The Compact - ‘ordinary’ vs ‘other’ annual services of government

Section 54 of the Constitution requires that there be a separate law appropriating funds for the ‘ordinary’ annual services and that other matters must not be dealt with in such a Bill. There must be separate annual Appropriation Bills for the ‘ordinary’ annual services, and for any ‘other’ annual services.

The distinction between ordinary and other annual services was set out in a ‘Compact’ (p. 386) between the Senate and the Government in 1965. Several amendments have been made to the Compact since 1965, and in 2010 the Senate Standing Committee on Appropriations and Staffing recommended the Senate restate the Compact in a consolidated form. On 22 June 2010, the Senate resolved as follows:

  1. To reaffirm its constitutional right to amend proposed laws appropriating revenue or moneys for expenditure on all matters not involving the ordinary annual services of the Government.
  2. That appropriations for expenditure on:
    1. the construction of public works and buildings;
    2. the acquisition of sites and buildings;
    3. items of plant and equipment which are clearly definable as capital expenditure (but not including the acquisition of computers or the fitting out of buildings);
    4. grants to the states under section 96 of the Constitution;
    5. new policies not previously authorised by special legislation;
    6. items regarded as equity injections and loans; and
    7. existing asset replacement (which is to be regarded as depreciation), are not appropriations for the ordinary annual services of the Government and that proposed laws for the appropriation of revenue or moneys for expenditure on the said matters shall be presented to the Senate in a separate appropriation bill subject to amendment by the Senate.
  3. That, in respect of payments to international organisations:
    1. the initial payment in effect represents a new policy decision and therefore should be in Appropriation Bill (No. 2); and
    2. subsequent payments represent a continuing government activity of supporting the international organisation and therefore represent an ordinary annual service and should be in Appropriation Bill (No. 1).
  4. That all appropriation items for continuing activities for which appropriations have been made in the past be regarded as part of ordinary annual services.

Adherence to the compact has not always been strict, and the High Court has held that such disagreements between the Houses are not justiciable. That is, they are not appropriate disputes for determination by a court. Any disputes are to be determined between the Houses themselves.