Re-invigorating the accountability and transparency of the Australian government's expenditure.

Author:Lawson, Charles

[The implementation of the central concepts captured by the final arrangements in ss 81 and 83 of the Australian Constitution has evolved over decades. However, some uncertainty as to their actual content and meaning remains. Significantly, the roles of the High Court of Australia and Parliament have been major forces in the breakdown of Parliament's control of the executive's expenditures, opening the way for the adoption of the current accountability and transparency arrangements. Recent actions by Parliament show that it is re-asserting its control over appropriations. However, this article advocates that the focus should be on expenditure rather than appropriations, taking advantage of the potential accountability and transparency afforded by the recent public administration reforms.]

CONTENTS I Introduction II The Consolidated Revenue Fund III Surplus Revenue IV Appropriations A What Are the Commonwealth's Purposes? B How Precisely Must Those Purposes Be Specified? V Ordinary Annual Services VI Conclusions I INTRODUCTION

The financial transitional arrangements finally adopted in the Australian Constitution provided for the Commonwealth to take over the collection and control of state customs duties and excise, (1) and then for the Commonwealth to impose uniform customs duties within two years of its establishment. (2) In the period before the Commonwealth imposed uniform customs duties, the Commonwealth was required to pay monthly the balance of the states' customs duties less any expenditure. (3) During the five years after uniform customs duties were imposed, or 'until the Parliament otherwise provide[d]', the Commonwealth was to account to the states, (4) and thereafter make payments to the states of the surplus 'on such basis as [Parliament] deems fair'. (5) Central to this delicate compromise was the maintenance of Parliament's authority over the executive's future expenditure, the Constitution providing in part:

81 All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution.


83 No money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law.

This article charts the unresolved tension in this compromise between the Constitution's apparent requirements for parliamentary control over the Australian government's (the executive's) expenditure, (6) and the roles of the High Court of Australia and Parliament in asserting Parliament's apparent constitutional paramountcy in these matters. (7) This analysis is timely as the losing parties in Combet v Commonwealth (8) who challenged various aspects of the Australian government's expenditure on constitutional grounds (9) are now Members of the House of Representatives and of the Australian government, (10) with direct involvement in Parliament's formulation of future Australian government expenditure arrangements. Further, the recently elected Australian government campaigned for much greater disclosure of government financial information, expressly citing loose appropriations and the loss of Parliament's control over expenditure. (11) The analysis presented in this article traces in detail the various decisions of the High Court to illustrate the uncertainty reflected in these decisions and the opportunity this has presented for the Australian government, with Parliament's approval, to undermine Parliament's control over the Australian government's expenditure. Although recent measures in Parliament may address some of these concerns, this article advocates that the focus should be on expenditure rather than appropriations and that this would provide enhanced accountability and transparency of the government's expenditure beyond that afforded by the recent public administration reforms.

Part II of this article considers the Constitution's Consolidated Revenue Fund ('CRF') to illustrate the ambiguous High Court conceptions of the CRF which led Parliament to give to the Australian government the details of the CRF's determination. Part III looks at the Constitution's closely related surplus revenue provisions to illustrate that Parliament, with the support and approval of the High Court, is undermining a key restriction on linking appropriations to the amounts of money actually held by the Commonwealth (and within the CRF). Part IV examines the Constitution's appropriation requirements to illustrate the High Court's apparent preference for Parliament to resolve the detail of appropriations. Part V considers the requirement that Senate amendment of appropriations is limited to those described as not for the 'ordinary annual services of the Government' and how this is now a matter for resolution entirely by agreement between Parliament and the Australian government. Part VI then concludes that Parliament needs to change its focus from the annual appropriation Bills to after-the-event reporting, accountability and transparency arrangements afforded by the recent public administration reforms, and in particular to the linkage between the appropriation Bills (and associated Portfolio Budget Statements), the related financial statements according to the Financial Management and Accountability Act 1997 (Cth) and the Annual Reports according to the Public Service Act 1999 (Cth). Various means of achieving this are discussed.


