Commonwealth Executive Power and Accountability Following Williams (No.
The importance of the High Court’s decision in the first
School Chaplains case to our
understanding of Commonwealth executive power, parliamentary accountability and
federalism has been demonstrated in previous editions of Papers on
paper further considers these issues by examining the significant implications
of the second School Chaplains case.
In Williams (No. 1) the High Court, relying to a large
extent on principles underlying parliamentary accountability and federalism,
held that the Commonwealth executive did not have the power to enter into a
funding agreement with a private company that provided chaplaincy services in a
Queensland government school. The Court thereby effectively invalidated the
National School Chaplaincy Program (NSCP) and cast doubt over the
constitutional validity of a significant proportion of Commonwealth
Following Williams (No. 1) it appears that the
Commonwealth will only have authority to expend public money that has been
legally appropriated when the expenditure is:
by the Constitution;
in the execution or maintenance of a statute or expressly authorised by a
by a common law prerogative power;
in the ordinary administration of the functions of government; or
supported by the nationhood power.
Any expenditure of validly appropriated public money that does
not fall into any of these categories is invalid.
Thus, in most cases the Commonwealth requires some form of legislative
authority in order to expend public money.
While these general principles can be discerned from the case,
Williams (No. 1) is also ‘fundamental in nature, and like all such cases
that involve major changes and development in our understanding of the
Constitution, it will take many decades of future cases for it to be refined
into a comprehensible and logical set of principles and rules’.
On 19 June 2014, the High Court handed down its decision in Williams
(No. 2)—the first of the potential line of cases to provide this
As the Commonwealth Attorney-General has stated, the decision
in Williams (No. 2) was quite limited;
however, the decision is important to the extent that it:
(again) invalidated the NSCP and all payments made under it;
detailed the High Court’s apparent frustration at the
Commonwealth’s continuing refusal to accept limitations on its executive power;
resulted in all payments made under the chaplaincy program
becoming debts owing to the Commonwealth which the Commonwealth subsequently
decided to waive; and
did not consider broader questions in relation to the validity of
the legislative response to Williams (No. 1) (with the result that there
remains uncertainty surrounding the constitutionality of many Commonwealth
This remaining constitutional uncertainty means that ‘governments should be cautious about their spending and do
their best to ensure that government programs involving payments or grants to
third parties are adequately supported’.
In this context, it is also important to emphasise the benefits of establishing
spending schemes in primary legislation.
II Chaplaincy program invalidated (again)
legislative response to Williams (No. 1)
The immediate legislative response to Williams (No. 1)
was the Financial Framework Legislation Amendment Act (No. 3) 2012 (Cth)
(the FFLA Act). The FFLA Act itself purports to retrospectively provide
legislative support for over 400 non-statutory funding schemes whose validity
was thrown into doubt following Williams (No. 1). Furthermore, future
additions to the list of spending schemes can be made by the executive by the making
of a disallowable instrument (the power to do so was provided for in new section
32B of the Financial Management and Accountability Act 1997 (Cth) (the
FMA Act)). The
list of items purporting to authorise executive spending schemes are contained
in Schedules 1AA and 1AB of what is now known as the Financial Framework
(Supplementary Powers) Regulations 1997 (Cth) (the FF(SP) Regulations).
The FFLA Act has been subject to significant criticism,
including concerns expressed by the former Chief Justice of New South Wales,
James Spigelman. Specifically, the former Chief Justice noted that ‘the
Commonwealth proceeded to virtually replicate its view of the Executive power
in the form of a statute’ and expressed concern that this may amount to a
breach of the rule of law. At a general level, Spigelman expressed concerns
about the Commonwealth ignoring the limitations on its executive power in the
Constitution—particularly after Pape.
This issue is discussed in further detail below.
challenge to the legislative response
In Williams (No. 2), Mr Ron Williams (the parent of
children who attended a Queensland government school in which services were
provided under the NSCP) challenged the legislative response to Williams
(No. 1). Specifically, Mr Williams challenged the purported authorisation
of funding of the chaplaincy program in the FFLA Act on the basis that:
- there was no
Commonwealth head of legislative power to support the authorisation of expenditure
on the chaplaincy program (the narrow submission); and
- section 32B
impermissibly delegated to the executive authorisation of expenditure because
the relevant programs were all identified by regulations which could be made
and amended by the executive (the broad submission).
The High Court rejected arguments that the chaplaincy program
was supported by a Commonwealth head of legislative power and therefore upheld
the plaintiff’s narrow submission—that is, it found there was no head of
legislative power to support the expenditure of funds on the chaplaincy
program. The Court, however, left undecided the question of whether section 32B
was invalid because of an impermissible delegation of the power to authorise
expenditure to the executive. It was not necessary for the Court to decide this
point because even if section 32B were valid it still did not support the
chaplaincy program. As Anne Twomey notes, for present purposes, the Court ‘read
down s 32B as not applying to support expenditure on those programs that
do not fall within a Commonwealth head of power’.
