Pape v Commissioner of Taxation [2009] HCA 23 (7 July 2009)

Pape v Commissioner of Taxation [2009] HCA 23 (7 July 2009)

Last Updated: 10 September 2009

HIGH COURT OF AUSTRALIA

FRENCH CJ,

GUMMOW, HAYNE, HEYDON, CRENNAN, KIEFEL AND BELL JJ

BRYAN REGINALD PAPE PLAINTIFF

AND

THE COMMISSIONER OF TAXATION OF THE

COMMONWEALTH OF AUSTRALIA AND ANOR DEFENDANTS

Pape v Commissioner of Taxation [2009] HCA 23

Date of order: 3 April 2009

Date of publication of reasons: 7 July 2009

S35/2009

ORDER

Order that the questions stated in the amended special case be answered as follows:

Question 1: Does the plaintiff have standing to seek the relief claimed in his writ of summons and statement of claim?

Answer: Yes.

Question 2: Is the Tax Bonus for Working Australians Act (No 2) 2009 (Cth) valid because it is supported by one or more express or implied heads of legislative power under the Commonwealth Constitution?

Answer: The Tax Bonus for Working Australians Act (No 2) 2009 is a valid law of the Commonwealth.

Question 3: Is payment of the tax bonus to which the plaintiff is entitled under the Tax Bonus for Working Australians Act (No 2) 2009 supported by a valid appropriation under ss 81 and 83 of the Constitution?

Answer: There is an appropriation of the Consolidated Revenue Fund within the meaning of the Constitution in respect of payments by the Commissioner required by s 7 of the Tax Bonus for Working Australians Act (No 2) 2009.

Question 4: Who should pay the costs of the special case?

Answer: In accordance with the agreement of the parties announced on the second day of the hearing of the special case, there is no order for costs.

Representation

B R Pape in person (instructed by Toomey Pegg Drevikovsky Lawyers)

S J Gageler SC, Solicitor-General of the Commonwealth with S B Lloyd SC and G M Aitken for the defendants (instructed by Australian Government Solicitor)

Interveners

R J Meadows QC, Solicitor-General for the State of Western Australia with C L Conley intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor for Western Australia)

M G Hinton QC, Solicitor-General for the State of South Australia with S A McDonald intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for the State of South Australia)

M J Leeming SC with J K Kirk intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor (NSW))

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Pape v Commissioner of Taxation

Constitutional law – Standing – Section 7 of the Tax Bonus for Working Australians Act (No 2) 2009 (Cth) ("the Act") provides that the Commissioner of Taxation must pay a tax bonus to entitled persons – Persons entitled under s 5 of Act if, inter alia, an individual, Australian resident with an adjusted tax liability greater than nil and not exceeding $100,000 for 2007-08 income tax year – Whether person entitled under s 5 of Act has standing to bring action for declarations and injunction.

Constitutional law – Appropriations of moneys from the Consolidated Revenue Fund – Whether payment of tax bonus supported by valid appropriation under ss 81 and 83 of Constitution – Whether appropriation "for the purposes of the Commonwealth" under s 81 – Whether phrase "for the purposes of the Commonwealth" limits legislative power – Whether source of legislative "power to spend" is ss 81 and 51(xxxix).

Constitutional law – Powers of the Commonwealth Parliament – Whether Act law with respect to trade and commerce under s 51(i) – Whether Act law with respect to taxation under s 51(ii) – Whether Act law with respect to external affairs under s 51(xxix) – Whether Act supported by implied nationhood power – Whether Act supported by power conferred by ss 81 and 51(xxxix) – Whether Act supported by power conferred by ss 61 and 51(xxxix) – If Act beyond power, whether Act can be read down so as to be within power.

Constitutional law – Executive power of the Commonwealth – Global financial and economic crisis – Whether Act supported by ss 61 and 51(xxxix).

Constitutional law – Taxation power – Persons entitled under s 5 of Act included persons entitled to tax bonus greater than their adjusted tax liability for the 2007-08 financial year – Whether Act law with respect to taxation.

Words and phrases – "appropriation", "for the purposes of the Commonwealth", "made by law" and "maintenance of this Constitution".

Constitution, ss 51(i), (ii), (xxix), (xxxix), 61, 81 and 83.

Acts Interpretation Act 1901 (Cth), s 15A.

Tax Bonus for Working Australians Act (No 2) 2009 (Cth).

Taxation Administration Act 1953 (Cth), ss 2 and 16.

FRENCH CJ.

Introduction

1. On 4 February 2009, the Minister for Families, Housing, Community Services and Indigenous Affairs introduced into the House of Representatives the Tax Bonus for Working Australians Bill 2009. The Minister said that the measure would provide, at a cost of $8.2 billion, financial support to about 8.7 million taxpayers. This support was to take the form of one-off payments ranging from $950 to $300 according to the taxable income of the recipients in the year ended 30 June 2008. Their stated purpose was to[1]:
   
   

"immediately support jobs and strengthen the Australian economy during a severe global recession."

2. The Bill was defeated in the Senate. A fresh Bill in substantially the same terms save for the amounts of the payments was introduced into the House of Representatives on 12 February 2009 as the Tax Bonus for Working Australians Bill (No 2) 2009. It provided for payments ranging from $900 to $250 for taxpayers earning between nil and $100,000 for the year ended 30 June 2008. A Tax Bonus for Working Australians (Consequential Amendments) Bill (No 2) 2009 was introduced at the same time.
   
   
3. The Second Reading Speeches for the new Bills incorporated by reference the Second Reading Speeches for their predecessors[2]. The payments were said to be among five key one-off payments for lower and middle-income households and individuals[3].
   
   
4. Eligibility for the payments, according to entitlements defined by the legislation, was to be determined by the Commissioner of Taxation. The bonus would be available from April 2009 to Australian resident taxpayers who had already had their tax returns assessed. Taxpayers who had not yet lodged their returns would have their bonus paid following assessment of their returns by the Australian Taxation Office ("the ATO").
   
   
5. The Bills were enacted and assented to on 18 February 2009 as the Tax Bonus for Working Australians Act (No 2) 2009 (Cth) ("the Tax Bonus Act") and the Tax Bonus for Working Australians (Consequential Amendments) Act (No 2) 2009 (Cth) ("the Consequential Amendments Act").
   
   
6. On 26 February 2009, Bryan Reginald Pape, a person apparently entitled to receive $250 under the Tax Bonus Act, issued a writ out of the Sydney Registry of this Court against the Commissioner of Taxation claiming, inter alia, declarations that the Tax Bonus Act is invalid and that the tax bonus payable to him under that Act is "unlawful and void". He also sought an injunction restraining the making of the payment to him.
   
   
7. The Commonwealth was joined as a defendant to the action. The parties agreed to submit a Special Case pursuant to r 27.08 of the High Court Rules 2004, stating questions for the opinion of the Full Court. On 13 March 2009, Gummow J ordered that the Special Case be referred to the Full Court for hearing commencing on 30 March 2009. Notices under s 78B of the Judiciary Act 1903 (Cth) were issued on 17 March 2009 to the Attorneys-General of the States and Territories. The States of New South Wales, South Australia and Western Australia intervened. In my opinion, Mr Pape had standing to claim the relief he sought. I am also of the opinion that the Tax Bonus Act is valid and the tax bonus payable to Mr Pape is lawful. On 3 April 2009, I joined in the pronouncement of orders reflecting this conclusion by way of the answers then given to the questions stated in the Special Case.
   
   
8. I base my opinion as to validity upon the following propositions:
   
   
   1. The executive power of the Commonwealth conferred by s 61 of the Constitution extends to the power to expend public moneys for the purpose of avoiding or mitigating the large scale adverse effects of the circumstances affecting the national economy disclosed on the facts of this case, and which expenditure is on a scale and within a time-frame peculiarly within the capacity of the national government.
      
      
   2. The executive power so to expend public moneys is conditioned, by ss 81 and 83 of the Constitution, upon appropriation of the requisite moneys by an Act of the Parliament for that purpose.
      
      
   3. The appropriation necessary to authorise the proposed expenditure in this case was effected by s 16 of the Taxation Administration Act 1953 (Cth) ("the Taxation Administration Act") read with s 3 of the Tax Bonus Act.
      
      
   4. The legislative power to enact statutory provisions, beyond appropriation, to support the exercise of the executive power in this case is found in the incidental power conferred by s 51(xxxix) of the Constitution.
      
      
   5. The provisions of ss 81 and 83 do not confer a substantive "spending power" upon the Commonwealth Parliament. They provide for parliamentary control of public moneys and their expenditure. The relevant power to expend public moneys, being limited by s 81 to expenditure for "the purposes of the Commonwealth", must be found elsewhere in the Constitution or statutes made under it.
      
      
   6. It is not necessary in light of the preceding to consider the specific heads of power otherwise relied upon by the Commonwealth to support the Tax Bonus Act.
      
      
9. The implications of these propositions for the scope of the executive power generally are limited. The aspect of the power engaged in this case involves the expenditure of money to support a short-term national fiscal stimulus strategy calculated to offset the adverse effects of a global financial crisis on the national economy. The legislative measures defining the criteria of that expenditure and matters incidental to it were authorised by s 51(xxxix). The expenditure was necessarily conditioned upon a parliamentary appropriation, in legislative form, mandated by ss 81 and 83 of the Constitution. The constitutional support for expenditure for national purposes, by reference to the executive power, may arguably extend to a range of subject areas reflecting the established practice of the national government over many years, which may well have relied upon ss 81 and 83 of the Constitution as a source of substantive spending power. It is not necessary for present purposes to define the extent to which such expenditure, previously thought to have been supported by s 81, lies within the executive power.
   
   
10. Future questions about the application of the executive power to the control or regulation of conduct or activities under coercive laws, absent authority supplied by a statute made under some head of power other than s 51(xxxix) alone, are likely to be answered conservatively[4]. They are likely to be answered bearing in mind the cautionary words of Dixon J in the Communist Party Case[5]:
    
    

"History and not only ancient history, shows that in countries where democratic institutions have been unconstitutionally superseded, it has been done not seldom by those holding the executive power. Forms of government may need protection from dangers likely to arise from within the institutions to be protected."

In that connection, and as appears below, the identification of a class of events or circumstances which might, under some general rubric such as "national concern" or "national emergency", enliven the executive power does not arise for consideration here.

The questions for determination

11. The Special Case stated the following questions for the opinion of the Full Court:
    
    
    1. Does the plaintiff have standing to seek the relief claimed in his writ of summons and statement of claim?
       
       
    2. Is the Tax Bonus Act valid because it is supported by one or more express or implied heads of legislative power under the Commonwealth Constitution?
       
       
    3. Is payment of the tax bonus to which the plaintiff is entitled under the Tax Bonus Act supported by a valid appropriation under ss 81 and 83 of the Constitution?
       
       
    4. Who should pay the costs of the Special Case?
       
       

The Special Case proceeded in part on the basis of certain "agreed facts" incorporated in it by recitation and by documentary attachment. It is necessary to consider the nature of those facts and their role in the decision in this case before turning to their detailed content.

The nature of the agreed facts

12. The facts agreed in the Special Case fall into the following categories:
    
    

(i) Statements of law or mixed law and fact. In particular the statement that Mr Pape is putatively entitled under the Tax Bonus Act to a payment of $250 and that his adjusted tax liability for the year ended 30 June 2008 was $25,951.92.

(ii) The existence of certain economic conditions.

(iii) Statements made by the Executive and by international bodies comprising the Group of 20 ("the G20"), the International Monetary Fund ("the IMF") and the Organisation for Economic Co-operation and Development ("the OECD").

(iv) Decisions taken by the Executive.

13. Mr Pape contested the relevance of the factual matters. He did not dispute their accuracy or that of the statements, attached to the Special Case, made by the Commonwealth Government, the G20, the IMF and the OECD.
    
    

Organisations referred to in the agreed facts

14. In order to understand the agreed facts it is necessary to describe the international entities referred to in the attachments to the Special Case. The G20, the IMF and the OECD may be explained briefly by reference to materials provided to the Court, without objection, during the hearing of the Special Case.
    
    
15. The G20, of which Australia is a member, comprises Finance Ministers and Central Bank Governors of industrialised and developing countries. Meetings of the Ministers and Governors are usually preceded by two meetings of Deputies[6].
    
    
16. The IMF was established in 1945 pursuant to the Articles of Agreement of the International Monetary Fund, a treaty which entered into force for Australia on 5 August 1947. The purposes of the IMF set out in Art I of the treaty include:
    
    

"(i) To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.

(ii) To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy."

Members of the IMF assume, inter alia, obligations to collaborate with the IMF to promote exchange stability and maintain orderly exchange arrangements with other members and to avoid competitive exchange alterations[7]. Members also undertake not to impose restrictions on the making of payments and transfers for current international transactions without the approval of the IMF[8].

17. Australia is also a party to the Convention on the Organisation for Economic Co-operation and Development made in Paris in 1960. The Convention entered into force for Australia on 7 June 1971. The Convention reconstituted what was formerly the Organisation for European Economic Co-operation as the OECD. The aims of the OECD are set out in Art 1 of the Convention, including the promotion of policies designed:
    
    

"(a) to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy;

(b) to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and

(c) to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations."

The members also agree that they will "co-operate closely and where appropriate take co-ordinated action"[9].

Factual background

18. The following sets out salient features of the agreed facts, including those reflected in the attachments to the Special Case.
    
    
19. There have been rapid adverse changes in macroeconomic circumstances globally and in Australia in 2008 and 2009. These are characterised in the agreed facts as a global financial and economic crisis. No country's economy is expected to avoid its effects. It has already involved the most severe and rapid deterioration in the global economy since the Great Depression. It is the most significant economic crisis since the Second World War. It involves sharp world-wide declines in growth, rises in unemployment, restricted access to credit and falling wealth.
    
    
20. The crisis has triggered a global recession. This has caused a deterioration in the Australian economy with almost all of its sectors facing significant weakness over the forecast horizon. Significantly weakened domestic growth and higher unemployment are forecast.
    
    
21. On 15 November 2008 the G20 held a Summit on Financial Markets and the World Economy in Washington DC and issued a declaration which referred to "serious challenges to the world economy and financial markets" and the determination of the members to enhance cooperation, to restore global growth and to achieve needed reforms in the world's financial systems. The declaration included the following statement:
    
    

"Against this background of deteriorating economic conditions worldwide, we agreed that a broader policy response is needed, based on closer macroeconomic cooperation, to restore growth, avoid negative spillovers and support emerging market economies and developing countries. As immediate steps to achieve these objectives, as well as to address longer-term challenges, we will:

...

* Use fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conducive to fiscal sustainability."

22. In December 2008 in an OECD publication entitled "OECD Economic Outlook" reference was made to fiscal stimulus packages. The general observation was offered that in some countries the scope for the reduction in policy rates was limited. In that unusual situation fiscal policy stimulus over and above the support provided through automatic stabilisers had an important role to play:
    
    

"Fiscal stimulus packages, however, need to be evaluated on a case-by-case basis in those countries where room for budgetary manoeuvre exists. It is vital that any discretionary action be timely and temporary and designed to ensure maximum effectiveness."

Reference was made to the long-term nature of infrastructure investment and:

"[a]lternatives, such as tax cuts or transfer payments aimed at credit-constrained, poorer households, might prove more effective in boosting demand."

23. Staff of the IMF prepared a note of a meeting of the Deputies of the Group of 20 held between 31 January and 1 February 2009 in London. The note referred to the current downturn in the global economy and an "adverse feedback loop between the real and financial sectors". The Executive Summary to the note stated:
    
    

"More aggressive and concerted policy actions are urgently needed to resolve the crisis and establish a durable turnaround in global activity. To be effective, policies need to be comprehensive and internationally coordinated to limit unintended cross-border effects. Action is needed on two fronts – to restore financial sectors to health and to bolster demand to sustain a durable recovery in global activity."

24. The need to support demand was specifically referred to:
    
    

"Macroeconomic policy stimulus will be critical to support demand while financial issues are addressed and to avoid a deep and prolonged recession. With conventional monetary policy reaching its limits, central banks will need to explore alternative policy approaches with a focus on intervention to unlock key credit markets. That said, with constraints on the effectiveness of monetary policy, fiscal policy must play a central role in supporting demand, while remaining consistent with medium-term sustainability. A key feature of a fiscal stimulus program is that it should support demand for a prolonged period of time and be applied broadly across countries with policy space to minimize cross-border leakages."

25. The role of direct fiscal stimulus was also identified:
    
    

"Fiscal policy is providing important support to the economy through a range of channels, including direct stimulus, automatic stabilizers and the use of public balance sheets to shore up the financial system. While such support is critical to bolster aggregate demand and to limit the impact of the financial crisis on the real economy, it implies a significant deterioration in the fiscal accounts."

26. At the time of the Deputies' meeting, G20 countries had adopted or planned to adopt fiscal stimulus measures amounting on average to around ½% of GDP in 2008, 1½% of GDP in 2009 and about 1¼% of GDP in 2010. There was considerable variation across G20 countries in the size and composition of stimulus packages. Fiscal stimulus, to that time, had consisted of one-third revenue measures and two-thirds expenditure measures. Revenue measures had focussed on cuts in personal income tax and indirect taxes such as VAT or excises. Increased spending for infrastructure had been emphasised on the expenditure side. Other expenditure measures included transfers to states or local governments, support for housing sectors and aid to small and medium enterprises.
    
    
27. Fiscal stimulus measures in G20 countries were expected to affect their growth in 2009 by the order of ½ to 1¼ percentage points.
    
    
28. A statement from an IMF-OECD-World Bank seminar convened in February 2009 included the following:
    
    

"In parallel, there continues to be an urgent need for fiscal stimulus. The size and composition of fiscal packages should be consistent with each country's fiscal space and institutional capacity. The deepening of the downturn suggests the need for an increase in high-impact fiscal expenditures in the first half of 2009, with further support in the following quarters, by countries in a position to prudently undertake such spending. At the same time, embedding stimulus packages in a credible medium-term strategy that safeguards fiscal sustainability will also increase their impact in the short term."

29. The Updated Economic and Fiscal Outlook ("the UEFO") published by the Treasurer and the Minister for Finance on 3 February 2009 referred to the deteriorating global economy and falling tax revenues. The circumstances were described as "exceptional" and the conclusion offered that "fiscal policy must take a strong role in supporting the economy". The paper described support for economic growth and jobs as "the immediate and overriding priority for fiscal policy". The Ministers said that a $42 billion Nation Building and Jobs Plan would deliver a fiscal stimulus package of about 2% of GDP in 2008-09.
    
    
30. Elements of the proposed fiscal stimulus package were set out in the UEFO. The element relevant to these proceedings was described:
    
    

"The Government will provide $12.7 billion to deliver an immediate stimulus to the economy to support growth and jobs now before investment spending and lower interest rates take effect. These measures include an $8.2 billion Tax Bonus for Working Australians, a $1.4 billion Single-income Family Bonus, a $20.4 million Farmer's Hardship Bonus, a $2.6 billion Back to School Bonus and a $511 million Training and Learning Bonus. These bonuses will be paid from early March."

The Ministers referred to statements by international financial institutions about the necessity for domestic fiscal stimulus. The decisions taken by the Commonwealth Government by way of response to the macroeconomic circumstances included:

(i) To create three substantial fiscal stimulus packages and a range of other interventions in financial markets, including a deposit and wholesale funding guarantee. The fiscal stimulus packages are the Economic Security Strategy, announced 14 October 2008, the Nation Building Package announced 12 December 2008 and the Nation Building and Jobs Plan announced in the UEFO on 3 February 2009;

(ii) To provide an $8.2 billion tax bonus for working Australians, which was reduced to $7.7 billion as a result of the legislative process.

31. A copy of a joint media release by the Prime Minister and the Treasurer on 3 February 2009 in relation to the Nation Building and Jobs Plan was set out as an annexure to the Special Case. The press release said, inter alia:
    
    

"Targeted bonuses to low and middle income households will provide an immediate stimulus to the economy and support Australian jobs.

In conjunction with the payments delivered as part of the $10.4 billion Economic Security Strategy announced in October, these measures have been designed to assist those groups most affected by the flow-on effects of the global recession."

32. The Special Case annexed a minute of the ATO relating to the implications of delaying the tax bonus as a result of these proceedings. The minute referred to:
    
    

"an extremely tight implementation schedule in order to ensure that as many tax bonus payments as possible are distributed in the last quarter of the financial year in line with the objectives of the Government's fiscal stimulus strategy."

Distribution of the payments was planned to begin in the week commencing 6 April 2009 with some 80% of the payments being made over the following four weeks. A smaller wave of distributions was to be made in May and June.

33. The objective of the Commonwealth Government was that payments of the tax bonus be made as soon as possible on the basis that the earlier the stimulus was delivered the more effective it would be.
    
    

The statutory framework

34. The Tax Bonus Act commenced on the day on which it received the Royal Assent[10]. Section 3 of the Act provides:
    
    

"The Commissioner has the general administration of this Act."

This provision makes the Tax Bonus Act a "taxation law" within the meaning of s 995-1(1) of the Income Tax Assessment Act 1997 (Cth). The term "taxation law" is there defined, inter alia, as:

"an Act of which the Commissioner has the general administration".

35. Section 5 of the Tax Bonus Act creates the entitlement to a tax bonus payment:
    
    

"Entitlement to tax bonus

(1) A person is entitled to a payment (known as the tax bonus) for the 2007-08 income year if:

(a) the person is an individual; and

(b) the person is an Australian resident for that income year; and

(c) the person's adjusted tax liability for that income year is greater than nil; and

(d) the person's taxable income for that income year does not exceed $100,000; and

(e) the person lodges his or her income tax return for that income year no later than:

(i) unless subparagraph (ii) applies – 30 June 2009; or

(ii) if, before the commencement of this Act, the Commissioner deferred the time for lodgment of the return under section 388-55 in Schedule 1 to the Taxation Administration Act 1953 to a day later than 30 June 2009 – that later day.

