On 25 July 2012, Gabrielle Appleby of the Adelaide Law School, Mike Wait from the South Australian Crown Solicitor’s Office and Stephen McDonald of the South Australian Bar presented a seminar on the recent decision in Williams v Commonwealth for the Australian Association of Constitutional Law. Below is an edited version of Gabrielle’s paper. Stephen’s full paper can be accessed here.
Introducing Ron Williams and the National School Chaplaincy Program
Ron Williams is a father of seven from Toowoomba. Williams sent four of his children to the Darling Heights State School. In April 2007, the School successfully applied for a federal funding grant for its school chaplaincy service, run by Scripture Union Queensland. The chaplaincy service had previously been funded by the Queensland Government. Since November 2007, the Scripture Union has had an agreement with the Commonwealth Government to provide chaplaincy services to the Darling Heights School.
This agreement was part of the National School Chaplaincy Program, a policy relying for support only on an annual appropriation and the Commonwealth’s executive power. (Although later the Commonwealth did try to ‘retro-fit’ section 44(1) of the Financial Management and Accountability Act 1997 (Cth) as a source of its power, this was quickly rejected by the Court). The chaplaincy program started in 2006, initiated by the Howard Government, but continued under the Rudd and Gillard Governments, with a recent expansion in 2008 to support non-religious counselling services as well.
The Darling Heights Funding Agreement incorporated the National School Chaplaincy Program Guidelines. The Agreement was for the provision of services, a key element of which was the provision of ‘general religious and personal advice to those seeking it, comfort and support to students and staff, such as during times of grief’. The chaplain was not to ‘impose any religious beliefs or persuade an individual toward a particular set of religious beliefs’.
Ron Williams objected to the religiosity of the program, provided at public expense, at a public school at which his children attended. In 2010, he brought a High Court challenge against the scheme.
The Full Bench heard Williams’ Special Case in August 2011, although it wasn’t until June this year that the High Court gave its decision. It was a decision that would change the form of executive spending into the future, if not the substance of it. It may also herald a change in the High Court’s approach to constitutional interpretation, with the embrace of federalism and ideas of responsible and representative government informing a more contextual and structural approach.
The three main issues that fell for consideration by the Court were:
- whether Williams had standing to challenge the validity of the Funding Agreement and payments made under it;
- whether the Funding Agreement was invalid on the basis it was prohibited by s 116 of the Constitution. It was argued that the religious qualifications of a chaplain amounted to requiring a religious test for an office under the Commonwealth. This was the most widely reported aspect of the challenge, although constitutionally not the most viable or the most interesting; and
- whether the Funding Agreement was supported by the executive power of the Commonwealth under s 61 of the Constitution.
It was the last issue that the case turned on. After the 2009 decision of Pape v Federal Commissioner of Taxation (which held a parliamentary appropriation could not alone support Commonwealth spending) this question was generally thought to require consideration of whether the Funding Agreement would fall within possible heads of legislative competence, within the prerogatives, or within the executive nationhood power.
It was assumed by all parties up until the hearing that the Commonwealth Executive could at least spend monies on subjects or for purposes that could be the subject of federal legislation. This reflected the idea that the contours of Commonwealth executive power followed the contours of Commonwealth legislative power. This was referred to throughout the judgments as the ‘Common Assumption’ (the capitalisation was added by Heydon J). The Commonwealth argued that these agreements could fall under ss 51(xx) (the corporations power) and (xxiiiA) (the power to give ‘benefits to students’).
The Commonwealth also made a broader submission that the executive power included all of the capacities of an individual (thus covering the power to contract, spend moneys and engage in other activities) even outside the heads of legislative power, the prerogatives or the executive nationhood power. I will refer to this as the ‘capacities argument’.
In a 6:1 judgment (Heydon J filling the role of lone dissenter again), the Funding Agreement was found unconstitutional on the basis it was not supported by the executive power. Before turning to this aspect of the judgment, I will briefly address the outcome and reasoning on standing and s 116. It was on these areas that there was the most cohesion in the reasoning across the judges.