The Court thus clearly affirmed the requirement for a constitutional head of
power to support spending programs.
head of legislative power
As noted above, ultimately, the central question in Williams
(No. 2) was whether the chaplaincy program was supported by a Commonwealth
head of legislative power. Both the Commonwealth and Scripture Union Queensland
(SUQ) argued that section 32B and the item in the regulations specifically
providing authority for the chaplaincy program were supported by:
the ‘benefits to students’ limb of section 51(xxiiiA) of the
the express incidental power (section 51(xxxix)) taken together
with sections 61 or 81 of the Constitution.
SUQ also argued that the item was supported by the
corporations power (section 51(xx)).
to students power
Section 51(xxiiiA) of the Constitution provides the
Commonwealth Parliament with the power to make laws with respect to:
the provision of maternity allowances, widows’ pensions,
child endowment, unemployment, pharmaceutical, sickness and hospital benefits,
medical and dental services (but not so as to authorize any form of civil
conscription), benefits to students and family allowances [emphasis
The Court held that the word ‘benefits’ in section 51(xxiiiA)
‘is used more precisely than as a general reference to (any and every kind of)
advantage or good’.
Therefore, for something to come within the meaning of ‘benefits to students’
the relief should amount to ‘material aid provided against the human wants
which the student has by reason of being a student’.
While the chaplaincy program had ‘desirable ends’ (‘strengthening values,
providing pastoral care and enhancing engagement with the broader community’),
the Court held that ‘seeking to achieve them in the course of the school day
does not give the payments which are made the quality of being benefits to
provision of chaplaincy services at a school therefore cannot be characterised
as falling within the meaning of ‘benefits to students’ in section 51(xxiiiA).
Section 51(xxxix) of the Constitution provides the
Commonwealth Parliament with the power to make laws with respect to:
matters incidental to the execution of any power vested by
this Constitution in the Parliament or in either House thereof, or in the
Government of the Commonwealth, or in the Federal Judicature, or in any
department or officer of the Commonwealth.
The Commonwealth argued that the authorisation scheme
established in the FFLA Act was incidental to section 61 of the Constitution
(relating to executive power). The Court
also rejected this argument on the basis that:
... to hold that s 32B of the FMA Act is a law with
respect to a matter incidental to the execution of the executive power of the
Commonwealth (to spend and contract) presupposes what both Pape and Williams
(No 1) deny: that the executive power of the Commonwealth extends to any
and every form of expenditure of public moneys and the making of any agreement
providing for the expenditure of those moneys.
The swift rejection of this argument appears to indicate the
High Court’s frustration at the Commonwealth’s continuing refusal to accept
limitations on its executive power. This is discussed in further detail below.
Section 51(xx) of the Constitution provides the Commonwealth
Parliament with the power to make laws with respect to:
foreign corporations, and trading or financial corporations
formed within the limits of the Commonwealth.
SUQ argued that section 32B, in combination with the relevant
item in the regulations that purported to provide legislative authorisation for
the chaplaincy program, was supported by section 51(xx).
The Court noted that SUQ’s argument in this respect ‘may be dealt with
Court held that a law which gives the Commonwealth the authority to make an
agreement or payment of the kind in question is not a law with respect to
trading or financial corporations because:
The law makes no provision regulating or permitting any act
by or on behalf of any corporation. The corporation’s capacity to make the
agreement and receive and apply the payments is not provided by the impugned
provisions. Unlike the law considered in New South Wales v The Commonwealth
(Work Choices Case),
the law is not one authorising or regulating the activities, functions,
relationships or business of constitutional corporations generally or any
particular constitutional corporation; it is not one regulating the conduct of
those through whom a constitutional corporation acts or those whose conduct is
capable of affecting its activities, functions, relationships or business.
As Simon Evans notes, this makes it clear that the
‘Commonwealth can no longer assume that contract is available as a regulatory
tool whenever the entity it seeks to regulate is a constitutional corporation’
and therefore the Commonwealth will need to reconsider how it implements its
policy objectives in this regard.
III The Commonwealth’s continuing refusal to accept
limitations on its executive power
While the decision in Williams (No. 2) was quite
limited, in addition to making it clear that neither the benefits to students
power, the express incidental power nor the corporations power could support
the expenditure of funds on the chaplaincy program, the decision also
demonstrated the High Court’s apparent frustration at the Commonwealth’s
continuing refusal to accept limitations on its executive power. In this regard
the Court rejected an assumption underlying the Commonwealth’s argument that
the executive power of the Commonwealth Government can be equated with the
executive power in Britain.
The Commonwealth’s disregard for the limitations on its
executive power appears to have continued with the Commonwealth purporting to
rely on the executive nationhood power (coupled with the express incidental
power in section 51(xxxix)) to provide legislative authority for spending
schemes relating to matters such as mathematics and computing curriculum
resources. Of course, as will be demonstrated below, this is particularly
problematic given that this argument (in relation to the NSCP) was expressly
rejected in Williams (No. 1).
High Court’s apparent frustration with the Commonwealth
The Court characterised the Commonwealth’s arguments in
relation to ‘the ambit of the Executive’s power to spend’ as being advanced
‘under the cloak of an application to reopen the decision in Williams (No 1)’:
The Commonwealth parties put four main reasons for what they
described as “a compelling case” to reopen the decision in Williams (No 1).
