Pape v Commissioner of Taxation

• Jurisdiction: Australia Federal only
• Judge: French CJ
• Judgment Date: 07 July 2009
• Neutral Citation: 2009-0707 HCA A,[2009] HCA 23
• Docket Number: S35/2009
• Date: 07 July 2009
• Court: High Court

Bryan Reginald Pape

Plaintiff

and

The Commissioner Of Taxation Of The Commonwealth Of Australia And Anor

Defendants

[2009] HCA 23

French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ

S35/2009

HIGH COURT OF AUSTRALIA

Pape v Commissioner of Taxation

Constitutional law — Standing — Section 7 of the Tax Bonus for Working Australians Act (No 2) 2009 (Cth) (‘the Act’) provides that the Commissioner of Taxation must pay a tax bonus to entitled persons — Persons entitled under s 5 of Act if, inter alia, an individual, Australian resident with an adjusted tax liability greater than nil and not exceeding $100,000 for 2007–08 income tax year — Whether person entitled under s 5 of Act has standing to bring action for declarations and injunction.

Constitutional law — Appropriations of moneys from the Consolidated Revenue Fund — Whether payment of tax bonus supported by valid appropriation under ss 81 and 83 of Constitution — Whether appropriation ‘for the purposes of the Commonwealth’ under s 81 — Whether phrase ‘for the purposes of the Commonwealth’ limits legislative power — Whether source of legislative ‘power to spend’ is ss 81 and 51(xxxix).

Constitutional law — Powers of the Commonwealth Parliament — Whether Act law with respect to trade and commerce under s 51(i) — Whether Act law with respect to taxation under s 51(ii) — Whether Act law with respect to external affairs under s 51(xxix) — Whether Act supported by implied nationhood power — Whether Act supported by power conferred by ss 81 and 51(xxxix) — Whether Act supported by power conferred by ss 61 and 51(xxxix) — If Act beyond power, whether Act can be read down so as to be within power.

Constitutional law — Executive power of the Commonwealth — Global financial and economic crisis — Whether Act supported by ss 61 and 51(xxxix).

Constitutional law — Taxation power — Persons entitled under s 5 of Act included persons entitled to tax bonus greater than their adjusted tax liability for the 2007–08 financial year — Whether Act law with respect to taxation.

Words and phrases — ‘appropriation’, ‘for the purposes of the Commonwealth’, ‘made by law’ and ‘maintenance of this Constitution’.

Constitution, ss 51(i), (ii), (xxix), (xxxix), 61, 81 and 83.

Acts Interpretation Act 1901 (Cth), s 15A.

Tax Bonus for Working Australians Act (No 2) 2009 (Cth).

Taxation Administration Act 1953 (Cth), ss 2 and 16.

Representation

B R Pape in person (instructed by Toomey Pegg Drevikovsky Lawyers)

S J Gageler SC, Solicitor-General of the Commonwealth with S B Lloyd SC and G M Aitken for the defendants (instructed by Australian Government Solicitor)

Interveners

R J Meadows QC, Solicitor-General for the State of Western Australia with C L Conley intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor for Western Australia)

M G Hinton QC, Solicitor-General for the State of South Australia with S A McDonald intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for the State of South Australia)

M J Leeming SC with J K Kirk intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor (NSW))

ORDER

Order that the questions stated in the amended special case be answered as follows:

Question 1. Does the plaintiff have standing to seek the relief claimed in his writ of summons and statement of claim?

Answer: Yes.

Question 2. Is the Tax Bonus for Working Australians Act (No 2) 2009 (Cth) valid because it is supported by one or more express or implied heads of legislative power under the Commonwealth Constitution?

Answer: The Tax Bonus for Working Australians Act (No 2) 2009 is a valid law of the Commonwealth.

3. Is payment of the tax bonus to which the plaintiff is entitled under the Tax Bonus for Working Australians Act (No 2) 2009 supported by a valid appropriation under ss 81 and 83 of the Constitution?

Answer: There is an appropriation of the Consolidated Revenue Fund within the meaning of the Constitution in respect of payments by the Commissioner required by s 7 of the Tax Bonus for Working Australians Act (No 2) 2009.

4. Who should pay the costs of the special case?

Answer: In accordance with the agreement of the parties announced on the second day of the hearing of the special case, there is no order for costs.