Unanimously, the High Court accepted that the action could be brought, although not necessarily that the plaintiff had standing. French CJ, Hayne, Crennan and Kiefel JJ all agreed with the reasoning of Gummow and Bell JJ on this point. Gummow and Bell JJ’s reasoning on this point is novel, and has the potential to dramatically increase litigation if followed in other cases by the Court. They held that because the plaintiff’s contentions were extensively supported by two of the intervening State Attorneys-General (Victoria and Western Australia), who unquestionably had standing to challenge the Funding Agreement, ‘the questions of standing may be put to one side’.
This, I would suggest, is extraordinary for two reasons. First, it is very difficult to reconcile with the Court’s previous emphasis on the relationship between standing and the constitutional requirement for there to be a matter, as had recently been confirmed in Pape. If there is no matter, the State Attorneys-General have no right to intervene. The standing of the States is gained only where there is a matter. The argument is inherently circular and unconvincing (and Heydon J pointed it out as such in his judgment).
Secondly, it seemingly conflates intervention with being a party, which are very different political decisions in practice. A decision by the States to intervene in a matter is quite a different question from a decision to bring an action. Intervention ensures the interest of the States are protected in litigation that is on foot, in litigation which the States may not have brought themselves because they may politically support the program or policy under challenge (and Williams and Pape are examples of this). But once litigation has commenced, they must ensure their institutional interests are protected in the outcome. Conflating intervention in ongoing litigation with bringing a matter raises the possibility of a dramatic increase in litigation in the future.
What the reasoning seems to tell us that is that the High Court will hear an issue if it wants to, leaving technicalities of standing and the need for a matter to one side. This does not bode well for the Commonwealth after the introduction of its remedial legislation which I think has serious constitutional flaws.
Unanimously, the High Court dismissed the argument that the Funding Agreement was invalid on the basis of s 116. The judges did not accept that the Commonwealth’s providing the salary of the chaplain to the Scripture Union who employed the chaplain, was sufficient to make the office one ‘under the Commonwealth’ so as to engage s 116. Gummow and Bell JJ referred to the fact the chaplain was engaged by SUQ, controlled and directed by the school principal, and had no contractual relationship with the Commonwealth. Similarly, Heydon J noted that the Commonwealth could not appoint, select, approve, dismiss or direct the chaplains.
Williams’ primary argument against the program was therefore not the cause of its demise, and the decision certainly does not represent a win for strengthened separation between church and state in public schools.
All of the judges, with the exception of Heydon J, rejected the broad submission of the Commonwealth that the executive power in s 61 included the capacities of a legal person.
This left the position that was a ‘Common Assumption’ amongst the parties until the first day of the hearing. The majority of the High Court (French CJ, Gummow and Bell JJ and Crennan J) rejected the Assumption. Justice Heydon accepted the Assumption. Justices Hayne and Kiefel did not have to decide whether the Assumption was correct on the basis there was no valid, hypothetical law that could support the chaplaincy program. How their Honours approached the question of whether the expenditures fell within the head of power is itself an interesting question, both taking a relatively narrow construction of section 51(xxiiiA) of the Constitution. This can be contrasted this with broad reading by Heydon J which is more typical of the High Court’s jurisprudence on federal powers post-Engineers.
As to whether the Common Assumption ought to have be overruled in this case, Heydon J fundamentally disagreed with the majority. The case, he argued, was not an appropriate one for the matter to be decided, noting that the Common Assumption was attacked only very late in the fray. The submissions demonstrated signs of disorganization, and the Commonwealth had been unable to properly defend its position (he even noted during the time to file further submissions, Commonwealth resources were directed towards the Malaysia Solution case). He said:
Radical changes in the construction of the Constitution should not be made without better assistance than the unpredicted conspiracy of circumstances permitted counsel to provide in this case.
