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Wednesday, 27 June 2012
Page: 4649

Senator BRANDIS (QueenslandDeputy Leader of the Opposition in the Senate) (12:57): The Financial Framework Legislation Amendment Bill (No. 3) 2012 was presented in the House of Representatives yesterday afternoon by the Attorney-General as an urgent response by the government to the High Court's decision in Williams v Commonwealth, which was handed down on Wednesday of last week. That decision found that funding for the National School Chaplaincy and Student Welfare Program, to which I will refer for the sake of shortness as 'the chaplaincy program,' which the opposition strongly supports, was beyond the executive power of the Commonwealth because it was not supported by an act of parliament and was therefore not a valid exercise of the executive power under the Commonwealth under section 61 of the Constitution, which provides:

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.

I should stress that the only Commonwealth program which the High Court's decision invalidated was the chaplaincy program. However, the language and reasoning of those justices who comprised the majority in the Williams decision have potentially far-reaching implications for other Commonwealth programs which rely upon the exercise of the executive power without appropriate statutory authorisation.

The solution proposed by the government is to amend the Financial Management and Accountability Act to provide for the validation of a large number of Commonwealth government programs and grants. This is proposed to be done by regulation. In all, some 11 types of Commonwealth financial assistance grants and some 416 types of programs, providing for the payment of Commonwealth moneys, are set out in the draft regulations, with which the opposition has been provided. I want to indicate that the opposition, with grave reservations, and subject to a sunsetting amendment to which I will return in a moment, has decided to cooperate with the government in expediting the passage of this bill through the parliament this week. Our decision to do so, however, should not mask our very grave concerns about the legal validity of the approach which the government has adopted—concerns which, I might say, were relieved not at all by the speech we just heard from Senator Wong. I do not criticise Senator Wong for not having read the Williams case, because I doubt she would have had time to do so. But those who prepared the notes for her ought to have read the Williams case and they have plainly not understood its effect.

I should also record that my request to the Attorney-General on Tuesday to be provided on a confidential basis with a copy of the Commonwealth's legal advice was refused by the Attorney-General. I understand that ordinarily legal advice to the government is not provided, even on a confidential basis, to the opposition, but this is an unusual case. It does not arise out of a political controversy and it is a case in which the government is seeking bipartisanship. Under the previous Attorney-General, Mr Robert McClelland, on two occasions after a decision of the High Court struck down either legislation or a ministerial decision, in respectively the Lane v Morrison case and the Malaysia solution case, the legal advice was provided to the opposition—indeed, in the latter case it was published—when the government sought the opposition's cooperation to deal with the consequences of those two High Court decisions. I can but wonder why on this occasion that level of cooperation was not afforded. Nevertheless, it was not.

So the opposition, without having the benefit of considering the government's legal advice, has arrived at its own views about this legislation. Our concern relates to the method adopted by the bill, the essence of which is to insert into the Financial Management and Accountability Act a new section, section 32B, which purports to validate any grant or payment of Commonwealth moneys which may be identified by regulation. That is done by providing that, omitting unnecessary words: 'If, apart from this subsection, the Commonwealth does not have power to make, vary or administer a grant or payment, and the grant or payment is specified in regulations, then the Commonwealth has the power to make the grant or payment.' That is the legal method adopted by the draftsman of this bill to overcome the effect of the Williams decision on the very many—hundreds—of Commonwealth programs which are specified in the regulation.

I am far from satisfied that that umbrella form of statutory validation is effective to satisfy the constitutional lacuna which the High Court identified in the Williams case. Nor am I satisfied that the proposed section 32B, in its application to each particular grant or program payment, is supported by any of the section 51 heads of power, although in respect of many such grants or payments it may be. The whole point of the Williams case was to decide that the executive cannot spend public money without legislative authority and parliamentary scrutiny. It seems to me that it is hardly sufficient to meet the tests which the majority set out in their reasons for judgment as necessary to constitute a valid expenditure merely to specify a schedule of grants payments and simply declare them to be valid. The approach adopted is particularly inept given that the programs are to be specified merely by regulation. It was the fact that the chaplaincy program was established only by executive order which resulted in its invalidity. It seems to me that there is an element of circularity in the Commonwealth's legal reasoning.

To make matters even worse, the power to make regulations which will bring particular programs within the general validation provision of proposed section 32B may itself, as a result of section 32D, be delegated by the minister to 'an official of any agency', which means in effect any public servant, no matter how junior. This is the legislative response to a High Court decision the whole purpose of which was to limit the executive power of the Commonwealth. But, just to prove that the draftsman of this bill does have a sense of humour, he has included section 32E. Wait for this, Senator Smith; I know that you are close student of these matters. It reads:

This Division does not, by implication, limit the executive power of the Commonwealth.

When I was writing these remarks last night, I was drawing upon my own no doubt very limited intellectual resources in arriving at some conclusions about the proper interpretation of the Williams decision. So you can imagine how gratified I was this morning to read that a constitutional scholar of far greater eminence than my poor powers of constitutional scholarship, Professor Anne Twomey of the University of Sydney, had posted on the University of Sydney's website a note about this legislation, under the heading 'Parliament's abject surrender to the executive'. Professor Twomey is obviously a woman who does not hide behind clouds of ambiguity. This is what Professor Anne Twomey, a professor of constitutional law at the University of Sydney, had to say about this bill in her article published today:

Will this Bill, once enacted, be effective? It is really just setting up more stoushes with the High Court. What the Court stressed in the Pape case in 2009 and the Williams case last week, was that the Commonwealth must have a head of legislative power to support its spending. Where is the head of legislative power to support this Bill? Many of the programs listed in the draft regulations will fall under a head of legislative power, and it is conceivable (although contestable) that this Bill, once enacted, is enough to support them. But others will not be supported by a head of power and will remain invalid regardless of such a law. Hence, this Bill merely provides a fig-leaf for the Commonwealth’s legislative incompetence. It still leaves open the question of whether the Commonwealth has the legislative power to support the chaplaincy program along with many others.

