Williams v Commonwealth of Australia & Ors - [2014] HCATrans 92

[2014] HCATrans 092

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S154 of 2013

B e t w e e n -
RONALD WILLIAMS
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
First Respondent
MINISTER FOR EDUCATION
Second Respondent
SCRIPTURE UNION QUEENSLAND
Third Respondent

FRENCH CJ
HAYNE J
CRENNAN J
KIEFEL J
BELL J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 6 MAY 2014, AT 10.16 AM

MR B.W. WALKER, SC: May it please the Court, I appear with my learned friend, MR G.E.S. NG, for the plaintiff. (instructed by Horowitz & Bilinsky)

MR J.T. GLEESON, SC, Solicitor‑General of the Commonwealth of Australia: May it please the Court, I appear with MR S.P. DONAGHUE, QC, MR G.M. AITKEN and MR N.J. OWENS for the first and second defendants. (instructed by Australian Government Solicitor)

MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friends, MR J.A. THOMSON, SC and MR E.M. HEENAN, for the third defendant. (instructed by Norton Rose Fulbright Australia)

MR M.G. SEXTON, SC, Solicitor‑General for the State of New South Wales: If the Court pleases, I appear with my learned friends, MR J.K. KIRK, SC and MS A.M. MITCHELMORE, for the Attorney‑General for New South Wales who intervenes in the proceedings. (instructed by Crown Solicitor (NSW))

MR G.L. SEALY, SC, Solicitor‑General for the State of Tasmania: May it please the Court, I appear with my learned friend, MS S.K. KAY, for the Attorney‑General of Tasmania who intervenes. (instructed by Director of Public Prosecutions (Tas))

MR M.G. HINTON, QC, Solicitor‑General for the State of South Australia: If the Court pleases, I appear with my learned friends, MR C. JACOBI and MR D.F. O’LEARY, for the Attorney‑General for South Australia intervening. (instructed by Crown Solicitor (SA))

MR S.G.E. McLEISH, SC, Solicitor‑General for the State of Victoria: If the Court pleases, I appear with my learned friend, MR N.M. WOOD, for the Attorney‑General for Victoria intervening. (instructed by Victorian Government Solicitor)

MR G.R. DONALDSON, SC, Solicitor‑General for the State of Western Australia: May it please the Court, I appear with my learned friend, MS F.B. SEAWARD, for the Attorney‑General of Western Australia intervening. (instructed by State Solicitor (WA))

MR P.J. DUNNING, QC, Solicitor‑General of the State of Queensland: May it please the Court, I appear with my learned friend, MR G.J.D. DEL VILLAR, for the Attorney-General for Queensland. (instructed by Crown Law (Qld))

FRENCH CJ: Yes, Mr Walker.

MR WALKER: May it please the Court. Your Honours, these proceedings were and, so far as we are concerned, remain framed as raising questions about the validity of what might be called a repair Act, that is, the provisions of section 32B of the Financial Management Act which was introduced in the wake of, and clearly as a response to the decision of this Court in the case that I will call, if you will permit me, Williams (No 1) or No 1. That is the decision reported at (2012) 248 CLR 156.

It would appear from the way in which the issues have fallen out in pleadings, the way that material has been conveyed by special case and in particular the joinder of issue in argument in written submissions that the premise of the repair Act may be itself in question. The burden in large part of making good that second part of the proceedings, which is not the way we frame it, of course lies principally upon the Commonwealth and those who would support the Commonwealth in that stance. I will come back to that aspect of the matter later. May I start then with the nature of the repair Act itself. Section 32B starts by declaring the premise in question, namely in subsection (1)(a):

apart from this subsection, the Commonwealth does not have power –

words which are completely general, utterly comprehensive of the case at hand –

to make, vary or administer –

and then (i), (ii) or (iii), and (i) in particular refers to –

an arrangement under which public money is, or may become, payable by the Commonwealth –

and (iii) is –

a grant of financial assistance to a person other than a State or Territory –

One knows, of course, that in relation to subparagraph 32B(1)(a)(ii), that is –

a grant of financial assistance to a State or Territory –

that respectively sections 96 and 122, not to mention other possibilities, in the Constitution manifestly provide what I am going to call constitutional power in the sense of legislative competence and therefore the possibility of executive authority.

Given that premise then of a lack of power, one then turns to what the subsection does. It requires a second condition or premise also to be true, namely that the arrangement or grant, as the case may be, falls within one or other of the three possibilities by way of what might be called inexactly as a matter of history, delegated legislation. I say “inexactly as a matter of history” because we know that the regulations in question, if I might call it this way, what might be the first tranche or first wave was in fact not done by delegated legislation but was in fact done by Parliament.

So the arrangement in order for the subsection to have the effect to which we are about to come is one which must be specified in the regulations or included in a class specified in regulations or perhaps - the one that we can concentrate, given the facts of this case – (iii), “is for the purposes of a program specified in the regulations”. If those two premises are true and only if they are true, then the Commonwealth is given by the subsection, purportedly, power to “make, vary or administer” the arrangements or grant.

So one moves in this fashion by what I will call delegated legislation, the regulations - one moves from a position of no power to a position of power. It is power, of course, subject to the rule of law but that is supererogatory by way of addition to that grant.

FRENCH CJ: Does the collocation has “power to make” say anything more than the word “may”?

MR WALKER: “May” – well, I should not say unfortunately – “may” is, of course, ambiguous and derives quite different meanings from different contexts. When I come to the appropriate Appropriation Acts argument, I will be referring to the way “may” appears there. So, in answer to the Chief Justice, could this have been expressed to the same effect by using the language involving “may”, the answer is yes. The significance of the language of 32B that I have drawn to attention is the framing of the first premise. This does not apply unless:

the Commonwealth does not have power –

and if that is true and there is the regulation, then the Commonwealth has power. That is plainly the nature – is to reverse the first premise. It is reversed simply by appearance in regulation. Your Honours know that it is regulation 16 in Part 5AA which makes the specification and one sees that in regulation 16, subclause (1)(d) which in the multiple referential style of these things, tells the world that Part 4 of Schedule 1AA specifies programs. That is the language, of course, from the subsection, subparagraph (b)(iii).

The programs identified, or specified, in Part 4 of Schedule AA includes what is now called the “National School Chaplaincy and Student Welfare Program” as item 407.013. We draw to attention the general – as your Honours know from our argument we submit completely vague terms so far as setting the prescription of what might turn out to be a hump for constitutional facts found in the description of that program. It is as follows:

Objective: To assist school communities –

I interpolate, your Honours will see that school communities, both as a matter of English there and elsewhere in explanation, extends beyond students. So:

to assist school communities to support the wellbeing of their students –

language which makes it clear that the communities is more than just the students –

including –

a word notoriously, not exhaustively, descriptive –

including by strengthening values, providing pastoral care and enhancing engagement with the broader community

Looking forward to the 51(xxiiiA) argument, one sees that questions may raised, but no answer is supplied by that level of generality of language to questions required by the Constitution such as what services and for whom.

Your Honours, that then brings us to the arrangements. Could I take you please in the core book, the yellow volume – I should say, the document that starts at 225 has been iteratively amended. As I understand it, even these we thought up‑to‑date compilations are now out of date – I will leave that to my friend, the Solicitor‑General, to deal with – but none of the multiple variations matter for our argument.

HAYNE J: What is the point you are taking us to the agreement for?

MR WALKER: Simply in order to show the level of generality with which it describes what it does so as to inform in due course both the 51(xx) and 51(xxiiiA) arguments, and only for that purpose.

As your Honours will have seen from our written submission, we in fact dispute that going to the agreement will assist one whit in understanding whether it is authorised, except for the purpose in the manner in which I have just explained, namely, that its terms will supply answers to putative application of 51(xx) or 51(xxiiiA). But, what it does not do is perform a bootstraps exercise; in particular, it does not do that by a validly forming part of those things which are for the purposes of the program as specified.

CRENNAN J: Is there anything in this document which illuminates the questions you formulated as being necessary for section 51(xxiiiA), what services and for whom? Is there anything in it in regard to those two issues to which you want to direct attention?

MR WALKER: No, but therefore yes. In other words, there is not specification of the services in the agreement except by reference to what I might call a malleable document, the guidelines which forms a flexible part, that is, they may be amended but if there is any inconsistency they yield.

HAYNE J: But in the end, Mr Walker, does the agreement shed any light brighter or sharper than the description of the program which appears in the relevant item in the schedule?

MR WALKER: No. Indeed, it is partly to make good that very proposition that I wanted to go to the agreement, and I can do that very quickly at page 227, just Purpose A. Now, there are other places where one, as it were, might expect to find specification but you do not, it is the speaking silence that we are relying upon.

On the same page, 227, you will see under 2.1(c) that there is an obligation to carry out the project in accordance with any applicable guidelines and I need, I think, to draw to attention as well at page 245 – and this, I flag, is for the purposes of what I am going to call the section 54 aspect of the Appropriation Acts argument – that the term, that is, the terminal date of the agreement, is 31 January 2015. The first of the statutes, of course, is the 2011‑2012 Appropriation Act.

Your Honours have seen the reference to the guidelines. Your Honours, I do not need to dwell on that. Suffice it to say that the document that starts at 136, which is revision 6 of those guidelines, contains at page 146 a tantalising heading, “1.5 Chaplaincy/student welfare service”. Then there follows a description which I will not read, it is too long, and it includes seven dot points, not all of which, it might be said, are utterly consistent one with the other, which, in our submission, impedes rather than assists in understanding, let alone with sufficient precision, so as to apply the ordinary judicial technique of finding constitutional facts to match with constitutional requirements for the purposes of, in particular, the 51(xxiiiA) argument.

That completes what I wanted to say about, as it were, the arrangement for the purposes of the program, which was the subject matter of the statute which had as its premise that but for the statute, 32B, the Commonwealth did not have power to make that arrangement, which includes, of course, to make the arrangement which had that avowed purpose. That is why, as we put it in paragraph 1 of our outline for the hearing, it is not to the point to refer to the specificity – that is, the specification achieved by the regulation as amended by the amending statute that also inserted 32B itself.

It is not to the point, as we apprehend the Commonwealth to raise, to say that that is a regulation which provides the means to read down what would otherwise be arguably, and as we put it, the impossible generality of 32B. Can I remind your Honours, by going back to 32B itself, why we say, as we have put in our written submissions, that there is an impossible generality about 32B. It is of course the terms of the opening premise on which we place this part of our argument:

If:
(a)apart from this subsection, the Commonwealth does not have power –

ellipsis –

the Commonwealth has power –

As a matter of parliamentary action that is on any view of it, a remarkable proposition in its generality. I am sure I will not be able to complete the following list exhaustively, but the two most obvious ways in which the Commonwealth may lack power to do something described as making, varying or administering an arrangement, et cetera, is first that it requires legislation and there is none. That is one where 32B, of course, may arguably supply the deficiency by being the legislation. The second is that the Commonwealth lacks legislative competence to authorise it and there is no possibility of it being done without legislation.

HAYNE J: All this is to erect a straw dummy, is it not, Mr Walker? Is not the relevant question whether 32B in its relevant operation is a valid law of the Commonwealth?

MR WALKER: Indeed, so.

HAYNE J: Why is there any broader question about whether 32B in its generality, 32B in its operation with respect to other payments, programs or arrangements may have valid operation? That is not a question, surely, before us?

MR WALKER: We cannot and one never would in such an argument seek exhaustively to describe all the hypothetical things that have not happened which would or would not be valid according to the contending interpretations of such a law. But in every reading down argument, once one has identified excessively broad words in a statute, in every reading down argument, there is, of necessity, a grappling with the possibilities and the way in which the text supplies or does not supply a dividing line.

HAYNE J: But if your arguments were all to be accepted, if that were to occur, why would the Court go beyond an answer which said that in its operation with respect to the impugned arrangement and impugned payments, the Act is not a valid law of the Commonwealth?

MR WALKER: Because the reasoning – the first thing is, of course, that would suffice to quell the controversy between the parties. The controversy between the parties is not about grand, embracing constitutional theories, we accept that. So, the outcome that Justice Hayne has asked me to consider is one which would effectively quell the controversy, yes.

However, if the reasoning to the invalidity of the purported authorisation of this arrangement involves the proposition that it is attempted to be done by words which cannot, on their face, be valid according to their ordinary meaning and cannot be valid because of a constitutional limitation, then there is either at common law or now in this country under the statute, a need to consider reading down to inquire as to whether this is a statute which can be brought within power by the device of giving to its words other than, that is, more restricted than the meaning that they would otherwise bear.

HAYNE J: Why is that not an advisory opinion?

MR WALKER: Your Honour, there is no question that the more definitive or categorical the reasoning and intermediate holdings of a reading down argument become, the more overtly hypothetical they must be. They are, after all, positing laws that have not been enacted and asking is this within, is that without, et cetera. There is no doubt that that has some of the qualities of what has been in a somewhat different context denounced as an advisory opinion outside the concept either of matter or the exercise of judicial power. However, it is unmistakable when one considers the authority of this Court in Pidoto and cases thereafter, it is unmistakable that some such form of reasoning is called up by every occasion for reading down.

Perhaps the reconciliation of these contending requirements of the Court’s exercise of power in relation to a putatively excessively broad statute, perhaps the reconciliation is to ensure that holdings and, in particular, the form of any relief does no more than say it cannot be read down so as to save by reason of validity the particular exercise which evokes the dispute which is the subject matter of the litigation before the Court. That is all we seek ultimately, but part of our reasoning is that this is language which cannot on its face be taken literally.

This is not a statute which could possibly, by mere legislative fiat, say that if the Commonwealth does not have power for constitutional reasons then if a matter is specified in a regulation then it does have power. It is because one must retreat from that quite obviously excessive understanding of the language that the question of where does one retreat to, where does one read down to, arises.

That is the reason why, in answer to Justice Hayne, in our submission, this is a case not unique in this regard at all where reading down becoming necessary then there starts the sequence of inquiries which are necessary in order to locate whether, identify whether, what is being done in locating the line that will affect the law in question is too legislative in character for the Court to undertake.

HAYNE J: Is not reading down or severance a process in which the Court engages to identify that which is a valid operation of the impugned provision?

MR WALKER: Ultimately, yes.

HAYNE J: Your allegation is that the several provisions whose validity you attack do not have valid operation in respect of an identified arrangement and specified payments.

MR WALKER: Yes, no doubt about that, your Honour. That is why I say the reconciliation is that that one must cleave ultimately to that. That is the question, those are the questions raised in the case.

CRENNAN J: Well, before you even get to the head of legislative power issue, there may be an antecedent distinction of some relevance – I do not know, I just raise it for consideration – between regulations which follow what I will call a decision about policy made by Parliament in the context of some debate, and regulations in the future which nobody knows anything about in terms of what they are going to cover. That is to say, I am adverting to the fact that these programs, some of them, will involve decisions by somebody of a political kind. This is a policy, is it a policy which Australia should subscribe to?

MR WALKER: Yes.

CRENNAN J: Now, on one view of representative government, when you have contested policy decisions the right place for them to be thrashed out is Parliament.

MR WALKER: And the hustings, yes.

CRENNAN J: On a view of the executive power put forward by the Commonwealth that is not necessary.

MR WALKER: That is right, and the hustings even less so.

CRENNAN J: I am just raising for you some distinctions which might be made in terms of the width of your argument before you even get to, is there a relevant head of power.

MR WALKER: Yes. At the moment, and to flag where I am, I am still in 1, 2 and 3 of our outline, at the moment we are saying, these are words which no one could on first reading, take at their literal extent. Parliament does not have the capacity at one bound to leap over constitutional constraints. The people and section 128 are involved.

BELL J: Why would one not take them in the first way that you posited, Mr Walker, namely that when the Commonwealth does not have power to make, vary or administer an arrangement or grant by reason of the need for there to be legislation to support the arrangement or grant then 32B bites?

MR WALKER: Well, the answer to that is that is certainly not what the words say, that is ‑ ‑ ‑

HAYNE J: Well, what really, Mr Walker?

MR WALKER: But, that it is literally correct, that is not what the words say.

FRENCH CJ: What is the kind of power that is being addressed in (1)(a)? It is executive power conferred upon the Commonwealth by a statute. It does not have that power. What other kind of power are you talking about?

HAYNE J: Pape‑type national interest power?

MR WALKER: That is the companion that certainly Pape raises, Williams (No 1) holds. It is available in the absence of what I am going to call enabling legislation.

FRENCH CJ: We are not talking about legislative power, obviously.

MR WALKER: I am sorry, your Honour, we are not talking about ‑ ‑ ‑

FRENCH CJ: The Commonwealth does not have power to make – it is not talking about an absence of legislative power because that would then be contradicted by the ‑ ‑ ‑

MR WALKER: Well, that is why I started and this is why ‑ ‑ ‑

HAYNE J: It is an heroic piece of legislation which is to be understood as saying if we do not have legislative power we are about to legislate, and that is the kind of hypothesis that you want us to consider, Mr Walker.

MR WALKER: Yes.

HAYNE J: I suggest it is absolutely heroic and not terribly useful.

MR WALKER: Your Honour, there is no question that 32B, as a response to Williams (No 1), is addressing the premise that there needs to be power other than the existence of the Commonwealth as a polity which has executive power. Williams (No 1) would have left – bearing in mind the identity of this program with that considered in Williams (No 1) – national emergency and like rubrics unavailable. So it is clear that, heroic or otherwise, 32B reads as, and is, an attempt to supply that power. Our submission is that it is done so in terms which are far too broad requiring therefore to be read within power – that is a form of reading down – and giving rise to the question as to what is the line to be drawn.

Now, bearing in mind the different kinds of legislative competence heads of power in – just to take section 51 – objects, purposes, for example – in our submission, section 32B in the manner that we have explained in our written submissions simply does not engage any of the criteria by which one could discern what are the methods by which it can be seen that 32B does not bite off more than it can chew and looks only to the question as to, for example, is this a provision which applies to – to take one that is relevant here – trading corporations. So 32B plainly does not do that.

Then one can go through the catalogue. It does not do it in any respect at all. One knows that these are programs – just to use the expression in 32B(1)(b)(iii) – one knows that these are programs which are utterly unlimited in their scope of subject matter. This is not something which can be confined within any part of section 51 or, indeed, any other parts of the Constitution providing the legislative competence, whether it be 51 or 52, for example.