The ratio from the majority (French CJ, Gummow, Bell and Crennan JJ) was that the executive power in section 61 of the Constitution extends to spending in the following areas:
- doing what is reasonably necessary for the execution and maintenance of valid laws and constitutional provisions;
- the ordinary and well recognised functions of government, including/analogous to the power to administer government departments pursuant to s 64 of the Constitution;
- conditional grants to the States under s 96 of the Constitution;
- the exercise of the prerogatives of the Crown properly attributed to the Commonwealth; and
- the executive nationhood power.
The majority rejected that the spending under the chaplaincy program fell within these categories.
In coming to this conclusion, the judges had to deal with previous cases on the issue, and particularly the AAP Case. References in the case to the breadth of the executive power being ascertainable from the distribution of legislative power were explained by Gummow and Bell JJ as being too broad and extended the executive power into areas it clearly could not. The distribution of legislative power was thus ‘inapt’ to define executive power. They used a number of examples. The executive power, without statutory backing could not be relied upon to impose taxation, or nor could the government sanction marriage, divorce or insolvency by executive decree. They also indicated the executive could of course not create new offences, whilst the legislature, within its heads of power, could. These arguments seem to confuse the question of breadth and depth of executive power. These two terms were developed by George Winterton. Breadth describes the subject areas over which executive power can be exercised, and depth describes the types of activities that the executive can engage in. It is well recognised, for example, that the Executive cannot impose taxation, create new offences, dispense with the law, without statutory authority. This is a matter of depth. So while the breadth of the executive power may extend to spending in relation to marriage, or the children of a marriage for example, it is true to say that the depth of the executive power would preclude the Executive from sanctioning marriage by executive decree. To say that the executive power could never extend over the marriage without statutory authority confuses breadth and depth.
The majority’s decision was heavily influenced by two broad strands of reasoning.
The first strand was the proper operating of the federal system that was established by the Constitution. This was particularly notable in French CJ’s judgment. The Commonwealth often uses expenditure to achieve policy and regulatory ends, with potential and often practical effect of diminishing the States’ authority in their fields of operation (French CJ quotes Nicholas Seddon that spending is a ‘powerful tool of public administration’). French CJ noted the consequences a broad spending power would have for the federation – presumably referring to the intrusion this would have into areas of legislative competence. This, he said, is not minimized because of the non-coercive nature of the laws and therefore the absence of any legal effect on the laws of the States.
How did the judges incorporate arguments about the federal design into the constitutional discourse? They are arguments that only 6 years ago in WorkChoices were virtually laughed out of Court by all judges excepting Kirby and Callinan JJ. In Williams, the understanding of the federal design was taken from the context and structure of the Constitution. French CJ interpreted the breadth of section 61 by reference to federal intentions of the framers, particularly as evidenced in the creation of the Senate as a part of the legislative power of the Commonwealth intended to represent the States and provide them with a house of review. So general spending without legislative backing would undermine not only accountability to Parliament (the second strand) but accountability to the States through the Senate. Other judgments emphasised the position of section 96 of the Constitution in the federal design as an express section allowing for expenditure outside the heads of legislative power in section 51. Crennan J emphasised the protection of section 109 that is available to citizens that would not be available when the Commonwealth used its executive power absent legislation.
The second strand was the importance of responsible government, and the legislative predominance and oversight it mandated. This was most notable in the reasoning of Gummow and Bell JJ, and Crennan and Hayne JJ. Gummow and Bell JJ emphasised that one of the basic problems with the idea that the Commonwealth had the capacities of other legal persons was that the Commonwealth was spending public moneys. They said: ‘Where public moneys are involved, questions of contractual capacity are to be regarded ‘through different spectacles’. Hayne J said that where the money being spent is public money, there are ‘Carefully crafted checks (worked out in England over so many years and reflected in Australia in the Constitution, especially Ch IV) that effect parliamentary control over the raising and expenditure of public moneys.’ Crennan J said that the Government often uses its capacities (including its spending power) to regulate activity in the course of implementing government policy. This highlights the importance of parliamentary oversight through responsible government mechanisms and the impact on the states’ legislative and executive competence (feeding back into the first strand of reasoning).
