 |
Chapter 13 - Financial legislation
(i) appropriations
There has been general agreement that
the expression charge or burden refers to appropriations of money (its supposed
application to matters other than appropriations is dealt with below). An
appropriation of money is a charge or burden on the people in the sense that it
is a charge on the public funds. An amendment to a bill which would increase
expenditure under a bill out of money proposed to be appropriated for that
purpose is an amendment which would increase a proposed charge or burden on the
people.
On the basis of this analysis, it would appear at first sight that the
interpretation of the relevant provision is relatively easy: if a bill contains
a proposed appropriation of money, and an amendment would have the effect of
requiring increased expenditure under that appropriation, for example, by
increasing the payments which are to be made under the appropriation, the
amendment would need to be in the form of a request.
The question soon arose, however, of the application of the paragraph
to an amendment to a bill which did not itself contain an appropriation but
which amended an act which contained an appropriation in such a way as to
affect expenditure under the appropriation. Should such an amendment which
would increase expenditure under the standing appropriation be moved in the
form of a request?
Strong arguments
could be advanced, on the basis of the 1903 debate and previous authority, that
the third paragraph did not apply to such an amendment. The bill would not of
itself propose an appropriation. Moreover, such a bill could presumably
be introduced in the Senate, and, as has already been noted, the application of
the paragraph to a bill which may be introduced in the Senate undermines the
only coherent purpose and rational application of the paragraph.
Unfortunately, when
this question arose in the Senate in relation to the Surplus Revenue Bill 1910,
it was not considered. A request was moved, and when the necessity for a
request was questioned, the matter was brushed aside with the by then familiar
remark: “What does it matter whether we proceed by way of request or
amendment?” (Senator Pearce, SD, 25/8/1910, p. 2060). The request was then
agreed to.
In this unsatisfactory way it was established that a request was
required for an amendment to a bill which would increase expenditure under an
appropriation in an act to be amended by the bill.
The situation could be rationalised by the thesis that such a bill
contains an implied appropriation, but there is still the problem that such an
amendment could be initiated by way of a Senate bill and could presumably be
made by way of an amendment to a bill first introduced in the Senate. The case thereby
extended the application of the third paragraph in a way which undermined its
rationale as a safeguard of the initiative of the House of
Representatives.
The interpretation of the provision has also been complicated in
relatively recent years by certain unfortunate features of the framing of
government legislation. These features are called unfortunate because, apart
from complicating the interpretation of the relevant provision, they also
amount to a removal of appropriation and expenditure from parliamentary control
and supervision. These aspects of legislation are as follows.
Standing
appropriations. The Parliament has
agreed to many bills which contain standing
appropriations, usually called special appropriations, that is, appropriations
which, when they have been put onto the statute book, continue to authorise the
expenditure of money for some years or until they are repealed, and do not have
to be renewed by Parliament. Bills to amend those bills are then introduced,
and the provisions of the amending bills affect the amount of expenditure to be
made under the standing appropriations. It is then necessary to determine
whether any particular amendment by the Senate of the amending bills will
increase the expenditure under the appropriation. This determination is further
complicated because these standing appropriations are often also appropriations
of indefinite amount.
Indefinite appropriations. The Parliament has
passed many bills which contain appropriations of indefinite quantity. The
provisions in question usually state that the money required for the operation
of the legislation is appropriated from the Consolidated Revenue Fund, without
any specification of an amount. This drafting device is adopted because it is
often not possible for the government to calculate with any degree of accuracy
the amount of expenditure which will be required by the legislation concerned,
because of uncertainty as to the impact of the legislation. This uncertainty
also has the effect of making it difficult to determine whether any particular
amendment of the legislation will require increased expenditure. If the
government cannot determine how much expenditure will be involved in a piece of
legislation, it is asking a great deal that the Senate should determine with
certainty whether any particular amendment of the legislation will increase the
expenditure. (The Financial Management and Accountability Amendment Bill 2000,
which belied its title, and which was passed in connection with the
government’s new tax scheme, added an indefinite amount to every annual and
standing appropriation in every statute, but it was explained that this was a
“bookkeeping” device not actually increasing expenditure.)
