POST-WILLIAMS EXPENDITURE–WHEN CAN THE
COMMONWEALTH AND STATES SPEND PUBLIC MONEY
WITHOUT PARLIAMENTARY AUTHORISATION?
ANNE TWOMEY*
I INTRODUCTION
While the Williams case1 had its origins in issues about freedom of (and from)
religion, it ended up being a case about executive power and the capacity of the
Commonwealth to spend public money and enter into contracts without parliamentary
authorisation, other than an appropriation. The case is 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. At the moment one can do little
more than to group statements on particular points from the six judgments and attempt
to discern common views that may lead in the future to a clearer understanding of the
extent of executive power and the constraints imposed upon it.
The primary question addressed by the High Court (and also largely initiated by
it)2 was whether legislation had to be enacted to support the expenditure of public
money, or whether executive authority to spend the money was sufficient, either on the
broad view that the Commonwealth executive has the capacity of a legal person to
spend on any matter it chooses or on the narrow view that the Commonwealth
executive can spend public money on subjects that fall within the scope of its
legislative power, even when no such legislation has been enacted.
In the Williams case, a majority of the High Court rejected both the broad3 and
narrow views.4 The majority concluded that unless the expenditure fell into particular
categories, parliamentary authorisation was needed. In the absence of such
parliamentary authority, the chaplaincy funding program was invalid.
II COMMONWEALTH AUTHORITY TO SPEND PUBLIC MONEY
According to the High Court in Williams, the Commonwealth has the authority to
expend money that has been legally appropriated when the expenditure is:
1.
*
1
2
3
4
authorised by the Constitution;
Professor of Constitutional Law, University of Sydney.
Williams v Commonwealth (‘Williams’) (2012) 248 CLR 156.
The case commenced with all parties accepting a ‘common assumption’ that the
Commonwealth could enter into contracts and spend public money without statutory
authority beyond an appropriation as long as it had the legislative power to give that
authority. However, signals from the bench led the plaintiff and the intervening States to
reject this common assumption during the course of proceedings. See: Ibid, 161-2 (oral
argument) and [342]-[344] (Heydon J).
Ibid, [4] (French CJ); [159] (Gummow and Bell JJ); [182] and [253] (Hayne J); [534]
(Crennan J); and [595] (Kiefel J). Heydon J found it unnecessary to decide: at [407].
Ibid, [4] (French CJ); [138] (Gummow and Bell JJ); and [544] (Crennan J). Hayne J at [286]
and Kiefel J at [569] found it unnecessary to decide the point because the expenditure could
not have been supported by valid legislation in any case. Heydon J, [340]–[341] and [404]
was the only Justice who supported the Commonwealth’s narrow proposition.
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2.
3.
4.
5.
2014
made in the execution or maintenance of a statute or expressly authorised
by a statute;
supported by a common law prerogative power;
made in the ordinary administration of the functions of government; or
(possibly) supported by the nationhood power.
If expenditure of public money does not fall into any of these categories (and the
spending on chaplains did not) then such expenditure will be invalid.
A Expenditure authorised by the Constitution
Section 61 of the Constitution provides that the Commonwealth’s executive
power extends to ‘the execution and maintenance of this Constitution’. This is regarded
as sufficient statutory authorisation for entering into contracts or expending
appropriated money in the execution and maintenance of provisions of the
Constitution. No further legislation is needed.5
The Commonwealth Constitution directly authorises expenditure in some cases.
For example, s 82 of the Constitution states that the Consolidated Revenue Fund shall
be applied to the payment of the costs, charges and expenses incident to its collection,
management and receipt. Sections 48 and 66 provide for the payment of Members of
Parliament and Ministers until Parliament otherwise provides, which it has since done.
The Constitution also provides for the payment of money to the States. Section
87, for example, states that until the Parliament otherwise provides, the
Commonwealth may expend no more than one quarter of the net revenue from duties
of customs and excise, with the balance being paid to the States or applied towards the
payment of interest on debts of the States taken over by the Commonwealth.
Unsurprisingly, the Parliament did ‘otherwise provide’ as soon as it was permitted to
do so and kept the revenue from customs and excise duties for itself. Section 94 also
provides for the payment of the Commonwealth’s surplus revenue to the States.6 The
Commonwealth got out of this one by allocating all excess revenue each year into
funds7 so that there has not been a surplus since 1908 and it has therefore not been
distributed to the States.
The most important provision today is s 96 of the Constitution, which permits the
Commonwealth Parliament to grant financial assistance to any State on such terms and
conditions as the Parliament thinks fit. As this power is conferred upon the ‘Parliament’,
it is arguable that it falls within the next category, being expenditure under legislation.
However, there are two critical differences in relation to s 96. First, the ‘terms and
conditions’ that can be imposed upon s 96 grants include terms and conditions that may
determine how the money is spent and upon what programs, policies or outcomes. While
s 81 of the Commonwealth Constitution confines Commonwealth appropriations, and
thus expenditure, to ‘the purposes of the Commonwealth’, s 96 permits conditions that
can require the money to be spent on subjects well outside Commonwealth legislative
power. Hence the boundaries of Commonwealth expenditure are significantly widened
where grants are made under s 96.
5
6
7
Ibid, [31] (French CJ); [193] (Hayne J); and [507] (Crennan J).
Despite some ambiguity in the wording, there is a legal obligation to make such payments:
See: John Quick and Robert Randolph Garran, The Annotated Constitution of the Australian
Commonwealth (Melville & Mullen, 1901) 865; Russell Lloyd Mathews and William Robert
Charles Jay, Federal Finance – Intergovernmental Financial Relations in Australia Since
Federation (Nelson, 1972) 52; and Victoria v Commonwealth and Hayden (‘AAP’) (1975)
134 CLR 338, 358 (Barwick CJ).
New South Wales v The Commonwealth (1908) 7 CLR 179.
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11
Secondly, the High Court has held that the making of grants to the States must be
consensual. While Commonwealth legislation may generally be coercive in aspect, the
actual making of grants under s 96 may not, as the States are entitled to refuse them.
Barwick CJ noted in the AAP case, that:
[A] grant under s 96 with its attached conditions cannot be forced upon a State: the
State must accept it with its conditions. Thus, although in point of economic fact, a
State on occasions may have little option, these intrusions by the Commonwealth into
8
areas of State power which action under s 96 enables, wear consensual aspect.
In Pape v Commissioner of Taxation, Heydon J criticised the broad view of the
appropriation and spending powers on the ground that it would involve by-passing the
States and the need for their consent under s 96 of the Constitution.9 Referring to
Barwick CJ’s comments above, Heydon J noted that s 96 grants depend on
consultation and cooperation with the States. In contrast, a broad power to spend, with
an associated incidental legislative power, ‘would be exercisable whether or not the
States agreed’.10 Thus under s 96, the Commonwealth could only fund a chaplaincy
program for State schools with the relevant State’s consent. However, such State
consent would not be required in relation to grants made under the Commonwealth’s
executive power directly to a body such as Scripture Union Queensland, or to other
bodies involved in the implementation of State educational policy.
In Williams, Gummow, Crennan and Bell JJ also expressed their concern about
the by-passing of s 96 and noted the relevance of ‘considerations of federalism’ to the
validity of such actions.11 They too quoted from the earlier judgment of Barwick CJ
that pointed to the consensual aspect of s 96 grants and the absence of the need for
State consent to the direct expenditure on executive programs such as the chaplaincy
program.12 Justice Hayne went further, arguing that while s 96 grants cannot be
coercive, the conditions placed on expenditure under the Commonwealth’s general
executive power could potentially be coercive by demanding obedience by the
recipients. He contended that such executive power ought therefore be constrained by
the application of federal considerations.13
Justices Hayne and Kiefel both pointed out that s 96 would be rendered useless if
the Commonwealth executive had power to spend money on whatever subjects it
wished and then to legislate to enforce conditions on its expenditure.14 Section 96
would have no work to do at all, as everything could be done under the executive
power and the incidental legislative power in s 51(xxxix). Justices Crennan and Kiefel
added that the very presence of s 96 in the Constitution was evidence that the
Commonwealth’s executive power did not extend so far and that there are large areas
beyond the scope of the Commonwealth’s executive power.15
Hence, while s 96 provides a means for the Commonwealth to fund projects in the
States that would not otherwise fall within its legislative powers, such as a chaplaincy
scheme, it has also been used by the High Court in Williams as a brake upon
Commonwealth executive power, preventing its unfettered expansion into areas of
State jurisdiction through the use of Commonwealth executive power and the
8
9
10
11
12
13
14
15
AAP (1975) 134 CLR 338, 357 (Barwick CJ).