Repercussions: Government Expenditure and Beyond?
Williams, at first blush, could be claimed as a victory for federalism or for responsible government. In practice, neither of these is likely, or at least in relation to the spending power. More broadly, it could be the start of a new era of constitutional interpretation in which these principles, and a wider conceptual understanding of the constitutional as a whole as incorporating these principles, now have a guiding role. This could be the most enduring aspect of its legacy.
The following discussion considers the implications for the spending power at the Commonwealth and State level. Rather than a victory for federalism and a reduction in Commonwealth spending or greater oversight of it, it is more likely that Commonwealth spending will now simply come in different forms. This may require in some instances State co-operation through s 96 grants, but this is unlikely to really cede much power to the States who have generally performed poorly at negotiating these grant conditions. Further, rather than a victory for responsible government and greater oversight of government spending, Parliament has responded in a way that indicates it is happy to give almost carte blanche, ongoing, statutory authority for government contracts and spending.
In his judgment, French CJ referred to Sir Owen Dixon KC’s evidence at the Royal Commission on the Constitution in 1927, where he suggested the enactment of a ‘General Contracts Act’ that would provide a general and ongoing authority to the Executive to enter contracts, as least where they are within legislative competence.
In supplementary submissions, the Commonwealth tried to point to s 44(1) of the Financial Management and Accountability Act 1997 (Cth) as such an Act. Section 44(1) placed on the Chief Executive an obligation to manage the affairs of an agency in a way that promotes proper use of Commonwealth resources, and the drafting note that said the Chief Executive has power to enter into contracts on behalf of the Commonwealth, in relation to the affairs of the Agency. However, the judges quickly rejected that this conferred authority. Rather, it related to prudent conduct of public administration where other substantial sources of power existed.
Dixon’s suggestion of a General Contracts Act could remedy those contracts that fell within a head of legislative competence. The beauty of a General Contracts Act would be that the Commonwealth would not have to distinguish contracts that did not fall within the fairly ambiguous exceptions developed by the Court – those that were made in the administration of departments, those that fell within the nationhood power and those that fell under the prerogatives of the Commonwealth. The Commonwealth must however distinguish between those that fall within its legislative competence, and those outside it. Those contracts outside its legislative competence could be remedied by s 96 grants using the States.
Despite this being the simplest way to remedy the funding agreements invalidated as a result of the decision, it would be a disappointing outcome for those who may have agreed with the sentiments in the judgments that greater scrutiny and accountability of Executive spending was desirable.
So what did the Commonwealth do? It introduced the Financial Framework Legislation Amendment Bill (No 3) 2012 which was passed without any great scrutiny in either House. Politically, the Government used bipartisan support of the chaplaincy program to push through the legislation (which supports much more than the chaplaincy funding). The Opposition unsuccessfully proposed a sunset clause, which would have at least allowed for further scrutiny to come at a later time (although I wouldn’t have held my breath that this would have been forthcoming) and the Greens proposed an amendment in the Senate that the legislation only support existing funding agreements, which was also defeated.
The Act itself amends the Financial Management and Accountability Act to insert a new Division 3B of Part 4. The new s 32B gives the Commonwealth power to make, vary, or administer arrangements (which include contracts, agreements or deeds) or make grants to the States, Territories or individuals, where those arrangements or grants are specified in the regulations, or the class of arrangements or grants are, or the program is. There is a transitional provision that purports to retrospectively validate pre-commencement arrangements by extending the legislative basis in s 32B to them.