Separation of appropriations. The use of standing and
indefinite appropriations and bills which amend the legislation containing
those appropriations means that appropriations are separated from the
provisions that affect the expenditure which may be made under them. It may be
argued, as indeed it was argued during the 1903 Senate debate,
that, on a strict interpretation of the relevant provision in section 53, if a
bill does not contain a specified appropriation there can be no question of any
amendment to it increasing a proposed charge or burden. This interpretation,
while probably strictly correct, has not been followed, and it has been accepted
that a bill proposes a charge or burden if it amends other legislation which
contains an appropriation. This is a very loose interpretation which could, if
carried to its logical conclusion, lead, as was pointed out in the 1903 debate,
to virtually every amendment becoming a request, because virtually every
amendment has an impact on an appropriation which exists somewhere. Fortunately
the interpretation has not been carried to that logical conclusion, but it does
indicate the difficulty of drawing clear lines in the application of the
relevant provision of section 53 if a direct connection between an amendment
and increased expenditure is not required as a condition for a request.
Complex provisions. Many bills passed by the Parliament in recent years
contain complex provisions which determine whether expenditure is to occur.
Usually these provisions take the form of providing that expenditure may occur
if certain factors apply, and the expenditure will occur only if the factors
apply and relate in a certain way. Specific examples of these types of
provisions are referred to in relation to the particular cases described below.
These kinds of provisions often make it difficult to determine whether there is
going to be any expenditure under a bill at all, and, if so, how much, and
thereby make it doubly difficult to determine whether particular amendments
will have the effect of increasing expenditure.
Discretion conferred on officials. Many bills passed by the Parliament
confer discretions on ministers and other office-holders to determine whether
payments are made and therefore to determine whether expenditure occurs. In
many cases these discretions are not governed by any objective factors. Many
appropriations authorise expenditure which is not statutorily required, as it
is, for example, by provisions which create entitlements to payments.
Expenditure under such appropriations depends on the decisions of officials in
the sense that it may be decided to make savings by not spending up to the
authorised level, or not spending at all. This is quite different, however,
from provisions which explicitly empower ministers and other officials to
determine whether payments are made, and if so in what amounts. As will be seen
in the following analysis of past cases, these sorts of provisions provide a
basis for an argument, which was advanced by the Senate in 1981, that an
amendment which merely affects such a discretion need not be a request.
Appropriations of these kinds
have been used (or abused) to such an extent in recent times that only about 20
percent of total government expenditure is now subject to annual parliamentary
scrutiny and approval in the annual appropriation bills. The remaining 80
percent of government expenditure has escaped from parliamentary control
through the use of these types of provisions. The following figures, extracted
from the annual budget documents, show the growth of standing appropriations as
a percentage of total government expenditure:
1909-10 10%
1929-30 38%
1949-50 49%
1969-70 56%
1992-93 74%
2002-03 80%
Had the Parliament not fallen into the habit of passing these kinds of
provisions (and, it is submitted, it is a very bad habit from the standpoint of
parliamentary control and supervision of expenditure), the interpretation of
the relevant provision of section 53 would be relatively straightforward. It is
because of these kinds of provisions that difficulties of interpretation have
arisen.
Proper parliamentary supervision and control of expenditure, and the
proper application of section 53 of the Constitution, require that all
government expenditure be approved annually in specified amounts by Parliament,
with additional and supplementary appropriations when required, and that
expenditure of appropriated funds be governed by objective conditions rather
than discretions vested in officials. There is no reason for this situation not
being achieved, except an executive desire to avoid unwelcome parliamentary
attention. (A bill to abolish standing appropriations and to make all
appropriations subject to annual renewal was introduced in the Senate in 1986
by Senator Vigor: 24/9/1986, J.1229.)
A report of the
Auditor-General presented in
2004 (Report No. 15, 2004-05, PP 240/2004) found widespread illegalities,
lack of information and absence of accountability and control in the
administration of special appropriations. It was pointed out that the nature of
special appropriations (“bottomless buckets of money”) encourages these
problems. (29/11/2004, J.122; SD, 29/11/2004,
pp 74-8) The problems posed by special appropriations were subsequently taken
up in debate on bills containing new provisions for such appropriations and by
the Scrutiny of Bills Committee (SD,
10/10/2005, pp 16-17; Fourteenth Report of 2005, Accountability and Standing
Appropriations, PP 461/2005). The committee adopted the practice of reporting
on provisions for such appropriations.
Other reports by
the Auditor-General disclosed lack of proper control and accountability in
other areas of the public finance system where annual appropriations are by-passed
(Reports Nos 24 of 2003-04, 28 of 2005-06, 31 of 2005-06).
The Finance and
Public Administration Committee presented a report in March 2007 on the
appropriations and funding system and its effect on parliamentary
accountability. The committee recommended significant changes not only to the
system of appropriations but to other features of public finance introduced
during the previous ten years which maximised flexibility for government but
reduced transparency and accountability and hampered parliamentary scrutiny (Transparency
and accountability of Commonwealth public funding and expenditure, PP
47/2007; response by the Chairs’ Committee, 21/6/2007, J.4028).