It is for those reasons, in our submission, that to adopt and seek to deflect the force of what Justice Hayne put to me by the epithet “heroic” this is, in our submission, a paradigm of legislation which, having gone too far, then enlists the Court as one, with respect, instinctively is urged to do by its excessive language in an exercise to cut back to keep within power and then finds that there is not a set of criteria or guidelines by which one can anchor the reading of this law so as to find out whether or not what has been done in this case is valid or not – that is within 32B to the extent of 32B’s validity.

That then leads to what seems to be, as we say, by the Commonwealth and those who support the Commonwealth, here particularly the third defendant, the point at which one sees in these proceedings the possibility that the first premise of 32B, lack of power, is, as it were, sidestepped, ignored or even reversed by an assertion that in fact there is power, which means of course one is no longer arguing about what this proceeding was framed to challenge, which is 32B, and its purported authorisation of the program and under it the arrangement and under it the payments, but rather addressing whether or not 32B was an act of supererogation on the part of the Commonwealth Parliament.

That is what we turn to in item 4 and for the purposes of the argument as we frame it, it suffices to say that in our submission for the reasons we have put in our written submissions, there can be no doubt that the holding in Williams (No 1) is antithetical to any such theory of the possibility of a so‑called general expenditure law attached to what used to be called, perhaps over‑glibly, the power of appropriation.

In proposition 5, we put a quite separate and rather more ambitious argument in its reach. It has to be said, as your Honours know from our written submissions, that more is said about this kind of reasoning than one could ever see by way of its application in a decision to invalidate purported laws. The books are not full of failures to enact a law by reason of excessive generality of a kind that is sometimes, with verbal difficulty, called excessive delegation, which is a difficult concept though one that has been long recognised.

But, in our submission, this is a case which answers all of the criteria that have been discussed in this Court as hallmarks of a purported law travelling beyond the law‑making function and here one sees something, as we have put it in our written submissions, very like the hypothesised, that is, hypothesised by the Commonwealth argument in S157, where the entire content – rights, liabilities, permissions, conditions – everything which is the legal embodiment of what might be called a policy, is left not to Parliament at all, but rather to the Executive in a regulation.

It has to be said immediately that the particular regulation that specifies this program for the purposes of which this arrangement and the payments under it are raised in this case, was not made by truly delegated legislation. We have drawn that to attention several times. It therefore must be said that we are in danger in this argument ‑ paragraph 5 in our outline – of travelling into unnecessary or even forbidden territory along the lines of those raised with me at the outset by Justice Hayne.

However, in our submission, it is a legitimate argument because it is a threshold argument about the law in question. If we can say the law simply does not answer the description of a law at all, then everything it does, including that about which we complain, has not been done effectually. It is for those reasons, in our submission, that it is of great significance that there can be no answer supplied to the rhetorical questions that we raise under the argument to which proposition 5 attaches in our outline, namely, what does the statute say may be the subject matter or the limits on that which might be specified in the regulations?

Now, it may be the Constitution will say something about it. That is why one in due course comes to what I might call the heads of power point, what in Williams (No 1) corresponds not exactly with the so‑called narrow approach. It may be that one finds dehors 32B itself necessary limits such as are supplied by the inability to point to anything other than 51(xx) or 51(xxiiiA) as a head of power to permit expenditure on a particular program – of this particular program.

But our point in proposition 5 is that 32B does not tell you anything about that at all. But the idea, in our submission, is worth teasing out a little more in this fashion. If it were made explicit in 32B that it was the heads of power in, say, section 51 or even, to be completely specific, 51(xx), that would supply the permissible territory for the delegated legislation purportedly authorised by 32B, what an extraordinary, we say, pseudo law would emerge because it would be if apart from this subsection the Commonwealth does not have power to make an arrangement the arrangement is specified to be for the purposes of program specified in the regulations by reason of the availability of a power under 51(xx) the Commonwealth has power to make.

The entire content of that law, the entire legislative choice which is permitted by saying 51(xx) is the available head is left to the delegate, and, in our submission, this would be then an actual example of what has, on our research, only been hypothesised to date, including in the passages to which we have drawn attention in our written submission, most obviously, though not only, most obviously S157, the regulation permitting the Minister to determine by regulation who may or may not be admitted.

Now, that was one which obviously invoked virtually expressly a head of power, but that did not stop it. We do not even have heads of power. We do not even have which are the heads of power that are said to be invoked. It is for those reasons, in our submission, that in that separate and different way there is another means by which 32B fails in its entirety thereby carrying with it determination of the particular complaint that we have about its effect.

Your Honours, could I then turn to the matters that are contained in propositions 6 to 9 in our outline, which in particular refer to the consequences in themselves may be not conclusive of the matter, but indicative of the need to scrutinise carefully the argument that would attract these consequences. As we say in proposition 6, our phrase, we accept, the effect of 32B, if it is given its ordinary meaning, is to authorise expenditure, as we put it, in blank. Nothing is known from the face of 32B as to what field of endeavour, or fields I should say, of endeavour 32B will be a standing authorisation to expend money upon.

That “in blank” quality, in our submission, stands in stark contrast to the care with which the anterior step before expenditure of appropriation is dealt with by the Constitution and I do not wish to dwell on rudimentary matters. They include those which, as a matter of politics, parliamentary practice and the institutions are set out in 6(b).

Can I at this point remind your Honours in particular, for the purposes of the argument to which we will come in relation to section 54 and the Appropriation Acts, can I remind you of section 54, which we do not mention in proposition 6 because it is part of the essential suite of provisions regulating the relations between the Houses and between Parliament, on the one hand, and the Executive on the other hand.

In that last sentence I raise, and wish to make it clear, the possibility of misunderstanding, when I refer to the Executive I am, of course, not referring to an entity. The Executive refers collectively to, what I will call, the ministerial group, the government. It is not a person. The Commonwealth Executive is not a person and when we refer to the Executive, we are not referring to an entity, we are referring to a group of people who are members of the Federal Executive Council.

The executive power, on the other hand, that which is the subject matter of section 61 is an aspect of the polity which is the Commonwealth. That digression is necessary, as your Honours have seen from our written submissions, because, in our submission, the Commonwealth from time to time treats as if there is an entity – one might think in terms of a monarch, an abstraction which is a monarch, called the Executive. That, in our submission, is not true.

The importance of section 54, if I can remind your Honours, is that taking that phrase which is peculiarly very largely a matter for the chambers of Parliament, namely the character of an appropriation as being for the ordinary annual services of the government, it takes that and once that is established in the means by which, as is currently understood it is to be established, the process in the Houses, it requires that the law doing so shall deal only with that appropriation. At this point, if I could remind your Honours, by taking you to it, to the way in which the odd‑numbered Acts are expressed currently. They are to be found, say, for the first one in question, in the yellow book at page 343. This is trite but significant. Its long title is:

An Act to appropriate money out of the Consolidated Revenue Fund for the ordinary annual services of the Government, and for related purposes –

and looking ahead to the argument about the Appropriation Acts, so it is in this Act that the Commonwealth, as we understand it – and if we have not understood it correctly, I apologise – it is in this Act that the Commonwealth says one may find an authorisation of expenditure. That is, the step which this Court has said as clearly as may be said is institutionally separate from appropriation, different from or other than. It is for those reasons, in our submission, that section 54 needs to be understood as a very important part in the issues raised by the Commonwealth argument in this case of the constitutional allocation of power and responsibility that we refer to in proposition 6. May I dwell a little next on section 56 to which we refer in 6(a) of the outline.

FRENCH CJ: That informs your characterisation of the provisions relied upon by the Commonwealth as mere appropriation?

MR WALKER: It does, indeed, exactly so. Can I just jump ahead to answer – to respond to the Chief Justice? That may depend in turn upon something which distressingly may be a fiction. Namely, that it is not to be supposed that the Commonwealth Executive would sponsor a Bill or the Commonwealth Parliament would enact legislation knowingly in breach of section 54. However, whether counsel is distressed or not by the perhaps fictitious character of that approach it is, with great respect, in this Court the constitutional arbiter an essential tool that one approaches legislation on that basis.

Could I go back then to section 56? What might be called the primacy of government policy in relation to the appropriation of money is recognised in section 56. The message of the Governor‑General which, of course, is on the advice of the Executive Council is given by those in the ministerial party enjoying the confidence of the lower house.

That is what the Constitution says concerning the earmarking, which is the appropriation, by means which can vary as parliamentary practice varies over the years, but which at present, as we know, has among other means this earmarking by reference to so‑called outcomes, administered items and outcomes. Section 56 is one which, in our submission, is very difficult to square with the legislatively uncontrolled breadth of policy which is, and must be, conveyed by the Commonwealth reading of section 32B, namely that the government can, by promulgating regulation – the Executive in that sense – supply the content of the purpose for which appropriated funds, earmarked funds, may then be expended. In our submission ‑ ‑ ‑

HAYNE J: What is the tension to which you point? The appropriation being cast historically at a very high level of abstraction, why cannot the law granulate that?

MR WALKER: The law here, 32B, does not permit Parliament to know any detail, or indeed any content at all about how appropriated funds may be expended. That is for Parliament, as this Court has determined, to decide except in cases where the section 61 power may be engaged, which, it is conclusively determined, is not this case, at least subject to the way the Commonwealth wishes to frame the arguments in this case. It is because of the complete lack of any specificity that there is, in our submission, a telling contrast between what section 56 says about the message for appropriation which may be in broad terms, and then the complete lack of ability to connect, even to know whether the expenditures in blank authorised by 32B will fit within an appropriation item or not.

Now, we interpolate by way of anticipating an argument, that as we understand it, the Commonwealth relies upon what I am going to call supervision after the event by dint of the capacity of a chamber, particularly in current political conditions, the Senate, to obtain information from representatives of the Executive one way or the other about the expenditure of public funds. That, in our submission, misses the point entirely. Checking inquiry and scrutiny after the event is fundamentally different from legislative involvement in authorisation for the event.

HAYNE J: You do not seek to challenge Combet?

MR WALKER: No, not at all.

CRENNAN J: You rely on Pape; an Appropriation Act is a necessary but not a sufficient condition?

MR WALKER: Yes. I hope that is – I fear it may be my repetition – very clear from our written submissions. May I be brief but emphatic; yes, that is a very important fixed point. Your Honours may note in paragraph 22(c) of our outline for address that we, as it were, gingerly look round a corner there.

We describe Pape as an authority which the Commonwealth does not expressly, at least, seek leave to reopen. It does not seek leave to reopen it, full stop. Our parenthesis is to try to make the point that it is an authority which, in our submission, forecloses a great deal of the way in which the Commonwealth seeks to answer what we have said.

KIEFEL J: Are you saying that the Commonwealth is ignoring it?

MR WALKER: That is a form of rhetoric which we would adopt, yes. They are ignoring it in the sense that of course they are bound. They make no attempt at what might be called distinguishing. They have not engaged in what I might call ingenious reading of it and that leaves only the full frontal assault and they do not do that. We submit that once one is persuaded of a Commonwealth argument that it ignores a binding authority then the argument fails unless an alternative justification can be found.

FRENCH CJ: The way you put it, as I understand it from the written submissions, is that this leads to a proposition that says it is beyond the legislative competence of the Commonwealth to enact a law authorising the Executive Government or creating an executive power to spend “in blank” is the term that you use.

MR WALKER: Yes.

FRENCH CJ: Can you just unpack the concept of “in blank” a little for me?

MR WALKER: The first is the one that, in particular, underlies our proposition 5, that is, no description of any kind is supplied by 32B of what area of endeavour, what topic, may be the subject of regulation. All we know about it is it is something that the Commonwealth lacks power to do. I do not want to go back to my reading‑down argument but that is the first way in which it is “in blank”. It is entirely at large, no criteria to test, for example, whether a regulation is within 32B or not can be found.

FRENCH CJ: So what is the minimum requirement of a law authorising expenditure outside the framework of mere appropriation?

MR WALKER: There must be criteria expressed by which, in the exercise of judicial power, testing whether a regulation is within the statutory authority to make the regulation can be carried out. Here, by reason of the very generality of the first premise of 32B, you only have one which is entirely unhelpful in relation to validity, namely, the Commonwealth lacks power. That cannot possibly supply an answer to the question is this regulation itself within that power or not? You would need to ask - ironically, the Commonwealth, I think, does not want to know the answer to the first question about that premise – does the Commonwealth lack power?

If, after all, the Commonwealth succeeds in one of its arguments the regulation under 32B could not be valid because the first premise necessary for its validity, its efficacy, would not be true. That is why I say it would appear the latter day version of the Commonwealth approach to this is that 32B was an act of supererogation.

HAYNE J: Why do you enter the maze of 32B without knowing that there is an Appropriation Act which is a necessary element if there is to be expenditure and the Appropriation Act, as we know from Combet, may lawfully be expressed at a very high level of abstraction?

MR WALKER: We have to go into the maze. We have to because 32B is invoked by dint of the statutorily inserted item in the regulation picked up by 32B as the answer to – or as the source of authority to make, vary, administer the arrangement including the expenditure of money.

HAYNE J: That is to say, we enter the maze recognising that there is a succession of Appropriation Acts which identify this program as an administered item of the Department and recognising that 32B – or the FFLA more accurately – inserted regulations which identified the program.

MR WALKER: Yes.

HAYNE J: We are back to the point at which we began, are we not, Mr Walker, of whether in its relevant operation those provisions are valid?

MR WALKER: Yes, and we actually never move away from that. At the end of the day the question is can 32B operate in the manner that an ordinary understanding of its words achieves, and in answer to the Chief Justice’s question it is in blank because, in our submission, it supplies no criteria or specification in the Act which authorises the regulation to understand how one connects relevantly a program or an arrangement with the very high level item in the appropriation.

Of course, all of this proceeds upon the basis, now utterly well established, that as has always been understood appropriation is necessary but it is now very firmly understood, more recently, but it is not sufficient. So the necessity of appropriation has never been doubted, the insufficiency is now crystal clear, the search is for - on the way we frame the case, the search is for a law authorising the expenditure, et cetera, et cetera. It is not just expenditure, but relevantly it is expenditure.

Now, 32B was plainly enacted on a supposition that in the absence of a law, a relevant law there would not be power. I do not want to go back for my hat but you can lack power for all sorts of reasons, not just for reasons greater than simply a lack of legislation.

HAYNE J: But in its relevant operation it was enacted against the courts answering questions which said the agreement is not supported by the executive power, the payments are not supported by the executive power.

MR WALKER: That is correct and, in our submission, that is why the burden of our argument is to challenge the proposition that 32B was apt to supply that gap, and it is in blank in the sense I have suggested. There is no limit on the means by which there can be, by regulation, supply of the content of an arrangement or program. If one were to say that there is a limit implied in the availability in the whole of the Appropriation Acts, because you cannot just look at one, it is the whole of the Appropriation Acts, at the high level of language there then, in our submission, one has overcome by what we would submit to be a mere device, and a cynical one at that, the reasoning, the rationale for what this Court held in Williams (No 1), which is parliamentary control of executive action including expenditure.

This is not just fiscal. But this - if 32B has the effect of permitting “in blank” portmanteau, to mix my metaphors, authorisation then it can and it will just be a standing provision, very few words, which from time to time will require complementary promulgation of regulations to keep up to speed, as it were, with the Appropriation Acts, whether they be odd or even numbered presently does not matter.

CRENNAN J: So it is no part of your sufficiency argument inspired by Bardolph, for example, to ‑ ‑ ‑

MR WALKER: No.

CRENNAN J: All right, I understand.

MR WALKER: We are not contra Bardolph.

CRENNAN J: No, but what I was going to suggest to you, it is no part of your sufficiency argument that this item should not be in the ordinary annual services Appropriation Act because it has never been through, if you like, the kind of scrutiny that contested policy would receive in Parliament.

MR WALKER: That is not completely correct. If I can take your Honours to 17(a) in our outline, yes, as I have already foreshadowed in address, for the purposes of reading the Appropriation Acts, so indirectly we do take the point that these are not ordinary annual services, that is, the repetition of error does not convert them into ordinary annual services, we are conscious, of course, that the delineation and affixation of that label has been recognised by this Court as, as I say, peculiarly a matter in which the judgment from time to time, the practices from time to time of the Chambers requires more in the nature of judicial deference perhaps than any other matter to be found in the Constitution.

I do not want to rehearse the history of tensions between the Houses which either does or does not explain the absolutely latest manner in which they are proceeding. There is argument about whether there is departure or not from accords; that is not to the point. Our proposition does include, fortified by the approach by this Court in Williams (No 1), that an appropriation for this program is not an appropriation for the ordinary annual services of the government.

But as you will have seen from 17(a), that is not a deal breaker for our argument because, even if it were, the whole point about the Appropriation Acts argument, if I can call it that, because they become a misnomer then – the whole point about the Commonwealth’s Appropriation Acts argument, if I have understood it correctly, is that it does not only appropriate; it also accomplishes that institutionally separate and constitutionally vitally different step of authorising – the execution of authorising the expenditure.

That is why, on any view of it, be these ordinary annual services or not, there is a breach of section 54 and one simply ought not, unless compelled by the almost unimaginably plain language and admissible circumstance, one ought not to construe those words as going beyond appropriation.

KIEFEL J: You say section 54 denies the duality that the Commonwealth seeks in an Appropriation Act?

MR WALKER: Yes. Section 54 makes crystal clear that the only function that may be carried out by those Acts are as described in it, which means that one cannot suppose, as I say except in circumstances that are almost unimaginable because it would involve openly, flagrantly, flouting the Constitution ‑ one could not possibly ascribe another function.

KIEFEL J: But you use section 54 in aid of construing the Appropriation Acts; that is your approach?

MR WALKER: Yes, and that point - the distinction I was trying to make in answering Justice Crennan, that the way we use it ‑ Justice Crennan asked whether it was no part of our argument that these were not ordinary annual, et cetera, and the answer is, well, yes, it is, but in this crabwise fashion. I hope that answers your Honour’s question.