Exception for persons aged under 18 without employment income etc.

(2) However, the person is not entitled to the tax bonus for the 2007-08 income year if:

(a) he or she is a prescribed person in relation to that income year and is not an excepted person in relation to that income year; and

(b) his or her assessable income for the income year does not include excepted assessable income."

The term "prescribed person" is defined in s 4 as having the same meaning as in s 102AC of the Income Tax Assessment Act 1936 (Cth). An "excepted person" is also defined by reference to s 102AC[11].

36. Section 6 sets out the amounts of the tax bonus payable to persons entitled to it for the 2007-08 income year. The amounts are:
    
    

"(a) if the person's taxable income for that income year does not exceed $80,000 – $900; or

(b) if the person's taxable income for that income year exceeds $80,000 but does not exceed $90,000 – $600; or

(c) if the person's taxable income for that income year exceeds $90,000 but does not exceed $100,000 – $250."

37. The obligation to pay the tax bonus is imposed on the Commissioner by s 7, which provides, inter alia:
    
    

"(1) If the Commissioner is satisfied that a person is entitled to the tax bonus for the 2007-08 income year, the Commissioner must pay the person his or her tax bonus as soon as practicable after becoming so satisfied."

38. It was submitted by the Solicitor-General of the Commonwealth that the entitlement created by s 5 did not give rise to a right of recovery by the person entitled to the tax bonus. It was the Commissioner's duty to pay under s 7 which would be enforceable by mandamus. In my opinion, however, a right of recovery would lie on the basis of the Commissioner's duty. And where, as in this case, the debt is liquidated an action in debt would lie[12].
    
    
39. Section 8 makes provision for recovery of overpayments in the event that a tax bonus is paid to a person not entitled to it or in the event that a person is paid more than the correct amount of his or her tax bonus. There is a general interest charge applicable by virtue of s 9 in the event that a person liable to repay an amount does not do so within the required time.
    
    
40. The Commonwealth[13] relied upon s 16 of the Taxation Administration Act as the provision effecting the appropriations necessary under ss 81 and 83 of the Constitution to authorise the payment of the bonuses. Section 16 provides, inter alia:
    
    

"(1) Where the Commissioner is required or permitted to pay an amount to a person by or under a provision of a taxation law other than:

(a) a general administration provision; or

(b) a provision prescribed for the purposes of this paragraph;

the amount is payable out of the Consolidated Revenue Fund, which is appropriated accordingly.

...

(3) In this section, general administration provision means a provision of a taxation law that provides that the Commissioner has the general administration of the taxation law."

41. The Explanatory Memorandum which accompanied the Bills for the Tax Bonus Act and the Consequential Amendments Act, under the heading "Context of the Bills", stated:
    
    

"1.3 These Bills give effect to the Government's Nation Building and Jobs Plan announced on 3 February 2009. The plan was introduced to assist the Australian people deal with the most significant economic crisis since the Second World War and provide immediate economic stimulus to boost demand and support jobs. This measure, at a cost of $7.7 billion, provides financial support to around 8.7 million taxpayers."

The constitutional framework

42. Provisions of the Constitution central to the arguments advanced for and against validity were:
    
    

(a) Paragraphs of s 51 conferring express legislative power on the Parliament with respect to:

"(i) trade and commerce with other countries, and among the States;

(ii) taxation; but so as not to discriminate between States or parts of States;

...

(xxix) external affairs;

...

(xxxix) matters incidental to the execution of any power vested by this Constitution in the Parliament or in either House thereof, or in the Government of the Commonwealth, or in the Federal Judicature, or in any department or officer of the Commonwealth."

(b) The executive power of the Commonwealth conferred by s 61 of the Constitution:

"The executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen's representative, and extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth."

(c) Section 81 which directs government revenues into a Consolidated Revenue Fund subject to appropriation in the following terms:

"All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution."

(d) Section 83 which provides:

"No money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law.

But until the expiration of one month after the first meeting of the Parliament the Governor-General in Council may draw from the Treasury and expend such moneys as may be necessary for the maintenance of any department transferred to the Commonwealth and for the holding of the first elections for the Parliament."

43. The Commonwealth seeks to support the validity of the provisions of the Tax Bonus Act by reference to the following broad propositions:
    
    
    1. The Tax Bonus Act read with s 16 of the Taxation Administration Act is supported by ss 81 and 51(xxxix) of the Constitution.
       
       
    2. In the alternative the Tax Bonus Act is supported by legislative powers identified as:
       
       

(i) Section 51(xxxix) of the Constitution read with ss 61, 81 and 83.

(ii) The Trade and Commerce Power – Constitution, s 51(i).

(iii) The External Affairs Power – Constitution, s 51(xxix).

(iv) The Taxation Power – Constitution, s 51(ii).

Jurisdiction

44. The jurisdiction of this Court to entertain the application is derived from s 30 of the Judiciary Act which confers upon the Court original jurisdiction:
    
    

"(a) in all matters arising under the Constitution or involving its interpretation".

That statutory jurisdiction is conferred pursuant to the authority given to the Parliament by s 76(i) of the Constitution.

The plaintiff's standing

45. The Commonwealth accepted that Mr Pape had a sufficient interest and therefore standing to seek a declaration that the tax bonus payable to him is unlawful and void. However, it maintained that he did not have standing to seek a declaration that the Tax Bonus Act is invalid. In particular, it was submitted, he could not argue that the Tax Bonus Act was invalid in its application to persons who would receive a tax bonus of a greater amount than the tax that they paid given that he himself will not be in that class of persons.
    
    
46. The submission was an unattractive one. It assumed that if Mr Pape were to succeed in establishing that the payment to him was unauthorised because the Tax Bonus Act was beyond power, there would be no consequence beyond his entitlement. It is difficult to imagine how the Commonwealth, faced with a finding by this Court that the Tax Bonus Act is invalid, could confine the application of that finding to Mr Pape and disregard it in its application to the remainder of those purportedly entitled under the Act. A declaration of invalidity of the Act would reflect the resolution of a question forming part of the matter in respect of which Mr Pape has invoked this Court's jurisdiction. Existing authorities as to standing in constitutional litigation would not prevent Mr Pape from obtaining the declaration he seeks as to the invalidity of the Act.
    
    
47. There is a long history of judicial caution in relation to the standing of private individuals to challenge the validity of statutes absent some particular or special interest to be advanced by such challenge. The Supreme Court of the United States described the relation of taxpayer to federal government as "shared with millions of others" and "comparatively minute and indeterminable"[14]. The resolution of the standing issue in that case was related to the availability of equitable relief[15] and limiting considerations flowing from the separation of legislative and judicial powers[16]. The decision was referred to and relied upon in Australia in the formulation of a "private or special interest" test for standing[17].
    
    
48. Earlier decisions of the Court have left some doubt about the standing of taxpayers to challenge taxing legislation. Absent exposure to a specific liability or obligation, taxpayers have been thought to lack the interest needed to support a challenge to the validity of the legislation[18].
    
    
49. Private challenges to spending arrangements have also encountered standing difficulties. In the AAP Case[19], Mason J observed that the activity there under challenge created no cause of action in the individual citizen and that the individual taxpayer would have no interest at all in funds standing to the credit of the Consolidated Revenue Fund[20]. Similarly, in Attorney-General (Vict); Ex rel Black v The Commonwealth[21], Gibbs J did not think that plaintiffs who were taxpayers and parents of children at government schools had a sufficiently "special interest in the subject matter" of an action to challenge the validity of grants made under s 96 for the purposes of funding church schools[22]. His Honour referred to an exception which appeared to have been recognised for constitutional cases by the Supreme Court of Canada in Thorson v Attorney-General of Canada[23]. He expressed no concluded opinion on that exception[24].
    
    
50. The question of standing is not readily detached from that of jurisdiction where the jurisdiction is federal. In Croome v Tasmania[25], Gaudron, McHugh and Gummow JJ pointed to the conceptual awkwardness, if not impossibility, of the attempted severance between questions going to the standing of the plaintiffs and those directed to the constitutional requirement that federal jurisdiction be exercised with respect to a "matter"[26]. Their Honours said[27]:
    
    

"Where the issue is whether federal jurisdiction has been invoked with respect to a 'matter', questions of 'standing' are subsumed within that issue. The submission made in the present case, to the effect that a proceeding in which a citizen seeks a declaration of invalidity of a law of a State, by reason of the operation of the Constitution, is liable to be struck out unless there is attempted enforcement of the State law against the citizen, indicates the interdependence of the notions of 'standing' and of 'matter'."

51. The interdependence of jurisdiction and standing was revisited in Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd[28]:
    
    

"[I]n federal jurisdiction, questions of 'standing', when they arise, are subsumed within the constitutional requirement of a 'matter'. This emphasises the general consideration that the principles by which standing is assessed are concerned to 'mark out the boundaries of judicial power' whether in federal jurisdiction or otherwise." (footnotes omitted)

52. Mr Pape's standing was conceded in relation to his challenge to the lawfulness of the payment to be made to him under the Tax Bonus Act. That concession concludes the question of his standing for the purpose of the relief he claimed. It was a necessary part of the disposition of the matter before the Court that it determine whether the Tax Bonus Act was valid. Declaratory relief which Mr Pape sought would reflect, were he to succeed, findings made by the Court leading to the conclusion that he was not entitled to the tax bonus payment. He would be entitled to a declaration of invalidity in relation to the Act reflecting that conclusion. There is no basis for the contention that he lacks standing to seek declaratory relief in relation to the validity of the Tax Bonus Act.
    
    
53. It is necessary now to consider the so-called "appropriations power", which has been called "the spending power"[29], under ss 81 and 83 of the Constitution. Having regard to their text, their historical antecedents in the history of responsible government and their development at the Conventions of the 1890s, these provisions are better seen as parliamentary controls of the exercise of executive power to expend public moneys than as a substantive source of such power. It follows that the "purposes of the Commonwealth", for which appropriation may be authorised, are to be found in the provisions of the Constitution and statutes made under it which, subject to appropriation, confer substantive power to expend public moneys.
    
    

Appropriation and responsible government – historical background

54. Parliamentary control of executive expenditure of public funds had its origins in 17th century England. Quick and Garran, in their commentary on s 53 of the Constitution, referred to the resolution of the House of Commons on 3 June 1678[30]:
    
    

"That all aids and supplies, and aids to His Majesty in Parliament, are the sole gift of the Commons; and all bills for the granting of any such aids and supplies ought to begin with the Commons; and that it is the undoubted and sole right of the Commons to direct, limit, and appoint in such bills the ends, purposes, considerations, conditions, limitations, and qualifications of such grants, which ought not to be changed or altered by the House of Lords."

Although the resolution was concerned with the relationship between the House of Commons and the House of Lords, it also reflected the assertion by the House of Commons of control as against the Executive of the expenditure of public moneys.

55. The needs of government before the Revolution of 1688 were "principally supplied by various ordinary lucrative prerogatives inherent in the Crown, and which had existed time out of mind"[31]. After the Revolution the public revenue of the Crown was[32]:
    
    

"dependent upon Parliament, and ... derived either from annual grants for specific public services, or from payments already secured and appropriated by Acts of Parliament, and which are commonly known as charges upon the Consolidated Fund".

56. The Bill of Rights 1689 provided, inter alia:
    
    

"That levying money for or to the use of the Crown by pretence of prerogative, without grant of Parliament, for longer time, or in other manner than the same is or shall be granted, is illegal."

57. The concept of a Consolidated Revenue Fund dates back to the 18th century. Before its emergence particular taxes were assigned to particular items of expenditure. There was some movement to partial consolidation. Blackstone wrote of a history of distinct funds set up to receive the products of various taxes and the reduction of the number of those funds to three[33]. In 1787 a Consolidated Fund was established by statute[34] "into which shall flow every stream of the public revenue, and from whence shall issue the supply for every public service"[35]. Drafts made upon the Consolidated Fund were based upon resolutions of a parliamentary ways and means committee. The resolutions were the basis for[36]:
    
    

"sessional Consolidated Fund Acts, and finally the Appropriation Act, which endows those resolutions with complete legal effect; and upon receipt of the order from the sovereign, which gives final validity to a supply grant, the treasury makes the issues to meet those grants out of the Consolidated Fund."

58. The right of supreme control over taxation with the correlative right to control expenditure was regarded as the "most ancient, as well as the most valued, prerogative of the House of Commons"[37]. The prohibition upon raising taxes without parliamentary authority would be nugatory if the proceeds, even of legal taxes, could be expended at the will of the sovereign[38]. The principle that the Executive draws money from Consolidated Revenue only upon statutory authority is central to the idea of responsible government.
    
    
59. The principle of parliamentary control of public expenditure was recognised by the Privy Council in Auckland Harbour Board v The King[39]. Viscount Haldane said[40]:
    
    

"For it has been a principle of the British Constitution now for more than two centuries ... that no money can be taken out of the consolidated Fund into which the revenues of the State have been paid, excepting under a distinct authorization from Parliament itself. The days are long gone by in which the Crown, or its servants, apart from Parliament, could give such an authorization or ratify an improper payment. Any payment out of the consolidated fund made without Parliamentary authority is simply illegal and ultra vires, and may be recovered by the Government if it can, as here, be traced."

60. Emerging from the Bill of Rights 1689 and the common law in England were what have been described as "three fundamental constitutional principles" supporting parliamentary control of finance[41]:
    
    

(i) The imposition of taxation must be authorised by Parliament.

(ii) All Crown revenue forms part of the Consolidated Revenue Fund.

(iii) Only Parliament can authorise the appropriation of money from the Consolidated Revenue Fund.

These principles were imported into the Australian colonies upon their achievement of responsible government. A Consolidated Revenue Fund was established for each of them. The principles operate today in all States and Territories, albeit they are not expressly referred to in all of their Constitutions[42]. They are central to the system of responsible ministerial government which "prior to the establishment of the Commonwealth of Australia in 1901 ... had become one of the central characteristics of our polity"[43].

61. The Executive in English and Australian constitutional history has on occasions expended public moneys without prior parliamentary appropriation[44]. Professor Keith wrote in 1933[45]:
    
    

"The practice is far from rare, but in some cases it has been mitigated by legislation which permits expenditure either of sums up to a fixed amount or sums based on the expenditure authorised for the previous year pending Parliamentary sanction ... The Governor-General's position in these matters is governed by the consideration that he cannot, unless in a very flagrant case of illegality, refuse to accept the assurance of ministers that funds must be provided to carry on the administration."

In the context of executive agreements involving commitments to expenditure, but not involving actual expenditure, he accepted that ministers could act and obtain an appropriation later on and described as "very dubious" the suggestion in Colonial Ammunition Co that a commitment by the Executive not previously authorised by the Parliament could not be put right by a subsequent appropriation[46].

62. In New South Wales v Bardolph[47], this Court upheld the validity of a contractual obligation undertaken by the Government of New South Wales without the benefit of a current parliamentary appropriation. Dixon J said[48]:
    
    

"It is a function of the Executive, not of Parliament, to make contracts on behalf of the Crown. The Crown's advisers are answerable politically to Parliament for their acts in making contracts. Parliament is considered to retain the power of enforcing the responsibility of the Administration by means of its control over the expenditure of public moneys. But the principles of responsible government do not disable the Executive from acting without the prior approval of Parliament, nor from contracting for the expenditure of moneys conditionally upon appropriation by Parliament and doing so before funds to answer the expenditure have actually been made legally available."

He also said, however, that "all obligations to pay money undertaken by the Crown are subject to the implied condition that the funds necessary to satisfy the obligation shall be appropriated by Parliament"[49]. This did not qualify the legal requirements of s 83. As Brennan J in Northern Suburbs General Cemetery Reserve Trust v The Commonwealth said[50]:

"The actual withdrawal of money from the CRF requires a prior valid appropriation."

In Australian Woollen Mills Pty Ltd v The Commonwealth[51] the Court, relying upon Bardolph, regarded it as "well settled" that judgment may be given against the Crown on a contract although that judgment cannot be enforced in the absence of provision of funds by an Act of Parliament[52].

63. The phenomenon of the so-called standing appropriation may be linked to the practical exigencies that in the past gave rise to expenditure without prior parliamentary authority. It is useful briefly to mention the two classes of appropriation made as a matter of practice.
    
    
64. Appropriations fall into two classes, annual and special (or standing) appropriations. The annual appropriations comprise the budget. The standing appropriations are permanent and provide for appropriation from time to time. They were described by Quick and Garran as "payments which it is not desirable to make subject to the annual vote of Parliament"[53]. Stawell CJ characterised them as "a voluntary surrender by Parliament of what is supposed to be its most important power"[54].
    
    
65. The Senate Standing Committee on Finance and Public Administration reported in 2007 that the great majority of Commonwealth funds are now provided by means of special appropriations. In 2002-03 they represented more than 80% of all appropriations drawings for the year[55]. Professor Lindell in a submission to the Committee described "the modern reality ... that Parliament is gradually losing control over the expenditure of public funds. Appropriations are increasingly permanent rather than annual and they are also framed in exceedingly broad terms"[56].
    
    
66. The history of executive and parliamentary practice does not suggest any legal qualification in existence at the time of federation, or subsequently under the Constitution, of the well established proposition, reflected in the law of Great Britain and its colonies, that parliamentary appropriation conditions the lawfulness of executive expenditure[57].
    
    
67. It is not submitted in the present case that there is any basis upon which the executive power of the Commonwealth would extend to the expenditure of public moneys without parliamentary appropriation[58]. It was the Commonwealth's contention that the requisite appropriation had been made.
    
    

Appropriation in the Convention Debates

68. The 1891 draft Bill for the Constitution contained two provisions directly material to appropriations. They appeared in Ch IV of the draft entitled "Finance and Trade". Clause 1 of Ch IV provided, in language foreshadowing that of s 81:
    
    

"All duties, revenues, and moneys, raised or received by the Executive Government of the Commonwealth, under the authority of this Constitution, shall form one Consolidated Revenue Fund, to be appropriated for the Public Service of the Commonwealth in the manner and subject to the charges provided by this Constitution."

Clause 3 provided:

"No money shall be drawn from the Treasury of the Commonwealth except under appropriations made by law."

This limitation set out the terms of what was to become the first sentence in s 83.

69. Clause 1 was not discussed at the 1891 Sydney Convention. Clause 3 was discussed and agreed to. In the course of debate an amendment was proposed to cl 3 which would have added the words "and for purposes authorised by this Constitution"[59]. Mr Thynne, who proposed the amendment, had originally intended to incorporate it in the precursor of s 51 with a view to "restricting the powers of the federal parliament for the appropriation of money absolutely to the purposes authorised by this constitution". He withdrew the amendment at the suggestion of Sir Samuel Griffith with a view to introducing it into cl 3.
    
    
70. The amendment was opposed and defeated. Sir Samuel Griffith commented that the words in cl 1 already contained "all the limitations we can really insert, however many words we may use to express them"[60].
    
    
71. Clause 79 of the draft Bill considered by the 1897 Adelaide Convention was in the same terms as cl 1 of Ch IV of the 1891 draft Bill. It was amended to omit the words "duties" and "moneys"[61]. The object of the amendment was to prevent loan moneys being taken into the revenue for the purposes of the Commonwealth. However, later in the drafting process, the word "moneys" was brought back. While Quick and Garran were unable to point to any reason for its reinsertion, they pointed out that it was the "universal constitutional practice, not only of Great Britain, but of all the British colonies, to keep loan funds distinct from revenue funds" and that there was no intention evidenced at the Convention of departing from that established usage[62].
    
    
72. Proposed cl 81 of the 1897 draft, corresponding to cl 3 of Ch IV of the 1891 draft, read:
    
    

"No money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law and by warrant countersigned by the Chief Officer of Audit of the Commonwealth."

The clause was agreed to in that form[63].

73. By the close of the 1897 Adelaide Convention, cl 79 of the draft there considered had been renumbered as cl 81. That clause became s 81 of the Constitution. An amendment proposed in Melbourne in 1898 to add back the word "moneys" after "revenues" was unsuccessful[64].
    
    
74. Clause 81 of the draft Bill considered in 1897 became cl 83 of the 1898 draft Bill. It foreshadowed s 83 of the Constitution. It was agreed to at the 1898 Melbourne Convention with two amendments. The first omitted the words "and by warrant countersigned by the Chief Officer of Audit of the Commonwealth"[65]. The second amendment foreshadowed the second paragraph of s 83 as set out in the Constitution. That amendment was itself further amended on the motion of Edmund Barton and the clause agreed to in its present form[66].
    
    
75. An amendment to cl 81, substituting the words "Public Service" with the word "purposes", was prepared by the Drafting Committee and ordered to be embodied in the draft Bill pro forma and printed on 1 March 1898[67]. Dixon J referred to the change in the Pharmaceutical Benefits Case when saying of s 81[68]:
    
    

"it is a provision in common constitutional form substituting for the usual words 'public service' the word 'purposes' of the Commonwealth only because they are more appropriate in a Federal form of government".

Notwithstanding the submission on behalf of the Attorney-General of New South Wales to the contrary, the words "purposes of the Commonwealth" must be given their full amplitude and not read down on the assumption that they are simply another way of saying "public service".

76. The terms of ss 81 and 83 have been contrasted in this Court with the equivalent provisions in the Constitution of the United States, which were known to the framers of the Commonwealth Constitution. Article I, §8, cl 1 of the United States Constitution confers upon the Congress the power:
    
    

"To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States".

Article I, §9, cl 7 provides:

"No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law ..."

77. There is nothing in the consideration at the Convention Debates, of what became ss 81 and 83 of the Constitution, to suggest that they were intended as other than parliamentary controls of public funds and of executive expenditure in accordance with established principles of responsible government. As Professor Harrison Moore wrote in 1910, the Constitution in ss 81 and 83 "adopts the results of English and Colonial experience"[69].
    