Pape v Commissioner of Taxation (‘Pape’) (2009) 238 CLR 1, [569] (Heydon J).
Ibid, [597] (Heydon J).
Williams v Commonwealth (2012) 248 CLR 156, [143] (Gummow and Bell JJ); [503]
(Crennan J).
Ibid, [148] (Gummow and Bell JJ); [501] (Crennan J).
Ibid, [248] (Hayne J).
Ibid, [243] and [247] (Hayne J); and [593] (Kiefel J).
Ibid, [501] (Crennan J) and [592] (Kiefel J).
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incidental legislative power. The consequence is that if the Commonwealth became
serious about complying with the High Court’s interpretation of the Constitution in the
Williams case, it would need to consider negotiating s 96 funding agreements with the
States.
B Expenditure authorised by statute or in the execution and maintenance of a
Commonwealth law
If a validly enacted statute expressly authorises the expenditure of appropriated
money by the Commonwealth, then that is all that is needed.16 This process involves
the potential for proper parliamentary scrutiny and authorisation of the Executive’s
action. It is therefore consistent with the system of representative and responsible
government. If the Commonwealth statute is validly enacted, this means that it comes
within the Commonwealth’s heads of legislative power and is therefore consistent with
the federal distribution of powers in the Constitution. It is accordingly compatible with
any ‘federal considerations’ that arise from the Constitution.
For the most part, any constitutional issues concerning the validity of expenditure
authorised by a Commonwealth statute turn upon whether the law is supported by a
valid head of power or is invalid because it breaches a constitutional prohibition. In the
Pape case,17 for example, the issue was whether the payment of $900 to certain
taxpayers, which was authorised by a Commonwealth statute, was supported by a head
of Commonwealth legislative power. The majority found that it was and that it was
therefore valid. In contrast, doubts have since been expressed about the validity of
legislation supporting the direct funding of local government for the construction and
maintenance of roads.18
After the Williams case was handed down by the High Court, instead of
negotiating s 96 grants with the States, the Commonwealth Parliament enacted (with
virtually no parliamentary scrutiny19) the Financial Framework Legislation
Amendment Act (No 3) 2012 (Cth). It inserted s 32B in the Financial Management and
Accountability Act 1997 (Cth),20 which not only validated executive spending on all
programs, grants and arrangements that the public service could think of, including the
chaplaincy scheme, but also gave the Executive carte-blanche to enter into and engage
in spending upon any future programs or grants, without any parliamentary scrutiny at
all, as long as the program or grant could be shoe-horned into one of the existing
descriptions set out in the regulations. The regulations identified over 400 executive
programs and grants by categories, many of which were extremely broad, such as
expenditure for ‘Foreign Affairs and Trade Operations’, ‘Payments to International
Organisations’, ‘Public Information Services’, ‘Regulatory Policy’, ‘Diversity and
Social Cohesion’, ‘Domestic Policy’ and ‘Regional Development’. The former Chief
16
17
18
19
20
Ibid, [4] and [22] (French CJ); [193] (Hayne J); [558] (Kiefel J).
Pape (2009) 238 CLR 1.
See further: Anne Twomey, ‘Always the Bridesmaid – Constitutional Recognition of Local
Government’ (2012) 38(2) Monash University Law Review 142, 155-61; George Williams,
‘Eleventh hour for action to change federal funding to local councils’ Sydney Morning
Herald, 29 January 2013.
The Bill was subjected to 3 hours debate in the House of Representatives and 2 hours debate
in the Senate, with almost none of it directed at the merits of the more than 400 programs
authorized. The Bill was passed through both Houses in just over 24 hours.
Note that this Act is to be replaced by 1 July 2014 at the latest, by the Public Governance,
Performance and Accountability Act 2013 (Cth). The latter Act does not appear to contain an
equivalent to s 32B of the Financial Management and Accountability Act 1997. It appears
that the decision of how to address this issue was left to the incoming Abbott Government,
which will have to make some kind of decision before the new Act comes into force.
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Justice of New South Wales, James Spigelman, described some of these programs as
being ‘identified in such a general language that they could not withstand
constitutional scrutiny’.21
Further, if the Commonwealth could not justify a new expenditure program by
reference to the categories in the existing regulations, it could amend the regulations by
the exercise of executive power, although this at least gives rise to the potential for
disallowance of the regulation by either House. An example is the Financial
Management and Accountability Amendment Regulation 2013 (No 3), which
authorised expenditure by the Executive on a national civics education campaign and a
communications campaign by those for and against the then proposed local
government referendum.22
The validity of s 32B is now being challenged by Mr Williams in his second High
Court tilt, on the basis that the section and the Division in which it is contained are not
supported by a head of legislative power.23 He also contends that there is implied in the
Constitution ‘a limit upon the Commonwealth Executive’s power to implement
policies and spend money without engagement of the Senate beyond the appropriation
process’.24
At the very least, the authorisation of expenditure by s 32B on those programs
that do not fall under a Commonwealth head of power (including the nationhood
power) must be invalid.25 Hence Mr Williams is also arguing, in the alternative, that if
s 32B can be read down as authorising only those programs which fall within the ambit
of Commonwealth legislative power, the chaplaincy program is not valid, as it is not
supported by any head of Commonwealth Parliament.26 The outcome of Williams No 2
will most likely turn on whether s 32B is completely invalid or whether it is supported
by s 51(xxxix) of the Constitution in conjunction with other heads of power and can be
read down so that it only applies to expenditure on those programs and grants that fall
within Commonwealth legislative power. If so, the next question will be whether the
corporations power in s 51(xx) or the power to give ‘benefits to students’ in s
51(xxiiiA) are sufficient to support the ongoing chaplaincy program.
Outside of issues concerning the validity of statutes that directly authorise
spending or otherwise confer executive power, there is a further issue about the
executive power to execute and maintain existing valid laws. Section 61 of the
Constitution confers on the Commonwealth executive power that ‘extends to the
execution and maintenance… of the laws of the Commonwealth’. French CJ and
Hayne J in Williams saw this as an additional source of power for the valid expenditure
of Commonwealth money.27 French CJ regarded this power as supporting ‘all things
which are necessary or reasonably incidental to the execution and maintenance of a
21
22
23
24
25
26
27
The Hon James Spigelman AC, ‘Constitutional Recognition of Local Government’, Address
to the Local Government Association of Queensland, 24 October 2012, 10. See also the WA
Solicitor-General who observed that it is ‘doubtful indeed that all fall within a
Commonwealth legislative head of power’: Grant Donaldson, ‘Aspects of State Executive
Powers’ (2013) 36(2) UWALR 145, 150.
See program 421.002A in Financial Management and Accountability Regulations 1997
(Cth). The proposed referendum was later abandoned.
Williams v Commonwealth (No 2), Statement of Claim, Filed 8 August 2013, para 57.
Ibid, para 58.
Note the view of Owen Dixon that it may be competent for Parliament to pass a General
Contracts Act unless it is desired ‘to confer a greater contractual power upon the executive
than subjects of legislative power at present permit Parliament to give’: Commonwealth,
Royal Commission on the Constitution – Minutes of Evidence, (Cth Gov Printer, 1929) Vol
3, 13 December 1927, 781.
Williams v Commonwealth (No 2), Statement of Claim, Filed 8 August 2013, para 92.
Williams v Commonwealth (2012) 248 CLR 156, [4] and [22] (French CJ); [193] (Hayne J).