First, they submitted that “the principle identified in [Williams
(No 1)] was not carefully worked out in a significant succession of cases”
and “constituted a radical departure from what had previously been assumed by
all parties to be the orthodox legal position”. Second, they submitted that the
course taken in the hearing in Williams (No 1) resulted in the Court not
receiving “sufficient argument ... on what became the ultimate issue” ... Third,
they submitted that “the reasons of the four Justices constituting the majority
in [Williams (No 1)] do not contain a single answer” to when and why
Commonwealth spending requires authorising legislation ... And fourth, they
submitted that the decision in Williams (No 1) “led to considerable
inconvenience with no significant corresponding benefits”.
In refusing the Commonwealth’s application to reopen Williams
(No. 1), the Court noted that the decision in Williams (No. 1)
depended upon premises already established in Pape.
In relation to the Commonwealth’s submission that the decision in Williams
(No. 1) ‘led to considerable inconvenience with no significant
corresponding benefits’ the Court noted that:
What was meant in this context by the references to
“inconvenience” and “corresponding benefits” would require a deal of elaboration
in order to reveal how they bear upon the resolution of an important question
of constitutional law. Examination of the proposition reveals no greater
content than that the Commonwealth parties wish that the decision in Williams
[No 1] had been different and seek a further opportunity to persuade the
Court to their view.
The Court went on to note that the Commonwealth’s submission
in relation to the scope of the executive’s power to spend and contract ‘was,
in substance, no more than a repetition of ... the “broad basis” submissions
which the Commonwealth parties advanced in Williams [No 1] and which six
Justices rejected’. The
submissions were, in effect, simply ‘another way of putting the Commonwealth’s
submission that the Executive has unlimited power to spend appropriated moneys
for the purposes identified by the appropriation’.
Overall, the Court noted that the Commonwealth’s arguments in Williams
(No. 2) about its own executive power ‘have been advanced ... more than once
in litigation in this Court’ and that they ‘have not hitherto been accepted by
the Court’. The
Court pointedly concluded that ‘[t]heir repetition does not demonstrate their
characterisation of the Commonwealth’s arguments appears to demonstrate a level
of frustration within the Court at the Commonwealth’s continuing refusal to
accept the constitutional limitations on its executive power.
B Executive power of the Commonwealth cannot be
equated with the executive power in Britain
Following Williams (No. 1) it was suggested that the
decision ‘substantially alters our understanding of the Commonwealth Executive,
and significantly removes it from our British origins and, on one view, from
the intentions and expectations of the framers’.
It has previously been noted that, while the Constitution drew on ‘British
origins’, the framers explicitly and deliberately departed from the British
model in many respects. The limitations on the Commonwealth executive outlined
in Williams (No. 1) therefore ‘simply underscore Australia’s unique
constitutional arrangements—arrangements which should not automatically be
equated with British traditions’.
In Williams (No. 2) the High Court outlined the relevance
of Australia’s unique constitutional arrangements to the scope of the executive
power in Australia. In this regard the Court pointed to ‘more fundamental
defects [than those outlined above] in the argument of the Commonwealth parties
about the breadth of the Executive’s power to spend and contract’.
In particular, the Court noted that underlying the Commonwealth’s argument was
the premise ‘that the executive power of the Commonwealth should be assumed to
be no less than the executive power of the British Executive’.
The Court stated that this ‘premise is false’
and observed that the Commonwealth had not demonstrated:
why the executive power of the new federal entity created by
the Constitution should be assumed to have the same ambit, or be exercised in
the same way and same circumstances, as the power exercised by the Executive of
a unitary state having no written constitution ...
The Court acknowledged that ‘[t]he history of British
constitutional practice is important to a proper understanding of the executive
power of the Commonwealth’, and particularly to understanding ‘why ss 53–56 of
the Constitution make the provisions they do about the powers of the Houses of
the Parliament in respect of legislation, appropriation bills, tax bills and
recommendation of money votes’. Of
course, it should be noted that while these provisions are informed by British
constitutional practice, they also depart significantly from British traditions
by ensuring that the Senate has nearly the same legislative powers as the House
of Representatives, including the power to reject all bills, even ‘money
The Court further noted that British constitutional history
also ‘illuminates ss 81–83 and their provisions about the Consolidated Revenue
Fund, expenditure charged on the Consolidated Revenue Fund and appropriation’.
However, the Court emphasised that this history:
says nothing at all about any of the other provisions of Ch
IV of the Constitution, such as ss 84 and 85 (about transfer of officers
and property), ss 86–91 (about customs, excise and bounties), s 92 (about trade,
commerce and intercourse among the States), or ss 93–96 (about payments to
The Court concluded that ‘questions about the ambit of the
Executive’s power to spend must be decided in light of all of the
relevant provisions of the Constitution, not just those which derive from
British constitutional practice’.
Therefore, the assumption underpinning the Commonwealth’s argument (that the
Commonwealth has an executive power to spend and contract which is the same as
the power of the British executive) was ‘not right and should be rejected’
because it ‘denies the “basal consideration”
that the Constitution effects a distribution of powers and functions between
the Commonwealth and the States’.
