What does the Constitution say about receiving and spending Government funds?

We had a fantastic discussion, with several hundred comments on social media following our article last Friday. We are pleased that so many people are interested in our Constitution. This is CEFA’s Constitutional ‘Forum’, in which we would like to promote a two way street. You can ask us questions and we encourage you to join the conversation on Facebook. One CEFA supporter wrote to us recently asking about Section 81 of the Constitution:

Hi CEFA, long time follower, first time in contact :)

Section 81 of the constitution of the CoA says that "All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution."

I've always wondered why it appears to prohibit multiple funds, by specifying "one Consolidated Revenue Fund".

Are you able to discuss the history, rationale, and court opinion, on this section? Thanks for that.


Thank you for your question Justin. We will see Section 81 in action next week. The budget will be announced on Tuesday and then legislation will be introduced to appropriate revenue for the Consolidated Revenue Fund.

Why would all the revenue of the Government have to be put into the one fund?

While our Constitution is unique, some of the tradition within our system of government has been inherited from Britain. One of these is section 81.

In Britain, unrest, civil wars and revolutions had occurred when a King or Queen increased taxes or spent funds on schemes that the people (or later the parliament) didn’t agree with. After the 17th century revolution, it became practice for the House of Commons to approve any spending. However, it wasn’t until 1787 that a Consolidated Fund was established. Prior to this particular taxes had been assigned to particular spending.

The British colonies in Australia, settled only a few years later did not initially have consolidated funds. But by the time each gained self-government, they had a Consolidated Fund as a requirement for responsible government. This meant that the Executive was accountable to the Parliament.

In the 1890’s the Constitution was written through a series of Constitutional Conventions. There was not a lot of discussion about Section 81 during the Constitutional Conventions in the 1890’s. But commentaries written at that time describe is as pretty stock standard provision for the British Empire.

Consolidated Revenue Fund

Revenues include not only taxation, but any revenue for services rendered by the government and other payments such as fees on licences. The Department of Finance Resource Management glossary defines it as:

Consolidated Revenue Fund (CRF)
Consists of all revenues and moneys raised or received by the executive government of the Commonwealth. The CRF is self-executing in nature, which means that all money received by the Commonwealth automatically forms part of the CRF.

So all revenues go into the CRF. The second part of Section 81 stipulates that the funds must be ‘appropriated’. The principle of Responsible Government means that the Parliament must agree to Executive spending by passing appropriation legislation and this is found in section 83 of the Constitution:

Section 83 Money to be appropriated by law
No money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law….

How has the High Court interpreted section 81?

The High Court of Australia interprets and applies the Constitution and the laws of Australia. In 1944 the Parliament, led by a Labor Government passed a Bill for a pharmaceutical benefits scheme. The pharmaceutical benefits scheme (PBS) is something that most Australians cherish these days. But when it was first introduced there was opposition to it from doctors who did not want a nationalised healthcare scheme (interestingly, just this week the government announced some changes to the PBS and the first group to complain were doctors).

Once the Bill was assented it was immediately challenged by the Attorney-General of Victoria on behalf of the doctors. In the Attorney-General (Vic) ex rel Dale v Commonwealth also known as the First Pharmaceutical Benefits case five out of the six Justices found that the Act was not authorised under the power of appropriation in section 81 of the Constitution. However, there was not much agreement by the justices on why this legislation was unconstitutional. The reasons for the restrictions of section 81 were inconclusive.

In any case, the legislation was invalid. To give themselves a direct power to create legislation for pharmaceuticals, the Government held a referendum to add a new parliamentary power into section 51 of the Constitution. The result was a majority yes vote in all six states and so the new section was introduced into the Constitution.

Section 51 Legislative powers of the Parliament
The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:
(xxiiiA) the provision of maternity allowances, widows’ pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances;

The Whitlam era

Section 81 was next considered by the High Court for the AAP case in 1975. Again, it was the Victorian Attorney-General challenging legislation passed by a Commonwealth Parliament led by Labor. This time there was a question on the Social Welfare Commission Act 1973, which had been established by the Whitlam Government to explore ways in which social services might be channelled through regional councils. The Justices were split and the Victorian Government’s action failed. The decision did not clear up the question as to whether Section 81 was constitutionally limited.

The GFC stimulus bonus

In 2009 Bryan Pape challenged the legislation that gave working Australians a stimulus bonus of up to $900. Mr Pape was a law lecturer and barrister, who had received a $250 bonus. He argued in the Court that the payments were a gift, rather than a tax bonus and were therefore not supported by the Constitution. Chief Justice French wrote in his judgement:

It is necessary now to consider the so-called "appropriations power", which has been called "the spending power", under ss 81 and 83 of the Constitution. Having regard to their text, their historical antecedents in the history of responsible government and their development at the Conventions of the 1890s, these provisions are better seen as parliamentary controls of the exercise of executive power to expend public moneys than as a substantive source of such power. It follows that the "purposes of the Commonwealth", for which appropriation may be authorised, are to be found in the provisions of the Constitution and statutes made under it which, subject to appropriation, confer substantive power to expend public moneys.

The Parliament provides checks and balances upon the Executive in regards to spending. Any spending from section 81 Consolidated Revenue Fund must be appropriated by the Parliament under section 83. The finding of this case had clarified that spending for the purposes of the Commonwealth must be authorised by provisions in the Constitution.

Unfortunately for Bryan Pape the majority of the Court found that legislation was supported by provisions in the Constitution. So he had to keep his $250.

The chaplaincy case

In 2012 Ronald Williams from Queensland asked the Court to decide whether the Federal Government had the power to fund Scripture Union Queensland as part of the National School Chaplaincy Program. With his own children attending a public school in Queensland, Mr Williams was surprised that religious teaching in state schools could be funded by the Federal Government.

The majority of the Court found that the payments were invalid as they were beyond the Executive Power of the Commonwealth. But there was no agreement upon any Legislative power under section 51 of the Constitution. Within a week of the decision, the parliament passed new legislation in an attempt to shore up the grants for the chaplaincy program, along with more than 400 other existing grants and programs.

Mr Williams went back to the court and in 2014 it was found that the Chaplaincy program was still invalidly funded by the Commonwealth because there were no specific section in the Constitution that gave power for this appropriation.

The government was able to find another way around. The Constitution does have provisions for the Commonwealth government to provide grants to the states and so the federal government made agreements with the States to fund the chaplaincy program. The Federal Government then provided the funding to the States, who spent that funding on the chaplains.  

Back to federation

When the six British colonies in Australian joined together, they gave specified and limited powers to the new Federal Government formed through the Australian Constitution. Most of these powers are found in section 51 of the Constitution. If something is not listed in the Constitution, it was intended to be a State power. The Parliament can appropriate funding for the provisions found within the Constitution, if they would like to fund something that is not found within the Constitution the funding can go through the States.


Section 81 requires that all government revenue is goes into one consolidated fund, to spend those funds the Parliament must pass legislation and a provision authorising the program must be found within the Constitution.


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