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Tuesday, 26 June 2012
Page: 8070

Mr FLETCHER (Bradfield) (19:37): I am very pleased to rise to speak on the Financial Framework Legislation Amendment Bill (No. 3) 2012. This bill is before us because the Commonwealth has a problem in relation to the constitutional validity of its funding for the chaplaincy program and indeed for a whole range of other programs. In the time available to me I want to make three points about the bill which is before the House. The first is the point that I have just mentioned, that the Commonwealth has a problem following the High Court's decision in Williams v the Commonwealth. Second, I note that the Commonwealth has in the bill before us today a purported solution, but the opposition has significant doubts as to the effectiveness of the solution and whether it will in fact address the constitutional problems which have caused the High Court to find that the existing funding mechanism is invalid. Third, the opposition is prepared to cooperate with the government in seeking to find an urgent solution to this problem, notwithstanding our well-founded doubts as to whether the government's mechanism actually works. But we are also proposing a sunset clause so that this emergency mechanism will be subject to review at the end of the year, which will allow a period within which a more considered approach can be developed and pursued.

I turn firstly to the proposition that the Commonwealth has a problem. The problem is that the Commonwealth has historically used a mechanism to fund a whole range of programs, including the school chaplaincy program, which, according to the High Court's recent decision in Williams v the Commonwealth, is not a valid mechanism. The mechanism that the Commonwealth has used to fund this program and many others is not the traditional mechanism of passing legislation to establish the program and in doing so taking care that in so legislating the parliament is legislating within one of the areas where it has authority granted to it under the Constitution. That is not the mechanism that the Commonwealth has chosen to use to fund the school chaplaincy program or indeed a whole range of other programs. Instead, the mechanism that the Commonwealth has used to fund this particular program and a range of other programs is to rely upon section 61 of the Constitution as it claims authority for the executive government to spend money on a whole range of programs which have not been specifically legislatively authorised by the parliament. Section 61 reads that:

The executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen's representative, and extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth.

The High Court case and its decision released last week found that, in the absence of express statutory authority, section 61 does not empower the Commonwealth in this specific case to enter into the funding agreement with the Scripture Union of Queensland or to make the payments, the validity of which were challenged in the case by Mr Williams.

Further, a majority of the court held that the Commonwealth's executive power does not include a power automatically to do anything that the Commonwealth parliament could authorise the executive to do. That is to say, it was argued by the Commonwealth in the High Court case that, although there was not specific legislative authorisation for the funding of this program, the way that the Constitution works, so the Commonwealth argued in the High Court, was that if the parliament could validly have legislated to establish a program such as the school chaplaincy program then section 61 gives sufficient power to the executive to fund the program. That is the proposition that the Commonwealth put to the High Court and that is the proposition that the High Court has expressly rejected in the decision handed down last week.

You will see that there are two distinct levels of questions which present themselves here. The first is the question as to whether the chaplaincy program, had it been authorised by specific legislation made by the parliament, would have been constitutionally valid. On this point I am reminded of the mantra drummed into constitutional law students at the University of Sydney by Professor. Pat Lane. Professor Lane drummed into all of our heads the mantra that the Constitution, and particularly section 51 of the Constitution, grants to the Commonwealth enumerated specific powers—in other words, if legislation is to be valid it must be based on one of the specific powers granted in the Constitution. So the first question which presents itself in any analysis is always: is the legislation made by the Commonwealth valid because it is based upon specific powers granted in the Constitution? But in this case we do not even get to that first question, because the Commonwealth has failed at the second level. The Commonwealth, or specifically the executive, has spent the money on this program without ever bothering to get legislative authorisation. There is no act which has been passed which authorises the School Chaplaincy Program or its funding apart from the general annual appropriations bill. It is uncontentious that that bill, of itself, is not sufficient to grant the constitutional authority for this particular program. So the Commonwealth has failed to secure legislative authorisation because there is no act having passed the parliament which specifically authorises and enables the School Chaplaincy Program. The Commonwealth, or particularly the executive, has sought to rely upon section 61 of the Constitution and has argued to the High Court that this gives it power to fund the chaplaincy program because, had the parliament chosen to legislate, it would have been validly exercising its power to do so.