    
78. This experience was reflected in the observation of Griffith CJ in the Surplus Revenue Case[70]:
    
    

"The appropriation of public revenue is, in form, a grant to the Sovereign, and the Appropriation Acts operate as an authority to the Treasurer to make the specified disbursements. A contractual obligation may or may not be added by some statutory provision or by authorized agreement, but it does not arise from the appropriation. The Appropriation Act does, however, operate as a provisional setting apart or diversion from the Consolidated Revenue Fund of the sum appropriated by the Act."

79. In similar vein, Isaacs J remarked[71]:
    
    

"'Appropriation of money to a Commonwealth purpose' means legally segregating it from the general mass of the Consolidated Fund and dedicating it to the execution of some purpose which either the Constitution has itself declared, or Parliament has lawfully determined, shall be carried out."

80. In his judgment in the Wool Tops Case[72], Isaacs J relied upon the British constitutional history. The Court there held that the Executive of the Commonwealth had no power, absent parliamentary authorisation, to enter into agreements involving the exaction of fees or the payment of public moneys. Some of the reasoning has been overtaken by later cases about the scope of the executive power[73]. Relevantly to parliamentary control of taxation and expenditure, Isaacs J said[74]:
    
    

"For centuries under responsible government, as any history will tell us, the insistence of the House of Commons on control of taxation was the basis of popular liberty. That alone, however, would have been of little use but for the accompanying power over appropriation. The Report of the Committee on Public Moneys of 1857 (App 3, p 568) said: 'The chain of historical evidence undeniably proves that a previous and stringent appropriation, often minute and specific, has formed an essential part of the British Constitution.'"

The last quoted sentence was taken from Durell on Parliamentary Grants[75]. It was repeated by Isaacs and Rich JJ in The Commonwealth v Colonial Ammunition Co Ltd[76], which also involved an executive agreement. They said of the appropriation requirement[77]:

"It ... neither betters nor worsens transactions in which the Executive engages within its constitutional domain, except so far as the declared willingness of Parliament that public moneys should be applied and that specified funds should be appropriated for such a purpose is a necessary legal condition of the transaction. It does not annihilate all other legal conditions."

That view supports the conclusion that appropriation is a necessary condition which takes its place with other conditions and limitations, derived from statute or otherwise, upon the executive power to spend. The history does not support a view that the requirement for parliamentary appropriation is itself a substantive source of power to expend public money.

The appropriation of moneys – s 81

81. Consideration of s 81 requires an examination of its text, albeit that examination may be informed by the history already outlined. The section directs that revenues or moneys raised or received by the Executive Government of the Commonwealth "form one Consolidated Revenue Fund". It requires that those revenues or moneys be appropriated in the manner and subject to the charges and liabilities imposed by the Constitution. It also requires that they be appropriated for the purposes of the Commonwealth. These are not words of legislative power in the ordinary sense. They are words of constraint. The manner of appropriation is shortly specified in s 83 and requires that it be made "by law". That can be taken as a reference to appropriation by a statute enacted by the Parliament of the Commonwealth, or otherwise authorised by the Constitution[78].
    
    
82. The textual basis for the proposition that the appropriation provisions of the Constitution should be elevated into a source of substantive power is elusive. In order to ascertain the correctness or otherwise of that proposition it is necessary to have regard to the way in which the provisions have been construed previously in this Court.
    
    
83. Section 81 was invoked in aid of Commonwealth power in the Clothing Factory Case[79]. The majority of the Court in that case held that the impugned extension of the operation of a Commonwealth clothing factory to supply clothing to civilians was authorised by the Defence Act 1903 (Cth) and supported by the defence power[80]. Only Starke J, who dissented, considered whether s 81 could be a source of the necessary power. After contrasting s 81 with Art I, §8, cl 1 of the United States Constitution he concluded[81]:
    
    

"The power to appropriate moneys 'for the purposes of the Commonwealth' does not, in my opinion, enable the Commonwealth to appropriate such moneys to any purposes it thinks fit, but restricts that power to the subjects assigned to, or departments or matters placed under the control of the Federal Government by the Constitution."

84. In Australian Woollen Mills[82] the Court referred in passing to the basis upon which subsidies were paid to wool manufacturers under the National Security (Wool) Regulations. The Court said of s 81 that it "authorizes the appropriation of the revenues and moneys of the Commonwealth for the purposes of the Commonwealth"[83]. The subsidies could not be described as bounties under s 51(iii) because they were not payable on the production or export of goods. The Court continued[84]:
    
    

"The justification, however, for the appropriation of moneys for paying subsidies would probably, if challenged, be sought in the defence power, which is conferred by s 51(vi)."

But no contention that there was a want of power to support the subsidy having been raised, the matter was not pursued further. This passage in the judgment in Australian Woollen Mills seems to suggest that while the Court regarded s 81 as the source of parliamentary authority for appropriation, the power to expend the money had to be found elsewhere.

85. These decisions, however, did not foreshadow a consensus on the Court as to the extent of the term "purposes of the Commonwealth" in s 81, which was central to the judgments in the Pharmaceutical Benefits Case[85] and the AAP Case[86]. In the Pharmaceutical Benefits Case a majority of this Court held that the Pharmaceutical Benefits Act 1944 (Cth), which appropriated money to pay chemists for medicines supplied to the public and imposed associated duties on them and medical practitioners, was not authorised by s 81 or the incidental power in s 51(xxxix)[87]. Opinions about the construction of s 81 varied among the members of the Court.
    
    
86. A wide view was adopted by Latham CJ and by McTiernan J, the latter in dissent. Latham CJ held that the Commonwealth Parliament has "a general, and not a limited, power of appropriation of public moneys" and that it was for the Parliament to determine whether a particular purpose was a purpose of the Commonwealth[88]. This treated s 81, in effect, as a substantive spending power, albeit it was held not to authorise "legislative control of matters relating to any such objects in respect of which there is no other grant of legislative power"[89]. On this latter basis the impugned Act was beyond power[90].
    
    
87. Dixon J, with whom Rich J agreed[91], referred to the "power of expenditure" under s 81 and gave it a wide construction although not as wide as that of the Chief Justice. He said[92]:
    
    

"Even upon the footing that the power of expenditure is limited to matters to which the Federal legislative power may be addressed, it necessarily includes whatever is incidental to the existence of the Commonwealth as a state and to the exercise of the functions of a national government. These are things which, whether in reference to the external or internal concerns of government, should be interpreted widely and applied according to no narrow conception of the functions of the central government of a country in the world of to-day."

Despite the reference to the "power of expenditure", the passage quoted is consistent with the view that "the purposes of the Commonwealth" are to be found in laws made by the Parliament and in the discharge by the Executive of the powers otherwise conferred upon it by the Constitution and particularly by s 61. As his Honour later said, "s 81 has little or no bearing upon the matter"[93].

88. In the event Dixon J did not express a concluded view on the construction adopted by Latham CJ and McTiernan J. It was sufficient for his purposes that s 81 was not to be equated to Art I, §8, cl 1 of the United States Constitution. To do so would import a "conception foreign" to the provisions in the Australian Constitution[94]. He said[95]:
    
    

"The words of our Constitution are 'purposes of the Commonwealth' and whether ultimately they are, or are not, held to be consistent with a power of expenditure unrestrained in point of subject matter or purpose, they cannot be regarded as doing the work which the words 'general welfare' have been required to do in the United States. That is all, I think, that need be decided in the present case about the power of expenditure under the Commonwealth Constitution."

Importantly he added that, in deciding what appropriation laws might validly be enacted, it would be necessary to remember the position occupied by a national government and "to take no narrow view"[96]. The "basal consideration", he said in a passage that would be described 43 years later as a "Delphic counsel"[97], "would be found in the distribution of powers and functions between the Commonwealth and the States"[98].

89. Starke J, like Dixon J, rejected the equation of s 81 to Art I, §8, cl 1 of the United States Constitution, and said[99]:
    
    

"[t]he purposes of the Commonwealth are those of an organized political body, with legislative, executive and judicial functions, whatever is incidental thereto, and the status of the Commonwealth as a Federal Government."

The Pharmaceutical Benefits Act was "beyond any purpose of the Commonwealth"[100]:

"No legislative, executive or judicial function or purpose of the Commonwealth can be found which supports it, and it cannot be justified because of the existence of the Commonwealth or its status as a Federal Government."

An implication in the reasoning of Starke J was that an appropriation could be justified for the exercise of an executive function.

90. Williams J regarded "the purposes of the Commonwealth" as words of limitation[101]. The purposes had to be found "within the four corners of the Constitution". The Pharmaceutical Benefits Act could not be supported on that basis[102].
    
    
91. At issue in the AAP Case[103] was the validity of an appropriation of money for the Australian Assistance Plan, under which grants were to be made to Regional Councils for Social Development programs. Six of the Justices were evenly divided on the validity of the legislation[104]. Stephen J held that neither the State nor its Attorney-General had standing to impugn the legislation[105]. The challenge therefore failed on two different bases.
    
    
92. Barwick CJ held that the words "purposes of the Commonwealth" in s 81 were words of limitation and not a matter for the Parliament to determine[106]. They were not confined to the heads of legislative power in ss 51 and 52. Some powers, legislative and executive, might come from the formation of the Commonwealth as a polity and its emergence as an international state. The extent of powers inherent in the fact of nationhood and of international personality had not been fully explored. They included the power to explore on foreign lands or seas or in areas of scientific knowledge or technology[107]. But to say of a matter that it was of national interest or concern did not attract power to the Commonwealth. Recognising that Australia has but one economy and that the economy of the nation is of national concern, Barwick CJ said[108]:
    
    

"But no specific power over the economy is given to the Commonwealth. Such control as it exercises on that behalf must be effected by indirection through taxation, including customs and excise, banking, including the activities of the Reserve Bank and the budget, whether it be in surplus or in deficit. The national nature of the subject matter, the national economy, cannot bring it as a subject matter within Commonwealth power."

The federal distribution of powers was an important element in the reasoning of the Chief Justice, who said in that connection[109]:

"However desirable the exercise by the Commonwealth of power in affairs truly national in nature, the federal distribution of power for which the Constitution provides must be maintained."

93. McTiernan J adhered to the wide view he and Latham CJ had adopted in the Pharmaceutical Benefits Case[110]. Gibbs J considered that the power of appropriation was not general and unlimited but could only be exercised for purposes which the Commonwealth could "lawfully put into effect in the exercise of the powers and functions conferred upon it by the Constitution"[111]. They were purposes for which the Commonwealth had power to make laws but were not limited to those mentioned in ss 51 and 52. They could include "matters incidental to the existence of the Commonwealth as a state and to the exercise of its powers as a national government"[112].
    
    
94. Stephen J's refusal to accord standing to the State of Victoria to challenge the appropriation in the AAP Case rested on the basis that what was complained of was "not truly an instance of law making but rather an example of the exercise of fiscal control over the executive by the legislature"[113]. This was consistent with the view, albeit he did not articulate it, that s 81 was not a source of substantive legislative power.
    
    
95. Mason J adopted the wide construction of "purposes of the Commonwealth" in s 81[114]. However, like Latham CJ in the Pharmaceutical Benefits Case, he held that the section was not a source of "legal authority for the Commonwealth's engagement in the activities in connexion with which the moneys are to be spent"[115]. He referred to s 51(xxxix) of the Constitution and its conjunction with s 61, relied upon in Burns v Ransley[116] and R v Sharkey[117], and added[118]:
    
    

"Secondly, the Commonwealth enjoys, apart from its specific and enumerated powers, certain implied powers which stem from its existence and its character as a polity ... So far it has not been suggested that the implied powers extend beyond the area of internal security and protection of the State against disaffection and subversion. But in my opinion there is to be deduced from the existence and character of the Commonwealth as a national government and from the presence of ss 51(xxxix) and 61 a capacity to engage in enterprises and activities peculiarly adapted to the government of a nation and which cannot otherwise be carried on for the benefit of the nation."

The establishment of the Commonwealth Scientific and Industrial Research Organisation was an exercise of that national governmental capacity by the Commonwealth. So too was expenditure of money on inquiries, investigation and advocacy in matters of public health. Mason J said[119]:

"No doubt there are other enterprises and activities appropriate to a national government which may be undertaken by the Commonwealth on behalf of the nation. The functions appropriate and adapted to a national government will vary from time to time. As time unfolds, as circumstances and conditions alter, it will transpire that particular enterprises and activities will be undertaken if they are to be undertaken at all, by the national government."

96. Mason J added the necessary qualification that the executive power could not, in this way, be given a wide operation effecting a radical transformation in what had hitherto been thought to be the Commonwealth's area of responsibility under the Constitution. His Honour said that the Commonwealth could not thereby be empowered to carry out programs standing outside acknowledged heads of legislative power, simply because they could conveniently be formulated and administered by the national government[120].
    
    
97. Jacobs J linked the appropriation provisions to the executive power under s 61 and the incidental power[121]:
    
    

"Within the words 'maintenance of this Constitution' appearing in s 61 lies the idea of Australia as a nation within itself and in its relationship with the external world, a nation governed by a system of law in which the powers of government are divided between a government representative of all the people of Australia and a number of governments each representative of the people of the various States."

It was within the competence of the Parliament to legislate on any matter within the competence of the Executive under s 61, including the exercise of that area of the prerogative which attached to the government of Australia. It did not follow that legislation was necessary before a prerogative power could be exercised[122].

98. As to the term "purposes of the Commonwealth" in s 81, Jacobs J adopted what he perceived as the majority view in the Pharmaceutical Benefits Case[123], namely that the power of appropriation is limited by the nature and purposes of the government of the Commonwealth, which not only fall within the subject matter of general or particular power prescribed in the Constitution but may include other purposes adhering fully to Australia as a nation externally and internally sovereign. He said[124]:
    
    

"The growth of national identity results in a corresponding growth in the area of activities which have an Australian rather than a local flavour. Thus, the complexity and values of a modern national society result in a need for co-ordination and integration of ways and means of planning for that complexity and reflecting those values. Inquiries on a national scale are necessary and likewise planning on a national scale must be carried out. Moreover, the complexity of society, with its various interrelated needs, requires co-ordination of services designed to meet those needs. Research and exploration likewise have a national, rather than a local, flavour."

Murphy J took the same wide view of the purposes for which public moneys could be appropriated under ss 81 and 83 as adopted by Latham CJ and McTiernan J in the Pharmaceutical Benefits Case[125].

99. As Professor Cheryl Saunders wrote in a helpful paper in the Melbourne University Law Review in 1978, "no clear constitutional principles emerged" from the Pharmaceutical Benefits Case and the AAP Case "did little to clarify the uncertainty" which has "bedevilled" the scope of the spending power since federation[126].
    
    
100. In Davis v The Commonwealth[127], Mason CJ, Deane and Gaudron JJ adverted to the "long-standing controversy about the meaning of 'purposes of the Commonwealth' in s 81"[128]. Taking the judgments of McTiernan, Mason, Jacobs and Murphy JJ in the AAP Case together, they treated that case as authority for the proposition that "the validity of an appropriation act is not ordinarily susceptible to effective legal challenge"[129]. It was unnecessary in that case to consider whether "extraordinary circumstances" might exist in which an appropriation could be susceptible to such challenge[130].
     
     
101. Professor Leslie Zines has made the fair point that it is doubtful whether the proposition extracted by their Honours in Davis from the AAP Case would ordinarily be regarded as its ratio decidendi. Nor was there an indication of what might amount to "extraordinary circumstances"[131].
     
     
102. The nature and purpose of s 81 was again considered in Northern Suburbs General Cemetery Reserve Trust[132]. Mason CJ, Deane, Toohey and Gaudron JJ, in a joint judgment, said of s 81 that it must be read with s 83. Their Honours said of s 83[133]:
     
     

"That section expresses the principle that parliamentary authority is required for the expenditure of any moneys by the Crown." (emphasis in original)

In similar vein, Brennan J said[134]:

"What s 81 is concerned to do is to identify the moneys which form the CRF and to prevent their application otherwise than in accordance with an appropriation by the Parliament for the purposes of the Commonwealth."

His Honour, referring to the passage extracted earlier in these reasons from the judgment of Griffith CJ in the Surplus Revenue Case[135], said that "[a]n appropriation is not a withdrawal of money from the CRF"[136].

103. In the same case, McHugh J expressed the view, to which I will presently return, that[137]:
     
     

"Neither s 81 nor s 83 of the Constitution gives any express power to appropriate money for Commonwealth purposes. However, the power to appropriate is a necessary incident of the power to make laws with respect to a subject matter and is implied by the grant of that power."

104. Professor Zines has helpfully summed up the different approaches to the appropriations power emerging from the decisions of this Court[138]:
     
     

"(a) The appropriation power is a power to appropriate for any purpose. The executive power enables the Commonwealth to carry out that purpose (McTiernan and Murphy JJ) and s 51(xxxix) provides a legislative source of power (Murphy J).

(b) 'Purposes of the Commonwealth' in s 81 refer to legislative and executive purposes to be ascertained by examining the specific powers of the Commonwealth and its inherent power as a nation: Barwick CJ and Gibbs J.

(c) Section 81 permits appropriations for any purpose but does not permit the Commonwealth to engage in activities unless those activities come within s 61. The scope of s 61 is to be ascertained as in (b) above: Mason J."

105. A significant feature of the appropriation process discussed in the plurality judgment in Combet v The Commonwealth[139] flows from s 56 of the Constitution. The plurality made it clear that it is "the Executive Government which begins the process of appropriation"[140]. It does this by specifying the purpose of the appropriation by message from the Governor-General to the House of Representatives.
     
     
106. The wide view adopted by Latham CJ and McTiernan J in the Pharmaceutical Benefits Case, and by McTiernan, Mason and Murphy JJ in the AAP Case, reflected opinions extant well before the former case was decided. Sir Robert Garran, in evidence given to the 1929 Royal Commission on the Constitution, said he had always considered that s 81 was "an absolute power of appropriation" and that "the Commonwealth Parliament has always acted on that supposition". He contrasted the term "purposes of the Commonwealth" in s 81 with "any purpose in respect of which the Parliament has power to make laws" in s 51(xxxi) to buttress that proposition[141].
     
     
107. In a paper published in 1952, the year he retired as Chief Justice, Sir John Latham gave examples of the "many occasions" on which, he said, Parliament had "authorized the expenditure of money upon matters which the Parliament regarded as of general interest and concern, but as to which the Parliament had no power to make laws so as to impose obligations upon any persons"[142]. Referring back to the Pharmaceutical Benefits Case he acknowledged the differing views as to the meaning of s 81 there expressed, but said that "the decision in the case did not depend upon the acceptance of one or other of these views"[143].
     
     
108. Notwithstanding what Sir Robert Garran may have perceived to be the prevailing view at one time about the operation of s 81, the uncertain foundations upon which that view rested were acknowledged in the Final Report of the Constitutional Commission of 1988 which recommended the amendment of the section to allow appropriation from the Consolidated Revenue Fund "for any purpose that the Parliament thinks fit"[144]. In support of that recommendation, the Commission referred to the differing judicial views about s 81 and what it described as the "Delphic counsel" provided by the judgment of Dixon J in the Pharmaceutical Benefits Case. The use of that metaphor may have been intended to draw out the indeterminate character of the boundary conditions formulated for the validity of appropriation laws, namely the "position occupied by a national government" and "the basal consideration" of the distribution of powers and functions between the Commonwealth and the States[145].
     
     
109. The Executive Government Committee advising the Commission had expressed the opinion that practical considerations favouring the wider view of the appropriations provision were compelling[146]. In its Report, the Commission noted that the Parliament had for many years made appropriations to persons or bodies for purposes having little or no apparent connection with the powers or functions of the Commonwealth[147]:
     
     

"If, as some of the Justices have said, the extent of the appropriation power is to be measured by that of the legislative power, many of such payments have been illegally made and likely to be so made in the future."

That observation reflected the view of Owen Dixon KC in evidence given to the 1929 Royal Commission on the Constitution. He said of s 81[148]:

"We have considered this matter somewhat closely, because we understand differences of opinion exist upon the subject, and in the view which we have suggested [ie that the appropriations power was limited to the subjects of the legislative powers of the Commonwealth] the Federal Parliament has upon a number of occasions, and over a long period of time, exceeded its powers in the expenditure of money."

110. The 1988 Constitutional Commission recommended amendment to dispel uncertainty. Notwithstanding its recommendation, the constitutional amendments which went to the unsuccessful referendum in 1988 did not include its proposed amendment to s 81.
     
     
111. In my opinion, the history, the text and the logic underlying the operation of ss 81 and 83 are inconsistent with their characterisation as the source of a "spending" or "appropriations" power, notwithstanding their description as such in some of the judgments of Justices of this Court[149]. There is no clear indication in the judgments of a majority consensus in support of a contrary view. The clearest statement of the character of ss 81 and 83 in this regard, with which I respectfully agree, is that of McHugh J in the passage quoted above from Northern Suburbs General Cemetery Reserve Trust[150]. Neither provision confers power. Section 81 directs all revenues or moneys made by the Executive Government into the Consolidated Revenue Fund. Such moneys are only to be appropriated from that Fund for "the purposes of the Commonwealth". By virtue of s 83 no money can be drawn from the Fund absent such an appropriation by law, that is to say by statute. Substantive power to spend the public moneys of the Commonwealth is not to be found in s 81 or s 83, but elsewhere in the Constitution or statutes made under it. That substantive power may be conferred by the exercise of the legislative powers of the Commonwealth. It may also be an element or incident of the executive power of the Commonwealth derived from s 61, subject to the appropriation requirement and supportable by legislation made under the incidental power in s 51(xxxix).
     
