Constitutional Challenges to Commonwealth Expenditure

The Commonwealth Parliament faces another constitutional challenge in the shape of health funding reform and the use of executive powers to fund Victorian hospitals under the National Health Reform Agreement.

Until 2009, and the constitutional challenge of Pape to government bonuses paid under the executive powers of the government, Commonwealth Parliament took a liberal view of the ability of Parliament to issue monetary grants as long as it was covered by an appropriation act in Parliament.

The shaky basis of this executive power was further challenged in the case of Williams v Commonwealth [2012] HCA 23, where the High Court held by majority that a funding agreement between the Commonwealth of Australia and Scripture Union Queensland for the provision of chaplaincy services at a State school in Queensland was invalid due to a breach of the executive powers relating to funding contained in the Commonwealth Constitution.

In this case, not only did the High Court find that there needed to be a separate head of power to support such expenditure, but that there needed to be actual legislation (not just a hypothetical power to legislate) to authorise such expenditure of public money.

The High Court stressed the importance of public scrutiny of parliamentary expenditure through the legislative process and that the constitutional procedure for making grants to the States under s 96 of the Constitution should not be lightly by-passed.

Due to this case decision, Commonwealth Parliament has assented the Financial Framework Legislation Amendment Act (No 3) 2012 that authorised the Executive to spend money upon more than 400 broadly described programs and subjects, listed in regulations.

Through this Act, the Commonwealth now wishes to pay hospital funding directly to the hospitals in Victoria rather than through the s 96 powers of grant to the States as specified in the Constitution.

It remains to be seen whether a constitutional challenge to this monetary expenditure will be brought before the High Court as there can be no public scrutiny of expenses in Commonwealth Parliament until this happens.

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