C Potential unconstitutionality of
new programs added to the FF(SP) Regulations
A cursory examination of recent regulations purporting to
provide legislative authority for spending schemes reveals items which may not
be supported by a Commonwealth head of legislative power.
For example, the Financial Framework (Supplementary Powers) Amendment (2015
Measures No. 3) Regulation 2015, in part, purports to provide legislative
authority for several initiatives including ‘Mathematics by Inquiry’ and
‘Coding across the Curriculum’. Without reflecting on the policy merits of
these initiatives, there is a real question about whether they fall within the
legislative competence of the Commonwealth and, consequently, as to whether
they are constitutionally valid.
The objective of the ‘Mathematics by
Inquiry’ program (to which the Commonwealth Government
has committed $7.4 million) is:
To create and improve mathematics curriculum resources for
primary and secondary school students:
- to meet
Australia’s international obligations under the Convention on the Rights of the
Child and the International Covenant on Economic, Social and Cultural Rights;
- as activities that are
peculiarly adapted to the government of a nation and cannot otherwise be
carried on for the benefit of the nation.
The objective of the ‘Coding across the Curriculum’ program
(to which the Commonwealth Government has committed $3.5 million)
To encourage the introduction of computer coding and
programming across different year levels in Australian schools:
- to meet
Australia’s international obligations under the Convention on the Rights of the
Child and the International Covenant on Economic, Social and Cultural Rights;
- as an activity that is
peculiarly adapted to the government of a nation and cannot otherwise be
carried on for the benefit of the nation.
The explanatory statement accompanying the regulation confirms
that the objective of both items:
references the following powers of the Constitution:
the external affairs power (section 51(xxix))
Commonwealth executive power and the express incidental power
(sections 61 and 51(xxxix)).
However, the explanatory statement asserts that this ‘is not a
comprehensive statement of relevant constitutional considerations’.
While it is not immediately clear what other constitutional considerations
would be relevant, it seems that the Commonwealth is seeking to rely on the
external affairs power and the executive nationhood power (coupled with the
express incidental power) as relevant heads of legislative power to authorise
the making of these provisions (and therefore the spending of public money
under them). However, as discussed below, it is unlikely that the provisions in
question would be supported by these heads of power.
In relation to the external affairs power, it appears that the
Commonwealth is attempting to rely on Australia’s international obligations
under the Convention on the Rights of the Child and the International
Covenant on Economic, Social and Cultural Rights. While it is beyond the
scope of this paper to consider the terms of these treaties in detail, it is
clear that for a legislative provision to be supported by the external affairs
power in section 51(xxix) the relevant treaty ‘must embody precise obligations
rather than mere vague aspirations, and the legislation must be “appropriate
and adapted” to the implementation of those obligations’.
In other words, if a treaty obligation merely amounts to ‘a broad objective
with little precise content’, and thus permits ‘widely divergent policies by
parties’, the Commonwealth will not be able to rely on that provision to
support legislation. This
position was outlined by the High Court in Victoria v Commonwealth:
When a treaty is relied on under s 51(xxix) to support a law,
it is not sufficient that the law prescribes one of a variety of means that
might be thought appropriate and adapted to the achievement of an ideal. The
law must prescribe a regime that the treaty has itself defined with sufficient
specificity to direct the general course to be taken by the signatory states.
Therefore, it seems that it could not be cogently argued that
the broadly expressed terms of the Convention on the Rights of the Child
and the International Covenant on Economic, Social and Cultural Rights
could support specific Commonwealth legislative provisions in relation to
improving mathematics curriculum resources for primary and secondary school
encouraging the introduction of computer coding and programming across
different year levels in schools.
nationhood power and the express incidental power
The Commonwealth’s purported reliance on the executive
nationhood power (coupled with the express incidental power in section 51(xxxix))
is even more problematic given that this argument was rejected in Williams
(No. 1) in relation to the NSCP. The nationhood power provides the
Commonwealth executive with ‘a capacity to engage in enterprises and activities
peculiarly adapted to the government of a nation and which cannot otherwise be
carried on for the benefit of the nation’.
As Twomey notes, ‘the combination of the executive nationhood power with s
51(xxxix) of the Constitution potentially provided a legislative head of power
to support the chaplaincy program’. This
was not accepted by the Court in Williams (No. 1)—all justices (other
than Heydon J who held that the nationhood power was irrelevant to the case)
held that the chaplaincy program did not fall within the nationhood power.
Kiefel J, for example, stated that:
It may be accepted that the executive power extends to ...
matters which are peculiarly adapted to the government of a nation. [This power
does not] support the Funding Agreement and the payment of monies under it ...
[as] there is nothing about the provision of school chaplaincy services which
is peculiarly appropriate to a national government. They are the province of
the States, in their provision of support for school services, as evidenced in
this case by the policy directives and funding undertaken by the Queensland
Government. Funding for school chaplains is not within a discernible area of
Similarly, Gummow and Bell JJ noted that:
the States have the legal and practical capacity to provide
for a scheme such as the NSCP. The conduct of the public school system in
Queensland, where the Darling Heights State Primary School is situated, is the
responsibility of that State. Indeed, Queensland maintains its own programme
for school chaplains.
