Wilkie v Commonwealth: A Retreat to Combet over the Bones of Pape, Williams, and Responsible Government

BY ANNE TWOMEY

27.11.2017

Such was the interest in the High Court’s judgment in Wilkie v Commonwealth and Australian Marriage Equality Ltd v Minister for Finance [2017] HCA 40 (hereafter ‘Wilkie’) that it caused the High Court’s web-site to crash.  The subject-matter to which the case related, being the holding of a voluntary postal survey on same-sex marriage, was controversial.

The judgment, however, has far greater ramifications as a precedent which upholds the capacity of the Executive to allocate the appropriation of funds and to expend them, when there is existing standing authorisation in legislation to do so, without any parliamentary scrutiny and even against the will of Parliament.  It undermines the foundational constitutional principle of responsible government and the authority of the significant precedents of Pape v Commissioner of Taxation (2009) 238 CLR 1 and Williams v The Commonwealth (2012) 248 CLR 156. 

Background

Prior to the 2016 election campaign, the Coalition promised, if elected, to hold a compulsory plebiscite on same-sex marriage.  It attempted to implement this promise after the election, but the Plebiscite (Same-Sex Marriage) Bill was defeated on two occasions in the Senate.  The Bill included a special appropriation to fund the plebiscite.  The amount was accordingly not included in the budget for the 2017-18 financial year, although a note was included in the ‘Statement of Risks’ that the government remained committed to the plebiscite and the provision of $170 million to conduct it ‘as soon as the necessary legislation is enacted by the Parliament’ (p 244).

The High Court had previously held in Pape that the expenditure of public money must be supported by a head of Commonwealth power and in Williams that legislation is ordinarily necessary to authorise expenditure, except in limited cases, such as expenditure on the ordinary administration of government or the exercise of prerogative powers.  Hence, if the Government could not achieve the passage of legislation to support its plebiscite, it faced problems both in relation to compulsion and how to fund it.

The Government decided to get around these problems in a fairly ingenious way by latching on to powers in existing legislation.  While it could not hold a compulsory plebiscite without legislation, it could use s 9 of the Census and Statistics Act 1905 (Cth) to give a ministerial direction to the Australian Statistician to ‘collect … statistical information’ in relation to matters that are prescribed for the purposes of the section.  These include ‘births, deaths, marriages and divorces’, ‘law’ and ‘population’.  On 9 August 2017, a direction was given to the Statistician to collect statistical information about the proportion of participating electors who are in favour or against the law being changed to allow same-sex couples to marry and the proportion of electors who wish to express a view about it.  It required the statistical information to be published on or before 15 November 2017.

Once this direction was made, the Australian Bureau of Statistics (‘ABS’) was able to expend money on what came to be described as the same-sex marriage ‘postal survey’, as it fell within the functions of the ABS, as authorised by legislation.  The only remaining problem was that the ABS did not have enough money in its budget to undertake the postal survey.

The second step was therefore to boost the appropriation to the ABS by drawing on the Advance to the Minister for Finance.  This was an amount, up to a maximum of $295 million, which was authorised by the Parliament to be drawn upon to deal with urgent and unforeseen expenditure.  It can be allocated by way of a ministerial determination.  On 9 August 2017, the Minister for Finance made a determination under s 10 of the Appropriation Act No 1 2017-2018 (‘Appropriation Act’) that increased the budget allocation for the ABS by $122 million.

The Government therefore used ministerial powers under existing legislation both to secure the power and the money to conduct the same-sex marriage postal survey, without further parliamentary scrutiny or approval.  Not surprisingly, its actions attracted legal challenges.

Validity of the Advance to the Minister for Finance

While other issues arose in the case, such as standing and the scope of the functions of the ABS, the main focus of the challenge in Wilkie was the use of the Advance to the Minister for Finance.

Section 10(1)(b) of the Appropriation Act provided that

if the Finance Minister is satisfied that there is an urgent need for expenditure, in the current year, that is not provided for … because the expenditure was unforeseen until after the last day on which it was practicable to provide for it in the Bill for this Act before that Bill was introduced into the House of Representatives,

then the Finance Minister may make a determination to make provision for that expenditure.  It also provided that the effect of such a determination is to alter the figures in the budget to include that amount in the appropriation to the relevant non-corporate entity, which in this case was the ABS.  Such determinations are legislative instruments, but are not subject to disallowance or sunsetting.

A challenge was brought to the validity of s 10 of the Appropriation Act and the appropriation of the Advance to the Minister for Finance on the ground that it involved Parliament abdicating its control over appropriations.  The Court dismissed this argument.  It noted that the Parliament, through the enactment of the Appropriation Act, appropriated the full amount of the Advance to the Minister for Finance, which could be used for the purposes (described as ‘items’) identified in relation to each entity listed in the Schedule to the Act.  All the Minister for Finance could do was allocate the whole or part of the appropriated $295 million for the use of one or more of those entities for the already nominated purposes.  As such, the amount, the purposes and the recipients of the appropriations are approved by the Parliament, with the role of the Minister for Finance confined to supplementing the amount received by a recipient for existing purposes, when there is an urgent need to do so, from a fund specifically appropriated for that purpose.

