Combet v Commonwealth

224 CLR 494

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(Judgment by: Gummow J, Hayne J, Callinan J, Heydon J)

Combet
vCommonwealth

Court:

Judges: Gleeson CJ
McHugh J

Gummow JKirby J

Hayne J
Callinan J
Heydon J

Legislative References:
Acts Interpretation Act 1901 - s 15AB; s 15AB(2)(g)
Workplace Relations Act 1996 - The Act
Financial Management and Accountability Act 1997 - s 26; s 27
Audit Act 1901 - The Act; s 34(3)
Auditor-General Act 1997 - The Act

Case References:
-

Hearing date:
Judgment date: 29 September 2005

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Judgment by:
Gummow J
Hayne J
Callinan J
Heydon J

[102] The issues presented by this Special Case turn upon interpretation of an appropriation law of the Commonwealth rather than upon any alleged invalidity of that law. Nevertheless, an understanding of the issues is assisted by reference at the outset to two provisions of Ch 4 of the Constitution.

[103] Section 81 of the Constitution makes two relevant provisions. First, "[a]ll revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund". Secondly, the Consolidated Revenue Fund is "to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed" by the Constitution. Section 83 then forbids drawing money from the Treasury of the Commonwealth "except under appropriation made by law". Thus, appropriations have two relevant characteristics -- that they are appropriations for the purposes of the Commonwealth, and that they are appropriations made by law (not by vote or resolution of either or both Houses of the Parliament).

[104] The first plaintiff, Mr Combet, is secretary of the Australian Council of Trade Unions, the peak representative body for trade unions in Australia. The second plaintiff, Ms Roxon, is a member of the House of Representatives and Shadow Attorney-General.

[105] On 26 May 2005, the Prime Minister, in a ministerial statement in the House of Representatives ^[40] , announced that the Government intended to introduce legislation that would reform the way in which workplace relations are regulated in Australia. The statement gave a broad description of what was proposed. It was said that a new body, the Australian Fair Pay Commission, would be established to set a single adult minimum wage. It was said that the Government would work towards a unified national system governing workplace relations. No details were given of how a unified system would be achieved. No Bill to give effect to the changes was then introduced into either House of the federal Parliament and none had been introduced by the time oral argument of the present matter was heard in this Court.

[106] The plaintiffs contend that expenditure of public money on advertising to provide information about, and promote, the Government's workplace relations reform package is unlawful. They contend that the expenditure is unlawful because there is no "appropriation made by law" ^[41] which would authorise the drawing of money from the Treasury of the Commonwealth to pay for that advertising.

[107] The plaintiffs' contentions were founded upon a construction of the relevant Act (the Appropriation Act (No 1) 2005-2006 (Cth)) that should not be accepted. As these reasons will demonstrate, the text of the Act does not bear the meaning asserted by the plaintiffs. Neither the constitutional framework which underpins the Act nor federal parliamentary practice support the plaintiffs' contentions about the construction of the Act.

The relief sought

[108] By their amended pleading the plaintiffs seek declarations and an injunction. They claim:

(a)

a declaration that the drawing of money from the Treasury of the Commonwealth to pay for advertisements promoting the workplace relations reform package announced on 26 May 2005 is not authorised by the departmental item for the Department of Employment and Workplace Relations ("the Department") in Appropriation Act (No 1) 2005-2006;

(b)

a declaration that the drawing rights issued by a delegate of the third defendant (the Minister for Finance and Administration) under s 27 of the Financial Management and Accountability Act 1997 (Cth) ("the Financial Management Act") ^[42] purporting to authorise the payment of public money for the purpose of advertisements promoting that reform package on the authority of the departmental item for the Department in Appropriation Act (No 1) 2005-2006 are invalid; and

(c)

an injunction restraining the third defendant, by himself or his delegates, from issuing any further drawing right under s 27 of the Financial Management Act purporting to authorise the payment of public money for the purpose of any advertisement promoting that reform package on the authority of the departmental item for the Department in Appropriation Act (No 1) 2005-2006.

It is to be noted that each of these three forms of relief focuses upon the "departmental item" for the Department in Appropriation Act (No 1) 2005-2006. It will be necessary, later in these reasons, to identify the meaning given in the Act to the expression "departmental item", and the way in which the Act treats appropriations for departmental items.

[109] At the end of oral argument the plaintiffs indicated that if the Court were to conclude that the relief sought in their amended pleading should not be granted, the Court should grant declarations:

(a)

that the drawing of money from the Treasury for the purpose of making payments to meet expenses incurred by the Commonwealth under contracts and arrangements for and in relation to certain past advertisements about the reform package is not authorised by the appropriation that has been mentioned; and

(b)

that the drawing rights issued by a delegate of the Minister for Finance and Administration on 23 August 2005 under s 27 of the Financial Management Act are of no effect in so far as they purport to authorise the debiting of an amount against the departmental item in respect of the Department in Appropriation Act (No 1) 2005-2006 for the purpose of making payments of public money to meet expenses incurred by the Commonwealth under contracts and arrangements for and in relation to those past advertisements.

The questions and answers

[110] The parties joined in stating questions of law in the form of a Special Case for the opinion of the Full Court ^[43] . For that purpose they agreed certain facts. The questions were:

(1)

Do the Plaintiffs, or either of them, have standing to seek the relief sought in the Statement of Claim in the Further Amended Writ of Summons?