The amendments to the Financial Management and Accountability Regulations list the specific arrangements and grants, classes or arrangements and grants, and programs (or leave these for future population). Future amendments to the Regulations can be made by the Executive, although I understand that they will be disallowable instruments. The Regulations currently list some classes of grants to non-State and Territory parties, and numerous programs (over 400 items are listed in the Bill).
Many of these programs fall within the Commonwealth heads of power. Many of them are dubious, including grants to schools, higher education and research institutions including universities, local government and, of course, the chaplaincy program. The ‘National School Chaplaincy and School Welfare Program’ is listed at 407.013 in the Regulations. And so the Williams decision is reversed. Or is it?
The High Court may not find this legislation to fall within a head of Commonwealth legislative competence. We know that Hayne and Kiefel JJ would not. Heydon J would. What the other judges would do is not known from the Williams decision. I have been told that Mr Williams plans to file a second challenge to the scheme. The Government would have to secure three of the remaining four judges to ensure the validity of the program.
Of course if the Commonwealth were to lose again before the High Court, there is always s 96 that would put the question beyond doubt. Or would it? If one were to view Williams as heralding a new approach to constitutional interpretation which has greater focus on the constitutional context as a whole, the High Court may be ready to revisit the breadth given to s 96 in the previous jurisprudence.
In summary, what the High Court did in Williams was reaffirmed that it is Parliament’s role to scrutinise government expenditure, in addition to what we always understood to be its role in scrutinising appropriations. One may ask why does the Parliament have to have an additional role, why is scrutiny of appropriations not enough? The judgments of French CJ, and Gummow and Bell JJ indicate that they see this supervisory role as additional and different from the appropriation process – under s 53 the powers of the Senate are limited in terms of introducing and amending appropriation bills, not so those bills that empower the Executive to spend or enter into contracts.
While this might be correct in theory, I can’t understand how if the Parliament were to choose to (or the High Court to force it to) engage in more detailed oversight in the appropriations process, rather than the broad and non-binding outcomes based appropriations that were found to be constitutional in Combet v Commonwealth, further oversight of expenditure would provide any additional scrutiny.
What the Financial Framework Legislation Amendment Act (No 3) 2012 shows is that it doesn’t matter that the Parliament has a role in overseeing appropriations and expenditure, it can still choose not to engage in either task in any meaningful way.
The decision has no direct consequence for the States’ power to contract and spend. State executive power does not come from an equivalent constitutional section to s 61. French CJ was careful to distinguish the States’ executive power to contract from that of the Commonwealth as it was not necessarily informed by federal considerations. He referred to the States’ power as being ‘analogous to that of unitary constitution’.
However, the focus of the other majority judgments was on the nature of the money the Executive is spending, and the need for parliamentary scrutiny under a system of responsible and representative government. Both of these concerns are equally applicable to the money spent by the States and constitutional system in which they operate. It is possible then that those judgments may be the basis for a future constitutional challenge to State spending. Given the Court’s relaxed approach to standing in Williams, it may be sooner than otherwise expected.
[…] Greens leader Christine Milne has asked for a pledge from the Commonwealth government that if Tasmania were to pass the legislation, the Commonwealth would not challenge it. If the Commonwealth did not challenge the law, that would not necessarily guarantee that the legislation would be free from challenge. Usually, to bring a constitutional challenge a person has to have standing, that is, a real interest in the dispute. It may be difficult to see how a non-Commonwealth party could argue they had this interest. A person or organisation could seek the fiat of the Commonwealth Attorney-General and bring a relator action. This simply means that the Commonwealth bestows on that person or organisation the Commonwealth’s standing to bring the dispute. Another alternative is that the Court may put questions of standing ‘to one side’ provided the Commonwealth intervened in the dispute in support of the plaintiffs so as to provide a contradictor with standing. This is what happened in the recent Williams litigation where the National School Chaplaincy Program was challenged. (See more analysis on the High Court’s approach to standing in Williams here). […]