     
112. In my opinion, the Commonwealth's submission that the Tax Bonus Act can be supported by a combination of ss 81 and 51(xxxix) should not be accepted. The requisite power in this case is to be found in s 61 read with s 51(xxxix), conditioned upon the appropriation requirement in s 83 read with the requirement in s 81 that appropriations must be for "the purposes of the Commonwealth".
     
     
113. The preceding conclusions do not involve an undesirable shift in the locus of a spending power of uncertain extent from Parliament to the Executive. They leave in place questions about the scope of the executive power which cannot be answered in the compass of a single case. They involve a rejection of the proposition that s 81 is a source of power to spend money on anything that the Parliament designates as a purpose of the Commonwealth. The "purposes of the Commonwealth" are the purposes otherwise authorised by the Constitution or by statutes made under the Constitution[151].
     
     

The executive power of the Commonwealth

114. The executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General. Ministers commissioned by the Governor-General and their officers and other officials exercise that power in the name of the Crown. The principal source of that power is s 61. Other references to executive power relating to particular matters are to be found in other provisions of the Constitution[152]. The only repository of the executive power other than the Governor-General was the Inter-State Commission which, under s 101, was to have "such powers of adjudication and administration as the Parliament deems necessary for the execution and maintenance, within the Commonwealth, of the provisions of this Constitution relating to trade and commerce, and of all laws made thereunder".
     
     
115. In his speech moving consideration of the draft Bill for a Constitution at the Australasian Federal Convention in Sydney in 1891, Sir Samuel Griffith said of the proposed Ch II, dealing with the executive power[153]:
     
     

"This part of the bill practically embodies what is known to us as the British Constitution as we have it working at the present time; but the provisions of the bill are not made so rigid that our successors will not be able to work out such modifications as their experience may lead them to think preferable."

116. Clause 8 of Ch II, which evolved into part of what is now s 61 of the Constitution, then provided:
     
     

"The executive power and authority of the Commonwealth shall extend to all matters with respect to which the legislative powers of the Parliament may be exercised, excepting only matters, being within the legislative powers of a State, with respect to which the Parliament of that State for the time being exercises such powers."

117. Griffith moved an amendment to cl 8 during the debate in Committee. The amendment was agreed to and the amended clause read[154]:
     
     

"The Executive power and authority of the Commonwealth shall extend to the execution of the provisions of this Constitution, and the Laws of the Commonwealth."

He said of the amendment that it did not alter the intention of cl 8 and added[155]:

"As the clause stands, it contains a negative limitation upon the powers of the executive; but the amendment will give a positive statement as to what they are to be."

He also said that the amendment would cover all that was meant by the clause and, in words that turned out not to be prophetic, said that it was "quite free from ambiguity"[156].

118. The first Attorney-General of the Commonwealth, Alfred Deakin, observed in his well-known opinion of 12 November 1902, arising out of the Vondel incident[157]:
     
     

"The original clause, therefore, extended the executive power of the Commonwealth to all matters within the legislative power of the Parliament, with a negative limitation applying to the execution of State laws on matters within the concurrent power of the States. The form was altered, to avoid even a negative limitation, but the intention remained the same."

As appears later in these reasons, Deakin did not intend to convey that the executive power was exhaustively defined by reference to the heads of Commonwealth legislative power[158].

119. The draft Bill as adopted by the National Australasian Convention on 9 April 1891, in Ch II dealing with the Executive Government, contained two relevant provisions:
     
     

"1. The Executive power and authority of the Commonwealth is vested in the Queen, and shall be exercised by the Governor-General as the Queen's Representative.

...

8. The Executive power and authority of the Commonwealth shall extend to the execution of the provisions of this Constitution, and the Laws of the Commonwealth."

The provisions were reproduced in the draft Constitution approved by the Australasian Federal Convention at Adelaide in April 1897 but were renumbered as cll 60 and 67.

120. At the Sydney Convention in 1897, cl 60 was amended to substitute the word "exercisable" for the word "exercised". Mr Reid, who moved the amendment, described it as "more in harmony with the nature of the clause which vests in the Queen the power and authority of the commonwealth"[159]. Clause 67 was agreed to without debate[160].
     
     
121. Clauses 60 and 67 were not debated in Committee at the 1898 Melbourne Convention. However, they were condensed by the Drafting Committee into one clause, cl 61, which became s 61.
     
     
122. Quick and Garran pointed to the encroachment by s 1 of the Constitution upon the old notion that the Crown enacts the law. Legislative power is vested by s 1 in the Parliament comprising the Senate, the House of Representatives and the Queen. However, in respect of the executive power they said[161]:
     
     

"The dictum that 'the Crown conducts all the affairs of State', is still true in theory, and has been followed and maintained in form, by s 61, which says that the executive power of the Federal Government is vested in the Queen."

123. There is a marked difference between the way in which the Constitution sets out the legislative and executive powers of the Commonwealth. Whereas Ch I provides a detailed account of the distribution of legislative power, Ch II is "suggestive rather than expressive" concerning the distribution of executive power[162]. Professor Michael Crommelin has pointed out that this approach accorded with colonial constitutional practice. In that connection he referred to Professor Harrison Moore's observation[163]:
     
     

"For more than one reason, Statutes defining the Constitutions of the Colonies have been almost silent on the subject of the powers as of the organization of the Executive. In the first place, the legislative power has included the power of making full provision for the execution of the law. Secondly, a large measure of executive power resides in the prerogative of the Crown, and has been conferred through prerogative acts and not by Statute, lest thereby the prerogative should be prejudiced. Finally, the organization of the Government and the relations of the Ministry and Parliament in our system are a very type of matters which are not under the continual direction of organic laws, but are freely organized as utility has suggested or may suggest within the ultimate bounds of law."

Further, as Professor Crommelin wrote, the sources of executive power in statute and the prerogative were recognised in the Conventions but it is not clear how they were reflected in the Constitution.

124. The content of the executive power of the Commonwealth was not defined nor in terms limited by the drafters of the Constitution. Alfred Deakin, in his Vondel opinion, said of s 61[164]:
     
     

"No exhaustive definition is attempted in the Constitution – obviously because any such attempt would have involved a risk of undue, and perhaps unintentional, limitation of the executive power. Had it been intended to limit the scope of the executive power to matters on which the Commonwealth Parliament had legislated, nothing would have been easier than to say so."

Noting the extension of executive power to the execution and maintenance "of this Constitution" as well as "of the laws of the Commonwealth", Deakin wrote[165]:

"The framers of that clause evidently contemplated the existence of a wide sphere of Commonwealth executive power, which it would be dangerous, if not impossible, to define, flowing naturally and directly from the nature of the Federal Government itself, and from the powers, exercisable at will, with which the Federal Parliament was to be entrusted."

And further[166]:

"The scope of the executive authority of the Commonwealth is therefore to be deduced from the Constitution as a whole. It is administrative, as well as in the strict sense executive; that is to say, it must obviously include the power not only to execute laws, but also to effectively administer the whole Government of which Parliament is the legislative department."

125. In testimony to the 1929 Royal Commission on the Constitution, Sir Edward Mitchell KC offered the same wide view of s 81 as Sir Robert Garran had and, in relation to the Executive Government, added that[167]:
     
     

"Of course, the executive government cannot be confined, like a manager of a business might, merely to those specific matters which come within the provisions enumerating what it is authorized to bring before Parliament to legislate about. It is clear that all sorts of emergencies may arise, and all sorts of things may happen as to which the executive government must have a free hand."

126. It is not necessary for present purposes to consider the full extent of the powers and capacities of the Executive Government of the Commonwealth. Such powers as may be conferred upon the Executive by statutes made under the Constitution are plainly included. So too are those powers which are called the prerogatives of the Crown, for example the power to enter into treaties and to declare war[168]. In addition, whatever the source[169], the Executive possesses what have been described as the "capacities"[170] which may be possessed by persons other than the Crown.
     
     
127. The collection of statutory and prerogative powers and non-prerogative capacities form part of, but do not complete, the executive power. They lie within the scope of s 61, which is informed by history and the common law relevant to the relationship between the Crown and the Parliament. That history and common law emerged from what might be called an organic evolution. Section 61 is an important element of a written constitution for the government of an independent nation. While history and the common law inform its content, it is not a locked display cabinet in a constitutional museum. It is not limited to statutory powers and the prerogative. It has to be capable of serving the proper purposes of a national government. On the other hand, the exigencies of "national government" cannot be invoked to set aside the distribution of powers between Commonwealth and States and between the three branches of government for which this Constitution provides, nor to abrogate constitutional prohibitions. This important qualification may conjure the "Delphic" spirit of Dixon J in the Pharmaceutical Benefits Case. But to say that is to say no more than that there are broadly defined limits to the power which must be respected and applied case by case. As for this case, it is difficult to see how the payment of moneys to taxpayers, as a short-term measure to meet an urgent national economic problem, is in any way an interference with the constitutional distribution of powers.
     
     
128. In this connection, Professor Geoffrey Sawer in 1976, referring to the judgment of Mason J in the AAP Case, suggested that s 61 includes "an area of inherent authority derived partly from the Royal Prerogative, and probably even more from the necessities of a modern national government"[171]. There has been substantial support in this Court for that proposition.
     
     
129. In the Pharmaceutical Benefits Case, in a passage cited earlier in these reasons, Dixon J abjured any "narrow conception of the functions of the central government of a country in the world of to-day"[172]. Starke J mentioned the "status of the Commonwealth as a Federal Government"[173]. In the AAP Case, Barwick CJ referred to the powers "inherent in the fact of nationhood and of international personality"[174]. Mason J spoke of "the existence and character of the Commonwealth as a national government" and referred to ss 61 and 51(xxxix) in the context of "a capacity to engage in enterprises and activities peculiarly adapted to the government of a nation and which cannot otherwise be carried on for the benefit of the nation"[175].
     
     
130. In Barton v The Commonwealth[176] the Court held that it was within the prerogative powers of the Commonwealth to request a foreign state to detain and surrender to Australia a person alleged to have committed an offence against a law of the Commonwealth. Mason J approached the case on the basis that in the United Kingdom, absent a treaty, a request to a foreign state for extradition of an offender fell within the executive power of the Crown at the end of the 19th century. It was necessary therefore to examine the executive power of the Commonwealth. He referred to the establishment by its Constitution of the Commonwealth of Australia as a political entity and as a member of the community of nations, and said[177]:
     
     

"By s 61 the executive power of the Commonwealth was vested in the Crown. It extends to the execution and maintenance of the Constitution and of the laws of the Commonwealth. It enables the Crown to undertake all executive action which is appropriate to the position of the Commonwealth under the Constitution and to the spheres of responsibility vested in it by the Constitution. It includes the prerogative powers of the Crown, that is, the powers accorded to the Crown by the common law."

Jacobs J thought it "within the executive power of the Australian Government as the government of a sovereign state to communicate in such terms as it thinks fit" with a foreign government unless that power is taken away by statute[178].

131. In Davis[179] Mason CJ, Deane and Gaudron JJ acknowledged that the scope of the executive power of the Commonwealth had "often been discussed but never defined"[180]. The spheres of responsibility vested in the Executive under the Constitution which had been referred to in Barton were described thus[181]:
     
     

"These responsibilities derived from the distribution of legislative powers effected by the Constitution itself and from the character and status of the Commonwealth as a national polity ... So it is that the legislative powers of the Commonwealth extend beyond the specific powers conferred upon the Parliament by the Constitution and include such powers as may be deduced from the establishment and nature of the Commonwealth as a polity".

The plurality acknowledged the federal distribution of powers between Commonwealth and States, and added[182]:

"On this footing ... s 61 confers on the Commonwealth all the prerogative powers of the Crown except those that are necessarily exercisable by the States under the allocation of responsibilities made by the Constitution and those denied by the Constitution itself. Thus the existence of Commonwealth executive power in areas beyond the express grants of legislative power will ordinarily be clearest where Commonwealth executive or legislative action involves no real competition with State executive or legislative competence."

Brennan J spoke of the executive power thus[183]:

"But s 61 does confer on the Executive Government power 'to engage in enterprises and activities peculiarly adapted to the government of a nation and which cannot otherwise be carried on for the benefit of the nation', to repeat what Mason J said in the AAP Case. In my respectful opinion, that is an appropriate formulation of a criterion to determine whether an enterprise or activity lies within the executive power of the Commonwealth. It invites consideration of the sufficiency of the powers of the States to engage effectively in the enterprise or activity in question and of the need for national action (whether unilateral or in co-operation with the States) to secure the contemplated benefit. The variety of enterprises or activities which might fall for consideration preclude the a priori development of detailed criteria but, as cases are decided, perhaps more precise tests will be developed." (footnote omitted)

Toohey J took a more restrictive approach to s 61 than Mason CJ, Deane and Gaudron JJ and was in general agreement with the view of Wilson and Dawson JJ that the legislative powers of the Commonwealth were to be found in the enumerated matters in s 51 of the Constitution, including the incidental power in s 51(xxxix)[184].

132. In R v Hughes[185] six of the members of this Court referred with evident approval to a passage from the judgment of Mason J in Duncan[186], where his Honour had said[187]:
     
     

"The scope of the executive power is to be ascertained, as I indicated in the AAP Case, from the distribution of the legislative powers effected by the Constitution and the character and status of the Commonwealth as a national government. Of necessity the scope of the power is appropriate to that of a central executive government in a federation in which there is a distribution of legislative powers between the Parliaments of the constituent elements in the federation." (footnote omitted)

The judgment in Hughes referred, in the footnote against that quotation, to the pages in Davis covering the various passages to which I have referred.

133. Elucidation of the content of the executive power in s 61 and the incidental power conferred by s 51(xxxix) is a process to be distinguished from the discovery by implication of a "nationhood" power as an implied head of legislative competence[188]. This is not a case which depends for its resolution upon the existence of any such implied power. The executive power extends, in my opinion, to short-term fiscal measures to meet adverse economic conditions affecting the nation as a whole, where such measures are on their face peculiarly within the capacity and resources of the Commonwealth Government. This is consistent with the executive power as broadly explained by Mason CJ, Brennan, Deane and Gaudron JJ in Davis, and by Mason J in the passage from Duncan quoted in Hughes. To say that the executive power extends to the short-term fiscal measures in question in this case does not equate it to a general power to manage the national economy. In this case the Commonwealth had the resources and the capacity to implement within a short time-frame measures which, on the undisputed facts, were rationally adjudged as adapted to avoiding or mitigating the adverse effects of global financial circumstances affecting Australia as a whole, along with other countries. The question of the reviewability of factual assertions of the Executive grounding the exercise of its powers under s 61 does not arise in this case, having regard to the accepted facts[189].
     
     
134. The executive power is exercised in this case with the necessary prior authority of the Parliament under s 83. The incidental power supports the provisions of the Tax Bonus Act which set up a statutory framework in aid of the tax bonus payments. In my opinion the impugned provisions are within the legislative power of the Commonwealth.
     
     

The locus of the appropriation

135. For the reasons set out in the judgment of Gummow, Crennan and Bell JJ[190], I agree that the requisite appropriation was effected by s 16 of the Taxation Administration Act read with s 3 of the Tax Bonus Act.
     
     

Conclusion

136. The Tax Bonus Act is supported by s 61 of the Constitution and by the incidental power. The expenditures made under it are authorised by an appropriation made in conformity with ss 81 and 83. Having regard to this conclusion, it is not necessary to consider whether the Tax Bonus Act is supported by the other heads of power relied upon by the Commonwealth.
     
     

137. GUMMOW, CRENNAN AND BELL JJ. The Tax Bonus for Working Australians Act (No 2) 2009 (Cth) ("the Bonus Act") received the Royal Assent on 18 February 2009 and commenced on that day. The first defendant ("the Commissioner") has the general administration of the Bonus Act (s 3). The Bonus Act is valid.
     
     
138. The reasons for that conclusion and upon other issues which are before the Full Court are organised as follows:
     
     

The legislation [139]

The context of the legislation [142]

The litigation [146]

Question 1 – standing [150]

Question 3 – appropriation [160]

The submissions upon Question 3 [172]

The first submission by the plaintiff [173]

Appropriation and law-making [174]

Conclusions respecting s 81 [184]

At Westminster and Whitehall [187]

The Australian situation [201]

The drafting of s 81 of the Constitution [203]

Section 83 of the Constitution [206]

Question 2 – validity [212]

The Executive Government of the Commonwealth [214]

The present crisis [229]

Conclusions respecting s 61 and s 51(xxxix) [232]

The taxation power – s 51(ii) [246]

Other heads of power [256]

Result [257]

The legislation

139. The central provisions of the Bonus Act are as follows. Section 5(1) states:
     
     

"A person is entitled to a payment (known as the tax bonus) for the 2007-08 income year if:

(a) the person is an individual; and

(b) the person is an Australian resident for that income year; and

(c) the person's adjusted tax liability for that income year is greater than nil; and

(d) the person's taxable income for that income year does not exceed $100,000; and

(e) the person lodges his or her income tax return for that income year no later than:

(i) unless subparagraph (ii) applies – 30 June 2009; or

(ii) if, before the commencement of this Act, the Commissioner deferred the time for lodgment of the return under section 388-55 in Schedule 1 to the Taxation Administration Act 1953 [(Cth) ('the Administration Act')] to a day later than 30 June 2009 – that later day."

Section 5(2) limits the entitlement of minors to the tax bonus, by the adoption of criteria consistent with the treatment of the income of minors by the Income Tax Assessment Act 1936 (Cth). Section 6 specifies the amount of the tax bonus as $250, $600 or $900, depending upon the size of the taxable income of persons entitled to the tax bonus. If the Commissioner is satisfied that a person is entitled under s 5 to the tax bonus, s 7 requires the Commissioner to pay it to the person as soon as practicable after becoming so satisfied. It is agreed between the parties that the plaintiff is "putatively entitled" under the Bonus Act to the payment of a tax bonus of $250.

140. Section 5 states an entitlement of certain persons and s 7 imposes a duty or obligation upon the Commissioner which arises upon the Commissioner being satisfied of the entitlement. The better view is that these provisions attract the reasoning of Parke B in Shepherd v Hills[191] and that an action in debt is the appropriate means of enforcement. Baron Parke said in that case:
     
     

"There is no doubt that wherever an Act of Parliament creates a duty or obligation to pay money, an action will lie for its recovery, unless the Act contains some provision to the contrary."

The result is that the payment of the tax bonus involves, contrary to the submission of the plaintiff, more than the receipt of a mere gratuity; the payment is the discharge of a legal obligation. There is a concomitant obligation to repay to the Commonwealth overpayments (s 8).

141. The Tax Bonus for Working Australians (Consequential Amendments) Act (No 2) 2009 (Cth) ("the Consequential Amendments Act") also commenced on 18 February 2009. Among the consequential amendments is the amendment of the Income Tax Assessment Act 1997 (Cth) ("the Assessment Act") so as to provide that a tax bonus paid in accordance with the Bonus Act "is not assessable income and is not exempt income". The amendment is made to Div 59 of the Assessment Act. Further, the Consequential Amendments Act amends the Taxation Administration Act 1953 (Cth) ("the Administration Act")[192] to ensure that the payment of the tax bonus cannot be considered a credit to offset tax debts or liabilities.
     
     

The context of the legislation

142. The Explanatory Memorandum circulated by the authority of the Treasurer to the House of Representatives on 3 February 2009 dealt together with the Bills for the Bonus Act and the Consequential Amendments Act. Under the heading "Context of the Bills" the Explanatory Memorandum stated:
     
     

"These Bills give effect to the Government's Nation Building and Jobs Plan announced on 3 February 2009. The plan was introduced to assist the Australian people [to] deal with the most significant economic crisis since the Second World War and provide immediate economic stimulus to boost demand and support jobs. This measure, at a cost of $7.7 billion, provides financial support to around 8.7 million taxpayers."

143. The parties accept that the Bonus Act was enacted to respond to a crisis in economic affairs. As a result of rapid, adverse changes in macroeconomic circumstances in 2008 and this year, the world is in the midst of a global recession; no country can expect its economy to avoid the effects of the crisis which include sharp world-wide declines in growth, rising unemployment, restricted access to credit and falling wealth; the global recession has caused a deterioration in the Australian economy; and the Treasury forecasts significantly weaker domestic growth and higher unemployment.
     
     
144. The Nation Building and Jobs Plan proposed measures "targeted towards those low- and middle-income households who are most likely to spend additional income and who are most vulnerable during an economic slowdown". It stated that payments which are saved rather than spent will "accelerate balance sheet repair and underpin consumption over time". One of the proposed measures is implemented substantially by the Bonus Act. The measure was designed for quick implementation so that the expected boost to demand would occur in the first half of 2009.
     
     
145. On 6 March 2009 the Second Commissioner of Taxation estimated that 6.7 million people were presently eligible to receive the tax bonus and would receive $900, that 250,000 would receive $600, and that 160,000 would receive $250. The Commissioner planned to begin distribution of payments on 6 April 2009. The Second Commissioner also estimated that a remainder of about 1.6 million people would file, after 6 March and before 30 June 2009, their income tax returns for the 2007-2008 income tax year and some would subsequently become eligible for payment of the tax bonus.
     
     

The litigation

146. On 26 February 2009 the plaintiff instituted an action in the original jurisdiction of this Court against the Commissioner asserting the invalidity of the Bonus Act and seeking declaratory and injunctive relief. The Commonwealth was later joined as a defendant. Directions for the further conduct of the litigation were given by a Justice on 13 March 2009 and on 17 March 2009, pursuant to r 27.08 of the High Court Rules 2004, the plaintiff and the defendants agreed a Special Case stating four questions for the opinion of the Full Court.
     
     
147. The Special Case was heard by the whole Court on 30 and 31 March and 1 April 2009. There were interventions by the Attorneys-General of New South Wales, South Australia and Western Australia. Their submissions offered varying degrees of support to those of the defendants.
     
