Anita Barraud: Hello and welcome to the Law Report, Anita Barraud with you. Today, life after a tree change: women lawyers in the bush. That’s coming up later. First, it’s round two of one of the biggest High Court challenges to the government’s spending power.

Reporter: A Toowoomba dad has won a victory in the High Court. Ron Williams took action against the Commonwealth school chaplaincy program and today the High Court...

Reporter: Today the High Court by majority held that the funding agreement is invalid as between the Commonwealth and the Scripture Union. So we succeeded.

Interviewee: It’s sensible for us to look at the implications, but they are not immediate ones, and people don’t need to...

Reporter: A new law was rushed through the House of Representatives last night. The Attorney General Nicola Roxon...

Interviewee: The bill will ensure that the parliament’s intentions in appropriating funding for programs are given effect.

Anita Barraud: In June the High Court ruled the national school chaplaincy program exceeded the Commonwealth executive spending power. Legislation was rushed through parliament to secure the funding arrangements of the scheme as well as quarantine hundreds of other programs affected by the High Court decision, from childcare support services, car industry assistance, road recovery programs and counter-terrorism activities. Now Ron Williams and his legal team are preparing once more to take the government to task over what’s been described as a knee-jerk reaction to the High Court decision. Cheryl Saunders is Professor of Law at Melbourne University.

Cheryl Saunders: The reason for the panic is that there were so many Commonwealth executive schemes without supporting legislation that were potentially called into question by this decision of the court.

Anita Barraud: Over 400 of them.

Cheryl Saunders: Exactly, but in our system we place a lot of weight on legislation. The advantages of legislation is that it goes through the parliament. There is a debate, sometimes it’s a pretty quick debate, but at least there is a debate in which we hear both sides of the parliament on the question. The legislation generally has some detail, it’s generally fairly carefully drafted and then it’s published in a way that is well understood and made available for the public to look at.

Anita Barraud: And even as they passed the bill there was deep concern about this, including an attempt at a sunset clause.

Cheryl Saunders: The sunset clause went to the point of principle; the sunset clause really says, ‘Look, we understand that you need to enact this legislation quickly to overcome immediately pressing problems of unconstitutionality, but that should not be the final solution. Give yourself six months to try and work out what a better legislative framework for such programs should be.’

Anita Barraud: And this affects about...I understand about ten per cent of the government expenditure?

Cheryl Saunders: Yes, a very large proportion of expenditure.

Anita Barraud: There was even a suggestion that the executive could fund what amounts to being political slush funds, money with various titles like ‘electoral and ministerial support costs’ and ‘political party secretariat training’ without any debate or approval from parliament. Is it that serious?

Cheryl Saunders: Well, of course it is, and in fact it’s funny that you say that about the political party secretariat support, because I noticed that and I thought, heavens, what’s that? Of course if spending programs are put in place purely in the exercise of executive power the temptation to use it for, you know, short-term political gain is obviously there. Now, whether these programs fall within that category or not I don’t know, but clearly that’s a danger, and that’s, again, a danger that legislation tends to overcome, and if you even take the school chaplaincy program itself, that’s gone through various iterations since the policy was put in place.

Anita Barraud: Under the Howard government?

Cheryl Saunders: In 2006, initially under the Howard government, then reiterated by subsequent governments. Some of the changes that have subsequently been made are the sorts of things that you would’ve hoped would’ve been picked up if the policy had been put through the parliament in the form of legislation. For example, one feature that’s been added recently is that some sort of non-religious pastoral care might be also provided to schools under this program. Now, if there had actually been a bill before the parliament at some stage, one would’ve hoped that someone would’ve picked that up earlier and said...

Anita Barraud: And debated it.

Cheryl Saunders: And said, well, why is this just religious care? Who are these people who are deemed to have the qualifications to deliver this care? What should be done about people in schools who do not have religious inclinations and so on, that will not necessarily be teased out in a purely executive policy process?

Anita Barraud: How does this reflect on the relationship not just between the parliament and the executive but the Commonwealth and the states?

Cheryl Saunders: The problem is this: our constitution gives us a lot of detail about the division of legislative power between the Commonwealth and the states. It tells us almost nothing about the scope of executive power, and so over the years, through a succession of cases, the High Court has sort of spun out the meaning of the executive power. Until the Williams case was decided, most of us, I think, thought that the real problem was the division is still the division of power between the Commonwealth and the states; could the Commonwealth do things in the exercise of its executive power that it couldn’t have done in the exercise of its legislative power because of the federal system?

Anita Barraud: There’s always lots of debates about federalism.

Cheryl Saunders: Always lots of debates about that, so that if you have a program like the school chaplaincy program, put in place through executive power, the immediate question used to be, ‘But the Commonwealth doesn’t have legislative power over schools or over chaplains, how can it do this?’ What has happened as a result of the Williams case is to change the focus a bit to say, ‘Well, even if the Commonwealth does have legislative power in a particular area, it may still need to actually enact legislation before it can do certain things. So, in the Williams case four members of the court didn’t ever get to the question of whether the Commonwealth would’ve had legislative power. It simply said, you can’t do this at all without the parliament. Now, once you do enact legislation, then that may be the occasion to say, is this a Commonwealth or a state matter under the constitution?