(2)

If yes to (1), is the withdrawal of money from the Treasury of the Commonwealth to pay for the Government's Advertisements authorised by the Departmental Appropriation?

(3)

If no to (2), have the Plaintiffs established a basis for any, and if so which, of the relief sought in the Amended Statement of Claim?

(4)

If yes to (3), should any such relief be refused on discretionary grounds?

(5)

Who should pay the costs of the proceedings?

[111] It is unnecessary to answer the first question (about standing). It is inappropriate to answer the second question (which asks, in general terms not connected to the particular arguments advanced in this matter, whether the withdrawal of money from the Treasury is authorised by the departmental appropriation). Question 3 should be answered: "The Plaintiffs have not established a basis for any of the relief sought in the Amended Statement of Claim or the alternative relief foreshadowed at the hearing of the Special Case, namely, declarations concerning payments to meet expenses incurred by the Commonwealth under contracts and arrangements for and in relation to certain past advertisements". It is unnecessary to answer question 4 (which was predicated upon an affirmative answer to question 3). Question 5 (about costs) should be answered: "The Plaintiffs."

The nature of the parties' principal contentions

[112] The plaintiffs' contention that expenditure of public money on advertising about the reform package is unlawful was a contention about the proper construction of the Appropriation Act (No 1) 2005-2006. They did not contend that there could be no appropriation for payment for government advertising as a purpose of the Commonwealth within the meaning of s 81 of the Constitution. Given the reasoning in New South Wales v Bardolph ^[44] , that is unsurprising. Their contention was there was no appropriation , not there could never be an appropriation.

[113] In support of their contentions about how the Appropriation Act (No 1) 2005-2006 should be construed, the plaintiffs made extensive reference to the constitutional provisions which regulate the relations between the two Houses of the federal Parliament in connection with money Bills, the provisions of Ch 4 of the Constitution concerning finance, and current and past practices in the federal Parliament.

[114] The defendants joined issue with the plaintiffs not only on the ultimate question of construction of the Appropriation Act (No 1) 2005-2006 but also on some aspects of what the plaintiffs asserted to be relevant parliamentary practices of the federal Parliament. And the defendants also contended that the plaintiffs had no standing to maintain the present proceedings. As indicated earlier, it will be unnecessary to examine the question of standing.

Appropriation Act (No 1) 2005-2006

[115] The long title of the Appropriation Act (No 1) 2005-2006 was "An Act to appropriate money out of the Consolidated Revenue Fund for the ordinary annual services of the Government, and for related purposes." Section 15 provided that "[t]he Consolidated Revenue Fund is appropriated as necessary for the purposes of this Act". Schedule 1 identified the "[s]ervices for which money is appropriated" and did so by 16 portfolios, one of which was Employment and Workplace Relations. The total of the items specified in Sch 1 was $47,371,218,000 ^[45] . Of that, $4,153,551,000 was dealt with under the heading of the Employment and Workplace Relations Portfolio.

[116] As the summary of that portfolio, set out in Sch 1, showed, six agencies were dealt with under the portfolio heading: the Department, the Australian Industrial Registry, Comcare, the Equal Opportunity for Women in the Workplace Agency, Indigenous Business Australia, and the National Occupational Health and Safety Commission. For the Department, separate provisions were made for "Departmental Outputs" and for "Administered Expenses". For the other five agencies dealt with under the portfolio heading, amounts were specified in the "Departmental Outputs" column but not in the "Administered Expenses" column. This situation was not peculiar to the treatment in Sch 1 of the Employment and Workplace Relations portfolio. Other instances are found, for example, in the treatment of agencies under the Attorney-General's portfolio and the Education, Science and Training portfolio.

[117] For the Department of Employment and Workplace Relations, separate amounts for Departmental Outputs and Administered Expenses were specified against each of three "Outcomes". These were laid out in Sch 1 as follows:

EMPLOYMENT AND WORKPLACE RELATIONS PORTFOLIO

Appropriation (plain figures) -- 2005-2006

Actual Available Appropriation (italic figures) -- 2004-2005

[118] In these proceedings, attention was given principally to Outcome 2: "Higher productivity, higher pay workplaces". The plaintiffs contended that the determinative question in the case is whether expenditure on advertising the Government's reform package fell within this outcome. They contended that answering that question required an examination of the Portfolio Budget Statements for the Employment and Workplace Relations Portfolio that had been tabled in both the House of Representatives and the Senate in relation to the Bill for the Appropriation Act (No 1) 2005-2006. This followed, so the plaintiffs submitted, from the provision in s 4(1) of the Appropriation Act (No 1) 2005-2006 that the Portfolio Budget Statements tabled in relation to the Bill were "declared to be relevant documents for the purposes of s 15AB of the Acts Interpretation Act 1901" ^[46] . The plaintiffs submitted that neither the words of Outcome 2, nor what was set out in the Portfolio Budget Statements, encompassed expenditure of the kind now in question.