Your Honours, I have in particular in seeking to answer the Chief Justice’s question about “in blank” said what I want to say in amplification of that which appears in our written submissions for proposition 8. One test – or the test of what might be called “unbearable high level of generality, excessive abstraction”, or to use plainer language “vagueness” of language intended to have legal effect, is whether it lends itself to that which the rule of law requires, namely supervision by this Court and other courts with the task from time to time. In our submission, for the reasons I have put, one simply cannot posit what are the constitutional facts which would call to be adjudicated, if there are any, in order to ascertain whether a particular regulation which in future would be made under section 65 of the FMA would fall within the power in 32B.

Proposition 9 really does return to proposition 1, there can be no bootstraps or cart pulling the horse here. In particular, and pace the matters that Justice Hayne invited me to consider at the outset of the argument, one cannot fasten on the regulation and say, well, there is the specificity and that suffices to demonstrate that 32B is in order. In our submission, that is capricious in the sense that it turns on the accident of the content of particular regulation as informing the validity of a statute which authorises not merely that regulation but all others which fall within its terms. There could be no reading down of 32B which happens, as it were, simply to say, well, this saves the school chaplain’s program.

HAYNE J: Just to return a moment to section 54 and your reliance on it, it would be necessary to take account of what four members of the Court said in Combet 224 CLR 494 at 575 and following, paragraphs 155 and following, about whether these are matters to be taken to account and, if so, how?

MR WALKER: Yes, is the short answer. In that passage, if I could ‑ ‑ ‑

HAYNE J: These are essentially intra‑mural matters for the Houses.

MR WALKER: This is what I have tried to recognise in my statements this morning in address of the peculiarly parliamentary quality of the character, for example, to the phrase “ordinary annual services”. Now, there are other aspects. In that passage, 224 CLR 577, paragraph 160, one sees another aspect, it is not the only one but it is another aspect of precisely what, with respect, Justice Hayne has just brought to attention. Our argument embraces that. It is not to any degree weakened by that necessity; that is the necessity to recognise the role of Parliament in shaping its procedures, including those which go to the intra‑mural relations of the chambers.

HAYNE J: As well, also, of the form in which Appropriation and Supply Acts are drafted including, in particular, the significance, if any, to be attached to the reference to application ‑ ‑ ‑

MR WALKER: Quite so. However ‑ ‑ ‑

HAYNE J: ‑ ‑ ‑ which has gone from Act No 1 of the Commonwealth in 1901.

MR WALKER: Yes, though as Justice Hayne pointed out in Williams (No 1) there have been verbal variations. In particular, the word “only” came and went. If your Honours would forgive me, I know this is out of the order of the document but it would be convenient because the questions from the Bench have focused on this, may I go straight to that matter now by going to the first of the statutes? The first of the statutes in question in this case for its wording, that is in the yellow book 346 and here is “may” in another context, it is perhaps significant in this case. Subsection 8(1), which is in Part 2, “Appropriation items” – section 7 dealt with departmental items; then we come to administered items, which are the relevant ones:

The amount specified in an administered item for an outcome for an Agency may be applied for expenditure –

It is those words which as a matter of ordinary English, depending upon context, impart permission which we understand to be the basis of an argument – unless I have misunderstood the Commonwealth’s position – that section 8, in this and the later iterations to which I will come, is not merely providing for appropriation items and therefore providing the subject matter of the appropriation in section 16, but is also for everything which can be described as being for the purpose of contributing to achieving that outcome constitutes that which Williams (No 1) and Pape require as legislation for these non‑emergency endeavours to authorise it being carried out, including by expenditure.

FRENCH CJ: Do you, as I understand the answer you gave to me earlier, simply say or invoke 54 to support a characterisation of 8 as an aspect of the appropriation provisions which make up the necessary condition for expenditure and nothing more?

MR WALKER: Yes.

FRENCH CJ: Is that a constructional exercise or a labelling exercise?

MR WALKER: It is probably both. The construction is ‑ ‑ ‑

FRENCH CJ: Anterior.

MR WALKER: ‑ ‑ ‑ a step on the way to affixing a conclusion by way of label. I do not wish to repeat what we have sufficiently written, but in summary, it is this; this is an Appropriation Act. The title is not a mere label. The description of the Appropriation Act makes crystal clear its subjection to section 54. Part 2 of the Act is part of the Act to which the extraordinarily entitled Part 4 – it is called “Miscellaneous” and it has the not unimportant provision in section 16, which is the appropriation in any event. So there is the, as it were, beating heart of the statute, section 16:

The [CRF] is appropriated as necessary for the purposes of this Act –

HAYNE J: The rest of the Act, you say, is interesting but by the by.

MR WALKER: The rest of the Act describes what is appropriated and how, in a sense. This is an Act about appropriation. What it accomplishes is appropriation ‑ ‑ ‑

CRENNAN J: Permission to spend as distinct from power to spend. That is your point?

MR WALKER: Exactly. It is permission in the sense of this is what may be expended on that. That is the earmarking.

It is possible of course that the alteration in practice which, to the time then current in Williams (No 1) was traced by Justice Hayne, in particular that word “only”, I mean, if only I had only, I do not have only but we have as good, we submit, for the reasons which, with respect, were suggested - I do not suggest conclusively held by Justice Hayne in that passage in (No 1). We have, in our submission, however a purposive, functional, constitutionally informed reading of this Act. By constitutionally informed, in particular I call in aid the expectation, unless the words prevented the Court from doing so, that this conforms with section 54. The remarkable thing about the Commonwealth argument, unless I have misunderstood it, is that it embraces overtly a breach of section 54 in this Act.

HAYNE J: Well, 54, as it is to be understood against the understanding of 80, 81, et cetera, at what point in time, Mr Walker?

MR WALKER: Well, this is 2011, 2012, so ‑ ‑ ‑

HAYNE J: I see. Going back in history to be understood against a background of English parliamentary practice as well?

MR WALKER: Yes.

HAYNE J: But in the end, Mr Walker, let it assumed that your argument were to be rejected and this was a statutory form of authority, that simply produces the same question, does it not, as 32B, about whether, in its relevant operation this is supported by a head of power?

MR WALKER: Quite so. Yes, of course. That is why I started by saying how do we frame these proceedings and we frame these proceedings because, innocently, well not so innocently, we suppose that 32B was the next challenge to be faced. We now find, we think, that the Commonwealth says, in effect, at least in part of its stance, do not worry about 32B, do not need 32B, we have got section 8. Now, I have already said enough about our response which is to say how can you have section 8 with section 54 plus the history, et cetera, and the understanding hitherto of what these Acts are doing, including what they are therefore not doing.

However, if it were to be supposed on the part of the Commonwealth in its stance here that upon succeeding in persuading the Court that Parliament has breached section 54 and section 8 does in fact authorise expenditure, not merely appropriate the funds for it, then, in our submission, it would appear the Commonwealth is returning to what might be called the broader view, that is, they do not need any legislative head of power once there is (a) an appropriation and (b) legislation which purports to authorise the appropriated funds being expended on the, in this case, administered item, in this case, for what is now called an outcome.

That, in our submission, is completely contrary to Williams (No 1). It is also, in our submission, contrary to – and Williams (No 1) did not pronounce novel principle in that regard - it is also, as it happens, contrary to the limits which informed what was unhappily called the common assumption that dominated Williams (No 1).

Could I take your Honours to the way in which, in the first of the statutes that we draw to attention, the outcome in question was described? This is for the purpose again of showing the inaptness of this to fit in particular with either 51(xx) or 51(xxiiiA). At 356 you will see outcome 2 described. That is in these – I will call them incorporated documents – the budget statements. Could I take you to the relevant one which is in the yellow book, 408?

One sees a description of the outcome 2 strategy and the reference to this particular program is found at about line 33. Then at 421 in the same document talking about the same outcome, at about line 35, the sixth dot item on that page, the program is described as being a “voluntary program”. We draw that to attention. We take a point that as it is currently referred to in the material which is given legislative force by the Appropriation Act which is current and upon which the Commonwealth relies in this part of their case, that that word “voluntary” disappears. We will show you that in one moment.

That is by reason of the way in which the Appropriation Act (No 1) 2013‑2014 proceeds. Relevantly, that starts at yellow book 555. Its section 8 is found at 562, the same language. At 636 there is the description of the program in relatively familiar language:

assists school communities to support the wellbeing of their students including strengthening values, providing pastoral care and enhancing engagement with the broader community.

There is now, it appears, no reference to anything being voluntary. That is in terms of what we understand to be accepted by the Commonwealth that compelling anything in relation to students is antithetical to the notion of services in (xxiiiA).

HAYNE J: But the principle – or a principle which informs the chaplaincy program is, is it not, “all may, some should, none must”?

MR WALKER: That is as we read the material, though I stress there is nothing in the statute which requires anything of that kind at all. Nothing in 32B and, for that matter, nothing in section 8 if one has to pursue that oddity, requires any such specification at all and we are saying the latest description of the program does not say it has to be voluntary. All of that can be changed from time to time. The arrangement itself does not descend to any specification in this regard.

Your Honours, before I then turn to 51(xxiiiA) itself, we have noticed in proposition 10 the possibility raised against us of what I will call the disallowance. That, in our submission, is absolutely no answer to the institutional requirements and allocation of function with respect to the different kinds of appropriation and with respect to the need to have legislation authorising expenditure for the reasons we have put.

In our written submissions, in short, as we note in proposition 10 this strangely is a method said – offered we think – in order to allay fears concerning bypassing the Senate. This is a method which would deny a voting majority in the Senate the capacity to arrest any short‑term program which involves rapid expenditure because disallowance, of course, occurs upon tabling which itself is not simultaneous with enactment or promulgation.

Could I then turn to where, for the reasons which we would respectfully adopt, raised with me by Justice Hayne several times today, is unavoidable? One does have to find what I am going to call a substantive head of power. There are only two offered in this case, really, one might think only one with any real conviction and that is at (xxiiiA).

We, with respect, as you have seen from our written submissions, do not wish to repeat – to weary the Court with what has been so recently canvassed in (No 1). With great respect, we have adopted, we hope faithfully or at least cogently, the elements of the approach in Justices Hayne and Kiefel’s reasons in (No 1), in particular, for the purposes of characterising the program for the purposes of which the arrangement is said to be made as one which cannot fit within the strictures of (xxiiiA).

The key difference between the parties, we submit, is the one that we identify in 11(a). In truth, at bottom, the Commonwealth’s position is one that challenges the hitherto accepted notion that benefits are not to be seen – if I may put it this way rather brutally – anything that benefits. One reason for that is that it is not only students, obviously, that benefit from physical security of society including, for example, the elimination or reduction in the risk of terrorism.

Partly, at least, that proposition which would explode and render otiose the careful delineation of legislative heads of power in section 51 – an answer to that is supplied by that which is pointed out by Justice Kiefel. It has to be relevantly in relation to a person’s character as a student to which one says a benefit is supplied. But as an example it shows obviously that that which has hitherto always been understood as true of that expression, namely, it does not have its literal breadth – it cannot have its literal breadth – is well established.

In our submission, the way in which the Commonwealth proceeds, bearing in the mind the way in which its program is promulgated, talking about school community in particular – a phrase which is not literally or figuratively confined within the walls of the school classroom – that, in our submission, makes it impossible for (xxiiiA) to be invoked.

We have said enough in relation to our “in blank” argument and related propositions about the way in which it cannot be seen from the program, whether one goes to guidelines, whether one goes to the arrangement alone or whether one goes to Appropriation Act item descriptions and outcome descriptions, one cannot see an answer to the question necessary in order to determine legislative validity, that is, the characterisation as a matter of constitutional fact necessary to know whether it falls within (xxiiiA) what are the services in question. There is language that describes what might be called the hoped for result of the program being implemented, but the actual provisions of service, particularly for people called chaplains, who are forbidden from proselytising, is, with respect, obscure.

The obscurity is such, in our submission, as to defeat the venture of saying that these are provisions, whether conveyed by 32B in the regulation or by section 8 and the item, these are legislative provisions which can be seen to provide within the meaning of 51(xxiiiA) - to provide for services. That is our proposition 13.

In proposition 14 we defensively, perhaps, and in anticipation, point out that the guidelines are not apt for the reasons we have put in our written submissions to be the tail that wags the dog. They are entirely out of the ambit of legislative imprimatur. They may be changed from time to time. They have been changed from time to time. They may be changed, it is contemplated expressly, in ways which would be inconsistent with the arrangement.

We can deal very briefly with the only other of the powers that would need, we submit, in accordance with Williams (No 1) to be invoked, to be tested. None other has ever been suggested, if you need legislation under a head of power. That is 51(xx). As we put in propositions 15 and 16, leaving aside the contested question of characterisation, is Scripture Union Queensland a trading corporation, leave that aside, so whether the answer to that is yes or no, that will be purely coincidental.

The requirement for there to be a trading corporation is completely absent from every expression which is called up by 32B or section 8, depending upon the legislative route taken, including the regulation in the former case, or the description of “administered item” and outcome in the latter case. Nothing is there said about the need for corporation or trading corporation. In our submission, it is a hopeless proposition that this is an exercise of legislative power granted by section 51(xx).

We have, by way of trying to complete the submission in answer to questions and comments from your Honours, already dealt with propositions 17 to 20 and it is proposition 20 which is the way in which, with respect, we adopted an approach that Justice Hayne raised with me somewhat earlier.

We then come to those matters in these proceedings which stand outside and for the reasons I have already put really contradict the way the proceedings were framed with respect to 32B, and that is the approach taken by the Commonwealth in its written submissions to the decision of this Court in Williams (No 1). Your Honours, as you have seen in our written submissions, there are perhaps three ways to analyse the matter.

HAYNE J: Just before you embark on this, just to understand what the Commonwealth’s proposition about reopening may involve, as I would understand it, the reopening that is sought extends so far as to say that the answers given to the questions in the special case were wrong.

MR WALKER: Yes.

HAYNE J: Short of that, I do not know what reopening entails.

MR WALKER: Quite. Your Honour anticipates me. If I can go back just one step, this is not ‑ to use a phrase I advanced earlier ‑ this is not an ingenious re‑reading approach. This is not the frisson that might be caused by a case not being challenged, but being understood better. This must be – this must be the proposition that the case was decided wrongly because – and there may be other reasons, but prime among them must be because the reasons advanced were wrong. It is as thoroughgoing a challenge to a previous decision of the Court as can be imagined. It is, in our submission, utterly without foundation if one contemplates it first through the prism of an ordinary reopening application. I should not have said that. They are not ordinary. Applications to reopen are not ordinary; at least they do not feel that way from the Bar table.

Your Honours, the critical features of stare decisis in this Court which recognise both the apical status of this Court and the dynamic nature of the law including constitutional law, and the need for stability and predictability in any recognisable system of law, is currently understood to require as a matter of what I am going to call method in this place, that is, forensic technique administered by the Bench and to be observed by the Bar, requires hoops to be jumped through which bespeak the extraordinary quality of the exercise in hand; that is, to say that what presently stands in form as an enunciation and articulation of the law does not have that character and should be the subject of an argument to that effect to invite the reversal or alteration. In our submission, nothing in what is advanced by the Commonwealth answers that description.

Now, I realise that at a very crowded Bar table and with limited time I am here embarking on something which might be regarded as being in anticipation of argument against us, but written submissions have been exchanged so unless your Honours desire otherwise, we would wish to elaborate somewhat our propositions 21 and 22. As I say, the first prism though which one might look at it is simply, here is a decision of the Court. It ought to be reopened because there is satisfaction of the following criteria to be found in Johns or Evda, whichever is one’s favourite point of departure. There is another way of looking at it, namely, pure stare decisis, to say that what binds is ratio and that what informs in ratio is an understanding of the issues as argued, including an appreciation of matters which went by concession or assumption rather than by contest and decision.

In particular, that second way would, I suppose – although we do not think it has been done by the Commonwealth in this fashion – permit the argument, I suppose, that the unavailability of the Appropriation Acts simultaneously to be authorisation of expenditure as well as appropriation, that which in the odd‑numbered statutes would be a breach of section 54, I suppose one could say that is an argument that went by concessional silence.

There is, in our submission, a real difficulty in that and I say that with great respect notwithstanding the exposition and canvassing of matters in Justice Hayne’s reasons concerning the Appropriation Acts. I do not want to repeat what I have said about, in particular, section 54 and the functional or purposive reading of the Appropriation Acts, but the matter was not argued.

I accept that because it was not argued – I should say the Appropriation Acts, of course, were before the Court because question 3 in Williams (No 1), which was unnecessary to answer – question 3 concerned the validity of the appropriation. But it is not as if they were absent from consideration but it is certainly true that there was not argued by the Commonwealth or anyone that they not only appropriated but they also authorised execution and expenditure.

In our submission, however, one has to be careful that one does not perforate, as it were, the intellectual utility of a holding of this Court for fully expressed reasons by retrospectively imagining – giving life to in an artificial way – arguments that were not put. There needs to be what I might call a sufficient materiality and separateness from the subject matter of what was determined of the argument that did not appear during the hearing in order for there to be such a confinement of the outcome of stare decisis in this Court without reopening.

For the reasons we have already put, in our submission, it is unthinkable that by dint of a breach of section 54, there could be supplied the legislation which by the time of the end of hearing in Williams (No 1) was plainly the subject of search.

FRENCH CJ: Your remarks about the Appropriation Act argument go not so much to preclusionary submissions which we have seen in the written submissions as to whether that does not amount to reopening Williams in the sense that it would render some of the answers given in Williams wrong.

MR WALKER: That is right, exactly so. A third or yet another way of looking at the matter is, as your Honours have seen, by issue estoppel under that label. I do not wish to add to what we have said in written submissions about it. Of course there are differences of issue. Time has moved on. There has been another appropriation. There is even, perhaps, a difference in party on the defendant’s side. But, for the reasons, we have put in our written submissions in terms of what, relevantly, must be regarded as privies in this kind of litigation and the exact, the exactly similar material provisions in question, that doctrine is as well apt in this area of disputation to be enforced as in any.

