ‘The Senate may not amend any proposed laws so as to increase any proposed charge or burden on the people.’ However, the Senate may request the House to make such amendments as the Senate itself is unable to make. The effect of these provisions is examined in more detail in the following chapter on ‘Senate amendments and requests’.

Section 54 of the Constitution states that bills appropriating revenue or moneys for the ordinary annual services of the Government—that is, the main Appropriation Bills (and, in the past, the main Supply Bills)—shall deal only with such appropriation. Section 55 of the Constitution requires that laws imposing taxation shall deal only with the imposition of taxation and furthermore with only one subject of taxation.

The importance of sections 54 and 55 is that they protect the Senate’s right to amend non-financial measures. As the Senate is precluded from amending a main Appropriation Bill or a main Supply Bill or bills imposing taxation, these two sections together were inserted in the Constitution to prevent the House embodying in such bills other provisions (known as ‘tacking’), a course which would prejudice the right of the Senate to amend such provisions.

2. Borrowings by the Commonwealth must also be authorised by legislation, Financial Management and Accountability Act 1997, s. 37.
3. As noted in earlier editions (1 to 3), appropriations could previously be made from the former Loan Fund. Under transitional provisions an appropriation expressed to be an appropriation of the Loan Fund has effect as an appropriation of the CRF, Financial Management Amendment Act 1999, s. 6.
4. Financial Management and Accountability Act 1997, ss. 20–22.
5. See May, 24th edn, pp. 711–19 and Quick and Garran, pp. 681–2. The latter commentary refers to the results which would follow from the absence of this principle: ‘… the scramble among the members of the Legislature to obtain a share of the public money for their respective constituencies, of the ‘log-rolling’, and of the predominance of local interests to the entire neglect of the public interest …’ (cited from Hearn’s Government of England, 2nd edn [1886], pp. 376–7).
6. May, 24th edn, p. 713.
7. As section 53 of the Constitution provides that proposed laws appropriating revenue or moneys shall not originate in the Senate, the ‘House’ referred to in this section 56 is, for all practical purposes, the House of Representatives. For background to the phrase ‘House in which the proposal originated’ see Quick and Garran, pp. 682–3.
8. S.O.s 178–182.
9. Quick and Garran, p. 667.
10. Quick and Garran, pp. 667–8.
11. J 1934–37/114; S. Deb. (30.10.1935) 1059, 1180; VP 1934–37/508.
12. PP 307 (1995). See also ‘Certain amendments viewed as initiation’ in Chapter on ‘Senate amendments and requests’.
13. Urgent Relief for Single Age Pensioners Bill 2008. The expected increase in expenditure under the appropriation in the Social Security (Administration) Act 1999 was $1.45 billion.
14. VP 2008–9/553–4, H.R. Deb. (23.9.2008) 8273–81. For a critical review of the respective positions of the two Houses on this bill see G. J. Appleby and J. M. Williams, ‘A tale of two clerks: When are appropriations appropriate in the Senate?’ Public Law Review, v. 20(3), September 2009: 194–213.
15. Social Security Amendment (Income Support for Regional Students) Bill 2011 (appropriation in the Social Security (Administration) Act 1999). VP 2010–12/310, see particularly speech by Attorney-General at H.R. Deb. (21.2.2011) 606–8.
16. Pape v. Commissioner of Taxation [2009] HCA 23 at 135, 164–171, 206. The Act concerned was the Tax Bonus for Working Australians Act (No. 2) 2009 which increased expenditure under a standing appropriation in the Taxation Administration Act 1953.