The text of the Appropriation Act (No 1) 2005-2006

[119] It is important to begin by examining and construing the text of the Appropriation Act (No 1) 2005-2006. That examination reveals that the premise from which the plaintiffs' arguments proceeded is flawed. On its true construction the Act does not bear the meaning asserted by the plaintiffs. Although some of the arguments advanced by the defendants assumed the validity of this premise for the plaintiffs' argument, the defendants submitted that it was flawed ^[47] . Indeed, much of the oral argument put by junior counsel for the defendants was directed to demonstrating its error by analysing the way in which drafting practices reflected in the Appropriation Act (No 1) 2005-2006 had developed with the changes made in government budget and accounting practices over the last 25 years.

[120] To explain why the premise for the plaintiffs' arguments is flawed, it is necessary to pay close attention to the text of ss 4, 7 and 8 ^[48] and to four different expressions used in the Act.

[121] The four different expressions are "departmental item", "Departmental Outputs", "administered item" and "Administered Expenses". "[D]epartmental item" is defined ^[49] as "the total amount set out in Sch 1 in relation to an entity under the heading 'Departmental Outputs'". A note is appended to that definition. It is not part of the Act but is relevant to its construction ^[50] and it will be necessary to refer to it again in these reasons. The note states:

The amounts set out opposite outcomes, under the heading 'Departmental Outputs', are 'notional'. They are not part of the item, and they do not in any way restrict the scope of the expenditure authorised by the item.

The definition of "departmental item" is to be contrasted with the definition of "administered item". The latter is defined in s 3 as "an amount set out in Sch 1 opposite an outcome of an entity under the heading 'Administered Expenses'" (emphasis added).

[122] As noted earlier, Sch 1 to the Act tabulates appropriations in columns headed "Departmental Outputs", "Administered Expenses", and "Total", and in rows specifying "outcomes". But provisions in the body of the Act (notably ss 7 and 8) refer to departmental items and administered items . That is, they refer, in the first case, to the total amount under the heading Departmental Outputs and, in the second, to each of the amounts set out in the Schedule under the heading of Administered Expenses opposite an outcome.

[123] The distinction between departmental items and administered items is of critical importance for the outcome of this case. Section 7 makes radically different provision for the way in which amounts issued out of the Consolidated Revenue Fund for a departmental item may be applied, from the provision made by s 8 for the way in which amounts issued out of the Consolidated Revenue Fund for an administered item may be applied. Section 7(2) requires that an amount issued out of the Consolidated Revenue Fund for a departmental item for an entity (here the Department) may be applied "only ... for the departmental expenditure of the entity". By contrast, s 8(2) provides that an amount issued out of the Consolidated Revenue Fund for an administered item "may only be applied for expenditure for the purpose of carrying out activities for the purpose of contributing to achieving" the outcome to which the amount is attributed. Departmental items are not tied to outcomes; administered items are.

[124] It is this contrast between s 7(2) and s 8(2) which provides the starting point for the reasoning which governs the outcome of this case. The course of argument in this Court does not foreclose consideration of the construction of s 7(2) and s 8(2) in this way.

[125] As noted earlier, the principal weight of the plaintiffs' case was placed upon the proposition that the impugned expenditures would not, or did not, fall within Outcome 2. And in response, the defendants sought to meet that proposition directly. In that sense, but only in that sense, a deal of the defendants' argument assumed that it was relevant to ask, as the plaintiffs did, whether the impugned expenditures fall within Outcome 2. But the defendants did not confine their arguments to seeking to meet the plaintiffs' arguments about the reach of Outcome 2.

[126] In the course of oral argument, close attention was directed to the different provisions made by the Act for departmental items and administered items. The Solicitor-General submitted ^[51] that the stated outcomes did not restrict the scope of expenditure authorised by the appropriation for the departmental item. And as earlier noted, junior counsel for the defendants developed this point by reference to some aspects of the history of federal appropriation acts.

[127] The premise for the plaintiffs' argument was thus put in issue. In reply, the plaintiffs sought to counter the submissions of the Solicitor-General by contending that departmental expenditure must relate to one or other of the three Departmental Outputs.

[128] The contrast to be drawn between s 7(2) and s 8(2) reveals no textual basis to support the plaintiffs' submission. Rather, the text of these provisions requires the conclusion that the several amounts of Departmental Outputs which are identified against particular outcomes, and together make up the departmental item, are not tied to expenditure for the purpose of achieving any of the nominated outcomes. The only relevant requirement imposed by the Act is that the departmental item be applied only "for the departmental expenditure of the entity". That is, the text of ss 7(2) and 8(2) requires the conclusion that the note appended to the definition of "departmental item" accurately records the effect of s 7(2) of the Act.

[129] There are two related propositions supported by the statement in the note appended to the definition of "departmental item". The note is to the effect that the amounts set out opposite outcomes under the heading "Departmental Outputs" are "notional", so that they are not part of the item and do not in any way restrict the scope of the expenditure authorised by the item (emphasis added).

[130] The first proposition is that a sum stated for a Departmental Output does not form part of the departmental item whether or not a particular agency has only Departmental Outputs and has no Administered Expenses. The outcomes stated throughout Sch 1 cannot assist the characterisation of expenditures as "departmental expenditure", whether or not in respect of the entity or agency in question there are no Administered Expenses. The text of ss 7 and 8 of the Act, which has been considered above, points strongly against such a result and the note confirms it.

[131] The second proposition is that no contrary conclusion as to the significance of the note is to be drawn from the use therein of the phrase " amounts set out opposite outcomes " rather than an expression that the outcomes themselves are "notional" (emphasis added). To conclude that the only flexibility afforded by s 7 and the current system of appropriations is the freedom for Departments of State to transfer sums between the identified outcomes for each departmental item would be to ignore the reference in the note to the "scope of the expenditure" authorised by the departmental item itself.

