The High Court walks down the aisle on postal appropriation
Monday, September 4, 2017
Justinian in Constitution, Court in the Act, Marriage equality

The High Court hearings on the same-sex marriage postal survey ... The subjective state of Mathias Cormann's mind comes under the microscope ... Whether the advance to the finance minister was "urgent" and "unforeseen" ... School Chaplains' case ... Plaintiffs' and Commonwealth's arguments ... Curtain raiser from Scott Young 

Minister Minister Cormann: advance was "urgent because it was unforeseen"

FOLLOWING the chief justice's decision to defer the resolution of the dual-citizenship debacle to October, attention has shifted to the two challenges to the government's proposed postal survey on same-sex marriage to be heard tomorrow (Tuesday, Sept. 5): Wilkie v Commonwealth and Australian Marriage Equality Ltd v Minister for Finance

The postal survey challenges raise fundamental questions about the government's appropriation and spending powers and have the potential to change the relationship between parliament and the executive.

The challengers and the Commonwealth have now filed their written submissions, and the issues are (in short):

  1. the plaintiffs' standing, or right to challenge the proposal in court;
  2. the validity of the Appropriation Act (No 1) 2017–2018, so far as it provides for an Advance to the Finance Minister (AFM);
  3. the validity of the finance minister's determination to use the AFM for the survey;
  4. the validity of the Treasurer's direction to the Australian Bureau of Statistics to carry out the survey;
  5. the power of the ABS to carry out the survey; and
  6. the power of the Australian Electoral Commission to assist it.

If the challengers can establish that they have standing and succeed on any of their other arguments, the postal survey is dead in the water. 

But the most interesting points, and the focus of the argument raised by Australian Marriage Equality, concern the AFM. This case is the High Court's first opportunity to directly examine the constitutional validity of the Advance to the Finance Minister, an important and occasionally controversial means of appropriating funds without parliamentary approval.

The Advance to the Finance Minister

The current version of the AFM, which is found in s.10 of the Appropriation Act (No 1) 2017–2018, gives the finance minister the power to determine that there is an "urgent need for expenditure" which was "unforeseen until after the last day on which it was practicable to provide for it" in the Appropriation Bill. 

The effect of the determination is to amend the Appropriation Act to authorise additional expenditure, up to a cap which is currently fixed at $295 million. 

On August 9, 2017, the finance minister gave the ABS $122 million under the Advance to the Finance Minister Determination (No. 1 of 2017–2018)

The AFM dates to the "Advance to the Treasurer" of £10,000 included in the very first Act passed by the Commonwealth Parliament, the Consolidated Revenue Act 1901

The concern that it might be abused arose in an inquiry conducted by the Senate Standing Committee on Finance and Government Operations in 1979. After that inquiry, the "urgent [and] unforeseen" criteria appeared in the Appropriation Act (No 1) 1980–1981 and have been reproduced in every annual Appropriation Act since. 

Constitutional uncertainty of the AFM for the postal survey

In 1998, the Howard government caused controversy by using the AFM to fund a "community education and information programme" (CEIP) - an advertising campaign promoting the GST, which it promised to introduce if re-elected. 

Shortly after the election, the auditor general conducted a "limited scope performance audit of the program" and produced a report entitled Taxation Reform – Community Education and Information Programme, concluding "that the approval of funds from the [AFM] met the legislative conditions that the requirement for the funds was urgent and unforeseen". 

But this conclusion, which was based on unspecified and unreleased legal advice, was doubted by constitutional scholar Professor Geoffrey Lindell in an article published in the Constitutional Law & Policy Review in 1999. 

According to Lindell, there was a "strong case" for doubting the validity of the CEIP expenditure under the AFM, which could have been tested by the attorney general. 

Noting "the likely unwillingness of the Government to have the legality of its own actions tested in a court of law," Lindell suggested that the expenditure could potentially have been challenged by a State attorney general, member of parliament, election candidate or even a taxpayer, and suggested the possibility of a "liberation of the rules of standing in public law litigation". 

Constitutional developments since 1999

Lindell's observations were prescient. In Combet v Commonwealth (2005), two judges of the High Court (McHugh and Kirby) held that the shadow attorney general, Nicola Roxon, had standing to challenge the government's expenditure on political advertising promoting WorkChoices

McHugh and Kirby JJ were both in dissent, but the majority judges still considered and rejected the challenge in order to avoid the need to make a decision on standing. 