Finally, what is most extraordinary above all is the fact that the Commonwealth Government seems so determined not to listen to the High Court. It ignored the High Court’s judgment in the Pape case, merrily going on with funding of bodies and programs without sufficient legislative power. In response to the Williams case it simply enacts a law that attempts to restore what it wrongly believed to be its former powers, without actually listening to or taking to heart the High Court’s concerns about a democratic deficit, the important role of parliamentary scrutiny and the importance of federal considerations. This Bill, in a bald-faced manner, rejects the fundamental propositions put by the High Court in the Williams case. The Commonwealth is clearly asking for another clobbering by the Court.

Those are the views of Professor Twomey, who arrived at the same conclusion I did. I am sure Professor Twomey's words carry a lot more weight than mine on this matter. I do say with all due respect, and I know they were operating under great pressure of time, that those who drafted this law and advised the government that it was a sufficient legislative response to the Williams case do not understand what the Williams case decided.

Senator Cormann interjecting

Senator BRANDIS: Thank you, Senator Cormann, for your interjection. I was about to demonstrate the accuracy of what Professor Twomey said in her article. Senator Cormann has drawn to my attention an exchange of questions and answers from the most recent Senate Finance and Public Administration Legislation Committee estimates hearing on 23 May 2012. Senator Cormann asked officers of the Department of Finance and Deregulation:

Senator CORMANN: What is the approach of the Commonwealth in terms of making sure that any and all of its spending is consistent with the constitutional requirements and does not go beyond what is authorised under the Constitution? What checks and balances are in place?

After an exchange that went for about a page, Mr Tune from the department ended up answering that question this way:

In the main we are relying on precedent here, so things have been going along in their 'likeness' and you make the assumption that they are okay. Where you have got new things and the same questions arise you go to the Attorney-General's Department to get their view. Ultimately, of course, this is a matter for the courts.

Senator CORMANN: What you are saying is consistent with what the Prime Minister's department told the inquiry by the Senate Select Committee on Reform of the Australian Federation:

To date the approach we have taken is that current arrangements will continue unless subsequent decisions by the court suggest that a particular activity should not.

So what you are saying is we will keep spending in the way we are spending unless somebody successfully challenges that a particular item of expenditure is not appropriate under the Constitution.

…   …   …

Mr Tune : The Attorney-General's Department may make some new interpretation, but until they do that is the way you operate.

A few lines down it continues:

Senator CORMANN: If I could ask this on notice: since the decision of the High Court in the case involving the Commonwealth and Mr Brian Pape the instances where Commonwealth expenditure was subject to advice on whether or not it would be consistent with the requirements of the Constitution. If you could provide me a list of instances where expenditure was reviewed from that perspective I would really appreciate it.

Mr Tune : Yes.

I understand from Senator Cormann that no such list has been forthcoming. So in fact the very thing that Professor Anne Twomey referred to in her article this morning where she said that the Commonwealth seems determined to ignore the judgment in the Pape case, 'merrily going on with funding of bodies and programs without sufficient legislative power', is precisely what is happening, as was confirmed to Senator Cormann in estimates last May. This is entirely unsatisfactory.

In short, this government's response to the Williams decision to invalidate a particular program because it was established by executive action rather than legislation is to say that all programs are validated so long as they are identified in a regulation, and that regulation does not even have to be made by the minister. That seems to be hardly an adequate response. My preliminary view, which I am emboldened to see is shared by Professor Anne Twomey, is that the bill is a flawed bill that does not overcome the legislative gap or constitutional problem identified in the Williams case.

Nor is the opposition satisfied with the manner in which the government has dealt with us in seeking to address the issue. Although the High Court handed down its decision on Wednesday last week, the first approach to the opposition by the government was the day before yesterday, some three working days after the judgment, when the Attorney-General invited me to a briefing after question time and outlined in broad terms the approach the government was proposing to take. It was at that meeting that my request to examine the government's legal advice was refused. When I met Ms Roxon on Tuesday afternoon I was promised a draft bill by late that night or very early the following morning. In the event, an initial draft was received just before 9 am yesterday. It was replaced later in the morning by another draft, which contained important differences. Neither the shadow cabinet nor the opposition's leadership group had a chance to examine the draft prior to its introduction by the Attorney-General in the House of Representatives late yesterday. The opposition had only a few minutes notice of the final iteration of the bill. As a result, we have gone into this debate having had only a matter of hours to consider the draft legislation and not having had any time to consider each of the more than 400 categories of grants to which it applies. For that reason, while expediting the passage of this legislation today because we want to cooperate in ensuring these grants continue to be paid—notwithstanding our doubts about the constitutional validity of the bill—the opposition proposes an amendment sunsetting the legislation until 31 December this year so that the matter can be considered properly and with the benefit of time.

I heard Senator Wong's observations in her remarks before that the sunset clause would have the effect of making it impossible for the Commonwealth to enter into contracts having an expiry date beyond that time or to make grants. Senator Wong, once again those who prepared those notes for you have let you down, because the proposition you advanced is directly at variance with what the court decided in the Williams case. Referring to the well-known authority of New South Wales v Bardolph, the Chief Justice said:

The case is authority for the proposition, applicable to the Commonwealth, that the Executive Government ... could enter into a binding contract absent prior parliamentary appropriation for the expenditure of money—

on the project. In effect, that is what this seeks to do. The sunsetting clause will have no effect on the application of that principle to these circumstances. The opposition will allow passage of the bill, but we record our deep concerns as to its constitutional validity.