[132] Mere amounts may restrict the quantum, but not the scope, of an authorised expenditure. It would not have been necessary to indicate in the note that the amounts set out opposite the stated outcomes do not in any way restrict the scope of the expenditure authorised by the item unless neither the numerical amounts provided nor the outcomes to which they are tied should be taken to fetter the scope of the expenditure authorised by a departmental item.

[133] Moreover, contrary to the plaintiffs' submissions, s 4 of the Act requires no different understanding of the Act's operation in relation to a departmental item. In particular, s 4(2) does not require that a departmental item be applied to activities in respect of any or all of the outcomes stated in Sch 1 to the Act. Section 4(2) does extend the activities that are to be regarded as contributing to achieving an outcome. It provides that if Portfolio Budget Statements indicate that activities of a particular kind were intended to be treated as activities in respect of a particular outcome, then expenditure for the purpose of carrying out those activities is taken to be expenditure for the purpose of contributing to achieving that outcome. But s 4(2) has no application with respect to departmental items. It has no application because the Act treats departmental items and administered items differently. The former need not be applied to activities in respect of a designated outcome; the latter must. A departmental item may be expended only on "departmental expenditure". And it will be recalled that the relief which the plaintiffs have sought is framed by reference to the appropriation for the departmental item in respect of the Department.

[134] These conclusions about the textual construction of the Appropriation Act (No 1) 2005-2006 require the rejection of the plaintiffs' central contention. And no separate submission was made by the plaintiffs that, on this construction of the Act, expenditure on advertising the Government's reform package would not be a "departmental expenditure". If this is the proper construction of the Act it is not necessary to deal with the defendants' contentions that expenditure on advertising the Government's reform package does, in any event, fall within Outcome 2.

[135] That the plaintiffs' submissions in answer to the challenge to the validity of the premise underpinning their principal contention were not lengthy does not relieve the Court of its obligation to construe the Appropriation Act (No 1) 2005-2006. And as has now been said so often ^[52] , that requires close attention to the statutory text rather than secondary materials. Likewise, the fact that the plaintiffs did not make any separate or additional submission about what is a "departmental expenditure" does not mean that the challenge to the premise for their principal argument is unfounded. In particular, the construction of the Act adopted in these reasons does not mean, and the plaintiffs did not contend that it meant, that the appropriation for the departmental item is an "appropriation in blank" ^[53] , and it is not necessary to consider what, precisely, that expression is intended to convey. The appropriations made by the Appropriation Act (No 1) 2005-2006 were, and were expressed ^[54] to be, appropriations for the purposes of that Act. Those purposes included the purpose of appropriating a sum of money for the departmental expenditure of one of the departments of State of the Commonwealth. That is a purpose of the Commonwealth within s 81 of the Constitution. And as noted earlier, the plaintiffs made no separate submission that the impugned expenditure would not be a "departmental expenditure".

Conclusions respecting construction of the legislation

[136] These may be expressed as follows:

(i)

The entry in Sch 1 under the heading "Department of Employment and Workplace Relations" has columns headed "Departmental Outputs" and "Administered Expenses".

(ii)

With respective reference to these expressions, the statute distinguishes between "departmental items" and "administered items".

(iii)

Amounts issued for a departmental item may only be applied for departmental expenditure.

(iv)

On the other hand, amounts issued for an administered item for an outcome may only be applied for expenditure for the purpose of carrying out activities to contribute to achieving that outcome.

(v)

Outcomes appear in Sch 1 with respect to both departmental items and administered items.

(vi)

But, in so far as they are linked to departmental items, outcomes are not part of that item and do not restrict the scope of the authorised expenditure.

(vii)

Contrary to the plaintiffs' case, the question for decision is not whether the advertising expenditure answers one or more of the stipulated outcomes but whether it is applied for departmental expenditure.

(viii)

Satisfaction of that criterion is not challenged by the plaintiffs.

[137] It is, however, important to recognise, and deal with, several broader contentions made on behalf of the plaintiffs in support of their general proposition that the Appropriation Act (No 1) 2005-2006 should not be construed as authorising the impugned expenditure because so to construe the Act would diminish, if not eliminate, a necessary level of parliamentary control over expenditure by, or drawing rights issued to, the Executive Government. That general proposition was put in a number of ways in the course of argument but each amounted to the proposition that "the purpose identified in the law [appropriating money] must be a purpose that was notified to the Parliament [and] that was therefore capable of being scrutinised by the Parliament".

[138] This general proposition was said to be supported by consideration of the relevant constitutional provisions and past parliamentary practice. It is convenient to begin by looking at those constitutional provisions that lead to the enactment of an appropriation Act.

Chapter 4 of the Constitution

[139] Reference was made at the beginning of these reasons to ss 81 and 83 of the Constitution and to the propositions that appropriations are for the purposes of the Commonwealth and that they are made by law. Two other provisions of Ch 4 of the Constitution are relevant to a proper understanding of the system of appropriation for which the Constitution provides. They are ss 94 and 97. First, s 94 empowered the Parliament (after five years from the imposition of uniform duties of customs) to provide "on such basis as it deems fair, for the monthly payment to the several States of all surplus revenue of the Commonwealth". The possibility may now appear to be remote that the federal Parliament would provide for the distribution of surplus revenue ^[55] . Nonetheless, s 94 emphasises the importance, to other integers of the federation, of the prohibition in s 83 against drawing from the Treasury except under appropriation made by law.