Anita Barraud: Funding arrangements between Commonwealth, state and council. How are they arranged and how do they work?

Cheryl Saunders: I think a great difficulty in Australia, which is that over the years the Commonwealth has overwhelmingly acquired the majority of the taxing power, and therefore the Commonwealth raises most of the money. That means that the Commonwealth has to distribute some of those funds to the other two levels of government, to the states and ultimately to local government. There are mechanisms under the constitution for the Commonwealth to do that, there is a grants power in Section 96, and that’s effectively the one that is used to distribute money to the states, and the Commonwealth used to distribute money to local government through the states, although more recently it’s taken to directly funding local government, which is another program that may or may not be put in question by the Williams decision. But the way in which all of this occurs tends to present the other two levels of government in Australia as mendicant, so we’re always hearing that the states are begging for more money, and local government is scrabbling around for more money, and really that is a mistaken perception. I mean, for all sorts of historical reasons we’ve created a fiscal imbalance in this country, and we ought to put in place systems that enables that revenue to be fairly shared between the levels of government in a transparent way.

Anita Barraud: And there’s even the question of strengthening the local government too, that’s part of this story as well, I understand?

Cheryl Saunders: Well, local government only comes into this story obliquely, insofar as many Commonwealth payments to local government are also just made in the exercise of executive power.

Anita Barraud: Such as the road recovery program?

Cheryl Saunders: Such as the road recovery program. Those payments may be threatened by this as well, although we don’t actually know the answer to that. Now, none of these payments are fatally threatened, insofar as the Commonwealth can always make payments to anyone it wants to if it goes through the states, and that would’ve been another mechanism to put in place.

Anita Barraud: And in fact that was a question that was asked, why didn’t they just directly fund it through the states?

Cheryl Saunders: Well, and it was a question canvassed by the High Court as well, because the High Court said, to understand what the Commonwealth can do in the executive power we need to look at the constitution as a whole, and the various mechanisms that the constitution makes available. One of those is a very open-ended power to fund programs through the states, given, in the face of the existence of a power like that, it seems less likely that such programs could be directly funded under the executive power.

Anita Barraud: Now you said that this leaves the government open to further challenges, but this has happened before, hasn’t it?

Cheryl Saunders: There have been cases dealing with the spending power since federation. A turning point came in 1975 with a big case called the Australian Assistance Plan case.

Anita Barraud: Can you briefly explain the facts of that case?

Cheryl Saunders: The Australian Assistance Plan case dealt with a regional assistance program; the Commonwealth was giving money to encourage the development of regional communities and community facilities across Australia. The states on that occasion challenged the constitutionality of the program on the ground that the executive power didn’t extend to these programs because they were in an area of state rather than Commonwealth responsibility, and the High Court divided in a not terribly helpful way. Three members of the court said it was constitutional, three members said it was unconstitutional and the seventh member of the court said that the state didn’t have the standing to challenge the validity of the scheme. So you can see why the outcome in the Australian Assistance Plan case was so ambiguous.

Anita Barraud: And I mean, there’s been a challenge even within this current government. Well, under Rudd.

Cheryl Saunders: Much more recently there was the challenge in Pape, in 2009, to the validity of the economic stimulus program that was designed to head off the consequences of the financial crisis, and the outcome in Pape was that the stimulus program was valid, but the reasoning of a majority of the court suggested that it was only valid because this was an economic emergency, and that not all such programs would necessarily be valid in the future. In other words, what Pape showed, everybody who read it carefully enough, was that the Commonwealth’s executive power to spend was a limited power.

Anita Barraud: So it’s flagged this current case...

Cheryl Saunders: Absolutely.

Anita Barraud: Now we have round two of the Ron Williams High Court challenge. What kinds of arguments could they present?

Cheryl Saunders: I think it is likely to take at least two points; one is that the legislation that the Commonwealth has now passed to try and save the validity of these schemes is cast in such general terms that it really doesn’t provide the sort of legislative support that the High Court was suggesting was needed in the Williams case, but another obvious point is that in any event now you have legislation, you need to find a head of legislative power that supports Commonwealth funding of school chaplaincy services and that the head of power doesn’t exist. Now, two members of the court suggested that that was so, and Williams itself, and so I would expect another round of the Williams case to confront directly the validity of Commonwealth legislation seeking to provide for school chaplaincy services. What’s really an issue here is whether major policy directions should be put in legislative form and approved by our parliament with all the implications for accountability and transparency that follows from that.

Anita Barraud: Cheryl Saunders, professor of law at Melbourne University, and Professor Saunders has just won the prestigious French award the Legion of Honour, congratulations. And if all goes to plan, Ron Williams could launch his second High Court challenge within weeks. This is the Law Report, I’m Anita Barraud on RN, ABC News Radio and internationally on Radio Australia, and you can find us online at abc.net.au/radionational or on Twitter, @lawreportrn.