Four years later, in Pape v Commissioner of Taxation (2009), the whole court accepted that taxpayer Bryan Pape had standing to challenge the validity of the Rudd government's economic stimulus package.

In Pape the court accepted that parliament had the power to legislate for the payment of tax bonuses to deal with the global financial crisis, in the absence of an explicit source of power under s.51 of the Constitution. The bare majority who upheld the legislation in its entirety (French CJ, Gummow, Crennan and Bell JJ) relied on the power in s.51(xxxix) to legislate with respect to matters incidental to the exercise of federal executive power. 

That executive power extended to addressing an economic crisis by means which were "peculiarly within the capacity and resources of" (French CJ) or "peculiarly adapted to" (Gummow, Crennan and Bell JJ) the federal government.

It seems clear that s.51(xxi) of the Constitution, by granting the parliament the power to legislate with respect to marriage, could have supported a law like the Plebiscite (Same-Sex Marriage) Bill 2016 had it not been twice rejected by the Senate. 

But the scene was set for a challenge to the Government's executive authority to fund the postal survey when Western Australia began its oral argument in Williams v Commonwealth (2012). 

Heydon: uncommon common assumption

As High Court judge, polyglot, scholar of 18th century European war history and 19th century English poetry, Dyson Heydon, recounted: 

"[The Commonwealth] submitted that the executive power of the Commonwealth included a power to do what the Commonwealth legislature could authorise the executive to do by enacting legislation, whether or not the Commonwealth legislature had actually enacted the legislation ... In its written outline of oral argument, the Commonwealth was thus correct to describe the assumed proposition as a 'common assumption' - correct at least at the time when that document was composed before the second day of oral argument commenced ... 

The extent to which the common assumption was actually common began to break down when Western Australia began its oral address. It withdrew the relevant part of its written submissions. Victoria and Queensland followed suit. In due course, the plaintiff and most government interveners withdrew their assertion of the common assumption and lined up against the defendants. This great renversement des alliances created a new and unexpected hurdle for the defendants. So the Court was as on a darkling plain, swept with confused alarms of struggle and flight, where ignorant armies clash by night - although the parties were more surprised than ignorant." 

The majority of the court (excluding Heydon) rejected this "common assumption" and held that the government lacked the executive power to fund the National School Chaplaincy Programme without legislation. 

As Professor Anne Twomey later said, Williams involved "major changes and development in our understanding of the Constitution, [and] it will take many decades of future cases for it to be refined into a comprehensible and logical set of principles and rules". 

Tomorrow's hearings present an opportunity for the High Court to continue that process. 

The plaintiffs' arguments

In the Wilkie matter it is submitted that the AFM is unconstitutional "in whole or in part". Drawing on the observation of Latham CJ in Attorney-General (Vic) v Commonwealth (1945) that "there cannot be appropriations in blank", the plaintiffs argue that the AFM is so wide as to authorise an appropriation for "any purpose whatsoever" so long as the threshold criteria of urgency and unforeseeability are satisfied, and therefore an invalid exercise of legislative power. 

It is also argued that the AFM impermissibly bypasses the "single, finely wrought and exhaustively considered, procedure" mandated by the Constitution for the approval of government expenditure, and constitutes an impermissible delegation of legislative authority by denying parliament its usual power to disallow legislative instruments.

The argument put on behalf of Australian Marriage Equality is less radical. Because the Appropriation Act (No 1) 2017–2017 originated in a non-amendable bill for the "ordinary annual services of government", Australian Marriage Equality argues that the purposes of the Act, and therefore of the AFM, are limited to those "ordinary annual services". 

It argues that the postal survey is not part of the ordinary annual services of the government because (among other reasons) it is unprecedented in Australian history, on a scale that vastly exceeds that of any survey that the ABS has been called upon to conduct in the past, and to be conducted only as a result of the failure of the Plebiscite (Same-Sex Marriage) Bill 2016 in the senate.

In both cases, it is argued that even if the AFM is capable of supporting expenditure of the kind the finance minister has determined, the statutory criteria for the determination have not been met. 