Crennan J held that:
contrary to the submissions of SUQ, the fact that an
initiative, enterprise or activity can be ‘conveniently formulated and
administered by the national government’, or that it ostensibly does not
interfere with State powers, is not sufficient to render it one of ‘truly
national endeavour’ or ‘pre-eminently the business and the concern of the
Commonwealth as the national government’.
Drawing on the reasoning outlined above, it is difficult to
see how the provisions which purport to provide legislative authority in
relation to the ‘Mathematics by Inquiry’ program or the ‘Coding across the
Curriculum’ program could be supported by the nationhood power.
The ‘Mathematics by Inquiry’ program relates to ‘the
development and implementation of innovative mathematics curriculum resources
for school students’. The
‘Coding across the Curriculum’ program relates to the development of resources
that ‘will help engage students in computer coding and problem solving across
all year levels in primary and secondary schools’.
There is nothing about the development of educational and curriculum resources
that is ‘peculiarly adapted to the government of a nation and which cannot
otherwise be carried out for the benefit of the nation’. It is clear that the
states already operate in this area. For example, the Western Australian
Department of Education has developed the ‘First Steps’ series of teacher
resource books in areas such as literacy, mathematics, fundamental movement
skills and VET. First
Steps Mathematics, for instance, is ‘organised around sets of mathematics
outcomes for Number, Measurement, Space, and Chance and Data’ and ‘will help
teachers to diagnose, plan, implement and judge the effectiveness of the
learning experiences they provide for students’.
As the statement by Crennan J quoted above demonstrates, the mere fact
that an activity can be ‘conveniently formulated and administered by the
national government’ does not mean that it will fall within the ambit of the
Given that it appears that neither the external affairs power
nor the executive nationhood power would support these provisions it must be
concluded that there is a real risk that the programs are unconstitutional and
therefore any payments made under them are invalid.
for the future
In Williams (No. 2) the High Court (again) rejected the
Commonwealth’s arguments about its own executive power. As a result, it would be
prudent (and in accordance with the rule of law) for the Commonwealth to now
accept these limitations and to change its practices accordingly. It is no
longer tenable to continue ‘business as usual’ or, as has been suggested, to
rely ‘on a combination of the unlikelihood of a constitutional challenge and
the need for standing’ in
order for particular initiatives to be challenged. At the very least, it would
be appropriate for the Commonwealth to comprehensively and systematically
review all of its spending initiatives to ensure that they are clearly
supported by a head of legislative power. As former Chief Justice Spigelman
has noted it is not appropriate for the Commonwealth to ‘proceed on the basis
that an arguable case is good enough’.
Moreover, given the limited nature of the decision in Williams (No. 2)
there also remains the broader question as to whether the process established
by section 32B to authorise spending initiatives (including the purported
authorisation of over 400 non-statutory funding schemes in the initial tranche
of regulations) is
constitutionally valid. These broader questions (and the benefits of
establishing spending schemes in primary legislation) are discussed in further
Before considering these broader issues it is appropriate to
consider the Commonwealth’s immediate response to Williams (No. 2). In
response to the decision invaliding its chaplaincy program, the Commonwealth
announced that it would invite states and territories to participate in a new
program. The Commonwealth would provide funding to states and territories for
the new program, so long as they agreed to certain conditions.
payments not recovered
Importantly, the government also announced that all the
payments that had been made (unconstitutionally) under the invalidated program
would not be recovered by the Commonwealth:
It follows from the court’s judgement that Commonwealth
payments to persons under the school chaplaincy program were invalidly made.
The effect of the decision is that these program payments, totalling over $150
million, are now debts owing to the Commonwealth under the Financial Management
and Accountability Act. However, under that act, the Minister for Finance has
the power to approve a waiver of debt of an amount owing to the Commonwealth
which totally extinguishes that debt. I am advised by my friend Senator Cormann
that he has today agreed to waive the program payments made to date. That
decision will provide certainty to funding recipients that these debts will not
be recovered in consequence of that decision.
The Australian National Audit Office confirmed that the
invalid payments made under the chaplaincy program became debts owing to the
Commonwealth following the decision in Williams (No. 2) and that on the
day that the decision was handed down (19 June 2014) the Minister for Finance
waived those debts (totalling $156.1 million) under paragraph 34(1)(a) of the
FMA Act. This
also meant that the chaplaincy program could continue for the remainder of 2014
(even after the decision invalidating the program) because service providers
had already received payments from the Commonwealth for the entire year.
avoiding the constitutional limits on its power
As Benjamin Saunders notes,
[i]t seems highly problematic for the Commonwealth to be able
to avoid constitutional limits on its power merely by waiving debts owed to it
after invalid payments have already been made. This is clearly a strategy that
could be employed in the future.
Saunders suggests that there is a balance to be struck in
relation to payments that are invalidly made. On the one hand, if the
Commonwealth were under a duty to recover the unconstitutional payments this
would potentially be ‘highly unfair to those organisations who have relied on
the payments’, and if such organisations were sued to recover the payments they
may have a claim in restitution against the Commonwealth for services provided
in consideration for payment. On the other hand, there is a legitimate question
as to whether it is appropriate for private law principles of restitution to
effectively take precedence over the Constitution.