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valid law of the Commonwealth once that law has taken effect’.28 It is not absolutely
clear how far this goes, but it seems that if the Parliament has enacted a law that
authorises some kind of program or outcome, then even if the statute does not
expressly authorise the relevant expenditure, it may be enough that the expenditure is
made in executing or maintaining the enacted law, as long as there is a valid
appropriation.
C Expenditure supported by a common law prerogative
A number of Justices in Williams noted that prerogative powers, being those
common law executive powers inherited by the Crown from medieval times that have
not been removed or replaced by statute, can also be used to support the executive
entering into contracts or spending money.29 The prerogative powers are now regarded
as falling within s 61 of the Constitution.30 They include, amongst other things, the
power to enter into treaties and declare war, the power to pardon offenders and to grant
honours, the power to protect the nation and preserve public safety, the power to
impose royalties and the right to treasure trove.31 As prerogative powers have been
inherited from the past, new prerogative powers cannot be created,32 although existing
prerogatives may be adapted to meet new factual circumstances.33 The prerogative is
therefore limited to those powers that can be identified by reference to historical use
and which have not been subsequently abrogated by legislation.
The difficulty in Australia has always been working out how the Crown’s
prerogative powers are distributed between the Commonwealth and the States, as each
have a ‘Crown’ to the extent that what is meant is an executive government. In
Williams, the High Court continued to support H V Evatt’s analysis of the distribution
of prerogative powers, which largely followed the distribution of legislative powers,
but in the case of some powers, privileges and immunities, recognised them as being
held simultaneously by both Commonwealth and State executives.34 Thus prerogatives
concerning external affairs, such as the power to enter into treaties or declare war, are
held by the Commonwealth and prerogatives with respect to land and property belong
to the States (except in relation to Commonwealth places).35
28
29
30
31
32
33
34
35
Ibid, [34] (French CJ).
Ibid, [4] and [22] (French CJ); [484] (Crennan J); [582] (Kiefel J).
Ibid, [24] (French CJ); [123] (Gummow and Bell JJ); Cadia Holdings Pty Ltd v New South
Wales (2010) 242 CLR 195, [86] (Gummow, Hayne, Heydon and Crennan JJ).
For a discussion of the different prerogative powers applicable in Australia, see: Harold
Edward Renfree, The Executive Power of the Commonwealth of Australia (Legal Books Pty
Ltd, 1984) 486-592.
BBC v Johns [1965] Ch 32, 79 (Diplock LJ).
See, for example, R v Secretary of State for the Home Department, ex parte Northumbria
Police Authority [1989] 1 QB 26; George Winterton, Parliament, The Executive and the
Governor-General (Melbourne University Press, 1983) 120; and Philip Joseph,
Constitutional and Administrative Law in New Zealand (Thomson Reuters, 3rd ed, 2007)
621-2.
Williams v Commonwealth (2012) 248 CLR 156, ([123] (Gummow and Bell JJ); [202]
(Hayne); [355] (Heydon). For further discussion on the distribution of prerogative powers,
see: Anne Twomey, ‘Pushing the Boundaries of Executive Power: Pape, the Prerogative and
Nationhood Powers’ (2010) 34 MULR 313, 321-4.
Federal Commissioner of Taxation v Official Liquidator of E O Farley Ltd (1940) 63 CLR
278, 320-1; Herbert Vere Evatt, The Royal Prerogative (Law Book Co., 1987) 220-38;
Patrick Harding Lane, Commentary on the Australian Constitution (Law Book Co., 2nd ed,
1997) 437.
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Critical to the Williams case was the distinction drawn between the prerogative
powers of the Crown and its legal capacities.36 The broad view of the prerogative,
known as the Diceyan view, is that it includes all the powers of the Crown inherited
from medieval times, including those powers or capacities that it shares in common
with other legal persons, such as the power to spend, enter into contracts, own property
and employ people.37 The narrower view, being Blackstone’s view, is that the
prerogative only includes those powers that are uniquely attached to the Crown as
sovereign.38 If the High Court had taken the broader view and still found that
prerogative powers could be exercised by the Commonwealth without the need for
statutory authorisation, then the Commonwealth would have had power to contract and
spend on programs under its executive power without the need for statutory
authorisation. However, the majority appears to have taken the narrower view of the
prerogative, so that it does not authorise the general exercise39 of the capacities of the
Crown as a legal person.40
Given that new prerogatives cannot be established and assuming that the
prerogative does not authorise the general exercise of the capacities of the Crown as a
legal person, there would appear to be few opportunities to exploit this category in
terms of funding government programs without legislative support. Most prerogatives
(eg entering into treaties, the prerogative of mercy and the like) do not entail the
expenditure of money, especially to outside bodies under contract.
Nonetheless, the courts can sometimes become creative in identifying or adapting
prerogatives. For example, in Johnson v Kent, Barwick CJ identified a prerogative
power on the part of the Commonwealth ‘in the absence of any statutory provisions, to
establish parks, gardens, sports grounds, tourist facilities and the like upon land it
possesses in Canberra’.41 Barwick CJ noted that the Commonwealth’s prerogative
powers are potentially broader in the Australian Capital Territory, as they are
unfettered by considerations of federalism and the distribution of powers.42 He held
that the Commonwealth could therefore expend money for the construction of the
Black Mountain Tower in the ACT without the need for statutory support.
The identification of such a prerogative power in Johnson v Kent would appear
dubious. Although the King held ancient prerogative powers to grant enclosed hunting
36
37
38
39
40
41
42
Williams v Commonwealth (2012) 248 CLR 156, [23] - [25] (French CJ); [124] and [156]
(Gummow and Bell JJ); [202]-[204] (Hayne J); and [488] (Crennan J). For more detailed
discussion of these two categories and the distinctions between them, see: Anne Twomey,
‘Pushing the Boundaries of Executive Power: Pape, the Prerogative and Nationhood Powers’
(2010) 34 Melbourne University Law Review 313, 325-7.
Albert Venn Dicey, Introduction to the Study of the Law of the Constitution (10th ed, 1959)
424-5.
Sir William Blackstone, Commentaries on the Laws of England, Vol 1, (1st ed facsimile,
1765) 232 and Henry William Rawson Wade, ‘Procedure and Prerogative in Public Law’
(1985) 101 Law Quarterly Review 180, 191.
The term ‘general exercise’ should here be taken to mean either the exercise of those powers
with respect to any subject matter at all, or with respect to any subject matter falling within a
Commonwealth head of power.
This approach was also taken by French CJ in: Pape v Commissioner of Taxation (2009) 238
CLR 1, [126] (French CJ). See further: Davis v Commonwealth (1988) 166 CLR 79, 108
(Brennan J); and Simon Evans, ‘Continuity and Flexibility: Executive Power in Australia’ in
Paul Craig and Adam Tomkins (eds) The Executive and Public Law (Oxford University
Press, 2006) 89, 93. Compare: Shipra Chordia, Andrew Lynch and George Williams,
‘Williams v Commonwealth – Commonwealth Executive Power and Australian Federalism’
(2013) 37(1) MULR 189, 225-6.
Johnson v Kent (1975) 132 CLR 164, 170 (Barwick CJ).
Ibid, 169 (Barwick CJ).
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grounds known as parks,43 it would appear to be difficult to extend this prerogative so
broadly as to include gardens, sports grounds and tourist facilities.44 The more likely
explanation for the case is that the prerogative was interpreted as encompassing the
power to exercise the capacities of a legal person, including the power to do anything
which can be done by a person which is not prohibited or otherwise regulated by law.
Although it is not clearly stated by the majority in the Williams case, its reasoning
and the outcome of the case make it clear that the High Court has now drawn a
distinction between the capacities of the Commonwealth as a legal person, such as the
capacity to own property, enter into contracts, spend money and employ people, and its
power to exercise those capacities. The Court in Williams did not deny that the
Commonwealth continues to have the capacity to enter into contracts – it is not
disabled from doing so, like a minor or a mentally incompetent person. Rather, the
question is one of the circumstances in which the Commonwealth has the power to
exercise its existing capacity.
