Kate Chaney (Curtin, Independent) Share this | Hansard source

This bill, the Financial Framework (Supplementary Powers) Amendment Bill 2024, is a technical amendment bill that seems innocuous, but it draws attention to a much bigger issue that goes to the heart of government accountability for spending our money. Under the Constitution, federal government can only make laws about certain listed topics, but there's a really fundamental question that's actually unresolved and is currently being dealt with through a combination of carefully worded court decisions, some bandaid legislative amendments and an assumption that no-one is really going to challenge it anyway. That big question is: when can the executive government spend our money—on anything it wants or only on things specifically authorised by parliament?

As background, laws need to be approved by a majority of both houses of parliament, but regulations can be made by the executive government of the day and then challenged or disallowed by parliament on a case-by-case basis, so there's an assumption that they're valid unless specifically questioned. At the moment, based on some court decisions and some legislative amendments, the executive government can spend taxpayer money under regulations, which it can change, and it doesn't actually need a law passed by parliament to justify the spending of money. The amendment bill we're talking about today firms up an aspect of this authority but doesn't really go to the core question of whether we think executive government spending should have parliamentary oversight.

There are some obvious advantages to executive government in being able to spend money based on regulations. It's faster, because the executive doesn't need to wait to pass laws when there's a need to spend money quickly, like during the pandemic. Another advantage to the government of the day is that it has a broader power to spend. But there are disadvantages for taxpayers. There's less parliamentary oversight. When a piece of legislation is debated in parliament, it gives the public the opportunity to consider whether this is what the country needs. If money can be spent based on regulations, not laws, there's less specific consideration about whether this is how taxpayer funds should be spent. This could potentially undermine trust in government.

It was only in 2009 that the courts found that spending should be linked to a substantive power—that is, the executive can't just authorise itself to spend money in any area. It can only be spent in areas the Constitution lists as areas of jurisdiction of the Commonwealth. Now, this hadn't been challenged before. Generally, when the government's spending money there isn't anyone who has enough of a specific interest to argue against it. Then, in 2012, the High Court held that there must be parliamentary authorisation before money can be spent. The government response was section 32B—legislation that sought to retrospectively validate 400 non-statutory programs and said: from now on, if money is spent under regulations then that will be adequate. Just think about that, Madam Deputy Speaker. It's a pretty big deal to say, 'By the way, all that spending was okay and we can now spend money on whatever we want if we make some regulations about it.' The courts have since interpreted this narrowly and found that it still has to be within constitutional heads of power. In 2012, 75 per cent of spending was made using special appropriations—that is, under legislation—and 25 per cent was not. I don't know how that percentage has changed since 2012, but it gives you a sense that this is not a small amount of money we're talking about.

So we have this section 32B of the Financial Framework (Supplementary Powers) Act, inserted by a previous government and today shored up by the current government, which purports to make everything okay and gives the government the power to spend taxpayer money without a specific piece of legislation authorising it.

This amendment that we're discussing today is a small technical change that changes words that may be construed as limiting this catch-all power. It just shores up a shaky extension of the power of executive government to spend what it likes. Various committees and experts have drawn attention to this awkward hole in accountability. Regulations can still technically be challenged, but it's harder and gets less attention. Loads of regulations pass every month, and to challenge them parliamentarians need to know about them and move to disallow them within a short period.

Is this enough oversight when it comes to spending our money? Professor Anne Twomey has said that section 32B is part of an incautious approach by Australian governments to the Constitutional risk of spending on grants and programs outside of the Commonwealth's legislative heads of power. She points out that the amounts of money are large and the scrutiny of them is limited. It amounts to a 'she'll be right' approach to government spending.

Although I accept that many regulations need to be able to be made nimbly to respond to changing circumstances, it seems reasonable to me that if taxpayer money is being spent, it needs to clearly fit under a law that has been considered by the parliament. No government is going to voluntarily increase its accountability, but taxpayer money should not be granted without appropriate scrutiny. We have a Constitution for a reason, and we have limits on the powers of the Commonwealth for a reason. This amendment reduces the likelihood of a specific type of legal challenge to government spending, but it doesn't address this broader issue, which I think deserves attention. If we want to rebuild trust in government, Australians need to believe that their money is spent carefully and in line with the powers granted to the federal government by the Constitution. This is not a new issue, and this government is not the first to want to shore up its spending power.

I will be supporting the member for Indi's proposed amendment to this bill, which would bring the provisions of her Accountability of Grants, Investment Mandates and Use of Public Resources Amendment (End Pork Barrelling) Bill into this bill. The effect of those changes is greater accountability for grants programs. We spend billions of dollars on grants that have pretty shaky business cases. These come to our attention only when they are particularly egregious, like the last government's sports rorts.

A division having been called in the House of Representatives—

Sitting suspended from 10:17 to 11:23

To continue, these come to our attention when they are particularly egregious, like the last government's sports rorts. But spending money in marginal electorates has become completely normalised, and unless there's someone with standing who's motivated enough to challenge it, it just happens. The member for Indi's amendment would require all grants programs to have clear and publicly available merit based selection criteria and guidelines. It would also require robust reporting to the parliament about grants, create a committee to oversee grants administration and require the minister to report to parliament about how money is being managed.

In the interest of greater accountability for government spending, I would like to see this bill referred to a Senate committee to consider this broader accountability issue.

See this speech in context