While the Court recognised ‘passing scepticism’ about how this can be reconciled with the constitutional requirement that an appropriation be for a legislatively determined purpose, it concluded at [91] that the ‘reconciliation lies in recalling that the degree of specificity of the purpose of an appropriation is for Parliament to determine’.

This harks back to Combet v The Commonwealth (2005) 224 CLR 494 where the High Court made such a finding in 2005 in relation to the funding of an advertising campaign for the ‘WorkChoices’ industrial relations policy of the Government.  Many regard this as a disastrous decision that undermined parliamentary scrutiny of appropriations by permitting purposes to be identified in a manner that is so broad and suffused with weasel-words that they are meaningless.  For example, the purpose for the appropriation of the money to fund the Commonwealth’s school chaplaincy scheme in the Williams case was ‘Individuals achieve high quality foundation skills and learning outcomes from schools and other providers’.  It is inconceivable that a House could know that this ‘purpose’ encompassed the funding of a chaplaincy scheme.

In Pape, it was recognised by Gummow, Crennan and Bell JJ at [197] that the consequence of Combet and the lack of specificity in relation to the purposes of appropriations was that s 81 of the Constitution could not be treated as a ‘spending power’ as it was not possible to determine as a matter of constitutional fact whether an appropriation actually comes within the identified purpose.  Accordingly, the Court held that a separate source of power was needed to support expenditure, beyond its appropriation.  This was necessary to support the constitutional principle of responsible government.

Justice Hayne reinforced this in Williams, where he lamented the fact that the purposes of appropriations are articulated at increasingly high levels of abstraction and also identified this failure as the cause for the separation of appropriations from expenditure for the purposes of determining their authorisation.  In Pape and Williams the High Court laid great emphasis on the principle of responsible government, stressing that Parliament is the branch of government that controls the raising and expenditure of public moneys.

In Wilkie, the Court perpetuated the problems caused by Combet, rather than giving effect to the principle enunciated in Pape and Williams of executive accountability to Parliament in relation to public moneys.  This failure to support and enforce the principle of responsible government is even more evident in the Court’s response to the argument in Wilkie that the Minister for Finance failed to meet the legislative conditions for the use of the Advance to the Minister for Finance.

Satisfaction of an ‘urgent need’ for expenditure that was ‘unforeseen’

The challenge here was to whether the Minister could have been ‘satisfied’ that there was ‘an urgent need’ for expenditure which had not been provided for in the budget because it was ‘unforeseen’ until the last day before it was practicable to insert it in the budget before its introduction, being 5 May 2017.  The plaintiffs argued that the expenditure on a postal survey was neither urgent nor unforeseen and that the Minister could therefore not have been satisfied that it was.

The Court noted that the source of the pre-conditions that the expenditure be urgent and unforeseen was originally the report of a 1979 parliamentary committee which sought legislative constraint upon resort to the Advance.  The Government, concerned about litigation about what was urgent and unforeseen, took the compromise approach of making this a matter for the ‘satisfaction’ of the Minister, adding a subjective element.  In legal advice prepared in 1988, the Commonwealth accepted that the ‘Minister is not free to form any opinion he pleases’.  The opinion ‘must be not unreasonable and it must be formed having regard to relevant considerations – including the correct legal meaning of the expressions ‘urgently required’ and ‘unforeseen’ and for permissible purposes’.  The High Court at [104] accepted that advice as ‘clearly correct’.  It stated at [109] that the Finance Minister’s satisfaction must be formed ‘reasonably and on a correct understanding of the law’ and must not take into account a consideration which is ‘extraneous to any objects the legislature could have had in view’.

Nonetheless, the Court proceeded to strip ‘urgent need’ of all meaning, so that anything is an ‘urgent need’ as long as it is something the government wants to do.  It concluded at [111] that a ‘need’ is simply something ‘which ought to occur’ – not something that is critical or imperative.  ‘Urgency’ was described as a ‘relative concept’ (at [113]), which in this case meant that the Minister was satisfied that the expenditure should be made in the period before the next Appropriation Act was due to be passed.  In other words, if the government wants to spend money in that period, that is enough to satisfy ‘urgent need’.

