Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Hansard source

A key constitutional principle is involved whenever parliament is asked, as it is at the moment, to approve appropriation bills such as the ones we are debating today. That principle, often forgotten in the day-to-day work of the House, is that it is parliament’s job to control government expenditure.

In a country of dominant executive government this might seem a little anachronistic, but I want to explore the protection it is meant to give taxpayers and my fears that one of the most basic and important constitutional concepts in the Westminster system, arguably the bedrock of responsible government, is disappearing from view and practice—and with it accountability to the people is disappearing too.

In 17th century England, this principle was hard won, with blood spilt in support of parliament’s rights. This history, of course, was very well known to the framers of our Constitution, who tried to set down in black-letter law parliament’s control of finances, principally in sections 81 and 83 of the Constitution. Unfortunately, as a result of changes to budget processes made by this government and compounded by a recent High Court decision, this constitutional principle has been reduced to little more than symbolism. The Howard government has ridden roughshod over this principle and rendered the whole parliamentary budget process, especially the additional estimates process, almost entirely meaningless.

The erosion of genuine parliamentary control of finances started with the introduction of accrual accounting in 1999. There is nothing intrinsically wrong with accrual accounting, but the change happened to coincide with another unrelated change—the outcome/output structure for the budget documents. This system of setting out the budget involves allocating money against general outcomes, written in terms that are so vague as to mean almost anything, and only slightly more clear are the outputs.

The problem was illustrated in the most startling way this year, and I want to spend some time on this. We can now actually see that the effects are reflected in Appropriation Bill (No. 3) 2005-2006 today. As the House is well aware, last year this arrogant government wasted millions of taxpayers’ dollars—$55 million so far, we are told—on a partisan, inaccurate and misleading advertising campaign for its extreme industrial relations changes. It was a despicable campaign. It was a gross misuse of taxpayers’ funds to force Liberal Party propaganda down the throats of those taxpayers who were actually funding the campaign. It was wasteful because it achieved nothing but making prime time TV viewing a very irritating experience for several months. Australians already knew what they thought about the IR package, and $55 million or more on advertising was not going to change that. It was wasteful, unethical and party political. I suspect we have not seen the end of it.

Under the 300-year-old principle that parliament controls the purse strings, you would have expected that this type of expenditure would have been contained in the budget papers passed last May. So of course I looked. It was not there at all. There was no talk of a public campaign of any type, an industrial relations information campaign or any of the euphemisms the government uses in other circumstances. There was nothing even close to a big, expensive Liberal Party propaganda campaign that we might have expected to feature somewhere under some name in the budget papers.

Together with Greg Combet of the ACTU, I launched an action in the High Court on the grounds that the government was spending money that had not been appropriated by the parliament. We took up an important fight on behalf of Australian taxpayers to stop this rort. But this was when the full constitutional ramifications of the 1999 budget changes became clear. In its defence the government made the extraordinary claim that it did not have to show any reference to the advertising in the budget papers, simply that it went toward one of the outcomes in the appropriation act. The one that it identified was the outcome ‘higher productivity, higher pay workplaces’.

We argued in the court that, because the appropriations act referred to the portfolio budget statements, the court needed to look at those documents to find what ‘higher productivity, higher pay workplaces’ meant, given that it is such an amorphous, if not meaningless, term in this context. To assist our argument we relied on actual parliamentary practice—for example, the critical role that the PBS play in Senate estimates and the constitutional principles set down in sections 81 and 83. The government’s argument was tantamount to saying that the PBS are not worth the paper they are written on: at any time the government can diverge from the spending plans that parliament was given when the budget was passed. This made a mockery of parliamentary scrutiny, and it made a mockery of the institution of parliament itself.

As it turned out, the High Court was split. Only one judge, the Chief Justice, accepted the reasoning of the government. Two judges accepted our argument: Justice Kirby and Justice McHugh. The other four judges took an entirely different approach with far more radical implications than even the government’s own submissions. Justices Gummow, Callinan, Hayne and Heydon looked at one small part of the appropriations act—in fact, an interpretative note—and decided that the government did not even have to stick to the broad outcomes, let alone the portfolio budget statements. Those judges held that it was enough to show that the money was ‘departmental expenditure’—that is, money spent by a department. In effect, this could mean that the executive government has complete, unfettered discretion to spend all the money in appropriation acts allocated as ‘departmental expenditure’ on any purpose, including on extreme ideological propaganda—even, in this case, when the industrial relations law had not even been presented to the parliament, let alone passed by the parliament.

With great respect to those judges, I have to disagree with that decision. Their reading of the appropriations act could just as easily and rationally have gone the other way, and the constitutional context was a very powerful reason to do so. Indeed, the effect of the decision is to do what, in 1945 in the pharmaceutical benefits case, Chief Justice Latham said the Constitution could not allow: providing an ‘appropriation in blank’. Until 2005, that was settled constitutional law of Australia. Chief Justice Latham went on to describe what he meant:

An Act which merely provided that a minister or some other person could spend a sum of money, no purpose of the expenditure being stated, would not be a valid appropriation Act.

But, according to the current High Court, an appropriation of exactly this type is not only valid but to be preferred in the event of ambiguous drafting.

Let us be clear about this: not even the government had that interpretation of its own appropriation acts. It is the result of a particular reading of a particular way in which the appropriation acts have been drafted since 1999. It is, in other words, an unforeseen side effect of the coalition’s new style of presenting the budget—and it needs to be fixed because it is doing serious damage to our constitutional arrangements, reducing parliament’s role in overseeing the budget to the extent that we are simply being asked to write blank cheques for the executive. In fact, as Appropriation Bill (No. 3) 2005-2006 shows, it is not even limited blank cheques that we are being asked to write: we can also be asked to pick up the tab after money has been spent on ways we were never asked to approve. This bill contains an additional estimate of over $100 million for the ‘higher productivity, higher pay workplaces’ outcome. This is to reimburse the Department of Employment and Workplace Relations for the money they have wasted on this advertising campaign. For all we know, it was more than the $100 million that is being sought to supplement the department’s expenditure.

This is what the centuries-old principle of parliamentary control of finances has come to in John Howard’s Australia: parliament has next to no control or opportunity to scrutinise the spending plans of government at all. The annual budget is effectively reduced to a blank cheque, and if the government overspends on that amount they can simply come back in the additional appropriations round for a top-up. The Howard government, with control of both houses, now has absolute power, and it has taken no time at all to become absolutely corrupt in its budgeting process. It is treating consolidated revenue as a Liberal Party slush fund. This abuse of parliament’s budget scrutiny role is, as we know, only one example.

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