Government spending powers restrained by the Constitution

On Tuesday night at 7.30pm the Speaker of the House of the Representatives Tony Smith stated:

I have received a message from His Excellency the Governor-General recommending in accordance with Section 56 of the Constitution an appropriation for the purposes of the Appropriation Bill No 1 2017- 2018. And I call the Treasurer.

The Treasurer Scott Morrison replied:

Thank you Mr Speaker. I present the Appropriation Bill No1 2017-2018 and the explanatory memorandum.

And then the Clerk of the House, David Elder stated:

First reading 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.

So why would the Governor-General have to send a message down to the House recommending an appropriation? Here is the section of the Constitution that the speaker was referring to:

Section 56 Recommendation of money votes
A vote, resolution, or proposed law for the appropriation of revenue or moneys shall not be passed 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.

Why is there a need for a message?

The spending of government revenue requires the permission of both the Executive and the Legislative branches of Government. The Executive power in section 61 of the Constitution is vested in the Queen and is exercised by the Governor-General. So the message from the Governor-General is a message recommending spending by the Executive Power. Of course the legislation outlining the spending still has to pass both Houses of Parliament.

Wait. What? The Governor-General has hold of the purse strings?

In most instances the Governor-General must act on the advice of his or her Ministers. In the case of the message sent to the House of Representatives on Tuesday, the Governor-General would have been advised to do this.

This is an important aspect of responsible government. The Executive branch of Government has recommended Government spending contained within the Appropriation Bill No 1. In order for the spending to occur, the legislation allowing it must now be passed by both Houses of Parliament. It means that the Executive can’t just spend money willy-nilly.

Can other things go into the Appropriation Bills?

The Government cannot tack anything extra into the annual budget. This is outlined in section 54 of the Constitution:

Section 54 Appropriation Bills
The proposed law which appropriates revenue or moneys for the ordinary annual services of the Government shall deal only with such appropriation.

The reason we have this section in our Constitution is because of the past practices in the British Parliament. The House of Commons had occasionally been in the habit of “tacking” provisions that were not related to the supply on to Appropriation Bills. The House of Lords was prevented from amending or blocking these Bills. In 1702 the House of Lords implemented a standing order that stated:

That the annexing any clause or clauses to a bill of aid or supply, the matter of which is foreign to, and different from, the matter of the said bills of aid or supply, is unparliamentary, and tends to the destruction of the Constitution of the Government.

Our Section 54 codified what had been standard practice in Britain for 200 years. However, unlike Britain, our Senate can block Appropriations Bills. This is called blocking supply and has only occurred once in Australia. In 1975 the Liberals blocked supply in the Senate which brought about a Constitutional crisis. The Governor-General then acted without the advice of his Ministers and sacked the Prime Minister. Both before and after this event there remains a constitutional convention not to block the appropriations for Government supply (Appropriation Bill No 1). If this Bill does not pass the Parliament before June 30, it means that Government departments and the services they offer do not have any funds to run. Pensions can’t be paid, public servants wouldn’t be paid, medicare benefits wouldn’t be processed, etc. Government would grind to a halt.

Can the Senate make changes to Appropriations Bills?

The Appropriation Bills cannot be introduced into the Senate or amended by the Senate. But they can send a message back to the House of Representatives outlining the changes they would like to the Bills. This is outlined in Section 53 of the Constitution:

Section 53 Powers of the Houses in respect of legislation
Proposed laws appropriating revenue or moneys, or imposing taxation, shall not originate in the Senate. But a proposed law shall not be taken to appropriate revenue or moneys, or to impose taxation, by reason only of its containing provisions for the imposition or appropriation of fines or other pecuniary penalties, or for the demand or payment or appropriation of fees for licences, or fees for services under the proposed law.

The Senate may not amend proposed laws imposing taxation, or proposed laws appropriating revenue or moneys for the ordinary annual services of the Government.

The Senate may not amend any proposed law so as to increase any proposed charge or burden on the people.

The Senate may at any stage return to the House of Representatives any proposed law which the Senate may not amend, requesting, by message, the omission or amendment of any items or provisions therein. And the House of Representatives may, if it thinks fit, make any of such omissions or amendments, with or without modifications.

Except as provided in this section, the Senate shall have equal power with the House of Representatives in respect of all proposed laws.

This is a very interesting section of the Constitution. There is a commonly held view that because it deals with proposed laws, it is not-justiciable (i.e. not capable of being determined by a court). The Court deals with what is law, rather than proposals to make law. Although, there are other sections of the Constitution that also deal with proposed law and are justiciable (section 57 for instance).

Checks and Balances

These sections of the Constitution provide checks and balances on both the Legislative and Executive branches of Government. The Parliament cannot pass legislation to spend money without the permission of the Executive.  And the Executive cannot spend money without the Parliament allowing it by passing legislation through both Houses.

These appear to be pretty good Constitutional protections of our money. Do you agree?


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