     
148. On 3 April 2009 the Court pronounced its order and reserved to a later occasion the delivery of reasons. The questions and the answers given by the Court, with our support, are as follows:
     
     

Question 1: Does the Plaintiff have standing to seek the relief claimed in his Writ of Summons and Statement of Claim?

Answer: Yes.

Question 2: Is the [Bonus Act] valid because it is supported by one or more express or implied heads of legislative power under the Commonwealth Constitution?

Answer: The Bonus Act is a valid law of the Commonwealth.

Question 3: Is payment of the tax bonus to which the plaintiff is entitled under the [Bonus Act] supported by a valid appropriation under ss 81 and 83 of the Constitution?

Answer: There is an appropriation of the Consolidated Revenue Fund within the meaning of the Constitution in respect of payments by the Commissioner required by s 7 of the Bonus Act.

Question 4: Who should pay the costs of the special case?

Answer: In accordance with the agreement of the parties announced on the second day of the hearing of the Special Case, there is no order for costs.

149. It is convenient to consider Question 1 and Question 3 before turning to Question 2.
     
     

Question 1 – standing

150. This asks whether the plaintiff has standing to seek the relief he claims. The plaintiff seeks declarations that the tax bonus payable to him by the Commissioner "is unlawful and void", and that the Bonus Act is invalid, and an interlocutory injunction restraining the Commissioner from making any payment to him of the tax bonus.
     
     
151. The controversy between the parties comprises several heads of "matter" within the original jurisdiction of this Court. Section 75(iii), s 75(v), and s 76(i) as implemented by s 30(a) of the Judiciary Act 1903 (Cth), are engaged.
     
     
152. It is now well established that in federal jurisdiction, questions of "standing" to seek equitable remedies such as those of declaration and injunction are subsumed within the constitutional requirement of a "matter"[193]. This important point appears to have been insufficiently appreciated in some of the submissions upon Question 1.
     
     
153. The defendants submit that the plaintiff has standing to challenge the payment of the tax bonus to him but "does not have standing to challenge the validity of the payment of tax bonus to anyone else". The defendants are supported in this submission by New South Wales, South Australia and Western Australia.
     
     
154. It is accepted, for example, by New South Wales that (i) the plaintiff has a right to payment by the Commissioner of the tax bonus pursuant to s 7 of the Bonus Act, and (ii) there thus is an immediate right and duty in the relationship between the plaintiff and the defendants which gives rise to a justiciable controversy. However, it is submitted that while the relief the plaintiff may obtain includes the injunction he seeks against the Commissioner, it cannot include a declaration against the Commissioner and the Commonwealth of invalidity of the Bonus Act. That outcome is said by New South Wales to be dictated by the absence in the plaintiff of a "particular interest in that broader issue of validity".
     
     
155. This and other submissions to like effect should be rejected. They proceed from erroneous assumptions as to the nature and incidents in the present case of the adjudication of matters arising under the Constitution or involving its interpretation, and thus give insufficient weight to the place of the rule of law in the scheme of the Constitution.
     
     
156. It may be accepted, to adapt the words of Starke J in The Real Estate Institute of NSW v Blair[194], that the plaintiff cannot "roam at large" over the Bonus Act and that he should be restricted to a declaration of invalidity with respect to those provisions applying to him, so far as they are unauthorised by the Constitution.
     
     
157. However, the Bonus Act is a statute of nine sections which together present what appears to be an inseverable whole. The plaintiff's entitlement is in an amount of $250 (s 6(c)). Other persons qualify for $900 (s 6(a)), or $600 (s 6(b)). Assume that the plaintiff demonstrates the invalidity of so much of the statute as purports to confer his entitlement to the $250. A question of severance would then arise as to the operation of the statute with respect to the payments of $900 and $600[195]. The plaintiff has the competence, as a step in the resolution of the controversy between him and the defendants, to embark upon that question as it may arise.
     
     
158. The disposition of the controversy between the plaintiff and the Commissioner and the Commonwealth does not turn solely upon facts or circumstances unique to the plaintiff. If the plaintiff succeeds in establishing, as a necessary step in making out his case for relief, that the Bonus Act is invalid, then the reasoning of the Court upon the issue of invalidity would be of binding force in subsequent adjudications of other disputes. Hence the very great utility in granting declaratory relief in the plaintiff's action. In this way the resolution pursuant to Ch III of the Constitution of the plaintiff's particular controversy acquires a permanent, larger, and general dimension. The declaration would vindicate the rule of law under the Constitution. The fundamental considerations at stake here were recently affirmed and explained in Plaintiff S157/2002 v The Commonwealth[196].
     
     
159. Question 1 should be answered "Yes".
     
     

Question 3 – appropriation

160. Question 3 of the Special Case asks:
     
     

"Is payment of the tax bonus to which the plaintiff is entitled under the [Bonus Act] supported by a valid appropriation under ss 81 and 83 of the Constitution?"

161. Section 81 states:
     
     

"All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution."

162. The first sentence of s 83 reads:
     
     

"No money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law."

163. The question assumes that the Commissioner is bound by the terms of s 83 and that this may present a justiciable issue as to the existence of an "appropriation" within the meaning of that section and s 81. Notwithstanding the doubts expressed by Jacobs J, and perhaps by Mason J, in Victoria v The Commonwealth and Hayden ("the AAP Case")[197] the contrary is not submitted in the present dispute.
     
     
164. However, the processes for the making of an appropriation involve other provisions of the Constitution, in particular the Vice-Regal recommendation provision in s 56 and the respective authority of the House of Representatives and the Senate which is identified in s 53. It may be noted that these provisions treat together those "money bills" dealing with the raising of revenue by the imposition of taxation and those providing for appropriation.
     
     
165. Section 53 has been said in this Court to be a procedural provision governing the intra-mural activities of the Parliament and not giving rise to invalidity of legislation which has passed both legislative chambers and received the Royal Assent[198].
     
     
166. The adjudication of the issue presented by Question 3, respecting the operation of s 81 and s 83 of the Constitution, thus requires some care lest that adjudication trespass upon the anterior operation of s 53 with respect to the passage of the Bill for the Bonus Act.
     
     
167. It may, however, be noted that House of Representatives Practice[199], edited by the Clerk of the House, treats as a special appropriation bill one which:
     
     

"while not in [itself] containing words of appropriation, would have the effect of increasing, extending the objects or purposes of, or altering the destination of, the amount that may be paid out of the Consolidated Revenue Fund under existing words of appropriation in a principal Act to be amended, or another Act".

168. The Bill for the Bonus Act, as will appear, was of that character. Accordingly, the answer to Question 3 is that there is an appropriation of the Consolidated Revenue Fund within the meaning of the Constitution in respect of payments by the Commissioner required by s 7 of the Bonus Act.
     
     
169. The Bill for the Bonus Act received its Second Reading in the House of Representatives on 12 February 2009. The Official Hansard for that day records the announcement of a message from the Governor-General dated 12 February 2009 and recommending to the House "that an appropriation be made for the purposes of a Bill [for the Bonus Act]"[200]. Section 56 of the Constitution states:
     
     

"A vote, resolution, or proposed law for the appropriation of revenue or moneys shall not be passed unless the purpose of the appropriation has in the same session been recommended by message of the Governor-General to the House in which the proposal originated."

170. It was the inclusion in the Bill of what became s 3 of the Bonus Act, stating:
     
     

"The Commissioner has the general administration of this Act",

which had the effect of increasing and extending the objects or purposes of the amount which may be paid out of the Consolidated Revenue Fund under existing words of appropriation in s 16 of the Administration Act.

171. Section 16 of the Administration Act appropriates the Consolidated Revenue Fund to the payment thereout of certain amounts the Commissioner is required to pay by a provision of a "taxation law". This term has an ambulatory definition. Section 2 of the Administration Act gives it "the meaning given by [the Assessment Act]" and this includes in its meaning "an Act of which the Commissioner has the general administration". The definition of "taxation law" was "picked up" by the Bonus Act, with the consequence that the Bill for the Bonus Act was a special appropriation bill as identified by the Practice.
     
     

The submissions upon Question 3

172. That answer involves rejection of three submissions by the plaintiff which are put in the alternative in his written submissions. The first is that upon its proper construction, s 16 of the Administration Act is limited to refunds of tax and related payments and the payments under the Bonus Act are not of that character. The second submission involves several steps. There is said to be no appropriation which answers s 81 of the Constitution, because the phrase "for the purposes of the Commonwealth" was correctly construed by Barwick CJ and by Gibbs J in the AAP Case[201] as requiring appropriation for a purpose for which the Parliament has power to make laws, and the Bonus Act is beyond power. The third submission is that the Bonus Act is "inoperative" because there is no appropriation provision stipulated in the terms of the Bonus Act itself and as a result no "appropriation made by law" as required by s 83 of the Constitution.
     
     

The first submission by the plaintiff

173. The first submission fails. As a matter of construction, s 16 of the Administration Act is ambulatory in its operation, in the sense described earlier in these reasons. The Bonus Act is a statute the general administration of which is given by s 3 to the Commissioner and as a consequence s 16 of the Administration Act is engaged.
     
     

Appropriation and law-making

174. Consideration of the second and third submissions by the plaintiff (and of certain submissions made by the defendants) requires construction of the text of s 81 and s 83 and an appreciation of the nature of an "appropriation" by the Parliament.
     
     
175. The term "appropriation" is an ordinary English word but it is apparent that it is used in the Constitution in a particular sense. The term appears in provisions of the Constitution dealing with the carriage of financial measures within the Parliament. These processes require recommendation by message from the Governor-General to the House of Representatives (s 56) and ss 53 and 54 lay down the respective roles of the two legislative chambers. Sections 81 and 83 on their face are concerned with the treatment of moneys raised or received by the Executive Government of the Commonwealth and the imposition of a requirement for the drawing of money from the Treasury.
     
     
176. The term "appropriation" is used here to identify the conferral of authority upon the Executive to spend public moneys, rather than the subsequent exercise of that authority and the debiting of the relevant account. This understanding is apparent in the statement by Griffith CJ in The State of New South Wales v The Commonwealth[202]:
     
     

"The appropriation of public revenue is, in form, a grant to the Sovereign, and the Appropriation Acts operate as an authority to the Treasurer to make the specified disbursements."

In the same case, Isaacs J said of s 81[203]:

"'Appropriation of money to a Commonwealth purpose' means legally segregating it from the general mass of the Consolidated Fund and dedicating it to the execution of some purpose which either the Constitution has itself declared, or Parliament has lawfully determined, shall be carried out."

The use of the phrase "the Constitution has itself declared, or Parliament has lawfully determined" is significant. Isaacs J was distinguishing the grant of authority to the Executive to appropriate from subsequent expenditure. The grant of an appropriation is not by its own force the exercise of an executive or legislative power to achieve an objective which requires expenditure. Yet, in different ways, both the plaintiff and the defendants presented submissions which assumed the contrary.

177. There is, as Mason J indicated in the AAP Case[204], no analogy between the validity of legislation and the validity of expenditure. Jacobs J, with respect, correctly said of an appropriation that it "is no more than an earmarking of the money, which remains the property of the Commonwealth" and the disclosure "that the Parliament assents to the expenditure of the moneys appropriated for the purposes stated in the appropriation"[205]. To the same effect is the statement by Stephen J in the AAP Case[206]:
     
     

"When an item in an Appropriation Act is attacked as ultra vires it is not in any real sense the Commonwealth Parliament's legislative power that is attacked but rather the taking of the first step in the expenditure of moneys on a particular purpose."

Stephen J also said of an appropriation Act[207]:

"It is an Act which, while a necessary precondition to lawful disbursement of money by the Treasury, is not in any way directed to the citizens of the Commonwealth; it does not speak in the language of regulation, it neither confers rights or privileges nor imposes duties or obligations. It only permits of moneys held in the Treasury being paid out, upon the Governor-General's warrant, to departments of the Government."

The reference in this passage to permission should be noted. Section 94 of the Constitution assumes that there may be surplus revenue of the Commonwealth, from which Parliament may provide payments to the States. However, the Surplus Revenue Act 1908 (Cth), the validity of which was upheld in The State of New South Wales v The Commonwealth[208], established the practice of appropriating to Commonwealth "trust" accounts revenues unexpended at the end of the financial year, so that there since has been no scope for the operation of s 94.

178. Once the nature of the process of parliamentary appropriation is appreciated, the sections of the Constitution which provide for it do not serve as sources of a "spending power" by the width of which is determined the validity of laws which create rights and impose obligations or otherwise utilise the supply approved by an appropriation.
     
     
179. Submissions which assume the contrary found upon statements in the several judgments delivered in Attorney-General (Vict) v The Commonwealth ("the Pharmaceutical Benefits Case")[209] and in the AAP Case of a range of opinions as to the construction of s 81 and s 83 and their place in the plan of the Constitution. However, it is fair to say that from those decisions no firm consensus emerges which is to the contrary of what has been said in these reasons[210].
     
     
180. The difficulty with some of the reasoning in the earlier cases in significant measure is the consequence of the form of the argument presented by the Commonwealth in the Pharmaceutical Benefits Case, to which the judgments responded and which they rejected. The holding of invalidity of the legislation largely was based on a minor premise. This assumed that s 81 conferred a "spending power" but constrained it by the phrases "for the purposes of the Commonwealth" in s 81[211] or "by law" in s 83[212]. However, the result in Pharmaceutical Benefits should today be supported by denial of the major premise.
     
     
181. Dr Coppel KC, who appeared for the Commonwealth, relied upon "the power to spend under s 81", which was "as wide as the power to tax", and "perhaps, for all practical purposes unlimited"[213]. The Commonwealth submitted that s 51(xxxix) provided for the means of execution of the power to spend money.
     
     
182. That submission reflected the long held view of those instructing counsel for the Commonwealth that s 81 enabled achievement of a financial outcome for the Executive Government without the need for legislation having a root outside s 81. That view saw a power of expenditure as the concomitant of the wide power of taxation enjoyed by the Commonwealth. It had been vigorously expressed by Sir Robert Garran in his evidence given to the 1929 Royal Commission on the Constitution of the Commonwealth. He said[214]:
     
     

"There is in the Commonwealth Constitution no limitation whatever of the purposes for which money may be raised by taxation. The Commonwealth Government can increase its taxation to any extent, and what constitutional or other reason there can be for limiting its power to spend the money so raised, I confess I am unable to see."

In particular, reliance upon a combination of s 81 and s 51(xxxix) made it unnecessary for the Executive Government of the Commonwealth to risk a narrow construction of what might be achieved by use of the power associated with s 61, with or without legislation relying upon s 51(xxxix).

183. That construction of s 81 was urged once more by the Commonwealth as its primary argument in the present case, and it was opposed by the plaintiff and by New South Wales, South Australia and Western Australia. For the reasons given above and following, it should be rejected.
     
     

Conclusions respecting s 81

184. Section 81 does not occupy either of the decisive (but opposing) positions which the plaintiff and the defendants sought to give it. The section does not support the validity of the Bonus Act (contrary to the defendants' submission), and the existence of the appropriation made by s 16 of the Administration Act is not impeached by the absence of s 81 as legislative support for the Bonus Act (contrary to the plaintiff's second submission).
     
     
185. There is no support in the text or structure of the Constitution for the construction for which the plaintiff contends in his second submission, treating the phrase in s 81 "for the purposes of the Commonwealth" as containing words of limitation of legislative power. The plaintiff answers reliance by the defendants upon s 16 of the Administration Act as the appropriation supporting the payments by the Commissioner under s 7 of the Bonus Act by construing s 81 as requiring a link to a head of legislative power. That submission should be rejected.
     
     
186. An issue of legislative power arises, but it does so with the challenge by the plaintiff in Question 2 of the Special Case to the validity of the Bonus Act itself. It does not arise with respect to the operation of s 81.
     
     

At Westminster and Whitehall

187. Matters of Imperial and colonial history respecting the raising and expenditure of public moneys support these conclusions respecting the power of appropriation conferred by the Constitution. A knowledge of legal history is indispensable to an appreciation of the essential characteristics of the power of appropriation in the Constitution; it affords an understanding of the setting in which the Constitution was formulated. This case thus illustrates the importance of the remarks on the subject of legal history by Gleeson CJ in Singh v The Commonwealth[215].
     
     
188. Even before Cole v Whitfield[216] broadened the scope of constitutional interpretation some attention had been given to successive draft bills for the Constitution which were debated in 1891, 1897 and 1898[217]. However much this may have been the practice before Cole v Whitfield, that case undoubtedly supports the giving of attention to considerations not expressly adverted to in the earlier decisions of this Court respecting s 81 and s 83. To these matters of Imperial and colonial history we now turn. They also give the setting for the provision made by s 61 respecting the executive power of the Commonwealth, which it will be necessary to treat when considering Question 2.
     
     
189. For the United Kingdom executive government (identified as "the Crown")[218] to function it was necessary to provide the "ways and means" for the raising of the revenue to fund its activities and for the appropriation of that revenue to make it available to the executive government for expenditure. Much of the development in the United Kingdom of a parliamentary system of government in the period before 1900 had concerned the control of the power of the purse.
     
     
190. The significance of this for Australia was well appreciated by Alfred Deakin when he said as early as 1902 (and with the later approbation of Sir Robert Menzies[219]):
     
     

"As the power of the purse in Great Britain established by degrees the authority of the Commons, so it will in Australia ultimately establish the authority of the Commonwealth."

191. In the United Kingdom, the control by the Parliament (particularly by the House of Commons) was effected by the principles that (i) taxes were to be imposed only by the authority of statute[220], and (ii) public moneys were subject to parliamentary control, until expended by the executive pursuant to a parliamentary appropriation[221]. Here lie the antecedents of the concurrent treatment in provisions such as s 56 and s 53 of the Constitution of proposed laws raising and appropriating revenue, a matter referred to earlier in these reasons.
     
     
192. At the time of the adoption of the Constitution the received understanding in the United Kingdom of the place of appropriations in the relationship between the executive and the legislature was stated in the then current edition of Erskine May's work[222] as follows:
     
     

"The Sovereign, being the executive power, is charged with the management of all the revenue of the state, and with all payments for the public service. The Crown, therefore, acting with the advice of its responsible ministers, makes known to the Commons the pecuniary necessities of the government; the Commons, in return, grant such aids or supplies as are required to satisfy these demands; and they provide by taxes, and by the appropriation of other sources of the public income, the ways and means to meet the supplies which they have granted. Thus the Crown demands money, the Commons grant it, and the Lords assent to the grant: but the Commons do not vote money unless it be required by the Crown; nor do they impose or augment taxes, unless such taxation be necessary for the public service, as declared by the Crown through its constitutional advisers.

The demand by the Crown for grants of aid and supply for the service of each financial year is made in the speech from the throne at the opening of Parliament. The sovereign addresses the Commons, demands the annual supply for the public service, and acquaints them that estimates will be laid before them of the amount that will be required. The form in which the Commons vote those supplies is consequently a resolution that each sum 'be granted to her Majesty;' nor is a grant of supply, even when endowed with the force of law, available for use until the sovereign puts it at the disposal of the treasury by a royal order under the sign manual." (citation omitted)

193. The Royal Order was addressed to the Commissioners of the Treasury and recited the grant of the sums mentioned in the Schedule to the Order "to defray the expenses of the Public Supply Services" which would come "in course of payment" in the next year; the Order directed the Commissioners to authorise the Bank of England to transfer the requisite sums to the accounts of those charged with payment of these Services[223].
     
     
194. It was important, as appears from the treatment of "Revenue" in the first edition of Halsbury's Laws of England, published in 1912[224]:
     
     

"to distinguish between the control which consists in determining in anticipation how the revenue is to be spent, and therefore ends with the act of voting, and that which is exercised over those who actually expend the grants, by the knowledge that accounts will have to be submitted and will be carefully scrutinised. It is only in recent times that Parliament has sought to obtain this latter form of control."

195. Thus, legislation controlled the actual receipt and issue of public money and provided for the examination of the accounts of all supply grants for the purpose of reporting thereon to the House of Commons: Exchequer and Audit Departments Act 1866 (UK)[225]. This system was adapted in the Australian colonies and the review and audit laws of the colonies were carried over by s 97 of the Constitution until the Parliament otherwise provided. It has done so first by the Audit Act 1901 (Cth) and more recently by the Auditor-General Act 1997 (Cth) and the Financial Management and Accountability Act 1997 (Cth)[226]. These are laws supported at least by s 51(xxxvi) of the Constitution, as matters in respect of which the Constitution made provision in s 97 until the Parliament otherwise provided. They may also be laws with respect to matters incidental to the execution of the power of appropriation vested in the Parliament and so supported by s 51(xxxix). It is unnecessary to pursue that question.
     
     
196. The degree of the control of the public purse by the House of Commons was qualified in at least three relevant respects. First, the Commons relinquished their annually exercised power over expenditure when a standing appropriation was enacted, because such appropriations do not need to be included in annual appropriations.
     
     
197. Secondly, as the dispute in Combet v The Commonwealth illustrates and as the Court in that case held[227], it is for the legislature to identify the degree of specificity with which the purpose of an appropriation is identified. One consequence is that, as Jacobs J indicated in the AAP Case[228], the description given to items of appropriation provides an insufficient textual basis for the determination of issues of constitutional fact and for the treatment of s 81 as a criterion of legislative validity. This underlines the conclusion reached earlier in the present reasons which denies to s 81 the character of a legislative "spending power".
     
     
198. The third aspect is a development of the second. It concerns the wide scope in the United Kingdom of appropriation for expenditure by the executive for "the Public Service". An understanding of this will assist in the construction of s 61 of the Constitution.
     