It is no answer that other countries have extensively used standing
appropriations. This means only that other countries have made the same
mistake. Generally speaking they have not made the same mistake to the same
extent. In the United Kingdom standing appropriations account for only 25 percent
of government expenditure.
The following are
four cases in which there was significant disagreement between the two Houses (in
reality between the Senate and the government’s advisers) in relation to
amendments and requests affecting appropriations, and they illustrate some of
the issues of interpretation.
States Grants (Tertiary Education Assistance) Bill 1981. This bill
contained a provision empowering a minister to make certain determinations
which could have the effect of reducing the payments otherwise authorised to be
made to the states under the bill. A Senate amendment removed the relevant
provision. The Senate passed a resolution declaring that it was in accordance
with section 53 of the Constitution to amend the bill in that way. The
principle which may be drawn from that resolution is that a request is not
required for an amendment which removes a ministerial power which may be
exercised in such a way as to reduce expenditure under a bill (see also
statements by Chair of Committees, SD 20/3/1997, p. 1820; 25/9/1997,
p. 6961; 2/12/1997, pp 10130-31;
the same principle applies to an amendment which would empower a minister to
make determinations which could be exercised to increase expenditure otherwise
to be made under the bill: statement by Chair of Committees, 21/6/2007,
J.4043).
States Grants (Technical and Further Education Assistance) Bill 1988. Under this bill a
minister was empowered to authorise payments to a state in respect of
expenditure of certain institutions. The minister was not to authorise the
payment of an amount that exceeded a prescribed maximum. That maximum was
determined by multiplying a certain sum of money by the number of students
receiving instruction in the relevant institutions. In calculating the number
of students, certain categories of students were to be disregarded. A Senate
amendment had the effect of removing the reference to one of the categories of
students to be disregarded. The belief that the amendment did not require a
request was based on an assessment that the effect of the amendment on the
expenditure under the bill would not be sufficiently direct or certain to
require a request. Whether the amendment increased expenditure would be
determined by whether, because of students falling into the relevant category,
the number of students would be thereby increased (this would depend on numbers
of students in the other relevant categories), whether the maximum amount
payable would thereby be increased and whether the minister would therefore
authorise an increased payment. It appeared on the face of the provisions that
the connection between the amendment and an ultimate increase in expenditure
involved too many links in the chain of causation and would be simply too
indirect and uncertain to warrant the amendment taking the form of a request.
Social Security Legislation Amendment Bill (No. 4) 1991. The Social
Security Act 1991 and its predecessor statute is a frequently-amended act
which contains a standing and indefinite appropriation, and amendments to
amending bills have given rise to difficult questions of interpretation. To
this bill the government moved in the Senate a number of amendments, one of
which created a category of potential recipients of benefits in respect of whom
a certificate could be issued by state or territory authorities. The payment of
funds therefore depended upon the exercise of a power conferred not on a
Commonwealth official but on state and territory officials. It was not known
whether any certificates would be issued by the relevant authorities or whether
any benefits would be paid, and subsequent publicity surrounding the bill
indicated that the matter was still in doubt for some time after its passage.
The view was therefore taken that the effect of the amendment on total
expenditure under the bill was uncertain. After the amendments had been passed
by the Senate and agreed to by the House of Representatives, a statement was
made by the Speaker indicating a belief that the amendment in question should
have been a request.
Local Government (Financial Assistance) Amendment Bill 1992. A provision of
this bill empowered the relevant minister to determine a figure which,
multiplied by a separately determined factor, produced an amount of a payment
to the state of Tasmania, and a ceiling was prescribed for the figure to be determined by the
minister. A Senate amendment had the effect of altering that ceiling. The view
was taken that the amount actually expended under the bill would not
necessarily be affected by the alteration of the ceiling by the Senate’s
amendment. Moreover, it was made clear that, if the ministerial power under
this bill were exercised in such a way as to increase the payment to Tasmania, payments to the
State under other legislation, also determined by ministerial determination,
would be reduced by a corresponding amount. It was clear, therefore, that in
practice the amendment would not result in additional expenditure. In this case
the effect of the amendment was influenced by two different statutory
ministerial discretions. Although, as the Speaker suggested in a statement to
the House of Representatives, it is somewhat anomalous to be interpreting the
question with reference to a ministerial undertaking, it is also highly
anomalous to argue that a request is required when it is known that there will
be no increase in expenditure.