[140] Section 97, on the other hand, is important because it emphasises that ss 81 and 83 are directed to regulating the relationship, in matters of finance, between the Executive and the Parliament. Section 97 provides for the review and audit of receipts and expenditures on account of the Commonwealth. Until the Parliament otherwise provided, colonial laws with respect to the receipt of revenue and expenditure of money on account of the government and the review and audit of receipt and expenditure were to apply to the receipt of revenue and expenditure of money on account of the Commonwealth. And s 51(xxxvi) gave to the federal Parliament power to make laws with respect to a matter "in respect of which this Constitution makes provision until the Parliament otherwise provides". In fact, one of the earliest statutes enacted by the federal Parliament was the Audit Act 1901 (Cth) (Act No 4 of 1901). But what the audit process required by s 97 reveals is that the constitutional provisions about finance were constructed on the basis that the Executive's expenditure of money was to be reviewed by an office holder who, under the colonial arrangements mentioned in s 97, had been obliged to report to Parliament the results of that review.

Part 5 of Ch 1 of the Constitution

[141] The provisions of Ch 4 to which reference has been made must also be understood in the light of those provisions of Pt 5 of Ch 1 (in particular ss 53, 54 and 56) which regulate the relations between the two Houses of the federal Parliament in respect of money Bills. Each of those three sections deals with proposed laws appropriating revenue or moneys. They are directed, therefore, to steps taken within the Houses of Parliament before the law is made.

[142] Four aspects of ss 53, 54 and 56 are of importance for present purposes. First, there are those aspects of s 53 which forbid the Senate amending proposed laws appropriating revenue or moneys "for the ordinary annual services of the Government", but permit the Senate to return such a law to the House of Representatives requesting omission or amendment of any item or provision. Secondly, s 53 provides that "[p]roposed laws appropriating revenue or moneys ... shall not originate in the Senate". Thirdly, s 54 provides that a proposed law which appropriates revenue or moneys for the ordinary annual services of the Government "shall deal only with such appropriation". Finally, there is the provision in s 56 that "unless the purpose of the appropriation has in the same session been recommended by message of the Governor-General to the House in which the proposal originated" a vote, resolution, or proposed law for the appropriation of revenue or moneys shall not be passed.

[143] What thus is revealed is not only that appropriations "for the ordinary annual services of the Government" are treated as a distinct class of appropriation (in respect of which the Senate has no power of amendment) but also that it is the Executive Government which begins the process of appropriation. This the Executive Government does by specifying the purpose of the appropriation by message to the House of Representatives. In the present case, the message recommended that an appropriation be made "for the purposes of a Bill for an Act to appropriate money out of the Consolidated Revenue Fund for the ordinary annual services of the Government, and for related purposes" and identified that Bill as the Appropriation Bill (No 1) 2005-2006. As noted earlier, what became s 15 of the Act appropriated the Consolidated Revenue Fund "as necessary for the purposes of this Act". The purposes of the appropriation were "the purposes of [the] Act".

Audit

[144] Examination and construction of an appropriation Act must also take account of the way in which effect has been given to the constitutional provision for the "review and audit of ... the receipt of revenue and the expenditure of money on account of the Commonwealth" ^[56] . In particular, it must be recognised that provision was made in the colonial audit legislation ^[57] referred to in s 97 of the Constitution, and in the federal legislation enacted immediately after federation, for the review and audit of expenditure of public money by the holder of an office independent of control by the Executive and accountable to Parliament. Thus, the Audit Act 1901, as originally enacted, provided ^[58] that the Auditor-General for the Commonwealth was to hold office during good behaviour and could be removed from office only upon an address to the Governor-General by both Houses of the Parliament. It further provided ^[59] that money was to be paid out of the Treasury under warrant. The warrant was to set out, by reference to the relevant appropriation that had been made by law, the services or purposes for which the money was required. The warrant was to be signed by the Auditor-General, but only if that officer was satisfied that the money was legally available for, and applicable to, the services or purposes stated in the warrant.

[145] Many changes were made to federal audit legislation over succeeding years. It is not necessary to trace them. But until the enactment of the Financial Management Act in 1997 and the repeal of the Audit Act 1901 in that year ^[60] there were two central features of the federal audit legislation. First, money was not to be paid out of the Consolidated Revenue Fund save on the written certification of an officer that moneys were lawfully available for the payment ^[61] . Section 34(3) of the Audit Act 1901 made plain that moneys were not lawfully available unless, in the case of a payment from the Consolidated Revenue Fund, moneys sufficient for the payment were "available from a relevant appropriation of that Fund". Secondly, the Auditor-General was bound to audit the "accounts and records of receipts of, and payments out of, public moneys" ^[62] and not only "ascertain whether the moneys shown therein to have been disbursed were lawfully available for expenditure in respect of the service or purpose to which they have been applied or charged" ^[63] , but also "ascertain whether the provisions of the Constitution ... relating to public moneys have been in all respects complied with" ^[64] .