     
199. Appropriation was provided in the United Kingdom by annual grants for the "Public Service" and after 1787 by charges upon the Consolidated Fund established by the statute 27 Geo III c 13 ("the Consolidated Fund Act"). The Consolidated Fund had been designed to receive "every Stream of the Public Revenue, and from whence shall issue the Supply for every Public Service" and thereby introduce "the most simple of all Modes of Account into the Depository of the Public Treasure"[229]. The phrase "Public Service" was not used in this period and thereafter as a limitation upon the activities of the executive branch of government. Rather, it encompassed the range of those activities conducted from time to time[230], and whether pursuant to statute or to what in the United Kingdom might be identified as "the prerogative". The concept of "Public Service" extended to what Pitt the Younger, in speaking in 1798 on the new income tax introduced to meet a financial emergency caused by the war with Revolutionary France[231], described as[232]:
     
     

"every purpose of national safety and glory ... every advantage of permanent credit and of increased prosperity".

Chitty distinguished the Civil List voted to the sovereign from the appropriation of the rest "to the public service", saying[233]:

"The civil list is indeed properly the whole of the King's revenue in his own distinct capacity; the rest being rather the revenue of the public, or its creditors, though collected and distributed again, in the name and by the officers of the Crown".

Blackstone had written in similar terms[234]. There is seen in such writings the themes that taxation was a gift to the executive government made by the Commons, the representative chamber, and was then disbursed for the benefit of the body politic[235].

200. The House of Commons (Disqualification) Act 1782 (UK)[236] is a progenitor of s 44(v) of the Constitution. This was noted by Barwick CJ in In re Webster[237]. The earlier statute spoke of disqualification by reason of the interest of a Member in any contract "for or on account of the public service", and s 44(v) speaks of "any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth". Of the 1782 statute, Viscount Haldane LC said that the phrase in question reached "any service of the Crown anywhere"[238].
     
     

The Australian situation

201. The development in the Australian colonies of representative and responsible government during the second half of the nineteenth century presented several issues which are relevant for the present case. One concerned the sharing or division of executive power between the Imperial and colonial governments[239]. Another required the making of legislative provision for parliamentary control of the appropriation of public moneys for the purposes of the colonial executive governments. In New South Wales, s 47 in Sched (1) to the New South Wales Constitution Act 1855 (Imp)[240] provided for all revenues of the Crown, from whatever source arising in the colony and over which the legislature had power of appropriation, to form:
     
     

"One Consolidated Revenue Fund, to be appropriated for the Public Service of this Colony".

No part of the revenue in the Colony arising from an appropriation was to issue except in pursuance of warrants under the hand of the Governor and directed to the Public Treasurer (ss 54, 55). Similar provisions were made for Victoria in the same year[241]. The result was later described by Mr H B Higgins as having been to make it "impossible to impugn any appropriation for Victoria or New South Wales"[242].

202. It was no doubt with an understanding of these matters of law and practice both at Westminster and in Whitehall and in the colonies that Isaacs and Rich JJ in The Commonwealth v Colonial Ammunition Co Ltd[243] explained the operation of the mechanism of supply and appropriation as being "simply to furnish the [Executive Government] with authority and opportunity to obtain the money it desires for the government of the country". After referring to Durell on Parliamentary Grants[244], their Honours identified the function of the Parliament as "financial, not regulative" and as not being concerned with "general legislation"[245]. Hence, the statement by Mason J in the AAP Case[246]:
     
     

"An Appropriation Act therefore is something of a rara avis in the world of statutes; its effect is limited in the senses already explained; apart from this effect it does not create rights, nor does it impose duties."

The drafting of s 81 of the Constitution

203. Against this background, it is unsurprising that the 1891 draft constitution prepared by Inglis Clark provided for a Consolidated Revenue Fund which was to be appropriated by the federal Parliament "for the Public Service of the Federal Dominion of Australasia"[247]. It became apparent, as the processes of drafting of the Constitution continued in the years after 1891, that even the broad expression "for the Public Service" of the proposed new federal polity might not extend to new and federal subject matter. This included grants to the States under what became s 96, and the provisions for the payments to the States before the imposition of uniform duties of customs (s 89), the distribution of all surplus revenue of the Commonwealth (s 94), the funding of pensions of certain former State public servants (s 84) and compensation to the States for property passing to the Commonwealth under s 85. At the Melbourne Convention, on 14 February 1898, Mr Isaacs suggested that the words "public service of the Commonwealth" were not sufficiently large to cover the proposed return of moneys to the States[248].
     
     
204. What Quick and Garran describe as a "drafting amendment" by the substitution of "purposes" for "public service" then was made "to make it clear that the payments to the States, under ss 89 and 93, were included"[249]. The amendment was made to confirm the extended reach of s 81, not to place a limit upon its scope. In the commentary on s 81 of the Constitution, they wrote[250]:
     
     

"'The purposes of the Commonwealth' include the payments to the States made by virtue of the Constitution. The States being 'parts of the Commonwealth,' expenditure by the federal government in pursuance of its constitutional liability to the States is as much a 'purpose of the Commonwealth' as its expenditure upon the services of the federal government."

205. In construing s 81, regard should be had to this history. This supports the statement by Dixon J in the Pharmaceutical Benefits Case[251] that s 81 is but "a provision in common constitutional form substituting for the usual words 'public service' the word 'purposes' of the Commonwealth only because they are more appropriate in a Federal form of government". In the course of argument, Dixon J said of the substitution of "the purposes" for "the Public Service" that "[i]t was merely done as a piece of draftsmanship, without much reflection"[252].
     
     

Section 83 of the Constitution

206. Before turning to Question 2, there remains the third submission by the plaintiff, namely that there is no appropriation "made by law" as required by s 83 of the Constitution. It is said that taken by itself the Bonus Act contains no appropriation. For the reasons given under the heading "Question 3 – appropriation", that submission should be rejected. However, given the consideration given to s 83 in the Pharmaceutical Benefits Case, something further should be said respecting s 83.
     
     
207. What then is conveyed by the requirement that the drawing be under appropriation "made by law"? The provision resembles Art I, §9, cl 7 of the United States Constitution which, in part, reads:
     
     

"No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law".

Story said of the object of this provision[253]:

"As all the taxes raised from the people, as well as the revenues arising from other sources, are to be applied to the discharge of the expenses, and debts, and other engagements of the government, it is highly proper, that congress should possess the power to decide, how and when any money should be applied for these purposes. If it were otherwise, the executive would possess an unbounded power over the public purse of the nation; and might apply all its monied resources at his pleasure. ... Congress is made the guardian of this treasure".

208. The reference to the Congress, and thus to both legislative chambers, is significant. The primacy of the House of Commons with respect to money bills gave a different slant to the subject in the United Kingdom. This gave rise to controversy in the Australasian colonies after the establishment of bicameral legislatures and the assertion by lower houses of an authority comparable to that of the House of Commons[254].
     
     
209. Against this background, the inclusion in s 83 of the Constitution of the words "by law" served, as Harrison Moore wrote[255]:
     
     

"[to exclude] the once popular doctrine that money might become legally available for the service of Government upon the mere votes of supply by the Lower House".

Thus s 83 affirms that a vote or resolution of either chamber cannot suffice[256]. Where, for the purposes of the Constitution, a resolution rather than a law will suffice, as it does for the exception as to bounties made by s 91, the Constitution expressly so provides. Further, the phrase "by law" is apt also to include those appropriations, such as for the salaries of the Governor-General (s 3), and Ministers (s 66), which are made by force of the Constitution itself.

210. In the Pharmaceutical Benefits Case[257], however, Dixon J went further. He said that:
     
     

"s 83, in using the words 'by law' limits the power of appropriation to what can be done by the enactment of a valid law".

Section 83 thus provided the path by which Dixon J responded to the Commonwealth's submission as to the width of "the power to spend" and in doing so his Honour reached the point which the plaintiff seeks by fixing upon the phrase "the purposes of the Commonwealth" in s 81. For the reasons that have been given above respecting the place of appropriation in the scheme of the Constitution, neither construction of s 81 and s 83 should be accepted. Nor, as explained above, should that broad, and reiterated, submission by the Commonwealth respecting the "spending power".

211. It is now convenient to pursue that aspect of the Special Case by turning to Question 2.
     
     

Question 2 – validity

212. Question 2 asks whether the Bonus Act is a valid law of the Commonwealth. The statute is a valid law of the Commonwealth.
     
     
213. The Bonus Act is a law with respect to matters incidental to the execution of a power vested by the Constitution "in the Government of the Commonwealth" (s 51(xxxix)), being the executive power of the Commonwealth recognised by s 61, vested in the Queen and exercisable by the Governor-General.
     
     

The Executive Government of the Commonwealth

214. The text of the Constitution in ss 67, 70, 81, 84 and 86 assumes the existence and conduct of activities of government by what it identifies as "the Executive Government of the Commonwealth". It is upon that understanding that Ch II (ss 61-70) is headed "The Executive Government" and s 61 states:
     
     

"The executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen's representative, and extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth."

The Constitution assumes also, in s 119[258], the existence and conduct of activities by "the Executive Government of the State". The conduct of the executive branch of government includes, but involves much more than, enjoyment of the benefit of those preferences, immunities and exceptions which are denied to the citizen and are commonly identified with "the prerogative"; the executive power of the Commonwealth enables the undertaking of action appropriate to the position of the Commonwealth as a polity created by the Constitution and having regard to the spheres of responsibility vested in it[259].

215. With that understanding, the phrase "maintenance of this Constitution" in s 61 imports more than a species of what is identified as "the prerogative" in constitutional theory. It conveys the idea of the protection of the body politic or nation of Australia.
     
     
216. In The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd ("the Wool Tops Case"), Isaacs J said[260]:
     
     

"When the Constitution was framed there were six separate Colonies, six separate 'constitutional units,' in Australia. In the aggregate they covered the whole territory of the continent of Australia. Each had its separate Constitution and laws, throughout the territory of each the Sovereign exercised the executive power of the Colony in accordance with the local Constitution, and by the advice of local Ministers, and that executive power, by whatsoever functionary exerted, extended to the execution and maintenance of the Colonial Constitution and laws. But the limit of executive jurisdiction as to every Colony was its geographical area, and that was easily gathered from its Constitution as a truth long familiar. Over the whole of that geographical area, and not beyond it, the local Government exercised executive power – and normally the power was exclusive."

His Honour then observed that the creation by the Constitution of the Commonwealth "superimposed" upon the constituent States a new constitutional unit, and went on[261]:

"Two conditions had, therefore, to be satisfied. First, the constitutional domain of the new unit had to be delimited and distinguished from the respective constitutional domains of the States, and, next, that could not be done simply in terms of territory. It was found by applying to the territory certain powers – powers differently phrased with respect to the three branches of government. As to the executive power, it was delimited by attaching to the notion of territory, which is always connoted, the words 'extends to the maintenance of this Constitution, and of the laws of the Commonwealth.'"

217. What the text of the Constitution did not attempt was to detail the respective relationships between those Executive Governments and between them and the Imperial Government[262]. With respect to the latter, the matter was fully settled only upon the commencement of the Australia Act 1986 (Cth)[263]. There could thereafter, even if not before 1986, be no doubt that the polity which the Constitution established and maintains is an independent nation state with a federal system of government.
     
     
218. But it is as well to recall that references to "nationhood" and the like in the decisions of this Court may be traced to its earliest years. In Commissioners of Taxation (NSW) v Baxter[264] Griffith CJ, Barton and O'Connor JJ said:
     
     

"The object of the advocates of Australian federation, then, was not the establishment of a sort of municipal union, governed by a joint committee, like the union of parishes for the administration of the Poor Laws, say in the Isle of Wight, but the foundation of an Australian Commonwealth embracing the whole continent with Tasmania, having a national character, and exercising the most ample powers of self-government consistent with allegiance to the British Crown."

219. It has also long been recognised that in ascertaining the boundaries of the authority of the Executive Government of the Commonwealth in any given situation there will be a need to deal, as Isaacs J put it, with "new positions which the Nation in its progress from time to time assumes"[265].
     
     
220. Express provision was made in s 109 respecting the exercise of concurrent legislative powers. But what are the respective spheres of exercise of executive power by the Commonwealth and State governments? We have posed the question in that way because it is only by some constraint having its source in the position of the Executive Governments of the States that the government of the Commonwealth is denied the power, after appropriation by the Parliament, of expenditure of moneys raised by taxation imposed by the Parliament. Otherwise there appears no good reason to treat the executive power recognised in s 61 of the Constitution as being, in matters of the raising and expenditure of public moneys, any less than that of the executive in the United Kingdom at the time of the inauguration of the Commonwealth.
     
     
221. New South Wales submitted that the Constitution split the executive and legislative power of the respective bodies politic in a particular way so as to effect an accommodation between them. The executive power, whether of the Commonwealth or the States, it was said, "continues to be subservient to legislative power irrespective of whether the source of the legislative power is State or Commonwealth".
     
     
222. There are difficulties with that submission and, like the submission itself, these are fundamental in nature. First, the submission gives insufficient acknowledgement to the comparative superiority of the position of the Commonwealth in the federal structure. That superiority informs the doctrine associated with the judgment of Dixon CJ in The Commonwealth v Cigamatic Pty Ltd (In liq)[266], and concerns the placement beyond the reach of the States of rights "belonging to the Commonwealth as a government" and of the "legal rights and duties between the Commonwealth and its people". Secondly, the submission of New South Wales, in speaking in terms of continuation, gives insufficient weight to the creation by the Constitution of a new body politic which enjoyed capacities superior to that of a mere aggregation of the federating colonies.
     
     
223. State laws of general application may regulate activities of the Executive Government of the Commonwealth in the same manner as persons generally[267], and, by the exercise of its legislative powers, the Commonwealth may affect the executive capacity of a State, but the States do not have power to affect the capacities of the Executive Government of the Commonwealth[268].
     
     
224. The submission for New South Wales referred to the position of s 109 in the scheme of the Constitution. But that weakens rather than strengthens its submission. In Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority[269], after referring to s 109, Dawson, Toohey and Gaudron JJ said:
     
     

"The States, on the other hand, do not have specific legislative powers which might be construed as authorising them to restrict or modify the executive capacities of the Commonwealth. The legislative power of the States is an undefined residue which, containing no such authorisation, cannot be construed as extending to the executive capacities of the Commonwealth. No implication limiting an otherwise given power is needed; the character of the Commonwealth as a body politic, armed with executive capacities by the Constitution, by its very nature places those capacities outside the legislative power of another body politic, namely a State, without specific powers in that respect. Having regard to the fundamental principle recognised in Melbourne Corporation v The Commonwealth, only an express provision in the Constitution could authorise a State to affect the capacities of the Commonwealth executive and there is no such authorisation."

225. In the same case, Brennan CJ stated that the States lack any legislative power that can reach the executive power of the Commonwealth[270].
     
     
226. A question thus may arise whether there is applicable to the scope of s 61 that very broad proposition concerning the extent of the common weal which was expressed in the United Kingdom constitutional theory in the notion of the public service of the Crown. That such notions were understood in the drafting of the Constitution is apparent from the provisions of s 52(i) of the Constitution. This contemplates the acquisition by the Commonwealth of "places ... for public purposes". The notion here of the public purposes of the Commonwealth resembles that of the public service understood in the Imperial and colonial application of moneys appropriated by the legislature and discussed earlier in these reasons. There is here, as Windeyer J put it in Worthing v Rowell and Muston Pty Ltd[271], the expression of "a large and general idea". He added[272]:
     
     

"[P]ublic purposes are not necessarily purposes for which the Parliament can make laws. I can see no reason why the Commonwealth, or a Commonwealth statutory body on behalf of the Commonwealth, should not be able to accept a gift from a landowner by his deed or will of land for the purpose, say, of a public park, just as I suppose it could become by gift possessed of pictures or books for public use and enjoyment."

227. However, in deciding the validity of the Bonus Act it is unnecessary to attempt to determine the outer limits of the executive power. One such settled limit, that respecting the need for statutory authority to support extradition from Australia of fugitive offenders, was affirmed in Vasiljkovic v The Commonwealth[273]. Another concerns the incapacity of the Executive Government to dispense with obedience to the law[274].
     
     
228. After denying the proposition that the Constitution created no more than an aggregation of colonies, with a redistribution of powers between the federal and State governments[275], Brennan J went on in Davis v The Commonwealth[276] to say:
     
     

"It does not follow that the Executive Government of the Commonwealth is the arbiter of its own power or that the executive power of the Commonwealth extends to whatever activity or enterprise the Executive Government deems to be in the national interest. But s 61 does confer on the Executive Government power 'to engage in enterprises and activities peculiarly adapted to the government of a nation and which cannot otherwise be carried on for the benefit of the nation', to repeat what Mason J said in the AAP Case[277]. In my respectful opinion, that is an appropriate formulation of a criterion to determine whether an enterprise or activity lies within the executive power of the Commonwealth."

That formulation should be accepted, subject to qualifications which it will be necessary to develop later in these reasons. The formulation, and the qualifications to be made, together emphasise a point made by six members of the Court in the joint reasons in R v Hughes[278]. This was that while s 51(xxxix) authorises the Parliament to legislate in aid of the executive power, that does not mean that it may do so in aid of any subject which the Executive Government regards as of national interest and concern.

The present crisis

229. This case requires consideration of certain novel or at least unusual matters which are not contested for the purposes of the Special Case. Some of these are identified, in short form, earlier in these reasons. In the determination of the existence of facts said to attract the exercise of the executive power of the Commonwealth, as with other matters of constitutional fact, the Court may rely on agreed facts[279]. The agreement of the plaintiff in the present case to the matters detailed in the Special Case was qualified only as to their relevance. They are relevant at least to the operation of the executive power.
     
     
230. Collectively the facts emphasise the unusual nature of the current economic times being experienced globally and in the domestic national economy. Rapid changes in macroeconomic circumstances globally have caused the Commonwealth Department of the Treasury to revise economic forecasts downwards from those released in the 2008-2009 Budget on 13 May 2008. The Government has published a document entitled Updated Economic and Fiscal Outlook, in which it is stated that the world is experiencing a global recession triggered by a global financial and economic crisis which is the most severe deterioration in the global economy since the Great Depression and the most significant economic crisis since the Second World War. The revised forecasts mentioned foreshadow significantly weaker domestic growth and higher unemployment. Reports and statements provided by international bodies, the Group of Twenty[280] and the International Monetary Fund[281], emphasise the global nature of the current financial and economic crisis. The Group of Twenty, colloquially the G20, is an informal forum of Finance Ministers and Central Bank Governors established in 1999 to discuss key issues in the global economy. Australia is a member. Such is the background and context in which the Commonwealth Government has announced three "fiscal stimulus packages"[282].
     
     
231. The third and most recent "package" includes the payment of the tax bonus pursuant to the Bonus Act. The defendants contend that the purpose of the tax bonus is immediate fiscal stimulus to the economy to support economic growth and employment and to help reduce the impact of the global recession in Australia. They also contend that without a timely stimulus to the economy of this kind, Australia would face a more severe financial and economic slowdown than has been forecast. It was alleged that the global conditions were extraordinary and that that circumstance gives rise to the need for a fiscal stimulus to support economic growth and jobs. It was said that the fiscal stimulus was targeted towards low and middle income households, which are most likely to spend the additional income and are most vulnerable during the economic downturn. Swiftness of execution was said to be desirable.
     
     

Conclusions respecting s 61 and s 51(xxxix)

232. In determining whether the Bonus Act is supported by s 61 and s 51(xxxix) of the Constitution, it is necessary to ask whether determining that there is the need for an immediate fiscal stimulus to the national economy, in the circumstances set out above, falls within executive power and then to ascertain whether s 51(xxxix) of the Constitution supports the impugned legislation as a law which is incidental to that exercise of executive power.
     
     
233. As already mentioned, that there is a global financial and economic crisis is not contested in this proceeding. It can hardly be doubted that the current financial and economic crisis concerns Australia as a nation. Determining that there is the need for an immediate fiscal stimulus to the national economy in the circumstances set out above is somewhat analogous to determining a state of emergency in circumstances of a natural disaster. The Executive Government is the arm of government capable of and empowered to respond to a crisis be it war, natural disaster or a financial crisis on the scale here. This power has its roots in the executive power exercised in the United Kingdom up to the time of the adoption of the Constitution but in form today in Australia it is a power to act on behalf of the federal polity.
     
     
234. The content of the power provided by s 61 of the Constitution presents a question of interpretation of the Constitution. That power has at least the limitations discussed in these reasons, but it is unnecessary in the present case to attempt an exhaustive description. A question presented in a particular controversy as to the existence of power provided by s 61 may be determined under Ch III of the Constitution with appropriately framed declaratory and other relief.
     
     
235. The decision in Australian Communist Party v The Commonwealth[283], to which reference was made in oral submissions, is not to the contrary. The provisions of the statute held in that case to be invalid included sections empowering the Governor-General to declare to be an "unlawful association" a body of persons in respect of which the Governor-General was "satisfied" of certain matters. Dixon J rejected a submission[284] that the validity of such a declaration might be impugned upon the principles governing the exercise of discretionary powers which were considered in Water Conservation and Irrigation Commission (NSW) v Browning[285]. One ground for that rejection was that the matters of which the Governor-General was to be satisfied were expressed in vague and indefinite terms[286]. Another was that decisions under statute of the Governor-General in Council had never been examined upon judicial review[287]. But that was said before FAI Insurances Ltd v Winneke[288].
     
     
236. What then is of immediate, and decisive, importance for the present case is the notion of national crisis captured by Sir Robert Garran in his evidence to the Royal Commission as follows[289]:
     
     

"Political and national emergencies are so unknown and unforseeable that the framers of the Constitution decided to give an unlimited power of taxation to the Commonwealth Parliament. After all, when you have once had the power of raising the money, the power of spending it is one with which you may very easily entrust the parliament."

237. Of course, the taxation power is not "unlimited". It must be employed "so as not to discriminate between States or parts of States" (s 51(ii)), nor by any law or regulation of revenue may the Commonwealth "give preference to one State or any part thereof over another State or any part thereof" (s 99). Nor may a subject of the Queen, resident in one State, be subject in any other State to discrimination as prohibited by s 117. Bounties on the production or export of goods must be "uniform throughout the Commonwealth" (s 51(iii)).
     
