Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

I move:

That this bill be now read a second time.

As I have indicated to the opposition, I intend to make some brief remarks on the second reading of this bill. To save time, I have flagged with the opposition and with Senator Milne that I intend to respond briefly to the amendments which have been foreshadowed by either party.

The Financial Framework Legislation Amendment Bill (No. 3) 2012 responds to the decision handed down by the High Court on 20 June 2012 in the matter of Williams v Commonwealth, a decision which represents a significant shift in the balance of power between the parliament and the executive. For over 100 years, governments of all political persuasions have understood that the executive could rely on the executive power of the Commonwealth to spend money on programs without the need for legislative authority. However, in the Williams case the High Court determined the executive cannot spend money on programs unless they are supported by legislation, regardless of the value of the programs.

The bill before the Senate responds to this new operating environment. It will amend the Financial Management and Accountability Act to establish clear legislative authority for the Commonwealth to make payments in relation to particular programs, grants and arrangements. Transitional provisions in the bill protect programs, grants and arrangements in place before the bill commences.

It is vitally important that recipients of Commonwealth grants and other payments who act in good faith consistent with the arrangements under which those payments are made not be left in doubt about the validity of payments. The government has been careful to identify grants and programs where a question might be raised about the need for legislative authority.

As the Senate will see from the schedule before the chamber, the types of programs that we are talking about are clear. This bill provides spending certainty across various government programs including Indigenous broadcasting, support for carers, National Immunisation Program, infrastructure spending, Australia's presence in Antarctica and many others.

This bill also responds directly and specifically to the Williams case, in which the High Court invalidated the national school chaplaincy program. A majority invalidated payments under the program on the ground that they were not supported by legislation. The bill before the parliament deals directly with that need. As parties are aware, we do need to provide certainty for these programs before parliament rises for the break. The only responsible response to government spending is to get this passed and passed through the Senate today.

As I indicated, I would like to make some brief comments on the amendments that have been foreshadowed. In respect of the amendment by the opposition to insert a six-month sunset clause, we need to be clear about the actual implications of this proposal. The effect of this would be to potentially put 900 chaplains' contracts at risk in Queensland. We cannot give these 900 chaplains the confidence of a forward contract beyond 2012 should the amendment be successful. This would mean over 900 chaplains would not be able to be contracted for the next school year.

The government are also of the view that the amendment would make this legislation legally meaningless. It would create great risk for the ongoing operation of important government programs, including chaplains. We are advised it means that no contract that extends beyond that six-month period would be able to be responsibly entered into. It would mean that the government could not enter into any agreements or have programs which went beyond the sunset provision. After the sunset clause, if new legislative support were to be provided, all agreements and programs would need to be re-established. This would therefore defeat the purpose of the act, which is to provide legal certainty for Commonwealth programs across everything from foreign aid to disability services and so forth.

I make some brief comments on the amendments foreshadowed by Senator Milne. We believe the proposed response to Williams encapsulated in this bill is responsible. The government do recognise that the decision increases the ability of the parliament to scrutinise the expenditure of Commonwealth money and this bill strikes a balance. It provides oversight to the parliament on new areas of spending and also provides flexibility for governments to respond to emergencies and unforeseen events. The government do not interpret the regulation-making provisions in this bill as unbounded and as shifting from the practice of governments for many years, and of all persuasions, in relation to the majority of Commonwealth expenditure. If one considers the stock of all government spending, approximately 75 per cent is in standing appropriation bills, which provide legislative backing. So when it comes to programs such as the age pension, the Pharmaceutical Benefits Scheme and payments to the states, we have and will continue to implement legislation.

In recognising the regulation-making power in this bill is broad, the government will obviously work through implementation issues over time. This would include looking at the utility of a set of principles or guidelines around government determining which programs are more appropriately underpinned by primary legislation and those for which regulation is suitable.

In conclusion, the bill is a measured, appropriate and necessary response to the Williams decision. It will ensure that the government can maintain funding for community programs, including the National School Chaplaincy and Student Welfare Program, and has been designed to address the new requirement for specific legislative approval of spending in programs identified by the High Court. This spending includes services vital to the lives of millions of Australians, an issue that parliament needs to resolve and resolve quickly. I thank the Senate.