We understand – or, perhaps, we anticipate over fearfully – an argument that issue estoppel is a curiously inapt way for this Court to proceed when constitutional disputation of a kind that goes to the fundamental fiscal institutions as this case does are raised. However, in our submission, there is an exactly opposite way of putting it – that an issue once determined stands determined and is the law on the point is every bit, if not even more important in such institutional areas as in what might be called “run of the mill” private disputes.

Then finally there is another prism through which it can be seen which can be, I suppose, summarised by the twinned notions of Anshun or abuse of process Reichel v Magrath. We do not wish greatly to elaborate on that except to say this. Notwithstanding the chapter and verse given of the forensic events in the arguments before, during and after the hearing of Williams (No 1), there is, in our submission, no element of admissible justification for, as it were, the Commonwealth to say that something went by what might be called “forgivable neglect”. There is no way that that can be attributed to the position of the Commonwealth in Williams (No 1). It is for those reasons, in our submission, that what might, therefore, be seen as a desire to have a second go, runs foul of those important self‑protective powers of this Court as well.

In proposition 23 against, as it were, our failure in that regard, and it is difficult to know just how compressed I can make this last submission, in proposition 23 we say but one cannot return, not least because of Pape, one cannot return to the notion that the combination of section 61 given section 81 and 51(xxxix) is enough to justify what has been done. I am aware that when I put that, not least by my reference to Pape, we are embodying a great deal of argumentation. The point about our propositions 21 and 22 is it is utterly inappropriate for us to have to go through all of that again or, perhaps more accurately, for this Court to have to do so. Proposition 24 speaks for itself and if I may then, having touched on standing, sit down.

FRENCH CJ: Thank you, Mr Walker. Solicitor‑General for New South Wales.

MR SEXTON: If the Court pleases. I think our outline has just been handed up. We thought we might not be on until after lunch. Your Honours, if the Court pleases, I propose to say something relatively briefly about the application of any requirement of legislative support for Commonwealth expenditure to the notion of expenditure and contracting at the State level, and my learned friend, Mr Kirk, will say something about section 32B of the Financial Management and Accountability Act.

Your Honours, at paragraphs 161 to 164 of its written submissions the Commonwealth raises the question of the application, if any, of the requirement of legislative support for Commonwealth expenditure to expenditure in contracting by a State executive, and this is not a question that in normal circumstances the Court would be required to consider in arriving at its decision in this case, and we do not suggest that the Court ought to consider it unless it were necessary to do so.

But, we do want to say something briefly about it given that the argument in this case is at a rather early stage and we will not have another opportunity to contribute to it. It might be noted at the outset that the Commonwealth’s powers are enumerated in the Constitution, whereas the powers of the State legislature might be taken to be whatever is necessary for the peace, order and good government of its territory.

FRENCH CJ: This is the Commonwealth’s in terrorem argument against the State’s.

MR SEXTON: It is the Commonwealth mortar bomb we thought, your Honours, to the trenches.

HAYNE J: One of.

MR SEXTON: One of, your Honour, that is quite right. But this is, of course, subject to some – the State legislative power, it is subject to some extraterritorial limitation, and to manner and form limitations under section 6 of the Australia Act 1986, and also of course to inconsistency with federal law by reason of section 109 of the Constitution, or inconsistency with an implication in the Constitution such as the implied freedom of political communication. But the States existed as colonies prior to the enactment of the Constitution and possessed their own charters of government from the imperial Parliament, and those constitutional charters have been confirmed and continued by the Constitution but they were not, of course, created by it.

So, in view of a State legislature’s plenary powers, it might be assumed that in normal circumstances any expenditure by a State executive would be within its powers. It would still of course be necessary for appropriation legislation authorising the expenditure in question before the funds could be actually spent. But, to give an example, the appropriation for the New South Wales Department of Education would normally list a series of subjects such as early childhood education services and a sum of money available for each of those subjects. We would say it might be assumed that any expenditure on education in New South Wales would fall within the powers of the New South Wales Parliament.

HAYNE J: Do the financial arrangements in New South Wales follow the former pattern of supply followed by appropriation at a later point in the year or are they now of a kind similar to that found in the Commonwealth?

MR SEXTON: I think there is budget legislation but appropriations in relation to particular departments and in particular subjects.

HAYNE J: But not supply first, picked up and dealt with in the appropriation later in the financial year?

MR SEXTON: I do not think so, your Honour, but I cannot be sure about that.

HAYNE J: My grasp on it (a) never was good, (b) certainly is not good, but my understanding was that supply preceded the end of the financial year and appropriation picked it up after the financial year had begun so that there would be no interruption in provision of government services and payments.

MR SEXTON: I cannot be certain about that, your Honour. Your Honours, in relation to contracts entered into by a State executive, Bardolph, which has already been referred to but it is (1934) 52 CLR 455, stands for the proposition that the existence of contractual liability on the part of a State is not conditional upon parliamentary authority or on the provision of funds by the Parliament for the performance of the contract. There did not seem to be an assumption in that case in the judgments of the Full Court, which are on appeal from a judgment of Justice Evatt, that legislative support was necessary for the existence of liability, although it was accepted that the contract in question there was one involving “the ordinary course of administering a recognized part of the government of the State”, to use the words of Justice Dixon at 508.

But at first instance, Justice Evatt expressed the view that under a Constitution like that of New South Wales where the legislative and executive authority is not limited by reference to subject matter, the general capacity of the Crown to enter into contract should be regarded from the same point of view as the capacity of the King would be by the courts of common law. This can be contrasted with the decision in the Wool Tops Case (1922) 31 CLR 421 where it was held that the Commonwealth had no power to make or ratify the agreements in question.

Now your Honours, Professor Seddon observes in his work “Government Contracts” which I do not need to take your Honours to, but we have handed up the extracts, at [2.17] that very little attention has been given to the powers of the States and Territories to make contracts, but ultimately he rejects the contention that there are inherent limits on a State’s power to contract and suggests that the only limits are, to use his words:

those that arise from the division of powers between the Commonwealth on the one hand and the States and Territories on the other.

That is at [2.19]. There is no real equivalent, we would say, at the State level to the operation of section 61 of the Constitution, and in this sense the State constitutional model is closer, except for the limitations we have already noted, to the United Kingdom model than to the Commonwealth Constitution, and it might be noted that in Williams (No 1), the Chief Justice at paragraph 79 described the decision in Bardolph as occurring in a context “analogous to that of a unitary constitution”. There is a similar observation by Justice Heydon at paragraph 391.

Nor is there any real equivalent in general at the State level to the role of the Senate under sections 53 and 54 of the Federal Constitution. New South Wales, for example, appropriation bills or legislation imposing a new rate, tax or impost are to originate in the Legislative Assembly; section 5 of the Constitution Act 1902 (NSW). If the Legislative Council rejects or fails to pass or amends unacceptably to the Assembly a bill appropriating moneys for the ordinary annual services of government, this

legislation can still be presented to the Governor for assent which can then be given; section 5A of the Constitution Act.

The Commonwealth contends in its written submissions that if there is a limitation on Commonwealth executive power arising as a matter of implication from the Constitution, then that implication would arise at the State level as well. But we would say there is no reason why an implication drawn from the text and structure of the Federal Constitution would necessarily be found to exist in one or more of the State Constitutions which have been formulated at different times and in a different fashion from their federal counterpart. That is all we wanted to say about that aspect of the Commonwealth submissions, your Honours, and Mr Kirk will now say something about section 32B.

FRENCH CJ: Yes, Mr Kirk.

MR KIRK: Your Honours, my submissions are directed as my learned leader said to section 32B. Can I start by taking your Honours back to that section conveniently found in the Amendment Act – the Financial Framework Legislation Amendment Act (No 3) 2012? Can I add some points without overlapping to what my learned friend, Mr Walker, said about the lack of content of this provision? May I do so by making four quick points? If your Honours turn to 32B(1)(b)(iii), your Honours will see that what is purportedly authorised is that:

the arrangement or grant, as the case may be:
. . .
(iii) is for the purposes of a program specified in the regulations –

What that implies is that this authorisation encompasses future arrangements. That is to say, arrangements not yet in place at the time that the program is mentioned in the regulation. Indeed, those arrangements may not be made until, for example, after the period of disallowance which is a maximum of 36 sitting days permitted by section 42 of the Legislative Instruments Act. That is the first point. Immediately under that, your Honours will see the words:

the Commonwealth has power to make, vary or administer –

We emphasise the word “vary”. So, even the arrangements made under one of the three categories can later be varied. The word “vary” is further defined in subsection (3) with two permeations, unsurprisingly. One, where it is varied:

in accordance with the terms or conditions of the arrangement –

or, two, where it is varied outside those terms –

with the consent of the non‑Commonwealth party –

That, again, serves to emphasise the disconnection between what is in the regulation and what may be the practical content of the arrangement. The third point we seek to emphasise emerges from subsection (2). That is to say:

A power conferred on the Commonwealth –

HAYNE J: Before you go past question (1), surely you have to look at item 9 in Schedule 1 to the Amending Act to deal with programs in place.

MR KIRK: It is true that it deals with programs in place, for example, encompassing this particular one, but the submissions I am directing myself to go to the proposition that, ultimately, first section 32B is not effective to meet the constitutional requirement that was articulated by a majority of the Court in Williams (No 2) and, secondly, that it cannot be read down. As a step along the way towards the arguments, I am seeking to emphasise the breadth of the power itself. The third point I was seeking to make relates to subsection (2), namely, that:

A power conferred on the Commonwealth by subsection (1) may be exercised . . . by a Minister or a Chief Executive.

But that has to be read with section 32D which authorises a Minister to delegate, seemingly to any official in an agency. Agency encompasses departments, for example. So, one can delegate the power down to make these arrangements well below a person who would be responsible to Parliament as an aspect of responsible government.

The fourth brief point we seek to make in relation to section 32B relates to the word “arrangement”. That is defined in subsection (3) of 32B in an inclusive manner to include contracts, agreements or deeds but not limited to it. Your Honours will note there is no particularly formality that is specified to be required here or, so far as we can see, elsewhere. Indeed, so far as we can see, there is no requirement the arrangement be in writing.

Now, that is subject to section 32C(2), which is that if the recipient is a State or Territory there needs to be a written agreement, and also subsection (4) of 32C, which says that:

subsection (2) does not, by implication, prevent the grant from being made subject to terms and conditions.

But, reading those together and then with the definition of “arrangement”, it seems to us that there is no requirement, certainly for any particular degree of formality, nor indeed, that it be in writing. In that context, our first proposition is that 32B is so broad and indeed lacking in content and lacking any connection to exercise of representative and responsible government that it fails to meet the requirement for legislation that four members of the Court articulated in Williams (No 1). Can I refer your Honours to paragraph 8 of our outline where we have sought to articulate without being too formalistic about it one way in which that might be put, namely that there is an absence of sufficient specificity to enable all relevant institutions and persons adequately to assess the nature and character of the program in question and its links to legislative power.

That is all I wanted to say in relation to that proposition about inadequacy, but that leads then directly to the issue your Honour Justice Hayne has emphasised about validity. Can I make one introduction point in this regard? The Commonwealth, in its written submissions, seeks to emphasise that the real question, as it calls it, is whether section 32B supports the regulation that specifies a particular program, arrangement or grant. So it seeks to put the focus of the validity question at the regulation level rather than at the level of 32B.

No doubt in some case that is the appropriate level of analysis, but as the joint judgment in this Court’s decision in Wotton V Queensland – I will not take your Honours to it but I will give the reference (2012) 246 CLR 1 at paragraph 22 – illustrates, where there is some constitutional limitation at play in relation to a regulation‑making power one would ordinarily assume and understand the regulation‑making power has been constrained by the constitutional limit, and the validity of the regulation is then a question not of constitutional law but of statutory ultra vires.

The reading down question arises at the anterior stage of constitutionality, namely where the regulation‑making power exceeds or arguably exceeds some constitutional limitation. It is at that level that the issue of reading down or severance must be judged, it cannot be sidestepped in the way the Commonwealth puts it, in our respectful submission. In our submission, 32B cannot be read down so as to encompass only matters within federal power, most notably because it fails to specify any standard criterion or test to bring its operation within validity. Can I take your Honours to Pidoto in Victoria briefly, (1943) 68 CLR 87?

At page 108 to 109 in the Chief Justice’s judgment and starting at about point 8 of 108, I am not going to read it to your Honours but remind your Honours of what will have been read many times. Chief Justice Latham postulates a Commonwealth statute dealing with larceny in simple terms. His Honour notes:

Prima facie the law is invalid.

But undoubtedly it could have some valid operation. In his Honour’s view that sort of law could not be read down within the terms of section 15A. At page 109 point 4, his Honour says:

It would be left to the Court to discover and prescribe an appropriate limitation as various cases presented themselves.

Then his Honour gives various examples. Then, at the beginning of the next paragraph, his Honour says:

Such an application of the Acts Interpretation Act appears to me to require the Court to perform a feat which is in essence “legislative and not judicial” –

a very familiar analysis. In our respectful submission, this provision, 32B, is of much the same kind as that larceny provision. In the larceny provision, some executive action, namely a prosecution, may in some particular case arguably bring it within Commonwealth power, but because the law prescribes no standard by which to judge whether it is within constitutional power to see whether it is in constitutional power requires the Court to complete the exercise. That is not permissible, that being so, in our submission, it is invalid.

The obvious counterpoint to that example is this Court’s decision in R v Hughes 202 CLR 535, if I could take your Honours briefly to that, concerning, of course, aspects of the corporations law scheme. If I could take your Honours to page 555 in the joint judgment of six members of the Court, your Honours will recall the issue here was that the Commonwealth Director of Public Prosecutions was empowered to prosecute offences under the State Corporations Law, relevantly of Western Australia. At paragraph 40 on page 555, the joint judgment says:

The DPP Act in a sense is supported by as many heads of power as from time to time have been exercised by the Parliament to create offences against Commonwealth laws.

Pausing there, in our respectful submission, that is not a surprising point. A DPP Act is in some senses a bit like an Interpretation Act. It links to other exercises of legislative power. The Interpretation Act links to other exercises of legislative power to help us understand what the Parliament meant. The DPP Act links to exercises of legislative power in terms of implementing the criminal laws that have been made from time to time by the Commonwealth. The joint judgment goes on to refer to the power at para 40 to the power conferred by section 51(xx) and notes at the top of the next page that:

perhaps the very great majority of offences created by the State legislation –

will fall within that power. But then a question arose as to the particular provision which hinged on this notion of prescribed interest and the Court did not determine that issue in terms of 51(xx). If your Honours go to paragraph 42 the Court indicates:

It is unnecessary further to consider the matter.

Namely, whether it is within 51(xx) and refers instead to section 51(i) and 51(xxix). Then, at paragraph 43, last three lines of the page:

Upon the present hypothesis, a law of the Commonwealth could not take these definitions as criteria of operation for prosecution unless they were read down so as to exclude purely domestic dealings . . . However, s 15A of the Interpretation Act may be applied to read down a provision expressed in general terms, including a power to prosecute so as to apply only where the particular prosecution is supported by a head of power.

Then paragraph 44:

Accordingly, the federal legislation identified above –

is within power. The key point here, in our respectful submission, and the key difference between this and 32B is in that case the Court was empowered in any particular instance to assess whether what had been done was within Commonwealth power by looking at a law, by looking at a particular State’s law such as 1064 of the Corporations Law and assessing whether that exercise of State legislative power could be taken to fall within one of the heads of Commonwealth power.

So although it is kind of at one stage removed, it is very much a standard form of constitutional analysis. That is quite different from this case, in our respectful submission, where we have no laws. All we have, without going over what Mr Walker has said, is that content‑less section 32B and a very high level of generalisation in the regulation. For that reason, in our respectful submission, Hughes is quite different and distinguishable and does not support 32B.

That leads me to the final point we wish to make, which is picking up on the Dignan point, as it might be called. My learned friend, Mr Walker, referred to S157. Your Honour Justice Crennan asked a question of my learned friend this morning about the absence of – or the arguable absence of a specification of a scheme or content within 32B. We would seek to emphasise that point.

As one further way of doing so, can I take your Honours briefly to Work Choices (2006) 229 CLR 1 at 174, paragraph 395. Your Honours will recall that in that case the Australian Workers’ Union challenged one aspect ‑ one amongst others ‑ aspect of the scheme. In particular, if your Honours note paragraph 396:

Section 358 renders a term of a workplace agreement “void to the extent that it contains prohibited content”.

If your Honours note paragraph 398, what “prohibited content” was was to be specified by the regulations and so that was said to raise the same sort of problem as was put here. If your Honours turn to page 176 within paragraph 400, about 10 lines down, the joint judgment notes that there were two distinct reasons given. To summarise, one was that there was “no ‘law’”; the second was that there was no law with respect to any identifiable head of power. Those were addressed in turn. The way we seek to put it is the second but it is useful to note how the Court here addressed both aspects: is there a law? If your Honours turn to page 178, paragraph 407, your Honours will see:

It is convenient first to deal with the AWU’s submission that there was no stipulated ambit . . . That submission must be rejected because in four respects it is erroneous.
The first error is that it would not be open to the Executive to say that a workplace agreement should not contain any of the matters which are required content.

So there were some things which the Act required to be in the content. Jumping to page 180, paragraphs 411 to 413, the second, third and fourth errors were articulated and we need not dwell on the detail. The key conclusion reached, if I can put it this way, is if your Honours look at the bottom of paragraph 415, the last three lines, there is a quote from the joint judgment in Morton v Union Steamship, a slightly different context of course but it says:

“The ambit of the power must be ascertained by the character of the statute and the nature of the provisions it contains.”

That is the ambit of the regulation‑making power must be so ascertained and the gravamen of the analysis put above is that the ambit of the power here was perfectly ascertainable when one looked at the various aspects of the law which indicated what was required to be there and certain things that could not be there and so forth. There was thus a sufficient articulation of a scheme.

If one then turns to paragraph 418, which is where the second variant of the argument is dealt with, the one we seek to emphasise - I might let your Honours read that - in our respectful submission, here there is no such articulation of a scheme contained in the statute itself, indeed, avowedly so. It is meant to solve all problems past, present and future in relation to, not some topic of law but some aspect of activity, namely spending.