In Wilkie, the argument is that an AFM determination is reviewable under ordinary administrative law principles, and that the minister "erred in law in being satisfied that there was an urgent need for the proposed expenditure because it was unforeseen". 

It is submitted that the question of urgency is a "broad" jurisdictional fact which can be determined by a court, but even if it is a "narrow" jurisdictional fact (based on the minister's subjective state of mind) the determination can be set aside because the minister misconstrued the meaning of the terms "urgent need" and "unforeseen", or formed an opinion which was "arbitrary, capricious or unreasonable". 

The argument in Australian Marriage Equality focuses on the construction of the AFM criteria as "broad" jurisdictional facts which can be reviewed by a court. The minister's subjective views as to urgency and unforeseeability are not directly attacked as "capricious", although it is suggested (as an alternative) that "there is no basis on which a reasonable person in the position of the finance minister" could be so satisfied. 

AFM functions as a Henry V111 clause

Australian Marriage Equality urges the court to interpret the AFM criteria strictly given the AFM's function as a "Henry VIII clause," noting that such clauses have been "frequently criticised for good reason". 

Both sets of plaintiffs argue that the Finance Minister misconstrued the test by "conflating" or "collapsing" the concepts of urgency and unforeseeability, referring to the Explanatory Statement to the Determination as to the expenditure "being urgent because it was unforeseen".

The Commonwealth's response

The Commonwealth's submissions in Australian Marriage Equality identify several recurring themes, which are also incorporated in the submissions in Wilkie

Appropriation Acts are special ("a rara avis in the world of statutes"); the courts should not supervise the relationship between parliament and the executive; it is for the parliament to exercise guardianship over Commonwealth finances through the "vigorous scrutiny" of parliamentary processes; and it would be "practical[ly] impossib[le]" to do anything about an illegitimate appropriation anyway.

Many of these themes are drawn from the seven separate judgments in the AAP Case, a High Court decision notable for its incoherence. It concerned a challenge to the Whitlam government's Australian Assistance Plan brought by Victoria, and supported by the coalition governments in Western Australia and New South Wales

McTiernan, Jacobs and Murphy JJ delivered separate judgments in favour of the Commonwealth; Barwick CJ, Gibbs and Mason JJ each gave their own reasons for holding that the appropriations were invalid; and Stephen J broke the tie in favour of the Commonwealth without actually finding that the program was constitutionally valid, by simply declaring that the States have "no relevant interest in the spending of federal moneys". 

Despite the High Court's apparently flexible approach to the question of standing in Pape, the Commonwealth maintains that none of the parliamentarians or advocacy groups can bring a challenge, and repeats Stephen J's conclusion that even a State lacks the authority to do so.

If the challenge is to be heard, the Commonwealth also says that the plaintiffs' arguments rely on a "basic misconception" as to the operation of the AFM. 

According to the government, the AFM appropriates nothing, and merely "links" funds already appropriated to a specified entity and outcome. The appropriation is achieved by s.12, which provides that the consolidated revenue fund "is appropriated as necessary for the purposes of this Act". 

As to the suggestion that the finance minister erred in finding that the need for expenditure was urgent and unforeseen, the Commonwealth submits that the court should not review the minister's subjective state of mind and any suggestion that he may have conflated the concepts of urgency and unforeseeability is based on an unhappy "looseness of language". 

The Commonwealth also draws a distinction between the power to appropriate funds and the power to spend them. It accepts that Pape and Williams established the parliament's authority to control spending, but argues that the authority is found in the legislation establishing the ABS and AEC. 

The Commonwealth repeats what was recently said by the Deputy Australian Statistician to the Senate Finance and Public Administration References Committee: the postal survey is a valid direction to the ABS to collect "statistical information" about electors' opinions.

Conclusion

The shadow attorney general puts the plaintiffs' chances of success at 50 percent, and Professor George Williams reportedly characterises the Solicitor-General's argument as a "tough ask"

If the High Court treats the case with the same urgency as its electoral law decisions in Roach, Rowe and Murphy, it could make a decision at the conclusion of the hearing in Melbourne on Wednesday, September 6 and publish its reasons at a later date. 

Hopefully, those reasons will include a majority opinion that clearly establishes the High Court's position on the AFM. 

Article originally appeared on Justinian: Australian legal magazine. News on lawyers and the law (http://justinian.com.au/).
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