[146] The office of Auditor-General was not abolished with the repeal of the Audit Act 1901. Rather, the Auditor-General Act 1997 (Cth) provided for the office and provided ^[65] that the Auditor-General "is an independent officer of the Parliament". Although appointed for a term of 10 years ^[66] , the Auditor-General could be removed from office only on an address of both Houses "on the ground of misbehaviour or physical or mental incapacity" ^[67] , or upon bankruptcy ^[68] . The Auditor-General's functions include auditing financial statements of "Agencies" in accordance with the Financial Management Act. Under that latter Act, "Agencies" include ^[69] "a Department of State" (an expression evidently derived from s 64 of the Constitution and its reference to the Governor-General appointing "officers to administer such departments of State of the Commonwealth as the Governor-General in Council may establish").

[147] Part 4 of the Financial Management Act ^[70] deals with what the heading of the Part calls "Accounting, appropriations and payments". Division 2 of Pt 4 ^[71] deals with "Drawing rights". Section 26 prohibits certain conduct "except as authorised by a valid drawing right". It now provides:

An official or Minister must not do any of the following except as authorised by a valid drawing right:

(a)

make a payment of public money;

(b)

request that an amount be debited against an appropriation;

(c)

debit an amount against an appropriation.

Maximum penalty: Imprisonment for 2 years.

Section 27 regulates the issue of drawing rights. The text of the relevant provisions of s 27 is set out earlier in these reasons. It will be recalled that s 27(1) permits the Finance Minister to issue a drawing right to an official or Minister that authorises making a payment of public money for a specified purpose, requesting the debiting of an amount against a particular appropriation or debiting an amount against a particular appropriation. It will also be recalled that s 27(5) provides that "[a] drawing right has no effect to the extent that it claims to authorise the application of public money in a way that is not authorised by an appropriation".

The ordinary annual services of the Government

[148] The plaintiffs emphasised what they contended to be an established parliamentary understanding of what is an appropriation "for the ordinary annual services of the Government" ^[72] . They contended that the expression is one which does not encompass appropriations for new policies. Because the Appropriation Act (No 1) 2005-2006 was an Act to appropriate money for the ordinary annual services of the Government it followed, so the plaintiffs submitted, that the Act should not, or at least should not readily, be construed as making an appropriation to advertise a "reform package", let alone one in respect of which draft implementing legislation had not been prepared.

[149] There is a long history of debate between the two Houses of the federal Parliament about what is meant by "the ordinary annual services of the Government". As Odgers recorded in the 1972 edition of Australian Senate Practice ^[73] :

In the early debates of 1901-2 it was quickly asserted by the Senate that it had the right to amend appropriations for public works and buildings and the practice was established of presenting to the Parliament two appropriation Bills, one for the ordinary annual services and another for works and buildings. The former was a Bill which the Senate may not amend, but the Senate exercised the right of amendment in respect of the works and buildings Bill.

This distinction between appropriation Bills was noticed in The Commonwealth v Colonial Ammunition Co Ltd ^[74] , but in that case no conclusion was drawn that was founded on the distinction. Rather, attention was directed to the "financial, not regulative" ^[75] object of an appropriation Act.

[150] From time to time, particularly in the early 1950s and early 1960s, questions arose, both between the two Houses and within the Senate, about what proposed laws should be understood as falling within the prohibition against Senate amendment, contained in s 53 of the Constitution, or about how the Government should frame its appropriation Bills. In 1965, the two Houses reached an accommodation which has come to be known as the "Compact of 1965". Its terms were reflected in a statement ^[76] made to the House of Representatives by the then Treasurer, Mr Holt, on the second reading of the Supply Bill (No 1) 1965-1966. In particular, it was agreed that one appropriation Bill would be presented for the ordinary annual services of the Government and that a separate Bill would be presented containing appropriations for expenditure on:

(a)

the construction of public works and buildings;

(b)

the acquisition of sites and buildings;

(c)

items of plant and equipment which are clearly definable as capital expenditure;

(d)

grants to the States under s 96 of the Constitution; and

(e)

new policies not authorised by special legislation.

This second Bill would be regarded as not for the ordinary annual services of the Government and thus subject to amendment in the Senate. It was further agreed, however, that subsequent appropriations for the last category of items, "new policies not authorised by special legislation", would be included in an appropriation Bill not subject to amendment by the Senate.

[151] Writing in the 1972 edition of Australian Senate Practice , Odgers said ^[77] of the inclusion of this last category of expenditure (new policies not authorised by special legislation) in a Bill amenable to amendment by the Senate, that:

One of the virtues of this practice is that Parliament is thereby protected from the possibility of appropriations for any new policies not being readily identifiable in an omnibus Appropriation Bill. Members of both Houses can approach a consideration of the annual appropriations sure in the knowledge that only appropriations for services already approved are included in one Appropriation Bill, while those for any new policies not previously authorised attract the searchlight of attention in a separate Bill.

Subsequently, during the mid-1970s, questions arose about whether certain appropriations should be included in one or other of the two Bills ^[78] . It is not necessary to pause to examine those particular questions. Rather, it is enough to notice that the Senate resolved, on 17 February 1977, to reaffirm that appropriations for (among other things) "new policies not previously authorised by special legislation" were not appropriations for the ordinary annual services of the Government ^[79] .

