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July 2014

History clearly does repeat itself. After the High Court handed down Williams v Commonwealth No 1 on 20 June 2012, striking down the validity of the schools chaplaincy scheme, the Labor Government rushed through the Commonwealth Parliament, within a week, legislation that purportedly authorised hundreds of Commonwealth spending programs that had previously relied upon Commonwealth executive power for their support. It was criticised for the rashness and bluntness of this exercise and its dubious constitutional validity.

In an astonishing replication of the past, the High Court handed down its judgment in Williams v Commonwealth No 2 on 19 June 2014 and the Coalition Government rushed through the Commonwealth Parliament, within a week, legislation to preserve the provisions made in 2012 which it had then criticised, in full knowledge that these provisions will in many cases not be constitutionally effective to support all the programs that they purport to authorise. This time, however, no fuss was raised, not an eye was blinked and almost nobody noticed.

The Commonwealth’s Response to Williams No 1

Back in June 2012 the Commonwealth Parliament enacted the Financial Framework Legislation Amendment Act (No 3) 2012 (Cth). It inserted provisions, including s 32B, into the Financial Management and Accountability Act 1997. Section 32B purported to authorise the making and administering of grants and payments of public moneys that fall within classes of arrangements, grants or programs specified in the Financial Management and Accountability Regulations 1997 (Cth). The Regulations were also amended to include a list of over 400 of these arrangements, grants and programs in Schedule 1AA. They include programs covering matters such as: drought assistance, animal welfare, ‘food in the national curriculum’, community legal services, crime-stoppers, disaster resilience, school security, child care, ‘creative young stars’, youth support and seasonal workers. Included in the list was Program 407.013 – ‘National School Chaplaincy and Student Welfare Program’.

Williams v Commonwealth No 2

Mr Williams then challenged this purported authorisation of funding of the chaplaincy program. He did so on the ground that there was no Commonwealth legislative head of power to support the authorisation of expenditure on the chaplaincy program. He also challenged the validity of s 32B on the ground that it impermissibly delegated to the Executive, authorisation of expenditure by virtue of the fact that the relevant programs were all identified by regulations which could be made and amended by the Executive.

The Court upheld Mr Williams’ first argument, holding that there was no legislative head of power to support the expenditure of funds on the chaplaincy program. It left undecided, however, the question of whether the whole of s 32B was invalid because of the impermissible delegation of the power to authorise expenditure to the Executive. It found that it was not necessary to decide this point, as s 32B, if valid, still did not support the chaplaincy program. For present purposes, it read down s 32B as not applying to support expenditure on those programs that do not fall within a Commonwealth head of power.

Hence, the status of s 32B was left in even greater uncertainty. At the very least, it must be read down so that it does not support what would appear to be a significant number of programs described in the regulations which do not fall within a Commonwealth head of power. This leads to the unfortunate outcome that while the statute book says that certain programs are authorised, they are in fact not authorised and expenditure upon them is invalid. Such a gap between what is stated on the face of the law and its constitutional effectiveness has the tendency to bring the law into disrepute. There also remains the bigger question of whether s 32B is valid at all.

The replacement of the Financial Management and Accountability Act

The dilemma that then faced the Abbott Government arose from a ticking time-bomb left by the Gillard Government. In the death-throes of the last Parliament, new legislation was again rushed through both Houses to reshape completely the Commonwealth’s financial management system. The new Public Governance, Performance and Accountability Act 2013 was enacted to replace the old Financial Management and Accountability Act 1997. The substantial provisions of the new Act were required to come into effect by 1 July 2014. The new Act did not contain any equivalent to s 32B of the Financial Management and Accountability Act. This left to the Abbott Government the question of what to do about s 32B – should it be replaced or left to die, or preserved as an anomalous island in an old Act from which the rest of its substance had been stripped?

The High Court handed down its judgment in Williams No 2 on 19 June 2014. On 24 June the Public Governance, Performance and Accountability (Consequential and Transitional Provisions) Bill was introduced into Parliament. It was rushed through both Houses, passing on 26 June and receiving royal assent on 30 June. What it did, amongst other things, was to strip out most of the Financial Management and Accountability Act, but to preserve s 32B and associated provisions and regulations, and rename the Act the Financial Framework (Supplementary Powers) Act. Hence, s 32B, despite its dubious constitutional status, and the highly misleading regulations all survive to be challenged another day.

Was there intense debate and scrutiny in the Parliament of this action? No. One oblique mention was made to the Williams case in the debate by a backbencher, but nothing else was said. Perhaps they are all waiting for history to repeat a third time.