     
238. The provision for payments made by the Bonus Act does not operate by any criterion which discriminates, gives preferences or has a lack of uniformity of application in the sense of these revenue and other provisions of the Constitution. The criteria for entitlement specified in s 5 of the Bonus Act are not of that character. Had the contrary been the case, then a question may have arisen as to the scope of the executive power to support a law resting on s 51(xxxix).
     
     
239. In Davis v The Commonwealth[290] Mason CJ, Deane and Gaudron JJ said:
     
     

"[T]he existence of Commonwealth executive power in areas beyond the express grants of legislative power will ordinarily be clearest where Commonwealth executive or legislative action involves no real competition with State executive or legislative competence."

In the same case Brennan J remarked of the determination of whether an enterprise or activity lies within the executive power of the Commonwealth[291]:

"It invites consideration of the sufficiency of the powers of the States to engage effectively in the enterprise or activity in question and of the need for national action (whether unilateral or in co-operation with the States) to secure the contemplated benefit."

240. The governments of the States have the interest given by s 94 of the Constitution in the distribution of all surplus revenue of the Commonwealth, but, as remarked above, the Commonwealth has no obligation to tailor its expenditure to provide a surplus[292]. The Parliament may grant financial assistance to any State, but, by force of s 96, the Parliament may impose such terms and conditions as it thinks fit. The Parliament of the Commonwealth is constrained by s 114 of the Constitution from imposing any tax on property of any kind "belonging to a State". That prohibition is supplemented by the principles of federalism associated with Melbourne Corporation v The Commonwealth[293] but no reliance is placed by the plaintiff or the interveners upon those doctrines. Further, to say that the power of the Executive Government of the Commonwealth to expend moneys appropriated by the Parliament is constrained by matters to which the federal legislative power may be addressed gives insufficient weight to the significant place in s 51 of the power to make laws with respect to taxation (s 51(ii)).
     
     
241. The intervening States do not seriously dispute that only the Commonwealth has the resources available to respond promptly to the present financial crisis on the scale exemplified by the Bonus Act. The submissions of the interveners appear to have been moved more by apprehension of a wide reading of the scope of s 61. But in considering what enterprises and activities are peculiarly adapted to the government of the country and which cannot otherwise be carried on for its benefit, this case may be resolved without going beyond the notions of national emergency and the fiscal means of promptly responding to that situation.
     
     
242. It is not to the point to regret the aggregation of fiscal power in the hands of the Commonwealth over the last century. The point is that only the Commonwealth has the resources to meet the emergency which is presented to it as a nation state by responding on the scale of the Bonus Act. That Australia is a federal state does not produce the consequence that the policy determined upon by the Executive Government cannot be put into effect by measures such as the Bonus Act. The present is an example of the engagement by the Executive Government in activities peculiarly adapted to the government of the country and which otherwise could not be carried on for the public benefit.
     
     
243. To the extent that the implementation of this policy involves the creation by s 7 of the Bonus Act of a right to receive the tax bonus and the imposition by s 8 of an obligation to restore overpayments, legislation is necessary and the authority to enact it is supplied by s 51(xxxix) of the Constitution.
     
     
244. In that regard the reasoning of Latham CJ in the Pharmaceutical Benefits Case[294] is important, albeit addressed to the attachment of s 51(xxxix) to s 81 not to an exercise of the executive power of the Commonwealth. It has long been established in the United Kingdom that the executive government cannot create a new offence and that limitation applies in this country[295]. Against that background, Latham CJ viewed as limited the extent to which s 51(xxxix) empowered the Parliament to make laws creating rights and imposing duties which were not incidental to the execution of another head of legislative power.
     
     
245. The legislation held invalid in the Pharmaceutical Benefits Case by the creation of rights and imposition of duties attempted to control medical practice. This was a matter beyond the legislative powers of the Commonwealth. The entitlement to payment which is conferred by the Bonus Act is not a use of s 51(xxxix) of such a character; it is incidental to the effectuation of the fiscal stimulus policy.
     
     

The taxation power – s 51(ii)

246. In the course of his oral submissions, the Commonwealth Solicitor-General made an important concession. It was that the defendants did not seek to support the Bonus Act as an exercise of the taxation power "to the extent that it would authorise payment to an individual of tax bonus that is in excess of that individual's adjusted tax liability". Without a reading down of s 6 of the Bonus Act, it was said that some 820,880 taxpayers, approximately 11 percent of recipients, would receive an amount greater than their adjusted liability.
     
     
247. Later in the hearing the Solicitor-General proposed a reading down of s 6 as follows:
     
     

"If a person is entitled to the tax bonus for the 2007-08 income year, the amount of his or her tax bonus is the lesser of the amount of the person's adjusted tax liability for that income year and:

(a) if the person's taxable income for that income year does not exceed $80,000 – $900; or

(b) if the person's taxable income for that income year exceeds $80,000 but does not exceed $90,000 – $600; or

(c) if the person's taxable income for that income year exceeds $90,000 but does not exceed $100,000 – $250." (emphasis supplied)

248. The plaintiff responded that a reading down in these terms was beyond what the authorities in this Court permitted. He referred to the statement by Dixon J in Bank of NSW v The Commonwealth[296]:
     
     

"[W]here severance would produce a result upon the persons and matters affected different from that which the entire enactment would have produced upon them, had it been valid, it might be said with justice that unless the legislature had specifically assented to that result, contingently on the failure of its primary intent, it could not amount to a law."

Thereafter, in Victoria v The Commonwealth (Industrial Relations Act Case)[297] the authorities were collected and one question they pose with respect to s 6 of the Bonus Act is whether it was designed to operate fully and completely according to its terms or not at all. The plaintiff correctly submits that the lower income earners, whose position was of particular concern in the framing of this fiscal stimulus "package", are the most prejudiced by the reading down proposed by the defendants. The reading down suggested by the Solicitor-General must yield to the contrary intention[298] to most benefit those who have paid the least tax. Section 6 cannot be read down as proposed.

249. In aid of the submissions in support of the reading down proposed by the Solicitor-General, counsel referred to the reading down effected in R v Hughes[299] and British American Tobacco Australia Ltd v Western Australia[300]. In the first case, the general words "functions and powers" were treated as limited to functions and powers in respect of matters within the legislative powers of the Parliament of the Commonwealth. In the second case, the phrase "in any suit to which ... a State is a party" was construed as applying to suits in which a State is a defendant.
     
     
250. These decisions provide examples of that class of case where the phrase "shall nevertheless be a valid enactment to the extent to which it is not in excess of [the legislative] power [of the Commonwealth]" in s 15A of the Acts Interpretation Act 1901 (Cth) ("the Interpretation Act") is applied to a provision which is addressed "to a larger subject matter, territory or class of persons than the power allows". The words quoted are those of Dixon J in R v Poole; Ex parte Henry [No 2][301]. In that case the word "aerodrome" was construed as applying to aerodromes used for air navigation with other countries and among the States.
     
     
251. The proposed reading down of s 6 of the Bonus Act does not limit the provision to one or more of various operations otherwise encompassed by any form of general words. Rather, it seeks to introduce a foreign integer, namely the adjusted tax liability of those persons who otherwise would have answered the criteria in one of pars (a), (b) and (c) of s 6. To treat s 15A of the Interpretation Act as authorising such a reading of s 6 would be to risk construing s 15A as impermissibly entrusting legislative power to Ch III courts[302].
     
     
252. The result is that the plaintiff has the benefit of the concession by the defendants and the Bonus Act is not supported by s 51(ii) of the Constitution.
     
     
253. New South Wales sought to gainsay that concession by arguing that it was unnecessary because the Bonus Act in its terms was supported by s 51(ii). That submission, made orally after the concession by the defendants, may have exceeded the proper role of an intervener, but no objection was taken to it.
     
     
254. In any event, the Bonus Act could not be sustained on the basis suggested. This is that the statute is analogous to that considered in Mutual Pools & Staff Pty Ltd v The Commonwealth[303]. That statute provided for the refund of payments of taxes paid pursuant to an invalid law. Here the Parliament has not acted to make any refund of tax lawfully exacted for the 2007-2008 income tax year.
     
     
255. In Moore v The Commonwealth[304], Dixon J said that the power conferred by s 51(ii) covers "what is incidental to the imposition and collection of taxation". The Bonus Act takes as the criterion of its operation certain taxpayers for the 2007-2008 income year. But that does not render the Bonus Act a law with respect to the imposition and collection of taxation. In particular, given the formulation of s 6 as enacted, the Bonus Act cannot be said to be "in substance" a law conferring a rebate of tax on income brought to account for 2007-2008.
     
     

Other heads of power

256. The defendants relied upon other heads of power, principally those with respect to trade and commerce (s 51(i)) and external affairs (s 51(xxix)). It is unnecessary to consider whether these also support the Bonus Act.
     
     

Result

257. The challenge by the plaintiff to the Bonus Act has failed. The further conduct of the plaintiff's action, from which the Special Case stemmed, should involve the taking of the necessary procedural steps to dismiss the action.
     
     

258. HAYNE AND KIEFEL JJ. On 3 February 2009, the Commonwealth Government published its Updated Economic and Fiscal Outlook. That document ("the 2009 Outlook") recorded that the International Monetary Fund ("the IMF") was forecasting "a deep global recession". The 2009 Outlook noted that advanced economies are expected to experience the sharpest collective decline in gross domestic product in the period since World War II and that the "key emerging economies" of China and India are expected to slow markedly. The global commodity boom, which was said to have provided significant stimulus to Australian growth and incomes over recent years, was described as "unwinding". The parties and interveners did not dispute that there is a global financial crisis. No party or intervener suggested that Australia stands apart from that crisis or is immune from its effects.
     
     
259. In response to these circumstances, the Commonwealth Government has taken a number of steps. In particular, three "fiscal stimulus packages" have been announced: an "Economic Security Strategy" announced on 14 October 2008; a "Nation Building Package" announced on 12 December 2008; and a "Nation Building and Jobs Plan" announced in the 2009 Outlook. This litigation concerned the validity of one statute enacted as part of the third fiscal stimulus package, the Tax Bonus for Working Australians Act (No 2) 2009 (Cth) ("the Impugned Act").
     
     
260. The constitutional questions presented in this matter are deeper and more enduring than the particular and urgent circumstances that caused the enactment of the particular law. They raise issues that are fundamental to the constitutional structure of the nation, and transcend the immediate circumstances in which the questions were posed.
     
     

The Impugned Act

261. The long title of the Act is "An Act to provide for a tax bonus, and for related purposes". Its central provision is s 5, which reads:
     
     

"(1) A person is entitled to a payment (known as the tax bonus) for the 2007-08 income year if:

(a) the person is an individual; and

(b) the person is an Australian resident for that income year; and

(c) the person's adjusted tax liability for that income year is greater than nil; and

(d) the person's taxable income for that income year does not exceed $100,000; and

(e) the person lodges his or her income tax return for that income year no later than:

(i) unless subparagraph (ii) applies – 30 June 2009; or

(ii) if, before the commencement of this Act, the Commissioner deferred the time for lodgment of the return under section 388-55 in Schedule 1 to the Taxation Administration Act 1953 to a day later than 30 June 2009 – that later day.

Exception for persons aged under 18 without employment income etc.

(2) However, the person is not entitled to the tax bonus for the 2007-08 income year if:

(a) he or she is a prescribed person in relation to that income year and is not an excepted person in relation to that income year; and

(b) his or her assessable income for the income year does not include excepted assessable income."

(The expressions "excepted person" and "prescribed person" are defined by s 4(1) of the Impugned Act as having the same meaning as in s 102AC of the Income Tax Assessment Act 1936 (Cth); the expression "tax offset" is defined as having the meaning given by the Income Tax Assessment Act 1997 (Cth).)

262. Section 3 of the Impugned Act provides that "[t]he Commissioner has the general administration of this Act", and the "Commissioner" is defined in s 4(1) as the Commissioner of Taxation.
     
     
263. The amount of the tax bonus is fixed by s 6 as $900 (if the person's taxable income for the 2007-08 income year does not exceed $80,000), $600 (if taxable income exceeds $80,000 but does not exceed $90,000) or $250 (if taxable income exceeds $90,000 but does not exceed $100,000). Section 7(1) provides that if the Commissioner is satisfied that a person is entitled to the tax bonus for the 2007-08 income year "the Commissioner must pay the person his or her tax bonus as soon as practicable after becoming so satisfied". Section 8 provides for recovery of overpayments and s 9 levies the general interest charge, worked out under Pt IIA of the Taxation Administration Act 1953 (Cth) ("the Administration Act"), on overpayment debts.
     
     
264. A person's taxable income is worked out[305] by subtracting allowable deductions from assessable income. The amount of the tax bonus to be paid is fixed according to the amount of a person's taxable income. But, as the Impugned Act recognises, the amount of a person's taxable income is not the only matter that affects how much income tax that person must pay.
     
     
265. To be eligible for a payment under the Impugned Act, a person must have had an "adjusted tax liability" for the 2007-08 income year that is "greater than nil"[306]. A person's "adjusted tax liability" is to be worked out[307] by taking the sum of a person's basic income tax liability (worked out in accordance with step two of the method statement in s 4-10(3) of the Income Tax Assessment Act 1997), Medicare levy and Medicare levy surcharge and reducing that by the sum of the person's tax offsets for that income year. Tax offsets are identified in s 13-1 of the Income Tax Assessment Act 1997 and include amounts allowed in respect of such diverse subject-matters as social security and other benefit payments, dependents, franked dividends, primary production, private health insurance and superannuation.
     
     
266. It follows that the amount to be paid under the Impugned Act is not expressed as being determined by reference to the amount of income tax that a person was liable to pay for the 2007-08 income year. It is to be paid only to persons who were liable to pay some amount for income tax during that year, but its amount is fixed as one of three set amounts by reference to that person's taxable income, regardless of how much tax the person was required to pay.
     
     
267. The Impugned Act contains no express provision appropriating the Consolidated Revenue Fund for the purposes of making the payment. Section 3 of the Impugned Act gives the general administration of the Act to the Commissioner of Taxation. This engages the standing appropriation made by s 16(1) of the Administration Act, which provides:
     
     

"Where the Commissioner is required or permitted to pay an amount to a person by or under a provision of a taxation law other than:

(a) a general administration provision; or

(b) a provision prescribed for the purposes of this paragraph;

the amount is payable out of the Consolidated Revenue Fund, which is appropriated accordingly."

Section 2(1) of the Administration Act defines "taxation law" as having the meaning given by the Income Tax Assessment Act 1997 and that latter Act provides in s 995-1(1) that:

"taxation law means:

(a) an Act of which the Commissioner has the general administration (including a part of an Act to the extent to which the Commissioner has the general administration of the Act); or

(b) regulations under such an Act (including such a part of an Act)."

Although the plaintiff contended to the contrary, if the Impugned Act is valid, s 16(1) of the Administration Act is engaged and, subject to compliance with the requirements of the Financial Management and Accountability Act 1997 (Cth) ("the Financial Management Act") concerning the drawing of moneys, s 16(1) authorises the withdrawal of the amounts necessary from the Treasury of the Commonwealth. If the Impugned Act is valid, s 27(2)(a) of the Financial Management Act obliges the Finance Minister to issue sufficient drawing rights to allow payment in full of the amount that the Impugned Act requires to be paid.

The proceedings

268. The plaintiff, Mr Pape, is an Australian resident eligible to receive a tax bonus if the Impugned Act is valid. In an action commenced in the original jurisdiction of this Court against the Commissioner of Taxation, he sought orders declaring the Impugned Act invalid, declaring the tax bonus payable by the Commissioner to the plaintiff "unlawful and void", and restraining the Commissioner from making any payment of the tax bonus to the plaintiff. The Commonwealth was joined as a defendant. The defendants were jointly represented. It is convenient, therefore, to refer to the submissions made on behalf of both defendants as submissions made on behalf of the Commonwealth.
     
     
269. The parties joined in stating questions of law in the form of a Special Case for the opinion of the Full Court. For that purpose they agreed certain facts. The questions were:
     
     
     1. Does the Plaintiff have standing to seek the relief claimed in his Writ of Summons and Statement of Claim?
        
        
     2. Is the Tax Bonus for Working Australians Act (No 2) 2009 (Cth) valid because it is supported by one or more express or implied heads of legislative power under the Commonwealth Constitution?
        
        
     3. Is payment of the tax bonus to which the plaintiff is entitled under the Tax Bonus for Working Australians Act (No 2) 2009 (Cth) supported by a valid appropriation under ss 81 and 83 of the Constitution?
        
        
     4. Who should pay the costs of the special case?
        
        

During the hearing of the matter, the parties agreed that, whatever the outcome of the case, each party would bear its own costs.

270. On 3 April 2009, the Court made orders answering the questions. We joined in the answers given to the first question, about standing, and to the last question, about costs. We did not agree with the answers given to the second and third questions. We would have answered the second question, about the validity of the Impugned Act:
     
     

"The Tax Bonus for Working Australians Act (No 2) 2009 (Cth) is a valid law of the Commonwealth to the extent to which it provides for the payment to a person entitled to a tax bonus of the lesser of the amount of the person's adjusted tax liability for the 2007-08 income year and the amount of the bonus fixed in accordance with that Act. Otherwise, no."

We would have answered the third question: "Yes".

Standing

271. The Commonwealth submitted, and no intervener submitted to the contrary, that Mr Pape has standing to seek relief in respect of the payment of the tax bonus to him. In particular, it was not disputed that Mr Pape has standing to seek a declaration that the tax bonus payable to him by the Commissioner of Taxation is unlawful and void, and an injunction restraining the Commissioner from making that payment.
     
     
272. The Commonwealth further submitted, however, and the interveners did not submit to the contrary, that Mr Pape does not have standing to seek a declaration that the Impugned Act is invalid. It was submitted that he "has no special interest which would allow him to challenge the validity of the Act in its application to other persons".
     
     
273. For the reasons given by Gummow, Crennan and Bell JJ this submission should be rejected and question 1 answered: "Yes".
     
     
274. It was not made clear in argument whether the Commonwealth's submission about standing was directed only to the form in which a declaration was made or was intended to advance some more general proposition to the effect that the decision in this case could later be seen and acted upon on a footing that it concerned facts or circumstances unique to Mr Pape and did not decide any point of more general application. A submission of the latter kind would have profoundly serious implications for the rule of law when, as was the case here, the Commonwealth pointed to no fact or circumstance unique to Mr Pape (apart, that is, from him being the only person willing to take a proceeding in this Court the outcome of which, if successful, would deny him entitlement to $250). It is not necessary, however, to consider this aspect of the matter further.
     
     

Question 2 – Heads of power

275. The Commonwealth submitted that the Impugned Act was supported on any or all of five bases: the appropriations power read with the incidental power, the implied "nationhood power", the external affairs power, the trade and commerce power and the taxation power.
     
     
276. Chief weight was placed upon the first of these arguments. It proceeded in two steps. The Commonwealth submitted first that an appropriation does no more than provide lawful authority of the Parliament for the Executive to withdraw money from the Treasury of the Commonwealth, and prescribe the purpose for which that money may be applied. The second step was to submit that s 51(xxxix) (the incidental power) supports a law imposing a duty on an officer of the Executive to withdraw and apply money which has been validly appropriated. This second step was described as s 51(xxxix) "relevantly [adding] to ss 61 and 81 of the Constitution by allowing for 'the making of laws for the purpose of securing that public money is applied to the purposes for which it is appropriated and not otherwise'[308]".
     
     
277. It will be observed that s 51(xxxix) was said to "add to" both s 61 and s 81. That is, the Commonwealth submitted that s 51(xxxix) was engaged in the present matter in two distinct ways: first, by the grant of legislative power with respect to "matters incidental to the execution of any power vested by this Constitution ... in the Government of the Commonwealth" and secondly, by the grant of legislative power with respect to "matters incidental to the execution of any power vested by this Constitution in the Parliament" (in this case the power given to the Parliament by s 81).
     
     

Section 81 and the incidental power

278. The argument about s 81 and the incidental power in s 51(xxxix) may be dealt with briefly. The Impugned Act is not a law whose making is incidental to the execution of a power vested by the Constitution in the Parliament to appropriate moneys.
     
     
279. Section 81 of the Constitution provides that:
     
     

"All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution."

280. Section 83 provides that "[n]o money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law."
     
     
281. The Commonwealth submitted that the Impugned Act provides "an essential element of the appropriation" because it prescribes the purposes for which amounts are appropriated. The Commonwealth submitted that because s 7(1) of the Impugned Act directs the Commissioner to pay the tax bonus it "is a sufficiently clear indication by the Parliament that the [Consolidated Revenue Fund] is to be debited for the purposes of making that payment". And in this connection the Commonwealth pointed to the fact that the Bill for the Impugned Act was the subject of a message from the Governor-General under s 56 of the Constitution recommending to the House of Representatives "that an appropriation be made for the purposes of a Bill for an Act to provide for a tax bonus, and for related purposes". The Bill identified in the message was the Bill for what was to become the Impugned Act.
     
     
282. As already noticed, the Impugned Act does not expressly provide any appropriation of the Consolidated Revenue Fund. It is sufficient for present purposes to conclude that the Impugned Act was evidently intended to engage, and if valid will engage, the standing appropriation in s 16(1) of the Administration Act. As the Commonwealth rightly pointed out in argument, s 3 of the Impugned Act, giving the general administration of the Act to the Commissioner of Taxation, had no purpose other than engaging s 16(1) of the Administration Act. That being so, it is not necessary to examine what the position would have been if the standing appropriation had not been engaged in this way.
     