[152] It is then necessary to notice two subsequent developments, the first in the 1980s and the second in the 1990s. In 1986, the Government decided to introduce what was called the "running costs" system of appropriations with effect from the 1987-1988 financial year. The nature of the change that was made is sufficiently illustrated by comparing the Appropriation Act (No 1) 1986-1987 (Cth) with the Appropriation Act (No 1) 1987-1988 (Cth). In relation to the Department of Employment and Industrial Relations the 1986-1987 Act appropriated a total of $777,028,000 for what were described as the "ADMINISTRATIVE" expenses of that department. Those administrative expenses were divided between "Salaries and Payments in the nature of Salary", "Administrative Expenses", and "Other Services". By contrast, the 1987-1988 Act divided the "ADMINISTRATIVE" appropriation for what was by then the Department of Employment, Education and Training into "Running Costs" and "Other Services". That is, in the 1987-1988 year, appropriations for salaries, administrative expenses and operational expenses of the relevant department of State were consolidated into a single "running cost" appropriation.

[153] During 1987, in correspondence between the then Minister for Finance and the then President of the Senate, there was discussion about whether "minor outlays for equipment and accommodation fit-out, of an ongoing nature might not also be more appropriately funded from running costs". The President concurred in the proposal to include these items in running cost appropriations, saying that he did not see the inclusion of such expenditures in the non-amendable Bill "as a reinterpretation or a modification of the concept of ordinary annual services or of the Compact of 1965".

[154] In the 1990s, the Government decided to have Government accounts and the Budget prepared on an accruals rather than cash basis. Accounting and budgeting on an accruals basis, rather than by reference to cash receipts and expenditures, led to reconsideration of the Compact of 1965. In March 1999, the Senate Standing Committee on Appropriations and Staffing reported to the Senate that the Minister for Finance and Administration had proposed that the classification of appropriations under the Compact of 1965 remain unchanged except in three respects ^[80] . The alterations proposed were that:

(a)

items regarded as equity injections and loans be regarded as not part of the ordinary annual services;

(b)

all appropriation items for continuing activities for which appropriations have been made in the past be regarded as part of ordinary annual services; and

(c)

all appropriations for existing asset replacement be regarded as provision for depreciation and part of ordinary annual services.

The Committee reported to the Senate that it considered that no objections to those changes arose from the constitutional provisions or from the terms of the Compact of 1965 and that "[i]n the context of accrual budgeting, the proposed changes are in accordance with the spirit of both the constitutional provisions and the Compact" ^[81] . Subsequently, the Senate resolved to endorse that recommendation ^[82] .

The significance to be attached to parliamentary practice

[155] The Constitution makes the references it does to proposed laws appropriating revenue or moneys for the ordinary annual services of the Government for the purpose of regulating relations between the two Houses of the federal Parliament. It is unnecessary to decide whether a dispute about the application of those aspects of ss 53 and 54 could give rise to a matter to be decided by this Court ^[83] . Nor is it necessary to decide what limits there may be to the use that might be made in construing an appropriation Act of exchanges between the Houses, Ministers and presiding officers of the kind that have been described above. In that latter regard, no party submitted that the limited reliance placed on parliamentary practice in the reasons of the Court in Brown v West ^[84] was inappropriate.

[156] It is unnecessary to decide these questions because what does emerge from consideration of the Compact of 1965 and subsequent events is the difficulty of marking any clear boundary around the types of expenditure that after 1987-1988 were included within the "running costs" appropriation for a department, or, since the adoption of accrual accounting and budgeting, fall within a "departmental item". Rather, as counsel for the defendants submitted, neither the Compact of 1965 in its original form, nor in the form it now takes, sheds any useful light on that question.

[157] For the reasons given earlier, the determinative question in the present matter is not, as the plaintiffs submitted, what is encompassed by "Higher productivity, higher pay workplaces" (Outcome 2). Rather, the Appropriation Act (No 1) 2005-2006 required that money issued out of the Consolidated Revenue Fund for a departmental item be applied only for the departmental expenditure of the entity.

[158] Making an appropriation for a departmental item that may be applied only for an entity's departmental expenditure (not otherwise specified or identified) does not represent any radical departure from previous federal parliamentary practice. As the Portfolio Budget Statements for the Department said in its "User Guide", under present budget and accounting arrangements, "departmental items" are:

Assets, liabilities, revenues and expenses in relation to an agency or authority that are controlled by the agency. Departmental expenses include employee and supplier expenses and other administrative costs, which are incurred by the agency in providing its goods and services. (emphasis added)

By contrast, "administered items" are:

Revenues, expenses, assets and liabilities that are managed by an agency or authority on behalf of the Government according to set government directions. Administered expenses include subsidies, grants and personal benefit payments and administered revenues include taxes, fees, fines and excises. (emphasis added)

[159] As counsel for the defendants rightly submitted, it is important to recognise that the immediate predecessor to the present system of appropriations was the making of a single lump sum appropriation for "running costs" of a department. And there is a very long history of the federal Parliament making appropriations that are not more closely identified than as being for the purpose of departmental expenditure. Indeed, the very first Act passed by the federal Parliament (an Act to grant and apply out of the Consolidated Revenue Fund a specified sum to the service of the period ending on 30 June 1901) contained items such as "For the Maintenance of the Department of the Minister of Defence" which, although divided into sums of expenditure in each State, were not further allocated between purposes or activities. Further, as noted earlier, immediately before the adoption of the running costs system, the appropriation for the maintenance of departments contained a large sum not specified further than as "Administrative Expenses".