Previously, it was assumed that if the Commonwealth had the capacity to enter
into contracts, it also had the power to do so, subject to any limitations derived from
the federal distribution of powers. In Williams, the High Court distinguished the
Commonwealth’s capacities from the power to exercise them. For example, Kiefel J
observed that the ‘question is not one of the Executive’s juristic capacity to contract,
but its power to act’.45 Hayne J also noted the conflation of the ‘question of contractual
and dispositive capacity (in the sense of absence of disability) with the question of
whether there was power to enter into the contract and to make the payments here at
issue’.46 A majority of the Court then restricted the power to exercise the capacity to
spend public money and to enter into contracts (at least to the extent that the contract
involved the expenditure of public money) to the particular categories being here
discussed. Hence, the prerogative is not the source of power for the exercise of the
capacities of the Commonwealth on any subject whatsoever. Rather, it is only the
source of power for the exercise of Commonwealth capacities in a manner that gives
effect to those traditional prerogative powers that are uniquely attached to the Crown.
D Expenditure in the ordinary administration of the functions of government
The Williams case was affected by a concession made by Mr Williams’ counsel
that the Commonwealth could spend appropriated money, without further legislative
authority, in the ‘ordinary course of administering a recognised part of the Government
of the Commonwealth’ or as an incident of ‘the ordinary and well-recognised functions
of [the] Government’.47 This would include expenditure on the operation of the
Parliament and ‘the servicing of the departments of State of the Commonwealth, the
administration of which is referred to in s 64 of the Constitution, including the funding
of activities in which the departments engage or consider engagement’.48 Although this
43
44
45
46
47
48
Joseph Chitty, A Treatise on the Law of the Prerogatives of the Crown (Butterworths, 1829)
140-2. Note that such parks ceased to be ‘parks’ within the prerogative once they no longer
held game.
Such prerogatives are not recognised in the UK. See the list of prerogatives identified by the
British Government: UK, Ministry of Justice, Review of Executive Royal Prerogative
Powers: Final Report, (2009) 31-4.
Williams v Commonwealth (2012) 248 CLR 156, [595] (Kiefel J).
Ibid, [203] (Hayne J).
Ibid, [139] (Gummow and Bell JJ).
Ibid, [139] (Gummow and Bell JJ).
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holds no greater status than a concession made by counsel, none of the Justices
disputed its validity or rejected it.49
The source of this concession may be traced back to earlier cases concerning the
Commonwealth’s capacity to enter into contracts without legislative authorisation. In
the Wool Tops case, it was held that the Commonwealth executive had no power to
enter into contracts except with statutory authority.50 However, Knox CJ and Gavan
Duffy JJ also observed:
It is true that sec 64 of the Constitution directs that the Sovereign through his Ministers
shall administer such departments of State as the Governor-General in Council may
establish, and they would probably be authorized to make such contracts on behalf of
the Commonwealth as might from time to time be necessary in the course of such
administration; but it is not pretended that the contracts now in question come within
51
that category.
This was reinforced by the conclusion of the 1929 Royal Commission on the
Constitution that:
The Executive has no power to enter into contracts, except such as are authorised by
Parliament, and except, possibly, contracts rendered necessary in the routine
administration of a government department and it does not acquire that power merely
because Parliament has appropriated money for the purposes of the contracts.52 The
Commonwealth Parliament is limited to the powers conferred on it under the
Constitution, and therefore cannot authorize a contract except in the exercise of those
powers. If the interpretation of section 81 of the Constitution, acted upon by successive
Commonwealth Governments, is incorrect and that section is construed as a restrictive
section, and not a section authorizing the Commonwealth Parliament to appropriate
money for all purposes thought to be beneficial to the people of Australia, a number of
53
contracts entered into by the Commonwealth may be of doubtful validity.
This 1929 observation is now fascinatingly close to the High Court’s current
position as a consequence of its recent decisions in the Pape and Williams cases. Back
in the 1930s, however, the Commonwealth executive revived its aspirational view of
the extent of its powers under s 61 following the High Court’s judgment in New South
Wales v Bardolph.54 The Commonwealth interpreted the High Court as having
overruled its earlier approach, permitting it to enter contracts without any statutory
authority.55 However, the High Court in Williams read Bardolph much more narrowly,
contending that it only recognised that the executive may enter into contracts in the
49
50
51
52
53
54
55
Compare Commonwealth v ACT [2013] HCA 55, where the Court observed at [8] that:
‘Parties cannot determine the proper construction of the Constitution by agreement or
concession’.
Commonwealth v Colonial Combing Spinning and Weaving Co Ltd (‘Wool Tops’) (1922) 31
CLR 421, 432 (Knox CJ and Gavan Duffy J); 451 (Isaacs J); 460-1 (Starke J).
Ibid, 432.
Ibid; and Commonwealth v Colonial Ammunition Co Ltd (1924) 34 CLR 198. [Note that in
the latter case, Isaacs and Rich JJ held at 222-224 that while the Parliament may authorize
the Executive to enter into a contract, it cannot itself become a party to a contract and nor
does it validate an invalid contract by appropriating money. Note also that both judgments
were handed down after the Engineers Case.]
Commonwealth, Report of the Royal Commission on the Constitution (Cth Gov Printer,
1929) 49.
New South Wales v Bardolph (‘Bardolph’) (1934) 52 CLR 455.
See the Opinion of the Commonwealth Solicitor-General, Sir George Knowles in: Peter
Benson and Adam Kirk (eds), Opinions of the Attorneys-General of the Commonwealth, Vol
3: 1923-45 (AGS, Canberra, 2013) Opinion No 1683, 3 June 1941, 640.
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ordinary administration of government functions. As French CJ noted: ‘The case is not
authority for the existence of a general contractual power derived from s 61 capable of
exercise without statutory authority.’56
One of the problems with the Bardolph case is that the category of contracts
regarded as exempt from the need for additional statutory authorisation was described
loosely. Its various descriptions included: ‘such contracts for the public service as are
incidental to the ordinary and well-recognised functions of Government’;57 ‘the
ordinary activities or functions of government’;58 a ‘recognized and regular activity of
the Government’;59 and the ‘ordinary course of administering a recognized part of the
government’.60 Some descriptions appear to relate to government departments and
agencies while others are directed at the functions that the Government engages in.
This gives rise to questions as to how one identifies what is ‘ordinary’ or ‘recognised’
and whether there is an objective test available for doing so.
In Williams, the category of what will be described here for ease of reference as
the ‘ordinary administration of the functions of government’61 appeared to be identified
as a distinct exemption from the requirement for statutory authority for contracts and
expenditure.62 There was some ambiguity, however, as to the source of this category.63
While the wording used was clearly drawn from the different judgments in Bardolph,
this does not, of itself, provide the constitutional basis for the distinction. Three
possibilities appear to arise. It is potentially arguable that contracts and expenditure
made in the course of the ordinary administration of the functions of government are
exempt from the need for further statutory authority because of:
(a) the application of s 64 of the Commonwealth Constitution;
(b) the application of the prerogative powers to establish and operate
government departments and agencies; or
56
57
58
59
60
61
62
63
Williams v Commonwealth (2012) 248 CLR 156, [74] (French CJ). See also: Hayne J at
[209]; and Crennan J at [529].
New South Wales v Bardolph, 496 (Rich J).
Ibid, 503 (Starke J).
Ibid, 507 (Dixon J).
Ibid, 508 (Dixon J).
In Williams it was variously described as: ‘administration of departments of State under s 64’
[34] and [65] (French CJ); ‘an ordinary and well-recognised activity of the Government’
[142] (Gummow and Bell JJ); ‘ordinary course of the administration of a recognised part of
the government’ [209] (Hayne J); ‘capacities to enter a contract and to spend money when
exercised in the ordinary course of administering a recognised part of the Commonwealth
government’ [484] (Crennan J); ‘the ordinary annual services of the Government’ [493]
(Crennan J); ‘the power to carry out the essential functions and administration of a
constitutional government’ [582] (Kiefel J), the latter appearing to be an amalgamation of
the ordinary administration category with the nationhood power.