For those reasons, in our submission, even as matter of general law, it would fail to be a law with respect to any identifiable head or heads of power, to pick up the phrase Justice Dixon used in Dignan’s Case but all the more so, in our submission, in this context where Williams (No 1) indicates that parliamentary scrutiny is required of these measures. Unless I can assist the Court further.

FRENCH CJ: Thank you, Mr Kirk.

MR HINTON: If the Court pleases. An unscheduled adjustment in the batting order.

FRENCH CJ: Yes.

HAYNE J: What are you, the nightwatchman, are you?

MR HINTON: Yes.

HAYNE J: Do not go there.

MR HINTON: I will be counting the number that rise above my shoulder, your Honour. The effect of our submissions, ultimately, is to arrive at the same conclusion as the plaintiffs but by a different route with respect to, in particular, section 32B. The starting point in considering this matter, because of the opening words of section 32B(1), “apart from this subsection”, must be a consideration of question 1 and then question 4 before one goes to questions 2 and 3. Accordingly, I will start with questions 1 and the Appropriation Act.

We focus, as your Honours will see from our oral handout point 1, on the words “may be applied for expenditure”, as are contained in section 8(1) of each of the relevant Appropriations Acts, but they were the words identified by your Honour Justice Hayne in Williams (No 1) as being capable, not a conclusive finding or holding, but as being capable of being construed as giving rise to a power to spend on terms.

In our written submissions, we have put three possible constructions of section 8(1), one that enables, in terms of appropriates and empowers, in terms of spends, one that purely enables, just appropriates, and one that purely empowers in terms of just providing a spending power.

The third can be rejected immediately as a matter of construction because if it were accepted, then that leaves section 16 in most of the Acts, 15 in one, as carrying the workload of the appropriation and that would be, in effect, an appropriation in blank because it does not state any purpose at all. Indeed, the third construction can be rejected because section 16 and section 15 necessarily direct us back to sections 7, 8 and 9 and works in conjunction therewith to effect the appropriation.

So we are dealing then with two possible constructions: one, merely appropriate; the other appropriate and spend. In our oral hand‑up your Honours will see that we provide five points as to why the appropriate construction is that section 8(1) of the Appropriation Act is enabling only in terms of what has long been understood as what an Appropriation Act does, and not enabling and empowering. Those points, in one way or another, have all been made in the submissions of Mr Walker and I do not intend to trespass upon that ground again.

Can I make two points, however? Firstly, with respect to your Honour Justice Hayne’s question about the practice in New South Wales with respect to Supply Acts and Appropriations Acts, one preceding the other, there is a discussion of that to be found in Bardolph’s Case and Justice Evatt’s judgment and your Honour is quite right in your understanding, assuming that continues to be the practice.

The second point, or the related point I wanted to make, was that we have traced in our written submissions, not definitively, but sufficiently, these words “issue” and “apply” and we have located them being used as far back as 1743 in other constitutional contexts where no power to spend had to be conferred by the Appropriation or Supply Act because, for example, at the imperial level the Crown was always treated as having, in effect, the capacities as we called that argument here. The point to be made is that we see that language come forward and until this case no one has ever suggested - sorry, I draw that back, until this case no one has ever argued that “applied” means, in effect, empowered to spend.

The second point I wanted to make was the reliance that the Commonwealth seeks to place on the treatment of section 55 of the Constitution in Permanent Trustee v State Revenue and in particular the words in section 55 of “shall deal only with” such appropriation - Permanent Trustee v State Revenue 220 CLR 388 and the relevant paragraphs are 68 and 69 to be found in the judgment of their Honours the Chief Justice, Justices Gummow, Hayne, Callinan and Heydon.

Here, their Honours are dealing with the question of whether or not in section 55 the words “therein dealing with any other matter” – dealing with the ambit of what those words are and we find that those words allow you to include in a taxation Act anything that is fairly relevant or incidental to the imposition of a tax or incidental and auxiliary to the assessment and collection of tax. The tests of their Honours Justice Higgins and Justice Starke in Osborne and Munro respectively are adopted.

As I understand my learned friend for the Commonwealth’s argument, that understanding of what the words “dealing with” can then be carried forward into the construction of section 54 such that when one comes to an appropriation and the limitation placed upon the content of an appropriation Bill and that it shall deal only with such appropriation that means it shall deal only with such appropriation and everything necessary to give effect to such appropriation including spending the money appropriated.

In my submission, that is a misapplication if you are indeed to translate the test with respect to section 55 to section 54. What is incidental and auxiliary to the appropriation or can be considered fairly relevant or incidental to the appropriation is incidental and auxiliary to or fairly relevant or incidental to the segregation of the funds from the consolidated revenue for application to a determined purpose so that they are available for that purpose if required, but not – but not – including expenditure.

If the Court pleases, with respect to the Appropriations Acts arguments, if indeed section 8 – I do not wish to make any further submission on the question of construction. If the Court finds that section 8 does include a power to spend, then the question becomes one of characterisation as to whether the outcome and the relevant schedule in the Act and the references in the portfolio statements provide sufficient detail such that one can conclude that they fall within section 51(xxiiiA). I do not need to rehearse the submissions made by my learned friend, Mr Walker, in that regard.

That concludes my submissions on question 1. I come to question 4, the application to reopen Williams. We adopt the submissions of the plaintiff and those of Western Australia, New South Wales and Victoria. In what follows, propositions 5, 6, 7 and 8 mirroring the paragraphs 19 through to 34 of our reply, we set out the seven factors drawn from text and structure that are to be taken into account in answering the question whether or not the Commonwealth has power derived from section 61 to spend on terms, the terms being those contained in the funding agreement in this case.

FRENCH CJ: That might be a convenient moment, Mr Solicitor.

MR HINTON: If the Court pleases.

FRENCH CJ: The Court will now adjourn until 2.15.

AT 12.44 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

FRENCH CJ: Yes, Mr Solicitor.

MR HINTON: Can I begin by back tracking for two seconds to question 1? I neglected to mention two cases in the course of discussing the long history of issue and apply. I just wanted to alert the Court to Colonial Ammunition and Bardolph, not for the reasons that my learned friend, Mr Sexton, relied upon them with respect to the content of State executive power, but in each of those cases, the relevant Appropriations Acts in Colonial Ammunition and the Supply Acts in Bardolph were all framed in terms of issue and apply.

In Colonial Ammunition their Honours Justices Rich and Isaacs rejected the argument that those Appropriations Acts provided a power to spend and in Bardolph we see all judges look outside the Appropriations Act for the power to spend – that power to spend being the executive power to contract and spend as part of the ordinary course of governmental administration. So, there are two authorities, 1924, 1934, decided consistent with the understanding of that language issue and apply coming forward does not include a power to spend. Of course, it was also understood by the report of the 1929 Royal Commission that issue and apply at page 49 did not extend to a power to spend.

I turn then to question 4. In our submissions in reply, we have gone through the various textual and structural and contextual aspects that were relied upon by the members of the Court in Williams (No 1). We have identified them again in paragraphs 6 and 7 of our oral hand‑up. I will not go through what your Honours have said. But can I make this point with respect to the submissions of the Commonwealth, in particular paragraph 116 of their written submissions:

It is necessary to distinguish the content of executive power from the limitations on its exercise –

the Commonwealth says –

Fundamentally, the identification of the content of the executive power should proceed from two premises: (a) a polity must possess all the powers that it needs in order to function as a polity; and (b) the executive power is all that power of a polity that is not legislative or judicial power.

That, at paragraph 116, is the Commonwealth’s starting point. In my submission, in determining the content of the executive power of the Commonwealth, we do not start with those premises because they carry with them assumptions as to the very nature of the polity that we are discussing. They do not start by looking at what is the creature. So when we look at section 61 and what it confers, we bear in mind it does not continue anything; it could not. It does not transfer anything; it vests. But it does not vest what someone else had. The question is, as part of this new thing created, what did it vest?

HAYNE J: Well, there is at least a question which no doubt the Solicitor for the Commonwealth will have to address about whether the two premises identified in 116 are the only premises or whether there is not a third suppressed premise, namely that the executive power of the Commonwealth is to be equated with that of the British Crown. As I understand your proposition, it is that the first of the two premises, a polity, must possess all the powers that it needs in order to function as a polity – at least leaves open, you say, assumes a polity of what kind, in particular a polity which is the central polity of the Federation or a polity of a unitary state with no written constitution.

MR HINTON: Precisely. So the starting point is fundamentally flawed and no member of this Court in Williams started from either of those two positions or the perhaps latent suppressed assumption. It was all a matter of text context informed by history.

HAYNE J: Just so that the Solicitor for the Commonwealth knows where the point is going and will deal with it directly, the suppression of the premise may be seen perhaps in paragraph 119.2 where the question is case in terms of limitation. Casting the question as one of limitation presupposes something that is being limited. What is being limited? At least a possible understanding of the Commonwealth’s submissions is that in their I think three different articulations of executive power there is in truth identity: the executive power of the British Crown; this notion of what befits a nation, unspecified; and the – that is to say, clause following what befits a nation which at least at first sight seems to be in some tension with what precedes it. Those are matters to which the Solicitor can come full knowing what lies ahead.

MR HINTON: My point, you do not start with any assumption. At paragraph 116, perhaps also the paragraph your Honour Justice Hayne referred to, are built upon an assumption. We know from the very first resolution of Sir Henry Parkes that what the framers were concerned with was something sui generis.

CRENNAN J: Do you at least start from an assumption about prerogative powers of some sort?

MR HINTON: That there are? Yes, and then, of course, the question is how are they distributed?

HAYNE J: In what sense are you using “prerogative”, Mr Solicitor? Are you using it in the same fashion that Sir William Wade refers to in his article in 101 Law Quarterly Review 180, particularly at 191, I think it is, as those things that are unique to the Crown and are possessed by no subject or are you using it in some broader sense?

MR HINTON: The narrower sense, and then allocated by virtue of the distribution of power affected by the Constitution between the States and the Commonwealth, and I think we see that now reinforced by section 7, I think it is, of the Australia Act. The example being the prerogative of mercy, for example.

FRENCH CJ: There was some passing discussion of that Cadia.

MR HINTON: Yes, your Honour, yes. We refer to our seven dot points. I will not take your Honours through them. I will not take your Honours to what your Honours wrote. Our submission is ultimately, having regard to those points, summaries of what your Honours said, the conclusion in Williams (No 1) was correct. Can I deal with State executive power and deal with it very, very briefly? There is no need to touch upon it in this case at all. If your Honours feel the need, with respect, to touch upon it, I adopt the submissions of my learned friend, the Solicitor‑General from New South Wales, but in deciding this case the content of State executive power does not fall for consideration. It can and should await, with respect, another day. I will move to questions 2 and 3.

Where we differ from the plaintiff, and indeed New South Wales, our submission is that on its face section 32B would be enlivened where, for example, legislation that purported to authorise the Executive to make, vary or administer a contract for a program had been held to exceed legislative power. To that extent section 32B is capable of having an operation beyond the legislative power of the Commonwealth. That drives us to the question of whether or not it can be read down. Here is where we part company with the plaintiff and New South Wales. In our submission, it can be read down.

The plaintiff advances four possible ways and by reference to those four possible ways says because there are choices, applying what Chief Justice Latham said in Pidoto, it is not open to your Honours to read section 32B down. Having regard to what Chief Justice Latham said in Pidoto, in particular at page 110 to 111, in searching for the intention of the Parliament that there can be a partial operation of the law based on some criterion or test discovered from the law itself one can have regard, his Honour said, and I am referring in particular to 68 CLR 87 at the very last line of 110 over onto 111, one can have regard to the nature of the subject matter with which the law deals, and the subject matter may provide the test or the criterion by which it can be read down to have a valid partial operation.

What is the subject matter of section 32B? In my submission, it is to provide statutory power for arrangements for programs where there is not otherwise power to enter into them. Applying section 15A it was the intent of Parliament to provide power as far as it could validly do so in order that the Executive could enter into arrangements for programs where it did not otherwise have power. The limit then of the power is the limit of Commonwealth legislative power.

FRENCH CJ: What you described earlier was really not subject matter so much as purpose, was it?

MR HINTON: You can, your Honour, yes. Chief Justice Latham equally said, purpose is to be pursued as part of a reading down exercise.

HAYNE J: Well, is the question one of reading down or is the question one of severance strictly so called by blue pencilling items inserted in as part of Schedule 1AA? I do not know, it is a question, but is it a blue pencil operation or is it a read down of 32B, or is it a combination of both?

MR HINTON: Option C, if your Honour pleases.

HAYNE J: All of the above?

MR HINTON: We will lock that one in. Our submission is, 32B can be read down applying section 15A and is valid, but the Commonwealth, with respect, still have difficulty when we turn to the schedule and paragraph 407.013 for all the reasons that my learned friend, Mr Walker, alluded to. So we arrive, as I said in opening, at the same position on questions 2 and 3 but by a different route. We say 32B can be read down, not a blue pencil exercise, just a matter of turning to its subject matter and reading it as permitting arrangements or grants, relevantly, with respect to programs that fall within a legislative head of power. Then one would apply the same test to the regulations and that is where we have the difficulty.

FRENCH CJ: So, in your reading, if there is some existing Commonwealth statute providing for spending which turns out to be invalid whether it be because it cannot be characterised as with respect to a head of power or because it offends against some prohibition.

MR HINTON: Yes.

FRENCH CJ: This steps in?

MR HINTON: On its face it would and that is why it has to be read down so it does not step in, so it does not have an operation where the Commonwealth does not have the legislative power.

FRENCH CJ: That is right. Where the Commonwealth does not have power or where it offends some prohibition it does not step in.

MR HINTON: Yes.

FRENCH CJ: It is only where you have got an absence of any other statute.

MR HINTON: Correct, your Honour, correct. That is entirely consistent, in our submission, with the R v Hughes.

HAYNE J: Just before you come to that, just staying with 32B and its text, on the face of it it seemed to me – and I may be quite wrong – that 32B(1)(b)(iii) was engaged in respect of the chaplaincy program. I do not say that other parts of 32B may not be engaged but 32B(1)(b)(iii), I think, is. First, is that right?

MR HINTON: That is my understanding, your Honour, yes.

HAYNE J: If that is right, then at least on the face of things, it seems to me there is a question of, well, there are however many programs identified in the regulations as amended by the Amendment Act. Can one not simply blue pencil this one if it is legislatively and otherwise infirm?

MR HINTON: Theoretically, yes – whether or not we can do it practically, no. No, for the reasons Mr Walker gave with respect to the infirmities of paragraph 407.013. But 32B remains valid, whether or not any of the other paragraphs fall within 32B validly is something the Court does not have to decide.

In R v Hughes my understanding of my learned friend, Mr Kirk’s, submission was that the distinction between that case and this case lay in the fact that, there, there was a law with content that their Honours could have regard to. The law with content being the offence – the State offence – that the Commonwealth DPP was duty‑bound to prosecute, and because there was that law in existence it allowed their Honours to conclude that, therefore, relevant heads of power supported section 47(1) and the Commonwealth Director having a duty to prosecute that offence. No law here. But, in my submission, what we would have here is the regulation. It would perform the same function as the State law creating the offence did in R v Hughes.

So we do then in 32B have a law because we have a declaration – a command – that directs people as to the ambit of power. You have power to enter into these arrangements provided that, and we have certainty because one can look at a regulation to determine whether or not it falls within a head of power and is, therefore, within the power.

FRENCH CJ: The question of characterisation – if we are looking at 32B(1)(b)(iii) – arrangements or grants:

(iii) is for the purposes of a program specified in the regulations –

is a characterisation for the purposes of valid operation of 32B is of the program, its purposes?

MR HINTON: Both. Sorry, the program – yes – the arrangement and the program.

FRENCH CJ: So that is where you look for the head of power, on your submissions?

MR HINTON: Yes, your Honour.

FRENCH CJ: Or the relationship to the head of power?

MR HINTON: Yes, your Honour, and the purposes specified in the regulations, so we do not go anywhere near a contract.

HAYNE J: Sorry, we do not go anywhere near the funding arrangement?

MR HINTON: We do not have to go near the agreement.

HAYNE J: Why not? It is “arrangements”, is it not, and that includes the funding arrangement.

MR HINTON: But the arrangement that is within power – the power granted is to enter into arrangement for the purposes of a program falling within a legislative head of power. What the particular arrangement – the content of it has or may have does not inform the content of the power.

FRENCH CJ: All right, so the section can validly confer power to enter into a contract for the purposes of a program – where the purposes of the program are referable to a head of power.

MR HINTON: Head of power, yes, your Honour, and the purposes of a program have to be, of course, under this section, specified in the regulation, so we go to the regulations. Here, when we go to the regulations and paragraph 407.013 for the same reasons as, in my submission, clause outcome 2 and the portfolio budget statements, not to be amenable to characterisation as falling within section 51(xxiiiA) neither does 407.013. Those reasons are all given by my learned friend, Mr Walker, and I will not traverse the same territory. If the Court pleases.

FRENCH CJ: Yes, thank you, Mr Solicitor. Solicitor‑General for Tasmania.

MR SEALY: Thank you, your Honours. Your Honours, when Andrew Inglis Clark wrote in 1901 of a truly federal government he was using the word “federal” in a very particular sense. In his Studies in Australian Constitutional Law published in 1901, he said at page 10:

The federal form of political organisation exists whenever a number of separately organised communities are embraced in one comprehensive community and the whole field of legislative and executive authority is definitely divided between the legislative and the executive organs of the larger and comprehensive community on the one hand, and the legislative and executive organs of each of the component communities on the other.

But as your Honour the Chief Justice observed in Williams (No 1) for Clark it was not the division of legislative and executive authority that was the essential and distinctive feature of a truly federal government, it was the preservation of the separate existence and corporate life of each of the component States. As a corollary of that proposition for Clark was that each State should be equally represented in the Senate. He said in the same passage a little earlier:

the only logical alternative to the equal representation of each State in the Senate is a refusal to recognise the separate existence of any State in the composition of the federal legislature, in which case the government ceases to be federal in the truest sense of the word, and it is transformed into a government which only differs from the government of a perfectly unified commonwealth in the fact that the sphere of its legislative power is limited. But it is not the limitation of the sphere wherein it can exercise legislative authority, which is the essential feature of a truly federal government. Its essential and distinctive feature is the preservation of the separate existence and corporate life of each of the component States of the commonwealth, concurrently with the enforcement of all federal laws uniformly in every State as effectually and as unrestrictedly as if the federal government alone possessed legislative and executive power within the territory of each State.