(See Supplement) An issue which has arisen from time to time relates to Senate
amendments which remove proposed restrictions on entitlements to payments. The
principle has been followed that where a bill proposes to restrict eligibility
for payments under an act which contains a standing appropriation, and the
Senate’s amendments remove or liberalise the restrictions, those amendments do
not need to be requests, although their effect is to increase the total of
expenditure which would otherwise have occurred had the bill been passed
without amendment. This principle appears to have been accepted by the government.
(See government amendments moved in the Senate to the Social Security
Legislation Amendment Bill 1990, 18/12/1990, J.633-7; statements by the Chair of
Committees, SD, 26/11/1996,
p. 5968; 29/11/1996,
p. 6379; 13/12/1996, p.
7490; 12/2/1997, p. 539;
for acceptance by the government, see HRD, 2/12/1996, p. 7454.)
In relation to a Senate amendment to the Social Security Amendment Bill
1993, it was conceded by the government that it was not possible to determine
the effect of the amendment on expenditure (HRD, 26/5/1993, pp 904-6).
In
1997 government amendments to a bill dealing with veterans’ affairs were
circulated as requests even though the explanatory memorandum accompanying the
amendments stated that they did not have any financial impact. The Chairman of
Committees stated that he was at a loss to understand why the amendments had
been framed as requests (SD, 12/2/1997, p. 539). See also the statements
by the Chair of Committees in relation to the Taxation Laws Amendment Bill (No.
1) 1997, SD, 27/6/1997, p. 5456; the Child Support Legislation Amendment Bill
1998, SD, 30/11/1998, p. 910, 7/12/1998, p. 1328; New Tax System Bills, SD,
30/4/1999, p. 4657; 24/6/1999, p. 6252; 25/6/1999, p. 6465; Telecommunications
Bills, SD, 27/5/1999, p. 5549. (See Supplement)
Amendments
which may result in increases of expenditure from funds not yet appropriated or
which authorise ministers to take action which may result in increased
expenditure are not treated as requests (statements by Chair of Committees, SD,
20/3/1997, p. 1820; 25/9/1997, p. 6961; 2/12/1997, pp 10130-31).
Where amendments
are purely consequential on amendments which are properly framed as requests,
the consequential amendments may also be framed as requests (statement by Chair
of Committees, A New Tax System (Family Assistance and Related Measures) Bill
2000, SD, 11/4/2000, p. 13807). On occasions government drafters have attempted
to have groups of government amendments all treated as requests on the basis
that some of them should be requests and they are related. The Senate has not
accepted this distorted application of the constitutional provisions.
(Statement by Chair of Committees, Further 1998 Budget Measures Legislation
Amendment (Social Security) Bill 1999, SD, 20/9/1999, p. 8438).
In debate in the
House of Representatives on the States Grants (Technical and Further Education
Assistance) Bill 1988, the responsible minister quoted an opinion by a
government adviser which
indicated that the amendment to the bill was one which required a message under section 56 of
the Constitution (HRD, 21/12/1988, pp 3777-8; the opinion was also quoted in
the Senate p. 4809). In other cases in the past where there has been
dispute about whether an amendment moved in the Senate infringed the rule
concerning a proposed charge or burden on the people, the government has sought
to establish that the amendment should take the form of a request by advising that
a Governor-General’s message would be necessary if the amendment were passed by
the House of Representatives.
In debate on the Trade Practices Revision Bill 1986, Senator Macklin pointed out that a
message had been brought into the House of Representatives in connection with
the bill. The bill did not contain any appropriation of money, and nor did the
Trade Practices Act which it amended; the money necessary for expenditure under
the Trade Practices Act is appropriated by the annual appropriation bills.
There was a clause in the bill which enlarged the category of proceedings in
respect of which, under the principal act, financial assistance might be
granted by the Attorney-General. The funds necessary for this assistance were
not appropriated by the bill or the Act, but were contained in annual
Appropriation Bill (No. 1), and when the relevant section of the principal act
was passed no message was produced. It was clear, therefore, that a
Governor-General’s message should not have been brought into the House of
Representatives in respect of the bill. In response to Senator Macklin, Senator Evans, the Minister
representing the Attorney-General, said that the introduction of the message
represented an “abundance of caution” on the part of the Office of Parliamentary
Counsel (the government drafting office). Senator Macklin asked why any
caution at all was required, since the requirements of sections 53 and 56 of the
Constitution are not justiciable. Senator Evans then conceded that the bill was not an appropriation
bill and that the message should not have been produced (SD, 30/4/1986,
p. 2072).