Due to the numerous other factors addressed by the Court, including considerations of
federalism, the principle that the executive must be accountable to the public and the
constraints upon the expenditure of public money, it is very difficult to isolate strands of the
Williams case into separately applicable propositions. As Seddon has noted ‘one
interpretation of the case is that expenditure outside “the ordinary course of administering a
recognized part of the government” must be backed by legislation, other than just an
appropriation Act’: Nicholas Seddon, Government Contracts (Federation Press, 5th ed, 2013)
68. There may legitimately, however, be other interpretations.
See, eg, Kiefel J who referred to ‘prerogative powers and the power to carry out the essential
functions and administration of a constitutional government’: Williams v Commonwealth
(2012) 248 CLR 156, [582] (Kiefel J). It is not clear on what basis the latter category rests.
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(c) the status of the Crown as a legal person, giving it the capacities of a
legal person, which may be exercised subject to the principles derived
from responsible government.
The first proposition is that at the Commonwealth level, this category of
exemption is derived from the application of s 64 of the Constitution, therefore falling
within category 1, above, of the execution and maintenance of the Constitution.
Section 64 of the Commonwealth Constitution authorises the Governor-General to
appoint officers to ‘administer such departments of State of the Commonwealth as the
Governor-General in Council may establish’. The grant of a power to establish and
operate these departments of State impliedly carries with it all powers necessary to
fulfil the functions conferred upon them.64 This approach is also suggested by the
reference to s 64 in the Wool Tops case.65
French CJ based his reasoning on s 64 of the Constitution, which he saw as
authorising the expenditure of money on the ordinary administration of the
departments and agencies of the Commonwealth.66 Later, he observed that the category
set out in the Bardolph case was analogous to the application of s 64,67 although he did
not identify its source in the absence of the application of an equivalent to s 64 of the
Commonwealth Constitution.
It is possible that Gummow and Bell JJ also supported this approach. They
appeared to accept that the Commonwealth could spend money in the ordinary
administration of the functions of government without legislative support (or at least,
did not reject the proposition), but in doing so simply referred to the plaintiff’s
submissions which acknowledged both the category set out in Bardolph and the
application of s 64 of the Constitution.68 Hayne J, after discussing the Bardolph case
and the Wool Tops case also accepted that ‘these cases do suggest that a polity may
make at least some contracts without statutory authority’, but he did not identify the
source of the power,69 other than prior authority.
The Bardolph case concerned State legislative power, so s 64 of the
Commonwealth Constitution was not applicable.70 There must therefore be a different
explanation to justify the identification of this category by the High Court in Bardolph,
which might also have relevance to the Commonwealth level of government. It is
possible that the High Court in Bardolph derived this category from the Crown’s
prerogative powers with respect to the establishment and operation of public service
bodies. There is a well recognised prerogative power on the part of the Crown to
establish and govern bodies that form part of the public service. Indeed, until 2010 the
civil service in the United Kingdom had for centuries rested on the basis of prerogative
64
65
66
67
68
69
70
See, eg: D’Emden v Pedder (1904) 1 CLR 91, 109 (Griffith CJ).
Commonwealth v Colonial Combing Spinning and Weaving Co Ltd (1922) 31 CLR 421, 432.
Williams v Commonwealth (2012) 248 CLR 156, [4] and [34] (French CJ).
Ibid, [74] (French CJ).
Ibid, [139] (Gummow and Bell JJ). As their Honours only addressed this argument in the
context of the plaintiff’s submissions, it is not abundantly clear whether they would accept
such a category in the future, in the absence of a concession. Most, however, have
interpreted their judgment as supporting it. See: Gabrielle Appleby and Stephen McDonald,
‘Looking at the Executive Power through the High Court’s New Spectacles’ (2013) 35
Sydney Law Review 253, 262 and 275; Shipra Chordia, Andrew Lynch and George Williams,
‘Williams v Commonwealth – Commonwealth Executive Power and Australian Federalism’
(2013) 37(1) MULR 189, 220, fn 187.
Williams (2012) 248 CLR 156, [212] (Hayne J).
Heydon J distinguished its application on this ground: Williams v Commonwealth (2012) 248
CLR 156, [391] (Heydon J).
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power.71 While in Australia, much of the prerogative regarding the public service has
been abrogated by legislation and the Constitution, it may still be arguable that the
power to enter into contracts and spend appropriated money on the ordinary
administration of public service bodies continues as part of the prerogative powers of
the Crown.72
The third possibility again concerns the circumstances in which the capacities
of the Commonwealth may be exercised. Crennan J observed that executive power
can be exercised without statutory authorisation in circumstances including the
exercise of prerogative powers as well as ‘the powers which derive from the
capacities of the Commonwealth as a juristic person, such as the capacities to enter a
contract and to spend money when exercised in the ordinary course of administering
a recognised part of the Commonwealth government.’ She identified Bardolph as the
authority for this proposition.73
If the argument discussed above about the distinction between the
Commonwealth’s capacities and the power to exercise them is correct, there would still
need to be some source of power for their exercise, unless the precedent in Bardolph
alone is enough to establish a new source of power. Crennan J, in contrast, focused
upon the principles that would limit such a power, being those derived from the system
of responsible government and the requirement that the executive be accountable to the
Parliament, rather than those that granted the power to exercise the capacity. Her
Honour considered that the chaplaincy program did not form ‘a recognised part of
Commonwealth government administration’ when it was established and that the
appropriation Act for the ordinary annual services of government in which it was
contained was insufficient to give the expenditure the level of parliamentary scrutiny it
required.74 Crennan J concluded that the chaplaincy program had ‘not been subject to
the parliamentary processes of scrutiny and debate which would have applied to
special legislation, a special appropriation Act, legislation incidental to an exercise of
power under s 61 or legislation referable to Parliament’s powers under s 96’.75
Crennan J also sought to draw a connection between the category identified in
Bardolph and bills for the ‘ordinary annual services of the Government’, as referred to
in ss 53 and 54 of the Commonwealth Constitution.76 Her Honour noted that while in
Pape it was held that authority to expend money is ‘distinct conceptually from the
appropriation of funds’, it is ‘possible for an Act to do both where it amounts to a
71
72
73
74
75
76
UK, Ministry of Justice, The Governance of Britain, CM 7170, July 2007, 22. In 2010 the
British civil service became governed by statute: Constitutional Reform and Governance Act
2010 (UK).
Note, however, that in the Wool Tops case, Higgins J briefly discussed the possibility that a
prerogative power might apply, but concluded that ‘the party who relies on any prerogative
right has the burden of showing it affirmatively’ and that the plaintiff had not met this
burden: Commonwealth v Colonial Combing Spinning and Weaving Co Ltd (1922) 31 CLR
421, 454-5 (Higgins J). Sir Robert Garran, in his evidence to the 1929 Royal Commission on
the Constitution also observed that he had previously thought that the executive power to
contract could be supported by ‘some common law authority’ but that ‘in view of those
words in section 61, I think you must seek support for it either in the Constitution itself or in
an act of Parliament’: Commonwealth, Royal Commission on the Constitution – Minutes of
Evidence, (Cth Gov Printer, 1929) Vol 1, 89.
Williams v Commonwealth (2012) 248 CLR 156, [484] (Crennan J).
Ibid, [532] (Crennan J).
Ibid, [532] (Crennan J).
Ibid, [530] (Crennan J). See the suggestion by Appleby and McDonald that the exemption
from statutory authority for spending on the ordinary administration of the functions of
government may be based upon the reference to the ‘ordinary annual services of the
Government’ in ss 53 and 54 of the Constitution as a result of Crennan J’s argument:
Appleby and McDonald, above n 68, 253, 262.