The case law in relation to claims in restitution against a
government party arising out of a void contract ‘is sparse and the principles
not very certain’. The
House of Lords has pronounced that where a government contract is void for lack
of power the ‘consequences of any ultra vires transaction may depend on
the facts of each case’. Much
of the limited (potentially) relevant case law relates to local authorities in
England (which possess only those powers conferred upon them by statute and
therefore their power to contract extends only to agreements which are
incidental to their authorised functions).
In this context, where services have been provided to a public authority under
an ultra vires ‘contract’ there has generally been some difficulty in
allowing a claim in restitution against the government party. This is because to
allow a claim is often contrary to the same policy which causes the law to hold
the contract itself void: it requires the public entity to pay for something
which it is not permitted to purchase at all.
Thus, the English case law appears to point towards non-recovery by the
non-governmental ‘contracting’ party in cases where the government entity acts
beyond power; however, the law in this area is uncertain.
In any event, as noted above it is clear that, when
considering whether it is appropriate for the Commonwealth not to recover
payments that are invalidly made, a choice has to be made between competing
interests. On the one hand, the non-government ‘contracting’ party has provided
services to the government such that, if the payments for services are
recovered, the Commonwealth will have been able to obtain the benefit of the
services for free and the non-government entity would be financially
disadvantaged. On the other hand, if the payments are not recovered the
Commonwealth has been able to spend money that it is not entitled to spend
under the Constitution.
In this context, the importance of adhering to the provisions
of the Constitution must be taken as being more significant than considerations
in relation to local government bodies acting outside their statutory remit. As
Guy Aitken and Robert Orr note, the Constitution ‘is the fundamental law of
Australia binding everybody and everything, including the Commonwealth
Parliament and the parliaments of the States’.
Furthermore, the High Court has noted that the Constitution’s status as the
fundamental law of Australia rests on the ‘sovereignty of the Australian
people’—that is, on the Australian people’s decision during the 1890s to
approve the Constitution, and on their continuing commitment to remain bound by
its terms. This popular sovereignty is reinforced by section 128, which
provides that the Constitution can only be changed if the people of Australia
approve of the change.
It is therefore suggested that where a payment is held to be unconstitutional
it is not appropriate for the Commonwealth to avoid the constitutional limits
on its power by choosing not to recover the invalid payments. While this is
undoubtedly a regrettable outcome for the non-government contracting parties,
it is the only outcome which respects the Constitution’s standing as
Australia’s fundamental law. It would also ensure that the Commonwealth cannot
rely on an ability to waive debts as a ‘back up plan’ to avoid the consequences
arising from the making of constitutionally invalid payments. As a result, the
Commonwealth may choose to more closely examine whether its spending schemes
are supported by a firm constitutional foundation—this can only be positive
from a rule of law perspective because it would ensure that the Commonwealth does
not ignore the constitutional limits on its power.
limited nature of the decision
As noted above, the fact that the High Court did not need to
consider the plaintiff’s broader arguments in Williams (No. 2) is
important as it underscores the remaining uncertainty surrounding the
constitutionality of executive spending schemes. The joint judgement of the
High Court noted that it was not necessary to consider certain arguments
advanced by the plaintiff:
if, as Mr Williams’ arguments based on Victorian
Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan suggested, s 32B does
present some wider questions of construction and validity, they are not
questions which are reached in this case and they should not be considered. Rather, it is enough to
consider whether, in their operation with respect to the agreement about and
payments for provision of chaplaincy services, s 32B and the other
impugned provisions are supported by a head of legislative power.
The Commonwealth Attorney-General highlighted the limited
nature of the decision in Williams (No. 2) on the day the decision
was handed down. In this regard he noted that the Court:
did not consider the broader question of whether division 3B of
the Financial Management and Accountability Act was a valid law. It merely
decided that, insofar as that act purported to validate the school chaplaincy
program, it was ineffective because the school chaplaincy program was not
supported by any constitutional head of power.
A Remaining constitutional uncertainty in relation to section
32B and the FFLA Act
In a ‘Litigation Note’ published following Williams (No. 2)
the Australian Government Solicitor (AGS) seems (at least at first glance) to
suggest that Mr Williams’ broad argument (i.e. that the legislative
response to Williams (No. 1) is wholly invalid) was outright rejected by
the High Court:
Section 32B is not invalid
The plaintiff contended that s 32B of the FMA Act is
wholly invalid. However, the Court held that s 32B of the FMA Act is
supported by every head of legislative power that supports the making of the
payments that s 32B deals with.