Your Honours, in our submission, in that passage, Clark was drawing a distinction between what he called a truly federal government in which each of the component States is recognised and equally represented in the federal legislature and a form of federation in which representation of the States in the federal legislature is not seen as being essential because federal legislative authority is regarded as coming from the people of the component States rather than from those States themselves.

That latter conception of federation was one that was favoured by, among others, Sir Isaac Isaacs and Henry Bournes Higgins. It appears that that conception of federation owes much to British imperial notions of sovereignty, whereas Clark and those who followed his way of thinking were much more influenced by the American constitutional writers and their notions of the compactual nature of federation. I raise all that because, in our submission, and speaking very broadly, those two differing conceptions of the nature of a federation correspond to the positions of the opposing parties in this litigation in some respects.

CRENNAN J: They reflect a tension, do they not, which was adverted to in Williams (No 1) between the conception of responsible government inherited from 19th century British institutions, and a notion of a separation of powers and representative government which reflected more perhaps influences from America.

MR SEALY: Yes, your Honour, and indeed much of the federation debates were about how that tension would be resolved, how there could be a marriage of those two forms of government, if you like, or organisations into a workable federation. In the end ‑ and really this is the endpoint of this submission – if one looks at the text and structure of the Constitution, that battle was resolved in favour of Clark and his followers, not in favour of a conception of federation in which the States had no vital place and in which the federal legislature was able to cure, or indeed ultimately the people through the ballot box were able to cure any excesses of executive or even of legislative power.

There is a theme, in our submission, that runs through the Commonwealth party submissions and, to some extent, the third defendant’s submission, that everything can be left to the Parliament and to the people, that ultimately this will be resolved either through parliamentary processes or through the ballot box. Our submission is that that tends to subjugate the role of the Parliament but in particular the role of the Senate and therefore, because the Senate is a State’s house, the role of the Senate, and hence the tension to which your Honour refers.

Your Honours, we are conscious of course that first and foremost this case involves the question of whether section 32B of the Financial Management and Accountability Act 1997 and regulation 16 and item 417.013 of the regulations can be supported by one or more heads of Commonwealth legislative power. But the Commonwealth defendants argue in the alternative that expenditure by the Commonwealth in the performance of the SUQ funding agreement requires no legislative authorisation. In other words, they return to the argument that was canvassed in Williams (No 1).

HAYNE J: Just building perhaps on your references to the writings of Inglis Clark, that thoroughly well‑known statement by Justice Dixon in Boilermakers’ may itself reflect the same idea when Chief Justice Dixon and Justices McTiernan, Fullagar and Kitto said in 94 CLR at 267:

A federal constitution must be rigid. The government it establishes must be one of defined powers; within those powers it must be paramount, but it must be incompetent to go beyond them.

Their Honours were there speaking of government generally, not just of government as exercised through the exercise of legislative power, nor indeed through the exercise of judicial power. It may be – I do not know – that the propositions that Inglis Clark was speaking of are perhaps denied and so too what is said in Boilermakers’ may perhaps be denied by saying that executive power, at least in this aspect ‑ contract and spend ‑ is unlimited. I suspect, Mr Solicitor, I can hear your opponents saying that Inglis Clark is battles long ago, far away and receded. Boilermakers’ might be a little closer.

MR SEALY: Yes, your Honour, but returning back to Sir Isaac Isaacs and Henry Bournes Higgins, the view they took seemed to be based largely, as I said, on English political theory and the imperial idea of sovereignty. Although I am reaching the limits of my knowledge in relation to the matter, the real distinction appeared to be one between a conception in which the federation was a compact of the States and of the people – the compact between the people being represented by the House of Representatives, the lower house and the compact between the States by the upper house – the idea that there was a coming together of the separate communities to create a new government to do for them what they could not do for themselves.

The contrary imperial view was more in the nature of a kind of amalgamation of those polities, the creation of a new federal government and then a redistribution among them of sovereignty. So that in crude terms the Clark conception, sovereignty or legislative authority, never left the States until they ceded it to the central body.

CRENNAN J: What is sovereignty in this debate, the power to command others? Is that the sense in which you are using sovereignty?

MR SEALY: A similar question was asked by his Honour of my learned friend, the Solicitor-General for South Australia. I am at a loss to answer that, your Honour. On one view, sovereignty is the power to do – if one takes an historical analysis, it was anything the monarch could do before there was a Parliament. It was the power to do literally everything and that ultimately, as Parliament grew in power and began to pass laws, the effect of those laws was to regulate the exercise by the sovereign of the powers of sovereignty.

HAYNE J: The debate will be illuminated by going back and looking at what H.W.R. Wade wrote as a very young academic - I think in about 70 LQR. It is a most illuminating piece about the notion of sovereignty.

MR SEALY: Yes.

HAYNE J: It would be, I think, important to then understand your submissions as having to embrace one idea rather than any of the several which I think may be competing ideas.

MR SEALY: No doubt, your Honour, and I would readily concede that Professor Wade had a better understanding of these matters than I, and so if you want to obtain a clear understanding that is the place to go, at least in preference to me. Our point really is that in the end, the true text and structure of the Constitution reveals that it was Clark’s conception, the idea that the States remained through the Senate an integral component part of the legislative – indeed, the governmental arrangements of the federation won the day.

The submissions really that are put by the Commonwealth parties seek to downplay that in a way that we say diminishes the true stature and purpose and role of the States and the States’ house in the federation. We say that irrespective of the practices that might obtain in that chamber today or in the foreseeable future because those practices cannot, as I think your Honour the Chief Justice observed, result in any inflation of executive power. The practices adopted by the Houses of the Parliament cannot alter the parameters of the Constitution, yet in a very real sense, as we understand the Commonwealth party submissions, there is a real flavour of saying if the people do not like it ultimately, the answer is in the ballot box. That is, in our submission with respect, to ignore the provisions of the Constitution.

Your Honours, if I can return to the arguments and try to summarise, for what that might be worth to your Honours, the positions of the parties, we say that the first and second defendants argue that the executive power of the Commonwealth is subject to two limitations which are stated in the Commonwealth’s submissions at paragraphs 135 and 136 symmetrical with or what we take to mean equivalent to that of the States and is sufficient to authorise the expenditure in question without legislation other than an appropriation.

They say that if the Executive exceeds its authority the remedies provided by the Constitution are supplied by the Parliament, or failing that, by the people. The third defendant, for its part, argues that the Constitution implicitly or, perhaps more accurately we would say inherently confers power upon the Commonwealth Parliament to enact laws to authorise the Executive to spend money with respect to any matters which it, the Parliament, considers appropriate.

Such a power is said to be a necessary incident of the character and status of the Commonwealth as a sovereign government, a sovereign government and in that submission we see the flavour of the idea of linking into the Commonwealth’s apparent reluctance to accept that there is no symmetry between the executive power of the Commonwealth and the States because there is no symmetry between the legislative power of the Commonwealth and the States.

So that the difficult question your Honour Justice Hayne posed to my learned friend, the Solicitor‑General for South Australia, about what is the prerogative and how is it distributed is a question to which I have no answer except to say that it is distributed as may be necessary within the federation so that to the extent that it is necessary for the execution of the laws of the Commonwealth and the Constitution the Federal Government has such prerogative powers as are necessary to attend to those matters and equally the States retain such prerogative powers as they require. That can change as, from time to time, the States through the Senate allow legislation to be made which takes from the States power formerly reposed in them, both legislative and executive, and is transferred to the Commonwealth.

The plaintiff and the interveners, on the other hand, point to the text and structure of the Constitution and to the composition and functions of the Senate and also, importantly, to section 96 as being inconsistent with the Commonwealth legislative or executive power and, in particular, a spending power of the breadth contended for by the defendants.

As I have said, your Honours, the defendant’s arguments therefore tend to emphasise the supremacy or sovereignty of the Federal Parliament as representing the interests of the whole of the people of the Commonwealth, whereas the plaintiff’s and the interveners’ arguments tend to emphasise those aspects of the Constitution which provide for responsible government, the representation of each of the component States and the necessity for the Senate, subject to section 57 of the Constitution, to join in the approval of every Act of the Commonwealth Parliament.

As I submitted earlier, your Honour, we say that those latter arguments which reflect Clark’s conception of a truly federal government also more accurately reflect the conclusions which are to be deduced from the structure and text of the Constitution and which have been articulated by this Court in a number of different cases, but culminating with the decision in Williams (No 1).

I will return briefly to those matters, your Honours, presently and can I say we have not taken the step of providing your Honours with an extract from Clark, Studies in Australian Constitutional Law. If that is required we can make the necessary arrangements. It is the first chapter. It consists of about 13 pages and I am happy to make arrangements to provide that if that is of assistance to any members of the Court. But can I turn now briefly to ‑ ‑ ‑

HAYNE J: Just to correct myself, the article by Wade is 1955 Cambridge Law Journal at 172, “The Basis of Legal Sovereignty”.

MR SEALY: Thank you, your Honour. Just a number of matters that I wish to make some brief oral submissions about, your Honours: firstly, the effect of the pleaded Appropriation Act, that is, the argument that the Commonwealth raises that the Appropriation Acts authorise not only appropriation but also spending. That, as we understand the argument, is said in respect of the Appropriation Acts Nos 1 and 3 for the years 2011 and 2012 and for each of the two following years.

For the reasons which are set out in our written submissions, which in turn adopt paragraphs 25 to 36 of the plaintiff’s written submissions, we say that even if the words “may be applied for expenditure” in section 8(1) of the relevant Acts are capable of being construed as an authorisation to actually spend the moneys thereby appropriated, as to which we say, like South Australia, that they cannot, then they nevertheless ought not to be construed in a manner which would make them incompatible with the requirements of section 54 of the Constitution.

So this is not an argument which would cut across Combet in saying that the law is necessarily invalid. But what we say is that the provisions of section 54 of the Constitution provide a crucial and, perhaps, even a decisive element in the context in which the provisions of the Appropriation Act should be interpreted.

So that, put another way as I think my learned friend, Mr Walker, did this morning, the Court ought to be very slow to adopt an interpretation of section 8(1) of the Appropriation Act which is held to authorise the expenditure unless the plain words of the Act are such that no other conclusion is reasonably open, having regard to the existence of section 54, we say that other construction ‑ ‑ ‑

FRENCH CJ: Is your alternative construction that it defines purpose?

MR SEALY: Yes, your Honour – the Appropriation Act – yes, your Honour, yes. It does no more – well, it appropriates which is to say sets apart and indicates a purpose but it does not authorise the application.

HAYNE J: How does that fit with the fact that the Appropriation Acts in former times were enacted well after the enactment of supply legislation? It is traced in quite elaborate detail by Justice Evatt in Bardolph by reference to Colonel Durell’s admirable work, as I think it is often referred to. But supply before the end of the financial year, supply of an amount based on estimates, Appropriation Act after the financial year has started, picking up that which has been supplied - it is more than earmarking.

MR SEALY: A possible response to that, your Honour – and I speak from a position of relative ignorance in relation to these – when you asked those questions of my learned friend earlier, I reflected on the practice in Tasmania and whether or not it is of any relevance. I notice the Appropriation Acts passed by the Tasmanian Parliament strictly authorise an appropriation between two dates. In other words, there is an authorisation, as I would understand it, to remove the money from the consolidated fund during that period but if the money is not removed during that period, then the appropriation expires.

HAYNE J: Yes.

MR SEALY: The existence of the appropriation, I might say, your Honour, is capable of giving the Executive some confidence that when the time comes to find the money to pay that supply will be available. I am not sure whether that answers your Honour’s question.

HAYNE J: In the end are we not beating the air because if the Appropriation Act does authorise application it presents the same question as to power as does 32B.

MR SEALY: Quite so, your Honour, yes. Of course, that is so. So if I am wrong about that then the Court is driven back to consideration of the question of what head of power supports the spending.

Your Honour, the third defendant submits that the Constitution has impliedly conferred power on the Commonwealth to enact laws to spend money with respect to any matters which the Parliament considers to be appropriate. It is said that that power is a necessary incident of the character and status of the Commonwealth as a sovereign government and so has the ring about it of the nationhood power, but it is rather an interesting elaboration of the nationhood power because it is freed of the restrictions which have been enunciated by the Court which I will come to in a little more detail shortly.

Power, as framed by the third defendant, is conceded to be subject to the limitation that cannot be exercised so as to effectively take over ‑ whatever that might mean in this context ‑ regulation of an area outside the legislative competence of the Commonwealth Parliament, and in support of that contention, the third defendant refers to, among other things, two Canadian authorities in which the third defendants say a federal legislative spending power has been inferred.

It is sufficient for our purposes, I think, to say to your Honours that the differences between the constitutional arrangements in the dominion of Canada and those in the Commonwealth of Australia are such that even in the absence of local authority those decisions would be of doubtful application in this country. But there is local authority in the form of the dicta of Justice Mason, as his Honour then was, in the AAP Case (1975) 134 CLR 338, the well known passage from his Honour commences at page 397 and goes on to page 398. Nor is the existence of such a power consistent with the decisions of this Court in both Davis v Commonwealth (1988) 166 CLR 79 and more recently Pape v Federal Commissioner of Taxation (2009) 238 CLR 1.

Your Honour, can I return then briefly to where I began and talk a little about the relationship between Chapter 1 and Chapter 2 of the Constitution. In Williams (No 1) this Court was called upon to determine whether or not the Executive Government of the Commonwealth possessed a general power to engage in spending in relation to matters within and even beyond Commonwealth legislative competence. The majority of the Court held that the existence of such a power was inconsistent with the principles of responsible government and many of the “federal considerations” – I use that term in inverted commas – to be deduced from the text and structure of the Constitution.

In this case, the Court is called upon not only to reopen and consider the decision in Williams (No 1) but it is also invited by the third defendant to determine whether or not the Parliament of the Commonwealth possesses a power to enact laws to authorise the Executive to spend money with respect to any matters which it, the Parliament, considers appropriate. If the decision in Williams (No 1) were to be reopened then all of the considerations relating to responsible government, the status and role of the Senate as a vital constituent in the Commonwealth legislature and as the State’s House and the purpose and effect of section 96 of the Constitution would need to be re‑examined.

We concede that because the third defendant argues that there is a broad legislative, not merely an executive power but a legislative spending power, considerations concerning the by‑passing of the Senate and the relationship between the legislature and the Executive do not arise in that limb of the case because the exercise of any such legislative power must necessarily involve the Senate and requires its approval. Indeed, the very legislation before the Court today is an example of the Senate having given its approval to legislation.

Your Honours, in our submission, the two most significant factors standing in the way of acceptance of a power to make general spending laws are these. Firstly, and it may seem trite but it needs to be pointed out, the absence from the Constitution of the grant of any such express power. There is no hint in the same way it was observed, I think, in Pape and before then by Chief Justice Barwick. There is no general power over the economy. It might be a desirable thing but it is simply not there. There is

no hint in the Constitution, we would say, at an express level, of any such power.

But, section 96 of the Constitution also stands in the way of the acceptance of this proposition because for in exactly the same way as section 96 would be rendered otiose by a general executive power to spend, so too would a general legislative power to spend leave no useful work for section 96 to do, it would simply be bypassed. In relation to that matter we refer generally to paragraphs 49 to 55 of our written submission, and in particular to the passage from the reasons for the judgment of Justice Hayne in Williams (No 1) which are extracted at paragraph 54 of the submissions. Lastly, your Honour, can I, as everyone else has done, because it has probably pressed a few buttons, if I can use that expression, deal with the Commonwealth’s in terrorem point, as the Chief Justice characterises it.

I have dealt with it a little earlier, but at paragraphs 161 of the Commonwealth’s submissions there is reference to “an asymmetrical conception of executive power through the Federation”. In our submission, there is no symmetry, as I said earlier, between the executive power of the Commonwealth and that of the States, or indeed of the United Kingdom, just as there is symmetry between the legislative powers of the Commonwealth and those of the States, or, again, the United Kingdom.

In our submission, your Honour, the distribution of legislative power between the Commonwealth Parliament and the State Parliament necessarily affects the distribution of the executive power between them and the Commonwealth, being a polity of limited legislative power, it therefore follows, in our submission, is also a polity of limited executive power. May it please.

FRENCH CJ: Thank you, Mr Solicitor. Solicitor‑General for Victoria.

MR McLEISH: If the Court pleases. I commence by apologising for what looks like a breach of the word limit on the oral outline, but I can assure the Court that in light of the submissions that have been made before me I will not be covering all the material that is in this document. I have referred to the written submissions in relation to the opening of Williams (No 1) and I do not propose to say anything further about that.

The second and third point that are raised in the oral outline document essentially canvas the Commonwealth’s starting point, which was the subject of the submissions for South Australia a short time ago, we adopt those submissions as to the starting point which, in my submission, is a submission by the Commonwealth about the powers of the Crown, or an assumption by the Commonwealth about the power of the Crown under the Westminster system which is not supported by the text or structure of the Constitution.

What appears in the attachment, or page 4 of our document, is a short synopsis of those considerations of text and structure which appealed to members of the Court in Williams as significant to the determination of the scope of Commonwealth executive power, adopting, as we submit, the correct starting point, the Constitution itself, and the fact that the Constitution is the source of the legal personality of the Commonwealth.

We make the point in 3.3 of the oral outline that – and indeed it could be made of each of the proposed routes by which the Commonwealth reaches its suggested formulations of its executive power, that its proposed limitation by reference to national benefit or concern is really no limitation at all, and that is illustrated by the reliance to Commonwealth places on the corporations power as an instance of, or an indication of, what is a matter of national benefit or concern, and the submission that is there made, paragraphs 152 to 156 of the Commonwealth’s submissions, that a transaction with a trading corporation relating to its existing activities is by force of that fact a matter of national benefit or concern.