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special appropriation Act and provides some detail about the policy being
authorised’.77 Crennan J saw bills appropriating money for the ordinary annual services
of government as falling within the exempt category, as identified in Bardolph. Where
new programs were proposed which would not fall within the Bardolph category as
they were not established in the ordinary course of administering a recognised part of
the Commonwealth government, then Crennan J considered that parliamentary
approval by way of a special appropriation was needed. She saw this as consistent with
current parliamentary practice, under which ‘new policies not previously authorised by
special legislation’78 are included in even numbered appropriation bills, which are not
considered as falling within the ‘ordinary annual services of the government’ and are
therefore not subject to the restrictions on the Senate’s power of amendment in s 53
and the prohibition on tacking in s 54 of the Constitution.79 Odd numbered bills, in
contrast, are considered as falling within the ordinary annual services of government,
and are therefore subject to the limitations imposed by ss 53 and 54.
It is doubtful, however, that an even numbered appropriation bill receives any
greater parliamentary scrutiny than an odd numbered appropriation bill. The limitation
on the Senate’s power to amend bills for the ordinary annual services of the
government is of little significance, given that it can send money bills back to the
House of Representatives with requests for amendments and in practice it presses those
requests, effectively replicating the usual method for dealing with amendments.80 The
suggestion that the even numbered appropriation bills, because they are not for the
ordinary annual services of the government, amount to statutory authorisation to
expend public moneys, would seem to be contrary to the unanimous view taken by the
High Court in Pape.81 Further, although the High Court has not yet settled on the
criteria for, or the parameters of, the category of expenditure related to the ordinary
administration of the functions of government, it would appear unlikely that the
category identified in Bardolph and the category derived from s 64 of the Constitution,
as eventually defined by the High Court, will necessarily coincide with the
parliamentary practice of the categorisation of bills with respect to appropriations for
the ordinary annual services of the government.82 As ss 53 and 54 of the Constitution
have so far been regarded as non-justiciable by the High Court, the definition of
‘ordinary annual services of the government’ has not been regarded as a matter for the
High Court to decide.
77
78
79
80
81
82
Williams v Commonwealth (2012) 248 CLR 156, [531] (Crennan J).
Resolution of the Senate, 17 February 1977, referred to in: Ibid, [472] (Crennan J). See a
more extensive list of what the Senate regards as falling outside the ordinary annual services
of government in: Harry Evans and Rosemary Laing, Odgers’ Australian Senate Practice
(Department of Senate, 13th ed, 2012) 372-3.
Note the concern of other Justices about the limitation in s 53 of the Constitution upon the
Senate’s power to deal with appropriation bills: Williams v Commonwealth (2012) 248 CLR
156, [60] (French CJ); [136] (Gummow and Bell JJ); and [220] (Hayne J). Compare Heydon
J at [396].
Evans and Laing, above n 78, 345.
Pape v Commissioner of Taxation (2009) 238 CLR 1, [111] (French CJ), [178], [183]
(Gummow, Crennan and Bell JJ), [320] (Hayne and Kiefel JJ), [601]-[602] (Heydon J).
Disputes arise between the Houses as to what should be excluded from bills for the ordinary
annual services of government. In general, the Senate contends that capital expenditure
(including the acquisition of sites and buildings and the construction of public works), s 96
grants to the States, asset replacement and ‘new policies’ that have not been the subject of a
previous appropriation are to be excluded from bills for the ordinary annual services of
government: Evans and Laing, above n 80, 369-73. It is likely, however, that there are many
‘old’ policies that would not be regarded as falling within the ‘ordinary course of
administering a recognised part of the government’.
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Overall, while there was no clear common reasoning amongst the Justices in the
Williams case for reaching their conclusion, a majority of the Court appeared to accept
the argument by Mr Williams’ counsel that the chaplaincy program did not fall within
any category of the ordinary administration of the functions of government. Although
the money spent on the chaplaincy program was spent by a public service department
on a government program, such expenditure was not for the administration of a
department in the sense required by s 6483 or the Bardolph case. It was instead a
payment to a non-government body in the implementation of a Commonwealth policy
to provide chaplains to schools.84 It was not a matter of funding the administration of
the public service or the ordinary functions of government.
This area, however, is ripe for exploitation. Now that it has been established as an
exemption from the Commonwealth’s need for legislation to support its expenditure,
no doubt the Commonwealth will seek to push the boundaries of what falls within the
‘ordinary course of administering a recognised part of the Government of the
Commonwealth’ and its variations. Interestingly, in the course of debate upon the
Commonwealth’s legislative response to the Williams case, the Minister leading for the
Commonwealth, Senator Wong, argued that the Bardolph exception was confined to
‘departmental running costs’.85 It is likely, however, that the Commonwealth will take
a much broader view of this exception in the future, trying to shift it from departmental
running costs to covering any payments made by a department to fund programs and
any grants to third parties that it administers in the implementation of government
policies unsupported by legislation.
As noted above, the exact terms of the Bardolph category have not yet been
agreed upon. To the extent that the category is based upon what is an ‘ordinary’ or
‘well-recognised’ function of the Government, it relies on past practice, allowing the
Government to reshape the category by actions which turn the exceptional into the
ordinary.86 Is it simply the case that contracts or expenditure with respect to new
matters require statutory authority, whereas contracts or expenditure with respect to
matters that have previously been dealt with by a Commonwealth department or
agency do not? What about new government bodies, such as those with a commercial
purpose? Do all their contracts and expenditure require statutory authority because they
do not form a well-recognised part of the Government? Does the Bardolph category
extend to the broad range of contracts entered into by government with third parties to
provide services or implement policies, or does it only apply to the expenditure and
contracts involved in keeping the government department or agency functioning, such
as the leases for its offices and furniture, the acquisition of stationary supplies, the
maintenance of buildings and its use of utilities, communications and the like? In
Bardolph an advertising contract undertaken by a tourist bureau was regarded as
falling within the exempt category, whereas in Williams a program to pay for chaplains
in schools was not. The parameters of the category, its source and its purpose remain
unclear.
A further problem with Bardolph is that it concerned the actions of a State
Government and therefore did not encompass the same ‘federal considerations’ and
issues about limited powers that would confront the application of this exception to the
Commonwealth Government.87
83
84
85
86
87
Williams v Commonwealth (2012) 248 CLR 156, [83] (French CJ).
Seddon has described the impact of the Williams case as directly falling on ‘eleemosynary
Commonwealth programs involving the expenditure of money’: Seddon, above n 62, 71.
Commonwealth, Parliamentary Debates, Senate, 27 June 2012, pp 4746-7 (Senator Wong).
Enid Campbell, ‘Commonwealth Contracts’ (1970) 44 ALJ 14, 15; and Leslie Zines, The
High Court and the Constitution (5th ed, 2008, Federation Press) 350. See also: Seddon,
above n 62, 67-8.
Williams v Commonwealth (2012) 248 CLR 156, [79] (French CJ); and [391] (Heydon J).
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Difficulty in defining such a category and practical difficulties in its
implementation88 had previously led commentators to dismiss the relevance of this
category as identified by the High Court in the Bardolph case. The High Court’s
revival of it in Williams will lead to much closer consideration in the future of what
genuinely amounts to ordinary government administration and what goes beyond it.
E Expenditure supported by the nationhood power
The final possible exception to the principle that expenditure must be supported
by legislation, is expenditure under the executive nationhood power. While
‘nationhood’ is the short-hand term given to this power by academics, the High Court
continues to describe it as ‘the 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’.89 It was this power that was used to support the
expenditure at issue in the Pape case.90
The nationhood power was potentially relevant in two different contexts in the
Williams case. First, 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. If the High Court had accepted the Commonwealth’s
‘narrow view’ of the executive power – that the Executive can spend money on
anything that falls within its legislative power without the need for the enactment of
legislation – then if the chaplaincy program had fallen within the scope of the
nationhood power, it would have been enough to uphold the validity of the program.
However, Heydon J, who accepted the narrow view, did not find that the nationhood
power was relevant to the chaplaincy program.91 Neither did Hayne and Kiefel JJ who,
while not necessarily accepting the narrow view, decided that whether or not it applied,
the nationhood power did not support the chaplaincy program,92 and nor did any other
legislative power.