While the AGS goes on to note that it was not necessary for
the Court to consider the plaintiff’s wider questions of construction and
validity, given the importance of section 32B to the validity of a very wide
range of government initiatives it may have been useful to specifically
highlight the plaintiff’s ‘wider questions of construction and validity’ which
could, in the future, be important to determining the validity of section 32B
in its entirety. This is because Williams (No. 2) leaves many broader
Of course, one obvious question is what other Commonwealth
spending programs are constitutionally invalid and therefore at risk? Twomey
specifically notes the remaining constitutional uncertainty in relation to section
32B and also why it is unsatisfactory for the Commonwealth to continue to rely
on this process (and the associated regulations) to authorise programs that do
not fall within a Commonwealth head of power:
the status of s 32B was left in even greater
uncertainty. At the very least, it must be read down so that it does not
support what would appear to be a significant number of programs described in
the regulations which do not fall within a Commonwealth head of power. This
leads to the unfortunate outcome that while the statute book says that certain
programs are authorised, they are in fact not authorised and expenditure upon
them is invalid. Such a gap between what is stated on the face of the law and
its constitutional effectiveness has the tendency to bring the law into
Moreover, there ‘also remains the bigger question of whether
s 32B is valid at all’. In
this regard, there is uncertainty in relation to the extent that the parliament
can delegate to the executive the power to make the legislation that authorises
further executive action. This uncertainty
remains because the Court did not need to reach the question of whether section
32B involved a delegation of legislative power that was so excessive or vague
that it transgressed the Constitution,
nor did the Court need to consider whether the provision was invalid because of
the ‘necessary role of the Parliament in supervising expenditure of public
of establishing spending schemes in primary legislation
Noting the above, it may be prudent for government advisers to
clearly highlight the fact that, in addition to the need for programs to be
supported by a head of legislative power, there is some constitutional
uncertainty in relation to the process for authorising spending initiatives by
regulation. This is particularly important as judicious government officials
may wish to take such matters into account when structuring new government
spending programs. After establishing that a proposed initiative is within the
legislative competence of the Commonwealth Parliament, officials may wish to
establish the legislative authority for their programs through statute. Such an
approach would remove any constitutional uncertainty (of the type discussed
above) in relation to the validity of the program, increase accountability in
relation to the expenditure of public money, and ensure that spending
initiatives are well-considered from a constitutional, policy and financial
Importantly, from a democratic and accountability perspective,
establishing legislative authority for spending initiatives through statute
would answer the High Court’s concerns expressed in Williams (No. 1)
which emphasised the importance of the role of the parliament in supervising
the expenditure of public money. For example, Gummow and Bell JJ expressed
concern in relation to the NSCP because there was only a limited engagement of
the institutions of representative government.
Their Honours noted that parliament was engaged ‘only in the appropriation of
revenue, where the role of the Senate is limited. It [was] not engaged in the
formulation, amendment or termination of any programme for the spending of
In this regard, it is important to note that direct spending
schemes through executive contracts between the Commonwealth and private
parties have been used over many years to implement a broad range of executive
policy objectives without the support of legislative authority or any
parliamentary oversight. Significantly, these executive contracts (which
are often used in a regulatory manner to influence and control the behaviour of
funding recipients) now
account for between five and 10 per cent of all Commonwealth expenditure.
As a result of the legislative response to Williams (No. 1),
this position, in practical terms, is virtually unchanged—there remains no
effective parliamentary engagement in the formulation, amendment or termination
of executive spending schemes. Despite constitutional uncertainty, the
executive continues to rely on the legislative authority purportedly provided
by existing items in the FF(SP) Regulations
(and the process in section 32B to add new items to the regulations) to implement
its policy objectives through executive contracts. This process for adding new
items involves no formal parliamentary engagement beyond scrutiny by the Senate
Regulations and Ordinances Committee and the potential for disallowance. Even
where new schemes are added to the regulations, there remains no formal
consideration by parliament of the underlying policy rationale for these
schemes. Very little (if any) detail in relation to how the schemes will
actually be conducted or administered is provided to the parliament and, as a
result, the parliament is unable to properly consider the appropriateness of a
particular scheme or to propose amendments to a scheme.
The Senate Standing Committee for the Scrutiny of Bills has
recently expressed concern in relation to the process established in section
32B to authorise spending schemes. The Public Governance, Performance and
Accountability (Consequential and Transitional Provisions) Bill 2014 moved section
32B from the FMA Act to the new Financial Framework (Supplementary Powers)
Act 1997 (Cth). In commenting on this bill the committee noted the decision
in Williams (No. 2) and:
restate[d] its preference that important matters, such as
establishing legislative authority for arrangements and grants, should be
included in primary legislation to allow full Parliamentary involvement in, and
consideration of, such proposals.
of constitutional issues (and federalism)
As well as answering the High Court’s concerns in relation to
parliamentary scrutiny of public money, establishing schemes in primary
legislation has the incidental benefit of ensuring that there is structured
consideration of potential constitutional issues. This would ensure, among
other things, that the ‘federal character of the Constitution’
is at least contemplated because there would be formal consideration as to
whether the Commonwealth has the power to legislate in relation to a particular
At the Commonwealth level government bills are drafted by the
Office of Parliamentary Counsel (OPC). Importantly, the constitutional validity
of each bill is considered by OPC as part of the drafting process. The OPC
Drafting Manual states that:
Constitutional law is extremely important to drafters in OPC.
There are two main aspects to this. First, every provision of every Act must be
supported by a constitutional power. Secondly, there are a number of
constitutional prohibitions that must not be contravened.