French CJ

Introduction

1 On 4 February 2009, the Minister for Families, Housing, Community Services and Indigenous Affairs introduced into the House of Representatives the Tax Bonus for Working Australians Bill 2009. The Minister said that the measure would provide, at a cost of $8.2 billion, financial support to about 8.7 million taxpayers. This support was to take the form of one-off payments ranging from $950 to $300 according to the taxable income of the recipients in the year ended 30 June 2008. Their stated purpose was to 1:

‘immediately support jobs and strengthen the Australian economy during a severe global recession.’

2 The Bill was defeated in the Senate. A fresh Bill in substantially the same terms save for the amounts of the payments was introduced into the House of Representatives on 12 February 2009 as the Tax Bonus for Working Australians Bill (No 2) 2009. It provided for payments ranging from $900 to $250 for taxpayers earning between nil and $100,000 for the year ended 30 June 2008. A Tax Bonus for Working Australians (Consequential Amendments) Bill (No 2) 2009 was introduced at the same time.

3 The Second Reading Speeches for the new Bills incorporated by reference the Second Reading Speeches for their predecessors 2. The payments were said to be among five key one-off payments for lower and middle-income households and individuals 3.

4 Eligibility for the payments, according to entitlements defined by the legislation, was to be determined by the Commissioner of Taxation. The bonus would be available from April 2009 to Australian resident taxpayers who had already had their tax returns assessed. Taxpayers who had not yet lodged their returns would have their bonus paid following assessment of their returns by the Australian Taxation Office (‘the ATO’).

5 The Bills were enacted and assented to on 18 February 2009 as the Tax Bonus for Working Australians Act (No 2) 2009 (Cth) (‘the Tax Bonus Act’) and the Tax Bonus for Working Australians (Consequential Amendments) Act (No 2) 2009 (Cth) (‘the Consequential Amendments Act’).

6 On 26 February 2009, Bryan Reginald Pape, a person apparently entitled to receive $250 under the Tax Bonus Act, issued a writ out of the Sydney Registry of this Court against the Commissioner of Taxation claiming, inter alia, declarations that the Tax Bonus Act is invalid and that the tax bonus payable to him under that Act is ‘unlawful and void’. He also sought an injunction restraining the making of the payment to him.

7 The Commonwealth was joined as a defendant to the action. The parties agreed to submit a Special Case pursuant to r 27.08 of the High Court Rules 2004, stating questions for the opinion of the Full Court. On 13 March 2009, Gummow J ordered that the Special Case be referred to the Full Court for hearing commencing on 30 March 2009. Notices under s 78B of the Judiciary Act 1903 (Cth) were issued on 17 March 2009 to the Attorneys-General of the States and Territories. The States of New South Wales, South Australia and Western Australia intervened. In my opinion, Mr Pape had standing to claim the relief he sought. I am also of the opinion that the Tax Bonus Act is valid and the tax bonus payable to Mr Pape is lawful. On 3 April 2009, I joined in the pronouncement of orders reflecting this conclusion by way of the answers then given to the questions stated in the Special Case.

8 I base my opinion as to validity upon the following propositions:

• 1. The executive power of the Commonwealth conferred by s 61 of the Constitution extends to the power to expend public moneys for the purpose of avoiding or mitigating the large scale adverse effects of the circumstances affecting the national economy disclosed on the facts of this case, and which expenditure is on a scale and within a time-frame peculiarly within the capacity of the national government.

• 2. The executive power so to expend public moneys is conditioned, by ss 81 and 83 of the Constitution, upon appropriation of the requisite moneys by an Act of the Parliament for that purpose.

• 3. The appropriation necessary to authorise the proposed expenditure in this case was effected by s 16 of the Taxation Administration Act 1953 (Cth) (‘the Taxation Administration Act’) read with s 3 of the Tax Bonus Act.

• 4. The legislative power to enact statutory provisions, beyond appropriation, to support the exercise of the executive power in this case is found in the incidental power conferred by s 51(xxxix) of the Constitution.

• 5. The provisions of ss 81 and 83 do not confer a substantive ‘spending power’ upon the Commonwealth Parliament. They provide for parliamentary control of public moneys and their expenditure. The relevant power to expend public moneys, being limited by s 81 to expenditure for ‘the purposes of the Commonwealth’, must be found elsewhere in the Constitution or statutes made under it.

• 6. It is not necessary in light of the preceding to consider the specific heads of power otherwise relied upon by the Commonwealth to support the Tax Bonus Act.

9 The implications of these propositions for the scope of the executive power generally are limited. The aspect of the power engaged in this case involves the expenditure of money to support a short-term national fiscal stimulus strategy calculated to offset the adverse effects of a global financial crisis on the national economy. The legislative measures defining the criteria of that expenditure and matters incidental to it were authorised by s...