Once one gets to that point it can be seen, in my submission, that there really is no limitation proposed on Commonwealth power at all. So not only is the starting point wrong, in my submission, but the end point as well takes no account of the federal considerations which we have listed and which the Solicitor‑General for Tasmania has just referred to in addition. The question of the Appropriation Acts has been fully canvassed and I rely on our written submissions at paragraphs 16 to 25 and also adopt the submissions made by the plaintiff and South Australia in relation to that part of the case.

Could I then turn to section 32B and the question whether it is a law with respect to any head of Commonwealth power? In my submission, there needs to be a valid law before any question of the validity of the regulations can arise and that is the case whether or not the regulations are made as delegated legislation or pursuant to legislation. The regulations do not purport to have any operation other than by virtue of section 32B, in this case 32B(1)(b)(iii), and therefore the question of whether that section is valid I would submit is a necessary step in any evaluation of validity of the regulations.

HAYNE J: Why is it not appropriate to start with the amending legislation and ask whether the amending legislation is valid ‑ ‑ ‑

MR McLEISH: Your Honour, because even ‑ ‑ ‑

HAYNE J: ‑ ‑ ‑ which would entail the amendments made statutorily to the regulations.

MR McLEISH: That part of the amending legislation ‑ ‑ ‑

HAYNE J: Yes.

MR McLEISH: ‑ ‑ ‑ which amends the regulations? Yes, because even the amending legislation does not purport to have effect, absent section 32B, your Honour. It is a means of incorporating material in regulations but not of freestanding authorisation, so that what is achieved by that part of the amending legislation is to give content to what is in section 32B, but if section 32B is itself not valid, then that attempt fails. That seems to be the way in which the questions in the special case are framed.

I might just take your Honours to them because question 2 asks – the reference, it is in the yellow book at page 133. Question 2 asks whether section 32B and the regulations in item 9 are wholly invalid. Now, there may be some ambiguity as to whether that is three questions or one question, but section 3 then raises the question, if not, then is the funding agreement authorised by those provisions. One way of looking at those questions which fits with my submission, it is suggested ‑ ‑ ‑

HAYNE J: That is the way the parties have chosen to frame the questions which they say arise. Surely they do not bind us, do they, in any respect?

MR McLEISH: No, they do not, your Honour, but it is consistent with my submission that the logical first step is to identify the operation of section 32B and, if it has no operation, the question of the regulation simply does not arise. That is not to say that it may well be possible to dispose of the controversy by deciding that questions are unnecessary to answer, for example. We submit that section 32B cannot be read down and we depart from the submissions made by South Australia in that respect.

Can I firstly refer to the decision in Hughes which the Court has already been taken to? That case of course was about a Commonwealth law which conferred functions and powers and it did so by reference to State laws. It was not simply a case of the Court holding – it is 202 CLR 535, but I was not proposing to read from it. That was not a case of the Court simply saying this law is valid insofar as it is capable of being valid, which is the flavour of the submission made by the Commonwealth in reliance upon the case. Instead, what the Court did was, in an entirely orthodox way, I would submit, read down the State laws to which the function and powers were related to a subset of those State laws, namely, those which the Commonwealth itself could have made.

In other words, the Act itself provided the reference point for the reading down consistently with the authorities which are cited in Hughes itself. The Commonwealth in its submissions appears to rely on the regulations themselves to achieve the reading down, and again, for the reasons I have already given, that reverses the analysis given that the regulations do not have force of themselves. Equally, I submit, the solution of it by South Australia requires recourse to the regulations.

It is not possible to read down the section by reference to programs and ask whether a program or its purposes or an arrangement is with respect to a head of Commonwealth power, because again one only finds those programs, et cetera, in the regulations. There is nothing in the section itself which enables one to ascertain whether or not the program, et cetera, is with respect to a head of power.

FRENCH CJ: Why cannot one simply say there is an ambulatory provision which is valid insofar as it attaches to subject matters within the scope of Commonwealth legislative power?

MR McLEISH: That, in my submission, is not the way section 32B works because it does not attach of its own force. It enables the Executive to determine to what it attaches. That is why there is no foothold in the section to limit what the Executive is capable of doing. It is like the larceny law in that it is permitting whatever might be able to be achieved to be achieved, but really not providing any criterion by which it can be read down, in my submission.

Many submissions have been made about different aspects of section 32B. We wanted to concentrate on what it is that is required to be specified by section 32B(1)(b)(iii), and the word “specified” has not so far been the subject of oral submissions. The question which I want to pose is whether it is only the program that needs to be specified, or whether the provision requires that the purposes also be specified in the regulations to the extent that the two can be disentangled, because in a sense a program is defined by its purposes.

We have referred in our written submissions to the case of Gantry Acquisition (1994) 51 FCR 554 in which Justice Burchett in the Full Court of the Federal Court referred to a series of judicial authorities on the meaning of the word “specify” at pages 569 to 570. The gist of the authorities is that specification is a word that connotes exactitude and precision, and as his Honour says at point G on page 569:

Judicial attempts to expound the meaning of the word “specify” have repeatedly fixed upon unambiguous clarity as being connoted by it –

There is reference to this Court’s decision in Jolly v Yorketown District Council (1968) 119 CLR 347, and his Honour then quotes Justice Barton in the Federated Engine-Drivers’ Case (1913) 16 CLR 245 as saying:

“Things specified must be specific things. Here all is general.”

Justice Burchett said:

Those words might have been written for the present case.

It would be the same, in my submission, if all that was required to be specified by section 32B(1)(b)(iii) was a program. One only has to look at a number of the programs in the regulations to see how general and unspecific the mere name of a program could be.

There would be a requirement if a program was all that had to be specified in the regulations to identify its purposes in any event. We submit that it is not to be thought that Parliament intended there to be a complex factual inquiry into what are the purposes of a program. Rather, the more practical reading of subparagraph (3) is that Parliament required the purposes of a program to be specified in the regulations. That not only avoids the need for an external inquiry into what are the purposes of the regulations but avoids the possibility of the Executive reciting itself into power by ascribing the purposes of a program – ascribing purposes to a program – whether by pronouncement of Ministers or other executive actions.

Indeed, unless the purposes of the program are specified in the regulations, a program obtains a life of its own. Its purposes can be identified from what it actually does. There is a circularity, I would submit, in enabling the Executive, other than in the regulations, to specify what are the purposes of a program.

HAYNE J: How is that argument consistent with Combet and the decisions about section 81?

MR McLEISH: This is merely a construction argument on section 32B(3), your Honour. The considerations regarding appropriation, I would suggest, are quite distinctive. Section 32B(1)(b)(iii) itself really raises the question, what it is that must be specified in the regulations?

HAYNE J: That is a question of construction?

MR McLEISH: Yes, your Honour.

HAYNE J: Why should one not construe it in light of what Parliament chose as the specification in so much of the specification as Parliament itself engaged in in the Act by inserting things into the regulations? Why would one construe the statute as internally inconsistent which is, I think, where you have to get to, is it not, Mr Solicitor?

MR McLEISH: I do not believe so, your Honour, because in any event we would submit the purposes have been specified in these particular regulations. The point of my submission is that one cannot go beyond the regulations to identify additional purposes. Whether that is because Parliament has already specified them in the manner your Honour describes, or because of the manner of construction was required to specify them – I am sorry, the regulations were required to specify them – does not really matter because in either event the purposes of this particular program have been specified in these regulations and there is no warrant, in our submission, for going to other documents or pronouncements to identify what those purposes are.

CRENNAN J: But your argument is narrowly focused on the no reading down point, is it?

MR McLEISH: Yes, yes, your Honour. This argument really depends – it arises in any event, actually, but even if the matter is read down, what is it that has to be specified in the regulations.

CRENNAN J: It goes to the wider point, not a law?

MR McLEISH: That is right. Yes, but it also goes to the application of section 32B if it is valid.

FRENCH CJ: The more one knows about the programs which were inserted by the amending Act into the legislation including the National School Chaplaincy and Student Welfare Program is their names and their purposes.

MR McLEISH: Yes.

FRENCH CJ: One knows nothing of the content of them. That is a parliamentary choice as Justice Hayne said.

MR McLEISH: Yes. Whether it is a parliamentary choice because Parliament created these regulations or because I am right about the construction argument that Parliament required that to be specified in the regulations may not matter ultimately. The end point in both cases is that the item is exhausted as to the purposes and your Honours do not need to look beyond the item to determine the question of head of power.

If I can then move directly to the head of power question and this is at paragraph 9 of the outline? Your Honours, in our written submissions we have adopted the analysis of your Honours Justices Hayne and Kiefel in the first Williams Case which itself derives from the authorities of British Medical Association and Alexandra Hospital Cases to produce the test, in short, of whether or not a benefit is material aid to provide for the wants of students. Without going over the ground that has already been covered, we have submitted that there are three respects in which the item in the regulations in this case does not satisfy that test.

Firstly, the services are provided to school communities and not just to students. Secondly, they are not confined to material aid. There is provision of money to support wellbeing and other intangible benefits. Thirdly, the services are not confined to aid to meet the particular wants of students. In other words, the services have no necessary or no particular connection to being a student which is a feature your Honour Justice Kiefel emphasised in Williams (No 1).

We have covered that in our written submissions but I wanted to go to the point that your Honour Justice Hayne makes in Williams (No 1) about whether or not a broader construction of the benefits to students power would approach a power with respect to education. That is the construction that refers or would permit anything that was of benefit to students or advantageous to students to fit within the phrase “benefits to students”. Paragraph 281 of Williams (No 1) your Honour Justice Hayne noted that there was no ‑ ‑ ‑

BELL J: What page is that?

MR McLEISH: I am sorry, your Honour.

HAYNE J: Page 279.

MR McLEISH: I apologise, your Honour, page 279, that it was – I will get the correct words – would approach a general power to make laws with respect to education and the Commonwealth in its written submissions, paragraphs 76 and 55, takes issue with the relevance of that statement and the relevance of the fact that there is no head of power with respect to education. In my submission, it is perfectly orthodox to have regard to the absence of such a power.

The Commonwealth relies on two principles in particular in paragraph 55 to suggest that that is not relevant and in support of its wider construction of the benefits to students to cover matters advantageous to students. The first is the principle that one construes the Constitution with all the generality which the words permit.

We rely in paragraph 12 of our written submissions on what was said by Justice O’Connor in Jumbunna and, in particular, when that well‑known phrase was used by his Honour, the fact that his Honour added the important rider which required reference – an exception where the context required otherwise. In other words, there is no unqualified principle of constitutional interpretation that the Court must always lean to a broad interpretation of Commonwealth power irrespective of context and that point was made by Justice Callinan dissenting in Work Choices which we have cited at footnote 24 of our written submissions.

HAYNE J: What is the reference in Jumbunna, Mr Solicitor?

MR McLEISH: I am sorry, your Honour, I should have given that. It is 6 CLR at page 367 to 378.

HAYNE J: Thank you.

MR McLEISH: Perhaps in cases where context is not significant the first part of the statement is often enough cited. The words I am relying on are in about line 5 of page 368 in fact:

For that reason, where the question is whether the Constitution has used an expression in the wider or in the narrower sense, the Court should, in my opinion, always lean to the broader interpretation unless there is something in the context or in the rest of the Constitution to indicate that the narrower interpretation will best carry out its object and purpose.

In section 51 there is of course the fact that it is an enumerated list of powers of limited legislative powers, and the absence of something as broad as education from the list is relevant to characterising a power in the list in the manner in which Justice Hayne’s judgment in Williams took it into account. There is nothing unorthodox in reliance on the absence of a wider power for the purpose of construing any power under section 51. What is unorthodox, I would submit, is ignoring the context of section 51 and the fact that there is an enumeration of limited powers in that section.

The second point of general principle which the Commonwealth relies on is the fact that a law may be validly a valid law with respect to a head of power even though it also may be characterised as a law with respect to a subject matter outside power. That is not relevant, I would submit. That is a principle of characterisation not a principle of construction.

As far as defining what the meaning of “benefits to students” is concerned, it is simply not relevant. However, it is worth noting that even in the context of characterisation the fact that a law might well be characterised as being with respect to a power that is not in section 51 may still be relevant and that is stated in the Alexandra Hospital Case, I will not take your Honour to it, at page 279 where the Court says that it is relevant that the law might be characterised as a law with respect to nursing services to the process of characterisation.

We have made some short written submissions about the incidental power and my learned friend from Tasmania has made submissions as to that. We do not need to add to what is in the written submissions or to those oral submissions. Finally, in relation to corporations, the third defendant makes a submission which is, as I understand it, to the effect that entering into a funding agreement under the school chaplains program of itself causes an entity to become a trading corporation within the meaning of section 51(xx).

Even if that were to be the case, it would not be sufficient to attract section 51(xx) because the entity would have to be a trading corporation in order for the power to be attracted, rather than as a result of the exercise of the power. It is difficult to see, but if it were to become necessary for the Court to decide whether the third defendant was a trading corporation, I just remind the Court we have made written submissions at paragraphs 50 to 57 about the nature of the test. If the Court pleases.

FRENCH CJ: Thank you, Mr Solicitor. Solicitor‑General for Western Australia.

MR DONALDSON: If it please, your Honours. Your Honours, most of these matters have been dealt with by others and so I will not repeat that which has already been said. I was proposing to take your Honours shortly to the Legislative Instruments Act, but I will simply refer your Honours to sections 5 and 20. They define for the purposes of the Commonwealth what is a legislative instrument and in this case, the relevant legislative instruments, the validity of which are the subject of consideration by the Court are the Act and the regulations made pursuant to the Act.

So the agreements that are in the appeal papers, for instance, are not legislative instruments. One can only assume they are in there for colour and movement, as it were. But the validity of ‑ or the matters, the validity of which are being considered, are obviously only the Act and the regulations.

Your Honours, can we submit to your Honours that when one understands what the Commonwealth and the third defendant actually put in relation to this legislation, it would have the effect of denuding this Court of the capacity to actually review the amending Act. The Commonwealth contends a number of – or makes a number of propositions: firstly, that the consideration of the Act and the regulations can only be dealt with on what is referred to as a case‑by‑case basis, that is, the only matter which is before this Court is the validity of the item which relates to the school chaplaincy program and anything else that might go the validity of the Act is hypothetical.

We have directed your Honours to the writ. My learned friend, Mr McLeish, referred your Honours to the special case questions but, in any event, in the writ of summons at page 2 of the appeal book a declaration is sought by the plaintiff that the Act, or Division 3B of Part 4 of the Act and the regulations and the item, are invalid. In our respectful submission, a declaration that the Act is invalid, which is the Act in its entirety, is sought. So the issue that we ventilate as to the invalidity of the entire Act is not, as it were, hypothetical.

Your Honours, I will not spend any time on this notion of reading down or the construction which the Commonwealth puts on the Act that it applies only to programs that are valid. That is, one assumes, somehow within Commonwealth power. The reading‑down contention must, with respect, be as Justice Hayne has suggested which is really a “blue pencil” test and what that comprehends is that if it is found in any particular case that a particular program is beyond power a blue pencil is put through that and an assumption is made that the balance of the Act is valid because to read down it must be assumed that the balance of the Act which includes – in relation to this particular legislation – the balance of the items in the regulations are also valid.

We have set out in point 3 of our outline, your Honours, the consequences of this and that is – and it comes really, ultimately, to this – that it could never be determined by this Court whether the Act – which is the subject of these proceedings – is, in fact, valid. If that contention were – or process of reasoning were – your Honours, to be accepted then that would not enable the Court to consider considerations which have been – sorry, contentions which have been put by the plaintiff and by a number of the interveners, certainly by Western Australia and Victoria and New South Wales – and they are the submissions that derive from a majority of the Court in the case of Dignan.

If I could ask your Honours to have that case before you – that is VictorianStevedoring v Dignan (1931) 46 CLR 73. At page 75 of the Commonwealth Law Report, your Honours, is set out there what was the particular regulation subject to challenge and your Honours will see that at about point 8 of the page. They were the Waterside Employment Regulations. Relevant to this particular action of Dignan it concerned, principally, regulation 3 which is set out at the bottom of page 75.

The matter in this particular case – and, of course, this decision in Dignan followed an earlier decision in Dignan of the same year where there was a challenge to the validity of the legislation. This case considered the validity of the delegation, being the validity of the regulation. If I could ask your Honours to turn first to Justice Rich’s judgment commencing at page 86? Your Honours are aware that the authority which the Court followed in Dignan is Roche v Kronheimer and you see that Justice Rich at the bottom of page 86 accepts the authority of Roche. That is, pausing there, an early case, of course, where it was accepted that the Commonwealth Parliament had legislative power to delegate its legislative power to the Executive.

His Honour goes on – and the relevance of taking your Honours to Justice Rich’s judgment is that his Honour agrees with Justice Dixon – and that is at page 86 and over onto page 87. Justice Dixon’s judgment, your Honours, commences at page 88. It is a very lengthy judgment which deals in detail with the matter subject to the question from Justice Crennan earlier today, that is, what Justice Dixon refers to as the asymmetry between separation – questions of separation of power in the Australian Constitution – that is the asymmetry between strict separation of judicial power from legislative and executive power and far less strict delineation of legislative and executive power.

At page 100, Justice Dixon deals with Roche’s Case and it is at the very bottom of that page, 100. If I could ask your Honours to read the sentence commencing “But I think the judgment really meant” and over the page. Then your Honours will see that Justice Dixon accepts that Roche is authority for the proposition that the legislature can delegate a law‑making power to the executive but then, your Honours, critically, at about line 8 is the qualification which Justice Dixon puts on that – this is the limitation on the delegation power:

This does not mean that a law confiding authority to the Executive will be valid, however extensive or vague the subject matter may be, if it does not fall outside the boundaries of Federal power.

That is a rather difficult sentence but, in my submission, what it means is even if a regulation is within power it will be invalid if the subject matter which is being delegated is extensive or too extensive or vague, and that is explained in the next sentence:

There may be such a width or such an uncertainty of the subject matter to be handed over that the enactment attempting it is not a law with respect to any particular head or heads of legislative power.

So that is the limitation, that is, the Commonwealth Parliament cannot simply enact a legislation which says the Executive can enact regulations on whatever subject matter it likes even if they are within power. Justice Evatt, your Honours, dealt with the matter also in some detail, and it commences at page 119 of the Commonwealth Law Report. I will not read to your Honours the paragraph commencing “In my opinion”, the first full paragraph on the page, but I will leave your Honours to consider that paragraph.