[160] It is for the Parliament to identify the degree of specificity with which the purpose of an appropriation is identified ^[85] . It may readily be accepted that the constitutional provisions examined earlier in these reasons are to be understood as providing for what, in 1903, was said in relation to the House of Commons ^[86] to be "a comprehensive and continuous guardianship over the whole finance" of the Commonwealth. But the manner of exercising that guardianship, within the relevant constitutional limits, is to be determined by the Parliament. In that regard it is essential to recall, as Mason J pointed out in Victoria v The Commonwealth and Hayden ^[87] , that:

It has been the practice, born of practical necessity, in this country and in the United Kingdom, to give but a short description of the particular items dealt with in an Appropriation Act. No other course is feasible because in many respects the items of expenditure have not been thought through and elaborated in detail.

[161] What is apparent from consideration of past practice is that at least since the mid-1980s the chief means of limiting expenditures made by departments of State that has been adopted in annual appropriation Acts has been to specify the amount that may be spent rather than further define the purposes or activities for which it may be spent. There is, therefore, nothing in the relevant constitutional framework or in past parliamentary practices which suggests some construction of the Appropriation Act (No 1) 2005-2006 different from the construction required by its text.

Summary

[162] In view of the complexity of the arguments advanced in this case, it is convenient at this point to summarise the reasoning set out above.

[163] The question posed by the plaintiffs is whether expenditure on advertising the Government's reform package falls within the figure of $140,131,000 appearing in that part of Sch 1 to the Appropriation Act (No 1) 2005-2006 which relates to the Department of Employment and Workplace Relations. That figure is in the "Departmental Outputs" column against Outcome 2 -- "Higher productivity, higher pay workplaces". The answer is in the affirmative for the following reasons.

1.

That figure is an integer in the total amount of $1,447,552,000 set out in Sch 1 in relation to the Department under the heading "Departmental Outputs" ^[88] .

2.

Therefore that total amount of $1,447,552,000 is a "departmental item". It is not an "administered item", because it is not set out opposite an outcome under the heading "Administered Expenses" ^[89] .

3.

Section 7(2) restricts the application of that departmental item of $1,447,552,000: it may only be applied "for the departmental expenditure" of the Department. But the Act imposes no narrower restriction on the scope of the expenditure ^[90] .

4.

In this respect s 7(2) is in contrast with the restriction imposed by s 8(2) on an administered item: an administered item may only be applied "for expenditure for the purpose of carrying out activities for the purpose of contributing to achieving" the outcome to which the amount is attributed ^[91] .

5.

Therefore it does not matter whether any part of the $140,131,000 (or the $1,447,552,000) is spent otherwise than on activities leading to higher productivity or higher pay workplaces (or activities forming part of either of the other two outcomes), so long as it is "departmental expenditure" ^[92] .

6.

That conclusion is supported by the terms of the note to the definition of "departmental item" ^[93] .

7.

The plaintiffs did not contend that expenditure of either $140,131,000 or $1,447,552,000 on advertising the reform package was not "departmental expenditure" ^[94] .

8.

The affirmative conclusion stated above is not affected by s 4(2) ^[95] or by issues relating to the audit of expenditure ^[96] .

Standing and relief

[164] Because the present matter can be decided by dealing with the proper construction of the relevant statutory provisions, it is not necessary to consider whether the plaintiffs have standing to make the claims they do. Nor, given the conclusion that is reached about the construction of the Act, is it necessary to decide what forms of relief could be granted if the plaintiffs' central contention had been made good.

[165] On that latter question of relief it is enough to make two points. First, the claim for injunction to restrain the future issuing of drawing rights encounters the very considerable difficulty identified by Jacobs J in Victoria v The Commonwealth and Hayden ^[97] of "carefully and precisely and exhaustively" defining the expenditures, and thus the drawing rights, in respect of which relief was granted. As Jacobs J said ^[98] , that may be a "practical impossibility". Secondly, in so far as the plaintiffs would seek declarations that past expenditures, or drawing rights relating to past expenditures, were not authorised by a valid appropriation, there are evident difficulties in making a declaration in a proceeding brought under s 75(v) of the Constitution without granting relief under s 75(v). Moreover, there would also appear to be considerable difficulties in making a declaration which, in its effect, would declare that one or more of the defendants had committed an offence under s 26 of the Financial Management Act by requesting that an amount be debited against an appropriation without a valid drawing right. It is, however, not necessary to decide these questions about relief. The plaintiffs have established no basis for the grant of any of the relief claimed in their amended pleading or foreshadowed in oral argument.

Conclusion

[166] For these reasons we joined in the orders, made on 29 September 2005, that the questions in the Special Case be answered in the manner indicated at the start of these reasons, namely:

(1)

It is unnecessary to answer this question.

(2)

It is not appropriate to answer this question.

(3)

The Plaintiffs have not established a basis for any of the relief sought in the Amended Statement of Claim or the alternative relief foreshadowed at the hearing of the Special Case, namely, declarations concerning payments to meet expenses incurred by the Commonwealth under contracts and arrangements for and in relation to certain past advertisements.

(4)

It is unnecessary to answer this question.

(5)

The Plaintiffs.