This incident demonstrated some of the issues of interpretation
referred to, and also demonstrated that an opinion by government advisers that
an amendment should have been a request cannot be taken as an infallible answer
to the question.
In framing government
amendments to be moved in the Senate the government drafters have occasionally
suggested that such amendments should be made as requests if they make
expenditure “legally possible”; in other words, section 53 of the Constitution
should be read as if it referred to notional charges or burdens rather than
real charges or burdens. This suggestion has not been accepted by the Senate.
(Statement by Chair of Committees, Indirect Tax Legislation Amendment Bill 2000,
SD, 26/6/2000, p. 15556; see also below under Procedure Committee’s proposals.)
In the course of consideration of cases of disagreement, various papers
were tabled in the Senate. In papers prepared by the Clerk of the Senate, it was suggested
that an amendment to a bill relating to a standing or indefinite appropriation
should not be regarded as increasing a proposed charge or burden unless the
amendment would clearly, necessarily and directly cause an increase in expenditure
under the appropriation. The contrary view appears to be that amendments have
to be considered on a case-by-case basis without the application of any such
general principle. (The various papers are collected in a volume entitled Constitution,
Section 53: Financial Legislation and the Houses of the Commonwealth Parliament,
Papers on Parliament No. 19, Department of the Senate, March 1993. These
papers refer only to the question of the effect of the provision on
appropriation bills; for the effect on taxation bills, see below. See also
below under Procedure Committee’s proposals.)
In relation to an
appropriation bill which appropriates a definite sum and which is not for the
ordinary annual services of the government, although the Senate may not amend
the bill to increase the amount of the appropriation, it is clear that the
Senate can alter such a bill to change the allocation of proposed expenditure
and the purposes for which money is to be appropriated, provided that the total
proposed expenditure of the bill is not increased (Appropriation (Works and
Buildings) Bill 1910-11, 15/9/1910, J.98; see also J. Quick and
R.R. Garran, Annotated Constitution of the Australian Commonwealth,
1901, p. 671; cf ruling of President Gould, 3/10/1907, J.134, in relation
to an amendment widening the scope of a bounty but subject to a limited total appropriation:
this ruling was clearly in error). Thus
the Higher Education Legislation Amendment (2005 Budget Measures) Bill 2005 was
amended to reallocate appropriations within the same total (8/11/2005,
J.1363; SD, 9/12/2005, p. 45). In the case of the States Grants (Primary and Secondary Education
Assistance) Bill 2000, although the total effect of the Senate’s amendments was
probably to reallocate the funds to be appropriated, the effect of amendments
which would have reduced grants for some private schools was not sufficiently
clear to conclude that the reductions would have funded amendments to increase
grants in respect of children with disabilities. The latter were therefore
moved in the form of requests. (9/11/2000, J.3549-50; 10/11/2000, J.3555-68)
In its judgment in 1995 in the proceedings relating to the Native
Title Act 1993 (Western Australia v Commonwealth 1995 183 CLR 373),
the High Court dealt with a submission that the Native Title Act was invalid
because the amendments made to the Native Title Bill in the Senate were
contrary to section 53 of the Constitution. The Court rejected the submission. In finding that the
provisions of section 53 are not justiciable, the Court observed:
“Section 53 is a procedural provision governing the intra-mural
activities of the Parliament” (emphasis added). More significantly, the Court
made the following observation: “In any event, the submission of want of
conformity with s. 53 appears to be without merit. None of the Senate
amendments appears to increase a ‘charge or burden on the people’ ” (at 482).
This confirmed the treatment of the amendments by both Houses at the time. They
were moved in the form of amendments and not as requests because they did not
directly increase expenditure under any appropriation contained in the bill or
in any act amended by the bill. One of the Senate’s amendments to the bill,
however, established the Parliamentary Joint
Committee on Native Title. This caused increased expenditure from a standing
appropriation contained in the Remuneration Tribunal Act 1973, as
modified by the Remuneration and Allowances Act 1990, in respect of
remuneration of the chair of the committee and travelling allowances for
members of the committee. The increased expenditure was automatic; no action by
the Remuneration Tribunal was necessary. This suggests that the High Court took
a view of the third paragraph of section 53 similar to that expounded
here: only a very direct effect on an appropriation is regarded as an increase
in a charge or burden.
Previous page | Contents | Next page
Website feedback: web.senate@aph.gov.au
Last reviewed 10 September 2010 by the Senate Web Administrator
© Commonwealth of Australia
Parliament of Australia Web Site Privacy Statement
Images courtesy of AUSPIC
|
 |