The other four Justices, having rejected the Commonwealth’s narrow view of the
executive power, did not need to consider the potential for the application of a
legislative implementation of the nationhood power, as it was accepted that no such
legislation had been enacted. Nonetheless, they all considered the relevance of the
nationhood power as an executive power. French CJ stated that the ‘fields of executive
action which do not require express statutory authority’ included ‘those activities
which may properly be characterised as deriving from the character and status of the
Commonwealth as a national government’.93 None of the other Justices expressly
considered whether the nationhood power fell within this category of exemption from
the need for statutory authorisation, although all referred to the nationhood power and
decided that the chaplaincy program did not fall within it.94 It is therefore uncertain as
to whether there would be majority support for this category in the future.
88
89
90
91
92
93
94
The concern has been expressed that third parties would be uncertain as to whether their
contract with the Commonwealth was valid if it was not expressly authorized by legislation,
given the uncertainty as to what falls within the ordinary administration of government. See:
Enid Campbell, ‘Commonwealth Contracts’ (1970) 44 ALJ 14, 15.
Williams v Commonwealth (2012) 248 CLR 156, [4], [22] and [34] (French CJ); [194]
(Hayne J); and [485] (Crennan J); [583] (Kiefel J). See also Heydon J at [402].
Pape v Commissioner of Taxation (2009) 238 CLR 1, [8]-[9] and [133]-[134] (French CJ),
[241]-[243] (Gummow, Crennan, Bell JJ).
Williams v Commonwealth (2012) 248 CLR 156, [402] (Heydon J).
Ibid, [196] and [240] (Hayne J); and [591] and [594] (Kiefel J).
Ibid, [34] (French CJ).
Ibid, [146] (Gummow and Bell JJ); and [498] and [503] (Crennan J).
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It is unclear why the nationhood power, being an implied executive power, should
support the exercise of powers, such as the powers to contract and spend, without the
need for legislative authorisation, when executive power related to express heads of
legislative power does not. It is possible that French CJ regarded the nationhood
category as falling within the category of the ‘execution and maintenance of this
Constitution’.95 This might be the source of French CJ’s view that the ‘character and
status of the Commonwealth as a national government’ informs all the aspects of
executive power, ‘including the prerogatives appropriate to the Commonwealth, the
common law capacities, powers conferred by statutes and the powers necessary to give
effect to statutes.’96 On this basis, the nationhood power might not be a stand-alone
category of exemption from the need for statutory authority, but merely an aspect of
the first three categories above.
French CJ’s approach may also reflect the concern that the incorporation of the
Bicentennial Authority in Davis relied upon the exercise of the nationhood power in its
executive form before relevant legislation was enacted.97 Crennan J addressed this
issue in Williams, noting that although the Bicentennial Authority was incorporated
prior to the enactment of enabling legislation, ‘the incorporation and the enactment of
enabling legislation were two steps in the execution of the same plan’.98
Equally, French CJ’s approach might reflect the fact that the executive
nationhood power, when combined with s 51(xxxix) of the Commonwealth
Constitution was held in Pape to support legislation permitting the expenditure of
money during a national emergency. It might be argued that s 51(xxxix), as a mere
incidental power, could not have provided that legislative support unless the implied
nationhood power, as an executive power, provided the substantive authorisation for
the expenditure. In other words, if the executive nationhood power could not authorise
the expenditure in its own right, then an incidental legislative power that merely
‘executes’ the executive power cannot take that further step of authorising the
expenditure.99 French CJ may therefore have been attempting to protect the integrity of
the majority reasoning in the Pape case, by identifying the executive nationhood power
as sufficient for the authorisation of expenditure without the need for additional
legislation, in recognition of the inherent weakness of the incidental power in s
51(xxxix).
An alternative conceptualisation of the majority approach in the Williams case,
however, is that the expenditure of public money and contracts involving the
expenditure of public money form a special category which requires parliamentary
scrutiny above and beyond that given to appropriations. Hence, while there may
continue to be a broad area of executive power, including an executive nationhood
power, it is only a very limited category of those executive powers that will support
expenditure and the making of contracts involving the expenditure of public money.
This category includes prerogative power, but may (or may not) include the nationhood
power only when it achieves the necessary level of parliamentary scrutiny through the
enactment of legislation under s 51(xxxix) of the Constitution.
Overall, there must be some doubt as to the extent to which an exercise of the
executive power on the basis of ‘nationhood’ would support expenditure or entering
95
96
97
98
99
Ibid, [31] (French CJ), referring to an observation by Brennan J in Davis v Commonwealth
(1988) 166 CLR 79, 109-10 (Brennan J). Note also the view of Jacobs J in Victoria v
Commonwealth (1975) 134 CLR 338, 405-6 that the nationhood power falls within the
words ‘maintenance of this Constitution’ in s 61.
Williams v Commonwealth (2012) 248 CLR 156, [30] (French CJ).
Davis v Commonwealth (1988) 166 CLR 79, 94-5 (Mason CJ, Deane and Gaudron JJ); 113
(Brennan J)
Williams v Commonwealth (2012) 248 CLR 156, [543] (Crennan J).
See the discussion of the incidental power in: Ibid, [237]-[240] (Hayne J).
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into contracts involving the expenditure of public money,100 unless it could also be
supported by a prerogative power, or done in the execution of the Constitution or
authorised by a statute enacted under a substantive head of power, rather than the
incidental power in s 51(xxxix).
III THE STATES’ POWER TO ENTER INTO CONTRACTS AND SPEND
Do any of the limits on the Commonwealth’s executive power to enter into
contracts and spend money transfer through to the States? Obviously those limits that
derive from the fact that the Commonwealth has limited legislative power will not
affect the States, as State legislatures possess plenary legislative power.101 Apart from
the rare circumstance where a power is denied to the States by the Commonwealth
Constitution (such as s 92 which requires that trade, commerce and intercourse
amongst the States shall be absolutely free102), the States would not appear to be
limited in their power to contract or spend by reference to federalism considerations. It
has also been suggested that the combination of a State’s plenary legislative power
with its power to enact legislation with retrospective effect might avoid the necessity of
legislating first to authorise the exercise of executive power.103
In contrast, the conclusions that the High Court drew in Williams concerning the
relationship between the legislature and the executive may have an impact on the
power of the State executive to contract and spend without legislative authority. It is
hard to be certain about this, because some of the comments made in Williams about
the importance of the role of the Senate in scrutiny of the executive and the
expenditure of public money appeared to relate to its role representing the States in the
federal system.104 However, other comments seemed to draw on the system of
responsible government and the accountability of the executive to the legislature.105
Much of the debate comes back to the case of Bardolph.106 It is primarily
authority for the proposition that it is unnecessary for an appropriation to be passed
first before a contract can be entered into for the expenditure of money. On a looser
reading, it has also previously been regarded as authority for the proposition that the
Executive has a general power to contract, just as the King in England can contract and
any individual can contract. However, in Williams, as noted above, the Court pulled
this proposition back to circumstances where the contract was ‘in the ordinary course
of administering a recognized part of the government of the states’.
If this is so, then it also means that Bardolph cannot be taken as authority for the
proposition that the State executives have a general contractual power in relation to any
subject matter.107 Hayne J observed that: ‘No broader proposition defining what kinds
of contract the executive government (of a State) may make, and for what purposes
they may be made, emerges from Bardolph.’108 He concluded that the authorities
‘recognise that neither a State’s nor the Commonwealth’s power to make contracts is
unlimited’.109
100
101
102
103
104
105
106
107
108
109
See also the discussion in: Seddon, above n 62, 78-82.
Victoria v CFMEU [2013] FCAFC 160, [24] (Kenny J).
For s 92’s practical interpretation, see: Cole v Whitfield (1988) 165 CLR 360.
Grant Donaldson, ‘Aspects of State Executive Powers’ (2013) 36(2) University of Western
Australia Law Review 145, 149.
See, eg: Williams v Commonwealth (2012) 248 CLR 156, [60] (French CJ).
See, eg: Ibid, [136] (Gummow and Bell JJ).
New South Wales v Bardolph (1934) 52 CLR 455.
Victoria v CFMEU [2013] FCAFC 160, [26] (Kenny J).
Williams v Commonwealth (2012) 248 CLR 156, [209] (Hayne J).
Ibid, [212] (Hayne J).
