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Public Sector Informant : PSI - September
16 THE PUBLIC SECTOR INFORMANT [SEPTEMB [LEGAL AFFAIRS The sorcerer's apprentice ta The stimulus package The High Court has granted the executive a legal power to spend that it cannot possibly control The present dysfunctional state of the federal union is characterised by the way the Commonwealth has usurped many of of state governments. Cooperative federalism has given way to collaborative federalism and now to executive federalism. Until the 1970s, Federal Parliament's only ''card of entry'', so described by former prime minister Sir Ro- bert Menzies, into state responsibilities like education was the grants power, with conditions attached (more specifically, the ''tied grants'' power of section 96 of the Consti- tution). The Whitlam government went a step further by relying on the use of the appropriation section, which was misconceived to confer a power of spending -- later corrected in the tax bonus case -- to bypass the states to make grants directly to bodies such as regional councils. When Victoria chal- lenged that action in 1975, the High Court handed down its majority decision (four to three) in the then leading, but now misleading, Aust- ralian Assistance Plan case. It con- cerned the Parliament's use of a few lines in an Appropriation Act to spend about $6 million to finance 35 regional councils for social development. Jus- tice Harry Gibbs strongly dissented, saying: The legislative power . . . does not enable the Parliament to legislate with respect to anything that it regards as of national interest and concern; the growth of the Commonwealth to nationhood did not have the effect of destroying the distribution of powers carefully effected by the Constitution. There are four so-called Common- wealth cards of entry. First, the standard s96 grants power card; sec- ond, the appropriation gold card; third, the executive power platinum card; and fourth, the new executive federalism oyster card. The latter is named after the London oyster card, which allows one to travel anywhere on the under- ground tube or bus. The standard card of entry This card works through legislation which relies on the grants power under s96 of the Constitution. Chief justice Sir Owen Dixon said: It must be borne in mind that the power conferred by s96 is confined to granting money to governments. It is not a power to make laws with respect to a general subject matter. The appropriation gold card The Commonwealth has for many years abandoned the practice of using the ''tied grants'' contrivance under s96 to supposedly authorise the funding of universities. Instead, universities receive grants under the Higher Edu- cation Support Act 2003, through funding agreements to finance their activities. If the Commonwealth has relied on what it misconceived as a spending power under s81 of the Constitution, then these payments would be unlawful. As Chief Justice Robert French said: Substantive power to spend the public moneys of the Commonwealth is not to be found in s81 or s83, but elsewhere in the Constitution or statutes made under it. The executive power platinum card This card is characterised by the tandem use of the s61 executive power and s51(xxxix) incidental power. As Gibbs said in the Australian Assistance Plan case: According to s61 of the Constitution, the executive power of the Commonwealth ''extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth''. These words limit the power of the executive and, in my opinion, make it clear that the executive cannot act in respect of a matter which falls entirely outside the legislative competence of the Commonwealth. Last year, Banjo Paterson's line of ''T'was Mulga Bill from Eaglehawk that caught the cycling craze'' seemed to have infected infrastructure minister Anthony Albanese. Like Mulga Bill, Albanese took to the cycling craze and decided to stimulate the economy by making direct grants to local councils to build bicycle paths. The AusLink (National Land Trans- port) Act was cosmetically renamed as the Nation Building Program (National Land Transport) Act. It was rebranded to give the misleading appearance of being a new initiative of the Rudd government by an amending Act commencing on June 27, 2009. Into the renamed Act was inserted the new definition of ''road'' to include ''a path for the use of persons riding bicycles''. When the amending Act commen- ced, the reasons for decision in the tax bonus case had not been published. So it is likely that the Commonwealth was still relying on a s81 appropriation, and its misconception that it was a spending power, to authorise its planned expen- diture on bicycle paths for 2009-10. After July 7, 2009, it could no longer rely on s81. Undaunted, the cycling craze began after the need for any further economic stimulus had ceased. For example, in October 2009, Albanese announced that the Tamworth Regional Council was to receive $135,000 to build a 13.5km bicycle path ($10,000 per km). In case you were unaware of this project, it is part of the $40 million National Bike Path Project, which also included 10.1km for the town of Kwinana at a cost of $600,000, an average cost of $60,000 per km. The great disparity in the price per km may lead one to deduce that the Common- wealth was making an inflated grant to the Kwinana, about six times the price per km for Tamworth. Having called in the aid of such a far-reaching power, when and how is it to end? Is it merely to be exercised at the whim of the executive? Or does it find itself in a similar position to the sorcerer's apprentice: of not knowing the magic word to stop the flood of money gushing into the economy? The High Court has given the executive a magic genie, but no criteria as to how it is to be used, let alone stopped. By July 2009, when the program was to start, the criteria for stimulating the economy through the use of the executive power and the incidental power simply did not exist. Yet the Commonwealth embarked on a five- year Nation Building Program of Roads to Recovery to 2014. One could be excused for thinking that the executive's enthusiasm for the economic stimulus package was an example of justice John Heydon's observation of the great maxim of governments seeking to widen their constitutional powers: ''Never allow a crisis go to waste.'' The need (if there was any need) for stimulating the economy through gov- ernment spending had passed. On October 7, 2009, the Reserve Bank increased the cash rate (that is, the overnight rate) from 3.0 per cent to 3.25 per cent. Since then, there have been five successive increases cul- minating in the present 4.5 per cent. The federalism oyster card The executive federalism revolution is relevant to the $14.7 billion spending on the so-called Building the Education Revolution (later increased to $16.2 billion). This program was delivered through the National Partner- ship Agreement on the Nation Building B S a
PSI - October