The plaintiffs argued that the Minister was obliged to consider whether it is reasonable or practicable for the government to introduce a Bill for a special appropriation to deal with the expenditure.  This is consistent with the government guidelines on the use of the Advance which state that an ‘urgent need’ is one that arises when the entity is ‘within two weeks’ of exhausting its available appropriation.  A special appropriation could not be passed in that amount of time.  The guidelines further describe ‘urgent need’ as meaning there is a ‘pressing or compelling’ need to make the payment which ‘cannot be delayed’.  The plaintiffs also argued that the urgent need must arise from some source external to government, rather than being a need of the government’s own creation.  The Court rejected all these arguments at [112]-[115], contending that the history of the exercise of the Advance did not support them and that the government guidelines did not amount to a legal constraint upon the Finance Minister’s powers.

The history of the use of the Advance to the Minister for Finance shows that it has been used to address genuinely urgent and unforeseen needs, such as payments to respond to extreme weather events and the H1N1 flu pandemic, but that it has also been used inappropriately to give grants to sporting and other bodies which do not appear to have been urgent or unforeseen.  The use or abuse of a provision in the past should not determine its interpretation in the present.

If the making of a grant to a sporting body, from funds appropriated through the Advance to the Minister for Finance, was not also authorised by a statute validly supported by a head of power, then according to the High Court in Pape and Williams it would be invalid, regardless of past practice.  Equally, if past practice in the government’s use of the Advance to the Minister for Finance has been inappropriate and not adequately met the requirement of ‘urgent need’, then it should not be relied upon to justify an interpretation of the provision that departs from the ‘ordinary and natural meaning of the language’.  Such an approach would appear to be contrary to that taken by the Court in Re Canavan [2017] HCA 45 at [19], where it applied the ordinary and natural meaning of the text over the apparently long practice of dual citizens by descent sitting in Parliament.

The Court’s interpretation of the legislative restriction on the exercise of the Minister’s powers renders it of no substantive effect.  This cannot be consistent with the intent of the provision.  If Parliament had wanted to give the Minister power to authorise expenditure of the Advance on anything that the Government wanted, it would not have imposed the conditions in s 10.  The fact that the Parliament did include this express limitation on the use of the Advance must indicate that it is intended to be a substantive limit on executive power.

The only reason why there was a ‘need’, albeit never urgent, to spend the money from the Advance to the Minister for Finance was that the Parliament had twice refused to pass a Bill containing a special appropriation to fund a plebiscite.  It can hardly be argued that the Advance is intended to be available to fund those matters that the Parliament has expressly refused to authorise or fund.  Such a use of the Advance to the Minister for Finance clearly detracts from parliamentary scrutiny of the appropriation and expenditure of funds, contrary to all that was previously said by the High Court in Pape and Williams.

The Court took a similar approach to the meaning of ‘unforeseen’, concluding at [121] that the question is not whether expenditure directed at achieving the same result was unforeseen, but rather whether the need to pay the particular amount to the particular government entity was unforeseen.  While the Government had foreseen the need to pay for the holding of a plebiscite, it had been able to avoid the inconvenient consequences of foresight by changing the recipient of the money and altering the plebiscite to a voluntary postal survey.  Hence the Court concluded that the expenditure was ‘unforeseen’, even though the Government had always intended to spend the relevant amount (or more) for the same purpose of being informed of the views of electors on same-sex marriage.

Justiciability of ss 53, 54 and 56 of the Constitution

 One small but interesting point coming out of Wilkie is that it gives unanimous support for the proposition that ss 53, 54 and 56 of the Constitution are non-justiciable.  While this is consistent with general belief amongst constitutional lawyers, the High Court has previously been cagey on the subject.  In Combet, for example, the majority judgment of Gummow, Hayne, Callinan and Heydon JJ discussed at [155] the application of ss 53 and 54 to appropriations for the ordinary annual services of the Government and concluded:

It is unnecessary to decide whether a dispute about the application of those aspects of ss 53 and 54 could give rise to a matter to be decided by this Court.

Until Wilkie, this was the most recent authority on the justiciability of those sections, and it left uncertain their status.  In Wilkie, the Court at [63] relied upon Combet and earlier cases to assert that these sections are non-justiciable.  What was uncertain and undecided in Combet has been mysteriously transformed into authority that supports certainty.

Conclusion

While Wilkie is consistent with the approach previously taken by the High Court in 2005 in Combet with respect to appropriations, it does not sit well with the Court’s more recent approach to parliamentary scrutiny of the use of public money in Pape or Williams.  It hands the Minister for Finance carte blanche to use the Advance to the Minister for Finance for any exercise, ranging from blatant pork-barrelling to actions clearly rejected by the Parliament.  It undermines the basic tenets of responsible government and contributes to the erosion of public trust in the governmental system.

Anne Twomey is a Professor of Constitutional Law at the University of Sydney.

Suggested citation:  Anne Twomey ‘Wilkie v Commonwealth: A Retreat to Combet over the Bones of Pape, Williams, and Responsible Government’ on AUSPUBLAW  (27 November 2017) <https://auspublaw.org/blog/2017/11/wilkie-v-commonwealth/>