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The High Court in Williams also identified principles of executive accountability
to the Parliament and constraints upon the expenditure of public money that would
appear potentially just as relevant to a State as to the Commonwealth.110 Gummow and
Bell JJ contended that the power of a government to contract is different from that of
an individual, because the government proposes to spend public money, in contrast to
an individual who spends his or her own money.111 They contended that where ‘public
moneys are involved questions of contractual capacity are to be regarded “through
different spectacles”.’112 Hence, the expenditure by a State of public money under a
contract must also be seen through those different spectacles. Issues that come into
play in such a debate will include, according to Gummow and Bell JJ, the extent to
which government action may fetter future executive action in a matter of public
interest and the extent to which it will regulate activity in the community, which cannot
be done in a coercive or penal way, as only the legislature has such power.113 Kenny J,
in considering the application of the Williams case to the State executive, has also
noted that principles of representative and responsible government should not be
ignored, even though they may not be expressly stated in State Constitutions.114
A further factor is the different express provisions of State Constitutions and State
legislation. In New South Wales, for example, s 5A of the Constitution Act 1902
(NSW) provides that if the Legislative Council rejects or fails to pass any bill
appropriating revenue or moneys for the ordinary annual services of the Government,
or returns it with a message suggesting an amendment to which the Legislative
Assembly does not agree, the Legislative Assembly may present the Bill to the
Governor for royal assent without the Legislative Council’s agreement. In other words,
the upper House cannot block supply bills for the ordinary annual services of
government. This is a much more serious parliamentary accountability issue than the
mere need to make requests rather than direct amendments to a bill. Parliamentary
practice is also different in New South Wales. Bills for the ordinary annual services of
government include capital works and new policies. Unlike the Commonwealth, there
is no separate general appropriation bill that is capable of amendment by the upper
House in relation to such matters.115
Victoria has more recently adopted the same position, with new policies and capital
works expressly permitted to be included in bills for the ordinary annual services of
government. Such bills may also be presented to the Governor for royal assent if the
Legislative Council has rejected them, failed to pass them within one month or returned
them with suggested amendments.116 In contrast s 63 of the South Australian Constitution
Act 1934 expressly requires that bills for the appropriation of money for previously
authorised purposes be separate from those for the appropriation of money for new
purposes. Section 62 permits the Legislative Council to suggest amendments to money
clauses in bills for the appropriation of money for new purposes. These differences
would potentially be relevant to the issue of executive accountability to the upper House,
particularly in relation to the approach by Crennan J.
110
111
112
113
114
115
116
Kathleen Foley, ‘What is the Relevance of Williams and Plaintiff M61 for the Exercise of
State Executive Power?’ (2013) 36(2) University of Western Australia Law Review 168, 181.
Williams v Commonwealth (2012) 248 CLR 156, [151] (Gummow and Bell JJ).
Ibid, [151] (Gummow and Bell JJ). See also: Victoria v CFMEU [2013] FCAFC 160, [26]
(Kenny J).
Williams v Commonwealth (2012) 248 CLR 156, [152] (Gummow and Bell JJ). See also
Crennan J at [521].
Victoria v CFMEU [2013] FCAFC 160, [27] (Kenny J).
See further: Anne Twomey, The Constitution of New South Wales (Federation Press, 2004)
547, 568-9.
Constitution Act 1975 (Vic) s 65. Note also Kenny J’s observation about the different
constitutional regime in Victoria in: Victoria v CFMEU [2013] FCAFC 160, [24] (Kenny J).
Vol 33(1)
Post-Williams Expenditure
27
Other differences will include whether or not a State Constitution or laws
expressly or impliedly authorise the making of contracts and the expenditure of public
money by the government.117 While most State Constitutions do not expressly confer
executive power at all, not even to the extent of having an equivalent of s 61 or s 64 of
the Constitution,118 there are variations. The Constitution of Queensland 2001 (Qld),
for example, provides that:
The Executive Government of the State of Queensland (the State) has all the powers,
and the legal capacity, of an individual.
Section 53 also gives express statutory authority for the State to engage in
commercial activities, including activities that are not within the ordinary functions of
the State.
It will be interesting to see whether other States are enticed into adopting
equivalent provisions in their Constitutions, at least where no manner and form
provisions would require a referendum for such an amendment. It will also be
interesting to see whether the Courts draw implications from those provisions in a State
Constitution that are entrenched, which impose principles of parliamentary
accountability, similar to those discussed in the Williams case.
In summary, although the executive power of the States is not limited by
reference to specific heads of power (as is the Commonwealth’s executive power) and
is not generally limited by federal considerations affecting the distribution of powers,
the States may find that their powers to contract and spend are limited because they are
spending public money and, under responsible government, such expenditure requires
parliamentary scrutiny. We know that the States can contract and spend regarding the
ordinary administration of the functions of government without the need for further
statutory authorisation, but when it comes to funding third parties, it may be the case
that some kind of legislation is needed.
IV CONCLUSION
The Williams case is very difficult to interpret. Trying to build majorities for
particular propositions from the different approaches taken in separate judgments is
fraught with difficulty. This is made even harder by the intrusion of a concession in the
case and the fact that the circumstances of the case did not require the making of
distinctions that may be necessary to be drawn in later cases. Over time, future cases
will provide greater clarity. In the meantime, 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.
At the Commonwealth level, this may involve the enactment of legislation that
both sets out and authorises a specific program as well as appropriating money for it
and authorising expenditure upon it. While no doubt the Commonwealth would argue
that this is a drain on parliamentary time, it is also likely to produce the benefit of
programs that are better thought-through and administered because the details of their
operation have had to be crystallised in legislation and made capable of withstanding
parliamentary scrutiny. As Hayne J noted: ‘Sound governmental and administrative
117
118
Note that unlike the Commonwealth, which may have difficulty finding a head of power to
support such a law, the States have plenary legislative power, so this is not a problem for
them.
See further Foley’s observations about the lack of an equivalent of s 61 in State
Constitutions: Foley, above n 110, 170.
28
University of Queensland Law Journal
2014
practice may well point to the desirability of regulating programs of the kind in issue in
[Williams] by legislation.’119 Formalising programs in this way and making them the
subject of both parliamentary scrutiny and judicial review would avoid the spectacle of
programs of spending worked out on (and later wiped off from) white boards120 and
may well avoid them being the subject of criticism by the Auditor-General for lacking
adequate planning, detail and administration121 or investigation by a royal
commission.122 While it might be the case that some bills for establishing and funding
Commonwealth programs would be rejected by the Senate, there is something to be
said for the proposition that if the Parliament refuses to approve of a program then it
should not proceed.
If there is no legislative power to support such legislation, then the
Commonwealth will need to consider negotiating s 96 grants with the States. More
radically still, it could simply drop out of involvement in funding programs that are not
relevant to its powers and instead fund the States appropriately so that they can deal
with such matters. After all, there is no obvious reason for the Commonwealth to be
involved in funding chaplains in schools, other than the fact that the Commonwealth
has an excess of revenue that it is unwilling to pass on as surplus money to the States
and would prefer to use to influence voters. In a federation, the idea that the federal
government should only fund programs relevant to federal powers and responsibilities
ought to appear perfectly reasonable. It shows how far our system has moved from
‘reasonable’, that such a suggestion would now be considered quite radical.
119
120
121
122
Williams v Commonwealth (2012) 248 CLR 156, [288] (Hayne J).
See the 1993-4 ‘sports-rorts’ affair that led to the resignation of Minister Kelly. See further:
Ian Ward, ‘Australian Political Chronicle: January–June 1994’ (1994) 40(3) Australian
Journal of Politics and History 381.
See, eg: ANAO, Performance Audit of the Regional Partnerships Programme, 2007:
<http://www.anao.gov.au/Publications/Audit-Reports/2007-2008/Performance-Audit-of-theRegional-Partnerships-Programme/Audit-brochure>.
See,
eg:
Royal
Commission
into
the
Home
Insulation
Program:
<http://www.homeinsulationroyalcommission.gov.au/Pages/default.aspx>.