Public Governance and Parliamentary Scrutiny of Expenditure

One of the many Bills that the Commonwealth Government is proposing to rush through the Senate with minimal scrutiny this week is the Public Governance, Performance and Accountability Bill. It raises a number of important constitutional issues, but has received little attention, given the other more prominent constitutional upheavals and the referendum proposal coming out of Canberra.
The Bill is intended to replace the Financial Management and Accountability Act 1997 and the Commonwealth Authorities and Companies Act 1997. In doing so, it will provide the legislative framework for the Commonwealth Government’s financial system. It is therefore a fundamentally important Bill.
One curious aspect of the Bill is its timing and commencement mechanism. The Bill is proposed to be rushed through the Senate, with gagged debate this week, so that its formal provisions can come into effect on 1 July this year, before the election. However, the substance of the Act is to commence upon proclamation, or if it is not proclaimed, by 1 July 2014. This means that an incoming government, whether it likes it or not, is stuck with the Act coming into force by 1 July 2014 at the latest, unless it can get changes to it passed by the Senate. This is happening so quickly that its proposed companion Bill, which will have to deal with consequential matters such as the formal repeal of the Financial Management and Accountability Act and the Commonwealth Authorities and Companies Act 1997, has not been introduced and is being left until after the election.
Another interesting aspect of the Bill is that it replaces detailed legislation with sections that establish basic principles and a framework, leaving most of the work and detail to the ‘rules’. The broad intention behind the Bill seems to be to increase flexibility for the executive, at the expense of accountability to Parliament and scrutiny of executive action. In the wake of the High Court’s judgment in the Williams case, one would imagine that a review of the Commonwealth’s financial system would be for the purposes of improving parliamentary accountability, especially in relation to expenditure. Remarkably, this Bill is directed at doing the opposite.
First, as the Act is largely about approving the making of unseen ‘rules’, it is very hard for Parliament to know what it is actually approving. The devil, as they say, is in the absent detail. The rules will be made later by the executive. Some rules are expressly identified as disallowable instruments, while others are not. It seems likely, in the post-Williams era, that the next High Court battleground will be about the extent to which the Parliament can delegate its authority and whether there are any implied constitutional constraints, such as a form of obligatory parliamentary supervision and scrutiny.
From a constitutional lawyer’s point of view, one of the first questions is how the Bill deals with Commonwealth expenditure. Does it provide parliamentary authorisation for specified kinds of expenditure, as was done post-Williams with the enactment of s 32B of the Financial Management and Accountability Act? The answer is no, it does not replicate that provision. It is likely that this is being left for later legislation to be enacted before the Financial Management and Accountability Act is repealed by 1 July 2014.
This leads to two interesting consequences. First, the proposed second challenge by Mr Williams to the funding of chaplains is potentially further delayed, as there is little point in launching a challenge to a section that will necessarily be repealed in just over a year. Presumably, Mr Williams and his counsel will want to know what, if anything, is to replace s 32B before commencing proceedings. Secondly, if the Coalition wins power in September, it puts it in the awkward position of having to take active measures in relation to the legislative authorisation of executive spending programs, given that the purported existing authorisation in s 32B will expire by 1 July 2014.
While the current Bill does not replace s 32B, what it does say about expenditure is still interesting. Clause 52 states:

The rules may prescribe matters relating to the commitment or expenditure of relevant money by the Commonwealth or a Commonwealth entity.

Could the Commonwealth intend to authorise expenditure through ‘rules’ rather than direct parliamentary authorisation? If so, would this be constitutionally acceptable?
Even more fascinating is the note attached to clause 52. It states:

Rules made for the purposes of this section could prescribe measures to ensure that, to the greatest extent practicable, relevant money that is within the CRF is not paid out without an appropriation.

This seems to imply that appropriation is merely desirable, not a constitutional requirement before money is paid out of the Consolidated Revenue Fund. Section 83 of the Constitution would appear to take a different approach.
Clause 105(3) also suggests that ‘rules’ may govern expenditure. Indeed, clause 105 is of interest in itself, being some kind of catch-all appropriation for when there is otherwise no appropriation, but without the specification of any ‘purposes of the Commonwealth’ at all. Despite the mess of appropriations made by the High Court in the Combet case, one wonders whether clause 105 would withstand judicial scrutiny.
The other interesting provision on expenditure is clause 71(1), which provides:

A Minister must not approve a proposed expenditure of relevant money unless the Minister is satisfied, after making reasonable inquiries, that the expenditure would be a proper use of relevant money.

This suggests that it is a matter for the Minister to decide upon expenditure, rather than a matter for Parliament.
All up, the Bill raises many important questions that are unlikely to be answered, or even considered in the 30 minutes of debate that is proposed to take place in the Senate this week. The Opposition, given that it might end up having to work with this legislation if enacted, would be wise to seek to defer debate until these constitutional issues are given further consideration.

Author Anne TwomeyPosted on June 25, 2013