As I indicated, that second question might well be one which is susceptible to careful analysis. It cannot be taken for granted that the answer to that question is that the Commonwealth or the parliament would have had the power. But in any event it is uncontested that the parliament did not so legislate. The executive purports to rely on section 61 and the High Court has held that that is not a valid basis for the payments which the executive branch of the cobbled government is making. Therefore, there is, on the present state of the law, no constitutional validity, no legal authorisation for the money the Commonwealth is presently paying to fund the School Chaplaincy Program. Moreover, the same mechanism has been used in respect of a whole range of other spending programs and the High Court's decision means that all of those programs are also equally suspect.

The second point I wish to come to is that the Commonwealth and the government have put before the House this evening a bill which purports to offer a solution to this program. The essence of the solution is contained in the proposed new section 32B of the Financial Management and Accountability Act. In essence, what that proposed new section says is that if the Commonwealth would not but for the new section 32B have the power to make a payment then the Commonwealth will have the power if it has separately authorised that program by regulation.

The opposition is deeply sceptical that this mechanism actually works to get around the constitutional problem which the High Court has identified with the current funding mechanism. The first reason we are sceptical it will work is for some curious reason the drafting approach has not been to say 'this act authorises the following programs'. Instead, for some curious reason, the drafting approach is to say this act authorises the minister to make regulations and then goes on to say—we are also told—the regulations will authorise a range of programs including the chaplaincy program. That squarely brings into question the very issue upon which the High Court struck down the current approach to funding, which is that it involves the use of executive power. It involves a decision by a minister to make regulations rather than an enactment by the parliament that the programs are authorised.

Secondly, there is, as usual, the question about whether there is specific constitutional authorisation for the parliament to pass section 32B. That comes back to the point I made previously—drummed into constitutional law students at Sydney University—that the parliament has the power to pass legislation which is authorised by one of the enumerated specific powers in the Constitution. If there is no constitutional authorisation for the passing of the legislation then the legislation is not constitutionally valid. There is a separate question as to the validity of proposed section 32B because of its breadth and because what it purports to do is allow, through the making of regulations, the authorisation of expenditure across any area that a minister may choose to make regulations about, which begs the very question: are those programs in turn valid because they fall within the areas that the parliament is authorised to legislate about?

One of the other odd features of this legislation—having only perused it in the last hour—is that what it effectively does is establish a laundry list of all of the programs which the government thinks are constitutionally vulnerable, all of the programs which could now be challenged in light of last week's High Court case. That causes me to at least speculate that what we may well see is a series of challenges mounted to individual programs, because a very strong signal has been given that these individual programs are considered by the government to be constitutionally dubious.

The third point I wish to make is that the opposition intends to cooperate with the government because we recognise the urgency of this issue. A program which we support, the chaplaincy program, is presently without a legally valid basis for funding. So too are a range of other programs we support as well as a whole range of programs we do not support. The reality is that we have not had time to consider in detail this legislation and we have not had time to consider in detail all of the programs which are listed in the bill as being ones that are intended to be the subject of the regulations which the government presently intends to make. We are somewhat surprised at the lack of cooperation we have received from the government and, particularly, the lack of willingness of the government to share with the shadow Attorney-General the government's legal advice, which it has presumably obtained, underpinning the drafting approach it has chosen to take in this bill. We are also quite properly wary of granting executive government a major new expansion of spending powers that would be the effect of this bill, particularly in light of the fact that the High Court has just found that granting the executive carte blanche as to spending in the absence of a specific legislative authority is something that it finds to be unconstitutional. We on this side of the House have had very little time to consider the government's bill and very little time to engage in detailed analysis. We have, as I have indicated, significant reservations about whether the drafting mechanism which is used here is in fact constitutionally valid. Our proposed way forward is to move the amendment which has been foreshadowed by the member for Stirling and which would insert a sunset clause so that the effect of this bill would expire on 31 December this year. This would give both the government and the opposition additional time to consider a long-term and more sustainable solution to this problem. In the interim we are prepared to support the government's approach here, although we do note we have significant reservations as to whether as a matter of law it is actually going to work.