OPC Drafting Direction 3.1 covers a range of constitutional
matters. It notes that prior to submitting bills to the legislation approval
process, a Senior Executive Service bill drafter must give an assurance that he
or she is satisfied that the bill is constitutionally valid (and if he or she
has any concerns or reservations about constitutional validity these must be
set out). To assist in this regard, OPC has developed a constitutional
checklist for use by bill drafters. The checklist is used as a tool for
ensuring that the consideration bill drafters give to the constitutional
validity of the legislation is systematic and thorough.
Thus, if a spending initiative is established through primary legislation the
chance of such a program being constitutionally invalid is diminished
(assuming, of course, that any constitutional issues identified during drafting
have been appropriately addressed).
As noted above, it appears that some schemes that are
purportedly authorised by the FF(SP) Regulations may not be supported by a head
of legislative power. It is therefore unclear whether the same level of
constitutional scrutiny is applied in relation to new programs added to the
In any event, it is clear that bills are subject to a higher
level of parliamentary and public scrutiny than delegated legislation and
therefore constitutional issues are more likely to be identified by interested
stakeholders where a program is established by primary legislation.
of policy and financial issues
Even if there were no constitutional uncertainty in relation
to a particular program, ensuring full parliamentary involvement in the
formulation, amendment and termination of new spending initiatives through the
process of enacting a statute would enable these programs to be fully
considered from a financial and policy perspective. Bills seeking to implement
spending initiatives would be able to be scrutinised by parliamentarians
representing a broad range of electors and interests, and may be considered by
Senate committees thereby enabling advocacy groups, experts and the broader
public to provide input into the structure of proposed spending schemes. As
Cheryl Saunders notes, full parliamentary consideration of spending initiatives
is not only positive from a democratic and accountability perspective, but is
also positive for the executive because:
At a time of financial constraint there is much to be gained
from procedures that ensure that spending programs are not undertaken hastily,
that there is a broad-based commitment to them, that they are well designed and
implemented and that money is well spent.
The decision in Williams (No. 2), while limited in some
respects, was important in a number of ways. Of course, it represents an
important development in our understanding of Commonwealth executive power, at
least to the extent that it reaffirmed principles espoused in previous
decisions. The decision is also of interest because it detailed the High
Court’s apparent frustration at the Commonwealth’s continuing refusal to accept
limitations on its executive power and reiterated that the executive power of
the Commonwealth cannot be equated with the executive power in Britain.
At a practical level, all payments made under the chaplaincy
program became debts owing to the Commonwealth following Williams (No. 2).
The Commonwealth’s decision to waive these debts raises important questions
because by doing so the Commonwealth has, in effect, invalidly spent over $150
million. Noting the Constitution’s status as Australia’s fundamental law, it is
suggested that where a payment is held to be unconstitutional it is not
appropriate for the Commonwealth to, in effect, avoid the constitutional limits
on its power by choosing not to recover the invalid payments.
Williams (No. 2) (again) made it clear that
Commonwealth spending initiatives with no connection to a head of legislative
power are (in most circumstances) invalid. It is therefore no longer tenable to
continue ‘business as usual’. In this regard, it would be appropriate for the
Commonwealth to comprehensively and systematically review all of its spending
initiatives to ensure that they are clearly supported by a head of
legislative power. As former Chief Justice Spigelman has noted:
It is not permissible to approach the Constitution on the
basis that whatever is in the institutional interests of the Commonwealth must
be the law. It is not consistent with the rule of law that the Executive and
the Parliament proceed on the basis that an arguable case is good enough, as
distinct from a genuine, predominant opinion as to what the law of the
Constitution actually is ... The Constitution is a document which is to be
obeyed. It is not an envelope to be pushed.
In addition to the clear need for spending initiatives to be
supported by a Commonwealth head of legislative power, the limited nature of
the decision in Williams (No. 2) means that there is constitutional
uncertainty in relation to the extent that the parliament can delegate to the
executive the power to make legislation that authorises executive spending
schemes. In this regard it is particularly important to note the significance
that the High Court has attributed to the role of the parliament in controlling
and supervising the expenditure of public money.
It has been suggested that the requirement
in Williams (No. 1) for increased parliamentary oversight of the
expenditure of public money ‘may have come at a high practical cost in terms of
governmental efficiency’. Of
course, as the High Court has explained, it is difficult to see how perceived
‘inconvenience’ could ‘bear upon the resolution of an important question of
Moreover, it has been suggested that ‘[d]emocratic considerations
need to be counterbalanced by the additional need for governments not to be
hamstrung and prevented from acting decisively and promptly in the face of
pressing popular demands’. This
is also an interesting argument given that in the Australian democratic
system it is the parliament (particularly the Senate),
not the government, that is most effectively able to represent a broad range of
‘pressing popular demands’. If a government is unable to ‘act decisively’
because it cannot secure passage of a bill to support a spending initiative,
such an outcome does not indicate that the government is being ‘hamstrung’,
rather it is likely to indicate that what is proposed by the government lacks
broader popular support (noting that governments regularly win office with only
around 40 per cent of the vote). As
has been demonstrated, increased parliamentary oversight of the expenditure of
public money is positive not only because it enhances democracy and
accountability—it also ensures that spending initiatives are well-considered
from a constitutional, policy and financial perspective.
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