Section 81 of the Constitution articulates the concepts of '[a]ll revenues or moneys' and 'raised or received' in respect of the 'one [CRF]'. The terms 'revenues' and 'moneys' are critical to the evolution of the modern conception of the CRF. The words in the original draft of the Constitution were 'duties, revenues and moneys'. (12) At the Adelaide Convention the words 'duties' and 'moneys' were removed to make it clear that loan moneys did not go to the CRF. (13) This was confirmed at the Melbourne Convention 'for the same reasons'.

(14) However, the word 'moneys' was again included in the Constitution and the reasons for this inclusion remain unclear. (15) As a consequence, loan moneys were considered to be separate from the CRF (16) so that the Audit Act 1901 (Cth) operated a 'Consolidated Revenue Fund' (17) with a separately accounted Loan Fund (18) and a Trust Fund. (19) The revenues and moneys from different sources were credited under these Audit Act 1901 (Cth) arrangements to the separate 'Consolidated Revenue Fund', Loan Fund and Trust Fund accounts, (20) with each 'component' of the Loan Fund and Trust Fund accounted for separately under comprehensive and centrally controlled ledger arrangements. (21)

These developments in Parliament were paralleled by the High Court's uncertainty over the form of the CRF and establishing when revenues and moneys entered and moneys left the CRF. The High Court first contemplated the CRF in New South Wales v Commonwealth ('Surplus Revenue Case'). (22) There the Old-Age Pensions Appropriation Act 1908 (Cth) and the Coast Defence Appropriation Act 1908 (Cth) appropriated amounts to two Audit Act 1901 (Cth) trust accounts 'for Invalid and Old-Age Pensions' and 'for Harbour and Coastal (Naval) Defence' respectively. (23) The Audit Act 1901 (Cth) also provided an appropriation that satisfied the provision that 'moneys standing to the credit of a Trust Account may be expended for the purposes of the account'. (24) The amounts were credited to these trust accounts but were not disbursed during the financial year of the appropriation. (25) Meanwhile the Surplus Revenue Act 1908 (Cth) provided that 'all payments to Trust Accounts, established under the Audit Act 1901-06, of moneys appropriated by law for any purpose of the Commonwealth shall be deemed to be expenditure', (26) and that these appropriations did not lapse. (27) The issue before the High Court was whether these appropriated but unexpended amounts were a part of the surplus revenue of the Commonwealth and so payable to the states. (28) In deciding that they were not, (29) the majority considered that, in the words of Griffith CJ, the 'Appropriation Act does ... operate as a provisional setting apart or diversion from the Consolidated Revenue Fund of the sum appropriated by the Act.' (30) However, there were different conceptions of exactly how these transactions should be characterised. Griffith CJ and Higgins J considered that the Old-Age Pensions Appropriation Act 1908 (Cth) and the Coast Defence Appropriation Act 1908 (Cth) validly appropriated amounts (or authorised expenditure of amounts) from the CRF, (31) while Barton, O'Connor and Isaacs JJ considered that the Acts appropriated the CRF and that amounts were drawn from the Treasury and paid to the trust accounts. (32)

Later in Northern Suburbs General Cemetery Reserve Trust v Commonwealth ('Cemetery Reserve Case'), (33) the High Court again considered appropriations involving an Audit Act 1901 (Cth) trust account. (34) There the Training Guarantee Act 1990 (Cth) imposed a charge (a tax) on employers of an amount equal to the employer's shortfall of a minimum set training expenditure and incorporated the Training Guarantee (Administration) Act 1990 (Cth). (35) The purpose of the Training Guarantee (Administration) Act 1990 (Cth) was

to increase, and improve the quality of, the employment related skills of the Australian workforce so that it works more productively, flexibly and safely, thereby increasing the efficiency and international competitiveness of Australian industry. (36) The Training Guarantee (Administration) Act 1990 (Cth) established the Training Guarantee Fund as an Audit Act 1901 (Cth) trust account. (37) Some of the amounts paid to the Commonwealth by employers were then to be paid into this fund, and then used to pay the Commonwealth and the states under separate agreements and in reimbursing employers...

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