Then Justice Evatt about halfway down the page posits an illustration or an example and your Honours will see that in the full paragraph, “The matter may be illustrated by an example.” His Honour sets out a delegation or a form of delegation or form of regulation‑making power which of course is far less extensive than what has been done in this case. Then at the bottom of the page, Justice Evatt says this, your Honours:

I think that in ordinary circumstances a law in the terms described would be held to be beyond the competence of the Commonwealth Parliament. The nature of the legislative power of the Commonwealth authority is plenary, but it must be possible to predicate of every law passed by the Parliament that it is a law with respect to one or other of the specific subject matters mentioned in secs. 51 and 52 of the Constitution.

It must be essential to be able to identify which power, legislative power, supports – or head of power supports the circumstances of this case, this particular Act. Then, your Honours, over the page - and I will not read out the whole of the next page, but Justice Evatt sets out seven rules to which regard can be had in considering validity of delegated legislation. If I could ask your Honours to consider 1, 2, 3 and 7.

So his Honour is setting out here well, there is no hard and fast rule about delegation because we accept that there can be valid delegations, but we accept that there are limits. Here are matters to which regard can properly be had in determining whether the power to delegate has been extended beyond, or has been exercised beyond, power. So one fact that it is made to the executive is a good thing. Point 2 –

The scope and extent of the power of regulation‑making conferred will, of course, be very important circumstances. The greater the extent of law‑making power conferred, the less likely is it that the enactment will be a law with respect to any subject matter –

That is what Justice Dixon is saying. If what is delegated is so broad that it really cannot be determined whether it is within power or not, then it is not a valid delegation. I direct your Honours to 3 because it arises in some of the written submissions but, of course, just because Parliament can itself repeal an invalid regulation does not save the enabling Act from being invalid. But then, your Honours, at point 7 – and I am not skipping over matters, no doubt your Honours will look at it – but point 7 is important in our submission:

The fact that the regulations made by the subordinate authority are themselves laws with respect to a subject matter enumerated in secs. 51 and 52, does not conclude the question whether the statute or enactment of the Commonwealth Parliament conferring power is valid. A regulation will not bind as a Commonwealth law unless both it and the statute conferring power to regulate are laws with respect to a subject matter enumerated in sec. 51 or 52 –

So your Honours, in our respectful submission, it is no answer to validity here to simply say, “Well, the chaplain’s item is valid and that is all that we have to establish”. What comes out of Dignan’s Case, your Honours, is that there are limits in the nature of extent and breadth as to what can properly be delegated. By that, in our submission, a law which delegates to too great an extent is not to be characterised as a law with respect to any matter in section 51 or 52.

HAYNE J: Are the arguments you have just advanced arguments which are reached if the relevant provisions and their operation with respect to the chaplaincy program are not supported by a head of power?

MR DONALDSON: Yes, your Honour.

HAYNE J: Why?

MR DONALDSON: The Court could exercise a discretion, as it were, to not deal with them but, your Honours, a declaration is sought by the plaintiff that the Act in its entirety is invalid. In our submission – and I will take your Honours to one or two of the items in the schedule – if one looks at it, one can by looking at the Act and the regulations determine that there has been, to use Justice Dixon’s term, a far too extensive and vague delegation in this case. If that is the case, then the Act is invalid, your Honour, full stop. With the greatest respect, your Honour, a better way of looking at it is one does not get to the question as to the validity of the particular chaplaincy program, and that is why we do not deal with it in our written submissions, your Honour. We say it simply does not arise because the Act is invalid on its face. Your Honours, in relation to those passages to ‑ ‑ ‑

HAYNE J: Before you leave Dignan’s Case, has Dignan’s Case in its relevant provisions subsequently been applied?

MR DONALDSON: I was going to take your Honours to that. In our written submissions – I do not know if your Honours have it – we have set out all of the authorities that deal with that particular provision of Dignan’s Case. It is at footnote 16. The short answer to – well, it is not the short answer ‑ the correct answer to your Honour Justice Hayne’s question is that principle has never been applied in any case, in the sense that there has never been a Commonwealth law found to be invalid on that ground. At footnote 16, your Honour, we set out all of the authorities that our researchers have been able to identify that refer approvingly to Dignan’s Case; perhaps most importantly, your Honours, the judgment of five of your Honours, Justices Gaudron, McHugh, Gummow, Kirby and Hayne in S157, and your Honour in M79 said the same thing.

Your Honour, can I also add this? It has never been doubted – it might never have been used as the basis ‑ and I know your Honour is smiling at me ‑ but it might never have been used as the basis to invalidate a Commonwealth law, your Honour, but that principle in Dignan’s Case has not been doubted by any decision of this Court, in our submission.

CRENNAN J: In that context, I think footnote 52 in Victoria’s submissions is something that is useful to look at, especially Crowe’s Case.

MR DONALDSON: I do not have them with me, your Honour, but you will find the reference to the cases in a number of the submissions. In further answer to Justice Hayne’s smile, can I ‑ ‑ ‑

HAYNE J: Good luck, Mr Solicitor. Good luck.

MR DONALDSON: Can I add this, your Honours? Perhaps the reason why there has been no resort to Dignan’s Case is we have not had to deal with legislation like this. It is not a heroic submission, your Honours, to say that nobody has ever seen legislation like this before. In our respectful submission, your Honours, this particular legislation – and I will take your Honours very quickly to it – but aspects of this particular legislation fall absolutely squarely within what was said in Dignan’s Case. If Dignan’s Case does not apply to this legislation, your Honours, then it should be overruled. Your Honours have been taken to the legislation on a number of occasions and I will not take you to the Act itself, but your Honours are, in our submission, entitled to have regard to the breadth and extent of the matters which are in the regulations to determine the extent and breadth of the matters which have been handed over by Parliament to the Executive.

Now, I am not going to take your Honours to each of these, happily, but if your Honours simply look in Part 4 at item 401.004. So if the validity of this matter had to be determined, what your Honours would have is “Tasmanian Forest Industry—Adjustment package” and a statement of an objective. If I could say this briefly, your Honours, about this notion of the statement of the objective, it is difficult to know whether that assists at all in determining the validity of any of these matters. It is uncertain whether that adds at all to determining what the rights, liabilities, obligations created by this legislation are. But over the page, your Honours, 007 is “Australian Animal Welfare Strategy”; 009, “National Weeds and Productivity Research Program”; 402.001, “Justice Services”.

HAYNE J: Does the drafting of any of these items depend upon what we find in portfolio budget statements from year to year? It has the sound of the language, but ‑ ‑ ‑

MR DONALDSON: Your Honour, there is no doubt that these were taken out of – these subject headings were taken out of appropriations type headings and we do not quibble, your Honour, and contend that they are not sufficient for the purpose of identification in an Appropriation Act, and that is nature of the sort of heading that they are.

HAYNE J: Could I say this, that absent demonstration to the contrary I would assume that each of the items in so much of the regulations as was inserted by the Amendment Act could be tracked into a portfolio budget statement either as a departmental item or as an administered item of some kind.

MR DONALDSON: Yes. Well, within two days of Williams (No 1) being handed down they were all put together and put into this form, your Honour, no doubt taken from that sort of ‑ or that provenance, as it were. They look like appropriations type headings, your Honour, and they may be sufficient for that purpose, but they are not sufficient, in our respectful submission ‑ well, they are not sufficient to determine whether they are valid or not on a stand‑alone basis as legislation. The reason why we have taken your Honours to three or four of them – and your Honours will look at them all in due course – is to simply show to your Honours the breadth and imprecision with which these matters are dealt with.

Finally, your Honours ‑ I had actually intended to exclude point 5 of my written outline, I am sorry, but anyway, you never know.

Your Honours, can I simply add in relation to appropriations, we have dealt with that in our written submissions in some detail and I will not repeat the submissions that have already been made. Likewise, your Honours, in relation to – and it is referred to as reopening, but it is really the overruling of Williams (No 1) on the basis that it is plainly wrong because that is what the Commonwealth contends. We have provided your Honours written submissions in relation to that as well.

HAYNE J: Yet I think the Commonwealth does not go so far as to say it is decided per incuriam.

MR DONALDSON: Everything but, I think, your Honour.

HAYNE J: Well, absent the submission, per incuriam, the case for reopening has to be considered in a particular way and like as not stare decisis is itself a trump card.

MR DONALDSON: Your Honours, we have dealt with that in half a page in reply which is, with respect, all it deserves. If your Honours please.

FRENCH CJ: Thank you, Mr Solicitor. Solicitor‑General for Queensland.

MR DUNNING: Your Honours, like South Australia, we arrive at the same conclusion as the plaintiffs and the other interveners but by a different route. In our respectful submission, 32B is valid but the application of in the case before your Honours is not. That is, it is our submission that it is unlikely that the Commonwealth Parliament should be taken to have, as it were, deliberately enacted something that was beyond power when instead there is an acceptable way of construing it as we have already submitted.

The only matter that I would like to amplify in that regard is the reference that your Honours have been given to this Court’s decision in Hughes. Can I take your Honours please to that decision? It is 202 CLR 535. May I ask your Honours please to go to page 557 in what is effectively the second half of paragraph 43? Chief Justice Gleeson and Justice Gaudron, McHugh, Gummow, Hayne and Callinan record this:

Consistently with the statement of general principle in the joint judgment in the Industrial Relations Act Case, this would be achieved by construing the phrase in s 47(1) of the Corporations Act “functions and powers that are expressed to be conferred on them by or under corresponding laws” as limited to those functions and powers in respect of matters within the legislative powers of the Parliament of the Commonwealth.

Respectfully, we listen with care to the submissions that have been made by some of our learned friends to the effect that Hughes is a case that should be seen as confined to its particular legislative regime but, in our respectful submission, the passage to which I am just taking your Honours indicates that the holding was a wider one than that and apt to demonstrate that in a case such as this, a provision such as section 32B would be a valid one. In terms of how it would operate, if we may take up Justice Hayne’s analogy of the blue pencil, effectively that is an analysis we would agree with even if we might not have styled it in those terms.

The terms we would, more particularly style it in is that section 32B is a valid enactment whether the particular law that is promulgated under it whether by specification or regulation or however, is a valid one, will fall to be determined by reference to whether it is referrable to an enumerated head of power. If it is, it will be valid, and if it is not, it will not be. So characterised, that may have the consequence of effectively running a blue pencil through parts of regulations or specifications.

BELL J: In so determining, can one look beyond the statement of the objective of the program contained in the regulation?

MR DUNNING: In our submission, yes, because the ultimate point of inquiry will be is the regulation or specification as the case may be one that the Executive of the Commonwealth had power to make and there is no reason why that inquiry ought not be informed by matters such as that.

BELL J: So one might look to the guidelines here?

MR DUNNING: Yes.

HAYNE J: The consequence follows, does it not, that if the guidelines say chaplaincy services may be provided only by and must be provided by trading or financial corporations formed within the limits of the Commonwealth, or made some other statement intended and successfully achieving the result of bringing within power that, what, pro tanto the item in the schedule is operative?

MR DUNNING: No, respectfully, we would submit that that would not be the outcome. The mere fact that the funding, for example, were to be taken to be directed towards a trading corporation would not be sufficient to characterise it as coming within power if otherwise that which was being done was in substance something to which there did not exist a power under the Constitution.

Now, one cannot look at it, in a sense, in a vacuum. You would need to see the specific provision in question, but the mere assertion or stipulation of something within power that did not go to the substance of what the specification was concerned with would not, in our submission, be sufficient. It follows, your Honours, from that submission that, in our respectful submission, the critical issue is whether the specification here can properly be characterised as coming within an enumerated head of power. Our learned friends for the Commonwealth and the defendants generally would say well it comes from the corporations power, or it comes within 23A.

In our respectful submission, it is simply not demonstrated that that is so. We would say useful illustration, and we would cite it as no more than illustration, is if one looks to the analysis of both Justice Hayne and Justice Kiefel in Williams in relation to the power in 23A it is plain that there has to be the sort of substantial connection that is there described rather than what we see here. Your Honours, otherwise, those issues have been extensively canvassed by our learned friends and we are reluctant to go over ground that has already been dealt with.

Can we then move to the symmetry argument, if we can put it in those ways. The Commonwealth assert that it is a matter of symmetry the limitation on Commonwealth executive – if there is a limitation on Commonwealth executive power arising from section 61 to apply with equal force to the States. Your Honours will see that in paragraphs 161 to 164 of the Commonwealth submissions. Other interveners have made submissions as to why that is not so and we would respectfully adopt those submissions as applying equally to the position in Queensland.

Might we simply identify a few additional matters that bear upon this point as well? Indeed, some of them that specifically apply to Queensland? The first is – and we have set it out in paragraph 6 of our oral submissions document – by force of section 51 of the Queensland Constitution:

The Executive Government of the State of the Queensland (the State) has all the powers, and the legal capacity, of an individual.

So, it simply does not invite the sort of inquiry that the Commonwealth is compelled to pursue because of the manner in which it is constituted. It follows that there is no counterpart to section 61 of the Commonwealth Constitution in the Constitution of Queensland.

The distinction that that reflects is reinforced, in our respectful submission, when one considers section 52 to 55 of the Queensland Constitution, which provide that the State has a capacity to carry out “commercial activities”, as that expression is defined there. So Queensland does not require statutory authority to contract with respect to matters outside the ordinary services of government. Similarly, Queensland is unique amongst the interveners as having no upper house, so the inquiry that the Commonwealth invite in respect of the sharing of power between the House of Representatives and the Senate is not a topic that bears relatively on assessing whether executive power in Queensland would be so limited.

On the other hand, we have given your Honours reference to section 66 of the Queensland Constitution that consolidated funds, or the payment out of consolidated funds, requires authorisation of an Act pursuant to section 66. For completeness we should perhaps have added that by section 64 a similar requirement exists in respect of an appropriation, that is, there is a requirement in respect of an appropriation that it be authorised by an Act.

Finally, your Honours, may we move, please, to the question of the formation of the Commonwealth as a national government in contradistinction to those of the States? I will not repeat what we have set out in paragraph 11 of the oral document we have – the document in respect of oral submissions we have passed up, but may we simply amplify it in this way?

There are three authorities I would like to take your Honours to to demonstrate the firmness, if we may put it that way, with which the Court has determined the limitations on powers of the Commonwealth, both legislative and executive. The first of those decisions was Kirby, which in fact Justice Hayne referred to a little earlier. The decision itself is (1955) 254 CLR 267 in the joint judgment of Chief Justice Dixon and Justices McTiernan and Fullagar and Kitto.

HAYNE J: Volume 94, I think.

MR DUNNING: My apologies, your Honour, yes, volume 94. I will not reread that which Justice Hayne read, but the critical features of it are that it is expressed as the government. There is nothing there to suggest that there is a limitation solely to Commonwealth legislative power and the firm terms in which the alternative was put, but it must be incompetent to go beyond them.

Can we then take your Honours, please, to the decision of this Court, colloquially referred to as the AAP Case, which is the State of Victoria v The Commonwealth (1975) 134 CLR. May we take your Honours, please, to page 396. Now, parts of this passage were extracted in Pape, so I will try and avoid taking your Honours to those because I am going to take you to Pape in a moment, but if I can take your Honours, please, to the third paragraph on page 396 that commences with, “But this is not to say that the Commonwealth has an unlimited executive power”, and if we may go down about five or six lines you will see:

It may provide the necessary parliamentary sanction for the withdrawal of money from Consolidated Revenue and the payment or subscription of money to a particular recipient or for a particular purpose but it does not supply legal authority for the Commonwealth’s engagement in the activities in connexion with which the moneys are to be spent. Whether the Commonwealth can engage in any specific activities depends upon the extent of the Commonwealth’s legislative, executive and judicial powers.

We need not concern ourselves with judicial powers, the important point being though that Justice Mason makes no distinction between legislative and executive power. Then one sees in the next paragraph the passage that is effectively reproduced in Pape, and going over to the top of the next page, starting at the foot of page 396:

The provisions of s. 61 taken in conjunction with the federal character of the Constitution and the distribution of powers between the Commonwealth and the States make any other conclusion unacceptable. Moreover, it is a view of the executive power which is confirmed by the past decisions of this Court –

So there is again no suggestion that it is in some way limited to legislative power. Your Honours, two other members of the Court also dealt with this issue. May I take your Honours please to page 378 and the decision of Justice Gibbs, and may we invite your Honours, please, to notice what is said in the last paragraph on that page that starts “It follows from what I have said”, over the first four lines of the next page. Finally, in the reasons of Chief Justice Barwick at page 362 in the second full paragraph that starts on that page at about point 7 or point 8:

However, to whatever source it be referred, any act or activity of the Commonwealth must fall within the confines of some power, legislative or executive, derived from or through the Constitution.

Then finally, your Honours, may we take you, please, to the decision in Pape (2009) 238 CLR 1. May we first of all take your Honours, please, to page 114 and paragraph 323 in the judgment of Justices Hayne and Kiefel and about halfway through that passage your Honours will see a sentence that starts “Rather, Mason J emphasised”. Might we invite your Honours, please, to read that through to the end of that quote, which is about six or seven lines on?

Now, in a sense that is an expurgated version of that passage out of the AAP Case that I took your Honours to and I have hopefully avoided repeating what I had earlier taken you to and Justice Heydon, whilst obviously in dissent as to the outcome, also deals with this issue on page 198, under a heading “Section 61 limited by legislative competence of Commonwealth” and deals with this topic in paragraphs 567 and 568. I do not need to take your Honour particularly to his Honour’s analysis. It does not take the matter beyond those submissions we have already made but it does carefully collate relevant authorities.

In our respectful submission, the consequence of that is the submission that there might be some distinction between legislative and executive power, that is that the Commonwealth if it did not enjoy a legislative power may nonetheless enjoy an executive power to promote such a program is inconsistent with settled authority, that is, that the requirement to find a constitutional head of power is as applicable to the executive action as it is to the legislative action. Thank you, your Honours.

FRENCH CJ: Thank you, Mr Solicitor. The Court will now adjourn until 10.15 am tomorrow.

AT 4.14 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 7 MAY 2014