     
283. It is not to be doubted that the Parliament has power to make a standing appropriation of the kind found in s 16(1) of the Administration Act: an appropriation permitting application of the Consolidated Revenue Fund to the execution of valid laws administered by the Commissioner of Taxation. But it is not incidental to the power of the Parliament to make a law providing for that standing appropriation to make a new law requiring a new and wholly different outlay to be made. The argument relying on the power with respect to matters incidental to the execution of a power of appropriation that is vested in the Parliament amounts to an assertion that it is incidental to a standing appropriation to make any law that would require a payment drawn against that standing appropriation. But, as was correctly submitted on behalf of New South Wales, that inverts the proper order of inquiry. The standing appropriation in s 16(1) responds to enable fulfilment of legal obligations whose source lies elsewhere. The creation of those obligations, by the Impugned Act, is not incidental to the standing appropriation which would respond to enable fulfilment of those same obligations.
     
     

Section 61 and the incidental power

284. This leaves for separate consideration the other way in which the Commonwealth submitted that the incidental power is engaged in connection with an appropriation: as the enactment of a law with respect to a matter incidental to the execution of power vested by the Constitution in the Government of the Commonwealth. Consideration of these submissions is organised as follows:
     
     

(a) The Commonwealth's submissions

(b) Beginning at s 81?

(c) The place of s 81 in the Constitution

(d) The "purposes of the Commonwealth" as a limit?

(e) Some matters of history

(f) The decided cases

(g) The executive power

(h) Conclusions respecting s 61 and the incidental power

(a) The Commonwealth's submissions

285. The Commonwealth submitted that "[m]aking a payment pursuant to an appropriation Act involves the doing of something authorised by a law of the Commonwealth and, accordingly, falls within the executive power of the Commonwealth under s 61 of the Constitution". The Commonwealth further submitted that the Executive, through the exercise of executive power, can give effect to an appropriation in a variety of ways but accepted that there remained unresolved issues about whether "the Commonwealth has a general power to engage in the activities that are the subject of the appropriation". The Commonwealth submitted that these unresolved issues do not need to be decided in this case because the appropriation effected by s 16(1) of the Administration Act in respect of the tax bonus is "for the purposes of the Commonwealth" within the meaning of s 81 of the Constitution.
     
     
286. Examination will reveal that this branch of the Commonwealth's argument has a number of elements which should be identified and treated separately. Ultimately, however, the critical question will be whether the payment of money drawn from the Treasury of the Commonwealth to those entitled under the Impugned Act is a payment that could validly be made in exercise of the executive power of the Commonwealth without any legislative support except the law which appropriates the Consolidated Revenue Fund for the payment. If it could, the Impugned Act will be valid as incidental to the execution of the executive power to make the payment. If the payment could not be made in exercise of the executive power of the Commonwealth, the validity of the Impugned Act must depend upon engaging some other head or heads of power.
     
     
287. The Commonwealth's submission that the Impugned Act was supported by ss 51(xxxix) and 61, as a law with respect to a matter incidental to the execution of a power vested by the Constitution in the Government of the Commonwealth, was expressed in various ways in the course of oral argument. Although not articulated in these terms, the submission can be summarised as follows:
     
     

(a) the Parliament has power to appropriate the Consolidated Revenue Fund for any purpose it thinks fit;

(b) the Executive necessarily has power to expend any money lawfully appropriated; and

(c) the Parliament may enact a law requiring that payment, and regulating the conditions that are to be met before payment is made.

Thus, so the argument concluded, the appropriation power having no relevant limitation (whether by reference to heads of legislative power or otherwise) the Executive of the Commonwealth may spend money for any purpose which the Parliament by its appropriation treats as a purpose of the Commonwealth.

(b) Beginning at s 81?

288. Although the argument, thus framed, proceeds from premises about the ambit of the Parliament's power to appropriate, it is important to recognise that there is no textual or structural reason to treat s 81 as the point at which it is necessary to begin in defining the ambit of the Executive's power to spend. It is necessary to construe each provision of the Constitution as part of the whole. There is no little danger in taking one of its provisions (for example, s 81), construing it in isolation, and then taking that construction as a premise for further conclusions about the ambit of other powers. Of course it is necessary to observe that the constitutional text is to be construed "with all the generality which the words used admit"[309]. But that neither requires nor permits consideration of particular provisions in isolation from their place within the Constitution as a whole.
     
     
289. Especially is this so with respect to s 81, which is not cast in its terms as a grant of legislative power. Rather, the head of legislative power relevant to s 81 is more readily identified in s 51(xxxix). And in the case of a number of other provisions of Ch IV of the Constitution (for example, ss 87, 93 and 96) the relevant head of legislative power is not to be found in Ch IV but rather in s 51(xxxvi).
     
     
290. Although it is convenient to begin the examination of this branch of the Commonwealth's arguments by considering s 81 and what is meant in that section by "for the purposes of the Commonwealth", it will ultimately be unnecessary to attempt some definitive exposition of the meaning of this phrase beyond saying that there is evident force in the view that it is not limited to purposes in respect of which the Parliament has express power to make laws. Not least is that so when it is recognised that there may be an appropriation for a valid exercise of the executive power of the Commonwealth and that, at least to the extent of matters going to the very survival of the polity[310] and a class of matters like national symbols and celebrations[311], the executive power of the Commonwealth is not bounded by the express grants of legislative power. But it is neither necessary nor possible to attempt to chart the boundaries of the area encompassed by the phrase "for the purposes of the Commonwealth" when it is used in s 81. And in particular, it is not necessary to decide whether the phrase encompasses any purpose determined by the Parliament to be a purpose of the Commonwealth[312].
     
     

(c) The place of s 81 in the Constitution

291. The nature of the processes for which ss 81 and 83 of the Constitution provide must be understood having regard to their constitutional context. As was pointed out in the plurality reasons in Combet v The Commonwealth[313], ss 81 and 83 of the Constitution must be understood in the light of other provisions of Ch IV of the Constitution, notably s 94[314] and s 97[315], and those provisions of
     
     
     
     
     
     
     
     
     
     
     
     Pt V of Ch I (in particular, s 53[316], s 54[317] and s 56[318]) which regulate the relations between the two Houses of the federal Parliament in respect of money bills. Section 94, with its provision for distribution of surplus revenue, emphasises the importance to other integers of the Federation of the prohibition in s 83 against drawing from the Treasury except under appropriation made by law. And s 97, with its provisions about audit of receipt and expenditure of money on account of the Commonwealth, is important because the audit arrangements that were picked up and applied required report to the Parliament. Section 97 thus emphasises that ss 81 and 83 are directed to regulating the relationship between the Executive and the Parliament.
     
     
292. Although s 81 has often been referred to as "the appropriation power" it is important to recognise that its purpose is to regulate a particular aspect of the relationship between the Executive and the Parliament: the relationship in matters of finance. Section 81 is not directed to the making of laws which will regulate the rights, duties or obligations of citizens. Rather, as Griffith CJ said in The State of New South Wales v The Commonwealth ("the Surplus Revenue Case")[319]:
     
     

"The appropriation of public revenue is, in form, a grant to the Sovereign, and the Appropriation Acts operate as an authority to the Treasurer to make the specified disbursements. A contractual obligation may or may not be added by some statutory provision or by authorized agreement, but it does not arise from the appropriation. The Appropriation Act does, however, operate as a provisional setting apart or diversion from the Consolidated Revenue Fund of the sum appropriated by the Act."

Or, as Isaacs J put the same point[320]:

"'Appropriation of money to a Commonwealth purpose' means legally segregating it from the general mass of the Consolidated Fund and dedicating it to the execution of some purpose which either the Constitution has itself declared, or Parliament has lawfully determined, shall be carried out."

293. Section 81 is not the only provision that regulates the relationship between the Executive and the Parliament in matters of finance. Sections 53, 54 and 56 make plain, among other things, that appropriations "for the ordinary annual services of the Government" are treated as a distinct class of appropriation. The appropriation relied on in this case is not of that kind; it is a standing appropriation of a kind long recognised[321] as distinct from appropriations for the ordinary annual services of the government.
     
     
294. But while the appropriation which would be relied on in this case is a standing appropriation, it is important to recognise that the provisions of Ch IV of the Constitution and Pt V of Ch I reflect the cardinal principle of parliamentary control which underpinned the British financial system at the time of Federation and which had earlier been transported to the Australian colonies. Proposed laws appropriating revenue or moneys or imposing taxation must originate, in Britain in the House of Commons, in the colonies in the more numerous House of the colonial legislature, and in the Commonwealth, under s 53 of the Constitution, in the House of Representatives. In Britain, "[t]he most ancient, as well as the most valued, prerogative of the House of Commons is the right of supreme control over taxation, to which the right to control issues is a natural corollary"[322]. So too, under the Constitution, the power of appropriation given by ss 81 and 83 is a logical consequence of the right of levying supplies. But no less importantly, it is the Executive which seeks supplies[323] and applies the moneys that have been appropriated.
     
     
295. An appropriation from the Consolidated Revenue Fund permits application of the Fund to the purpose or purposes described in the appropriation and, subject to any statutorily prescribed steps, permits the drawing of money from the Treasury of the Commonwealth. Drawing and application of appropriated moneys are now regulated by the Financial Management Act and provision is now made for the "review and audit of ... the receipt of revenue and the expenditure of money on account of the Commonwealth", as contemplated by s 97 of the Constitution, by the combined operation of the Financial Management Act and the Auditor-General Act 1997 (Cth). Those two Acts are examples of laws whose making is supported by the incidental power. The subjects with which those Acts deal are matters incidental to the execution of the Parliament's power under ss 81 and 83 to make an appropriation by law which will authorise withdrawal from the Treasury of the Commonwealth.
     
     
296. Parliamentary appropriation is the process which permits application of the Consolidated Revenue Fund to identified purposes. Since Federation, those purposes have usually been articulated at a very high level of abstraction. The adoption of output accounting practices described in Combet has led to the adoption of even more general, not to say diffuse, descriptions of those purposes. The appropriation of funds, standing alone, does not and never has required application of the amounts appropriated. Any obligation to apply the funds to the permitted purpose must be found elsewhere than in the appropriation.
     
     

(d) The "purposes of the Commonwealth" as a limit?

297. It has been said[324] that "for the purposes of the Commonwealth" in s 81 of the Constitution encompasses any and every purpose which the Parliament may choose. Others have concluded[325] that the purposes of the Commonwealth can only be purposes for which the Parliament of the Commonwealth has power to enact a law. Between these polar extremes lie several intermediate positions, including the view[326] that:
     
     

"[e]ven upon the footing that the power of expenditure is limited to matters to which the Federal legislative power may be addressed, it necessarily includes whatever is incidental to the existence of the Commonwealth as a state and to the exercise of the functions of a national government. These are things which, whether in reference to the external or internal concerns of government, should be interpreted widely and applied according to no narrow conception of the functions of the central government of a country in the world of to-day."

(e) Some matters of history

298. Much of what has been written about the construction and application of s 81 of the Constitution has been written without express resort to any material extrinsic to the Constitution, whether in the form of Convention Debates or like material. In Cole v Whitfield, the Court referred[327] to the history of s 92:
     
     

"not for the purpose of substituting for the meaning of the words used the scope and effect – if such could be established – which the founding fathers subjectively intended the section to have, but for the purpose of identifying the contemporary meaning of language used, the subject to which that language was directed and the nature and objectives of the movement towards federation from which the compact of the Constitution finally emerged".

Like reference should be made in this matter to the history of the drafting of s 81 in order to understand better the contemporary meaning of the language used ("for the purposes of the Commonwealth"), the subject to which that language was directed, and the nature and objectives of the movement towards Federation which bear upon the questions that now arise.

299. There was disagreement at the 1891 Sydney Convention about whether the draft Bill for the Constitution, as it then stood, empowered the Commonwealth to appropriate and spend money raised for any purpose, and disagreement about whether the Commonwealth should have such a power. In debate, Mr Inglis Clark denied[328] that the Bill as it stood gave such power to the Commonwealth. Sir Samuel Griffith agreed[329] in substance with Mr Inglis Clark whereas Mr Deakin may be understood[330] to have been of the opposite opinion.
     
     
300. The draft Bill, as it stood after the Sydney session of the Convention in 1897, provided[331] in cl 81 that:
     
     

"All revenues raised or received by the Executive Government of the Commonwealth, under the authority of this Constitution, shall form one Consolidated Revenue Fund to be appropriated for the Public Service of the Commonwealth in the manner and subject to the charges provided by this Constitution."

301. In debate at Melbourne on 14 February 1898, Mr Isaacs suggested[332] that the words "Public Service of the Commonwealth" may not be sufficiently large to cover the proposed return of surplus revenues to the States. Thereafter, the Bill was amended by deleting from cl 81 reference to the Public Service of the Commonwealth and substituting "for the purposes of the Commonwealth".
     
     
302. Apart from the intervention of Mr Isaacs, the Convention Debates do not give any indication of why "for the purposes of the Commonwealth" was chosen in preference to "for the Public Service of the Commonwealth". It may be assumed that the latter phrase was modelled on the common form of expression used in colonial constitutions[333] in connection with the appropriation powers of colonial legislatures. Further, as Quick and Garran noted[334], "for the Public Service" was itself an expression reflecting then current British parliamentary practice which, as recorded in the edition of Erskine May's Parliamentary Practice[335] current at Federation, was to appoint those Committees of the whole House of Commons known as the Committee of Supply and the Committee of Ways and Means to respond to "the demand of aid and supply for the public service made by the speech from the throne".
     
     
303. It may be accepted, then, that the expression "for the Public Service" had a very wide application and that adoption of "for the purposes of the Commonwealth" was intended to encompass within its ambit the proposed return of surplus revenue. But it is also necessary to notice one other aspect of the drafting history of the Constitution.
     
     
304. During the Convention Debates about what was to become s 96 of the Constitution (enabling the Commonwealth to grant financial assistance to the States on condition) differing views were expressed[336] about whether, without an express provision to that effect, the power to make such grants would in any event be implied. Mr O'Connor expressed[337] the view that such an express power would be necessary because, although the colonial parliaments "do as they think fit almost within any limits", the only expenditures that would be constitutionally permitted to the Commonwealth would be expenditures within the heads of legislative power.
     
     
305. Taken together, these matters of drafting history may well be equivocal. Whether, as has been suggested[338], "it seems unlikely on balance that [s 81] was intended to allow appropriation for any purpose" need not be decided. It is enough for present purposes to say that the drafting history of the relevant provisions of the Constitution does not point unequivocally to a settled understanding at the time of Federation that the appropriation and spending powers of the Commonwealth extended to any purpose.
     
     
306. That there was no such settled understanding about the extent of the appropriation and spending powers of the Commonwealth is confirmed by the fact that debate about the extent of the Commonwealth powers of appropriation and spending continued after Federation. In the early years of Federation
     
     
     
     
     
     
     
     
     
     Mr Higgins[339], Sir John Forrest[340] and Sir John Quick[341] all expressed the view, in the course of parliamentary debates, that the spending power was limited to the heads of legislative power. Yet despite the expression of such views, the Commonwealth enacted several pieces of legislation whose validity could rest only in an extended understanding of the appropriation and spending powers. Thus, the Maternity Allowance Act 1912 (Cth) provided an allowance to "every woman who ... gives birth to a child" in Australia and who fell within the class of claimants described by s 6 of the Act. And in 1923 Acts were passed to promote the purchase by settlers in outback areas of wire netting for fencing[342] and to authorise the first systematic road grants[343]. The validity of these Acts was not challenged in the courts.
     
     
307. In 1926, however, by the Federal Aid Roads Act 1926 (Cth) the Parliament provided for specific purpose grants to the States for construction and reconstruction of roads. The State of Victoria challenged the validity of the Act. The challenge was dismissed by this Court[344] with very brief reasons. The Act was said[345] to be "plainly warranted by the provisions of s 96 of the Constitution". Further exposition of that conclusion was said[346] to be unnecessary.
     
     
308. The ambit of the Commonwealth's powers to appropriate remained controversial. The Report of the Royal Commission on the Constitution, presented on 21 November 1929, considered the appropriation power. It concluded[347] that:
     
     

"[t]he only constitutional limitations on the power of the Commonwealth Parliament to appropriate the [Consolidated] Revenue Fund are those which are mentioned or referred to in s 81. The Commonwealth Parliament cannot disregard the charges and liabilities imposed by the Constitution, or the obligations of the Commonwealth under the Financial Agreement of 12 December 1927, but subject to these charges liabilities and obligations it may appropriate any part of the Fund 'for the purposes of the Commonwealth'."

309. How far those words limit the power of appropriation was the subject of conflicting evidence to the Royal Commission. Sir Robert Garran submitted that "the Commonwealth" was used in the phrase "for the purposes of the Commonwealth" in the wider sense of "the whole government structure, that is, the Commonwealth as an organised system of government, including the States"[348]. Thus, in Sir Robert Garran's view, the Commonwealth Parliament may appropriate for any purpose which it considers to be a purpose of the Commonwealth. Further, even if the power of appropriation was not properly to be regarded as unlimited, the purpose of an appropriation was, in his view, a political question on which the High Court would not interfere "unless it could be satisfied that the purpose was one which could, by no conceivable means, have any interest for the Commonwealth qua Commonwealth, or have any relation to any of the powers given to the Commonwealth by the Constitution"[349]. By contrast, Sir Edward Mitchell and Mr Owen Dixon gave evidence to the Royal Commission to the effect that s 81 should be read as limiting the objects of appropriation. Sir Edward Mitchell's view was that "the purposes of the Commonwealth" included not merely everything about which the Parliament may legislate but also everything which the Executive Government of the Commonwealth may do without express legislative authority. Mr Dixon submitted that the power of the Parliament to appropriate money was restricted to the subjects assigned to federal legislative power.
     
     
310. The competing views expressed to the Royal Commission reveal four distinct strands of argument which did not necessarily intersect. First, Sir Robert Garran focused upon what is meant by "the Commonwealth" in the phrase "for the purposes of the Commonwealth". Secondly, Sir Edward Mitchell pointed to the difficulty of using "for the purposes of the Commonwealth" as a criterion of constitutional validity when appropriations are expressed at a very high level of generality and abstraction. Thirdly, all of those who gave evidence on this subject to the Royal Commission gave attention to questions of federal structure. Finally, all recognised that although Parliament controls the application of public moneys by the processes of appropriation, it is the Executive that initiates the process by proposing the estimates of expenditure not only for the ordinary annual services of the government but for "the Public Service" more generally.
     
     
311. It is necessary to say something further about two of these strands of thought: the Executive's role with respect to appropriations and the debate about the meaning of "the Commonwealth" in s 81.
     
     
312. As was said in the 10th edition of Erskine May's Parliamentary Practice[350]:
     
     

"The Sovereign, being the executive power, is charged with the management of all the revenue of the state, and with all payments for the public service. The Crown, therefore, acting with the advice of its responsible ministers, makes known to the Commons the pecuniary necessities of the government; the Commons, in return, grant such aids or supplies as are required to satisfy these demands; and they provide by taxes, and by the appropriation of other sources of the public income, the ways and means to meet the supplies which they have granted. Thus the Crown demands money, the Commons grant it, and the Lords assent to the grant: but the Commons do not vote money unless it be required by the Crown; nor do they impose or augment taxes, unless such taxation be necessary for the public service, as declared by the Crown through its constitutional advisers". (emphasis added)

313. There is no doubt that in British parliamentary practice the "public service" encompassed a wide variety of purposes. But the breadth and diversity of purposes for which money might be appropriated under British parliamentary practice is consistent with the absence of any relevant limitation of the subjects to which the executive power in Britain could apply the revenues of the state. If the Crown demanded money for a particular purpose, and if the Commons granted it and the Lords assented to the grant, money could be applied to the purpose. The breadth of the powers of the Crown in Britain provides no assistance in deciding whether, in the federal form of government for which the Constitution provides, the Executive Government of the central polity has some lesser power.
     
     
314. Similarly, the debate about whether "the Commonwealth" when used in the phrase "for the purposes of the Commonwealth" refers to the polity created upon Federation or refers to the nation organised in accordance with the Constitution is a debate which, however it is resolved, sheds little light upon the questions that must be decided in the present matter. It sheds little light on those issues because the debate about the meaning of "the Commonwealth" when used in s 81 masks a more fundamental question.
     
     
315. That more fundamental question is whether "for the purposes of the Commonwealth" is to be understood as limiting the purposes for which the Executive Government of the Commonwealth has power to apply money drawn from the Consolidated Revenue Fund. Consistent with the notion that it is the Executive that demands money, the more numerous House of the Parliament (the House of Representatives) that grants it, the upper House (the Senate) that assents to the grant and the Executive that then outlays the money demanded and granted, the question is whether "for the purposes of the Commonwealth" provides some limitation upon executive power in relation to spending that is not derived by reference to other provisions of the Constitution, notably s 61. That question is not resolved by choosing between reading "the Commonwealth" in s 81 as referring to the polity or the nation.
     
     
316. It is readily accepted that "for the purposes of the Commonwealth" does not yield a criterion easily applied as a measure of constitutional validity of an appropriation. When it is recognised that parliamentary appropriation is a necessary but not sufficient step for the spending of money by the Executive it may be thought to follow that a more precise and concrete issue would be presented by considering whether particular expenditure for identified purposes was a valid exercise of the executive power of the Commonwealth or was authorised by a valid law of the Parliament. Even in such a case, however, determining whether the purpose being pursued is within the phrase "the purposes of the Commonwealth" would not be easy.
     
     
317. In Victoria v The Commonwealth and Hayden ("the AAP Case"), McTiernan J concluded[351] that the question of what is a purpose of the Commonwealth was "non-justiciable". In Attorney-General (Vict) v The Commonwealth ("the Pharmaceutical Benefits Case"), Latham CJ described[352] the question as a "political matter". It is not necessary to adopt either of those paths of reasoning to conclude that asking whether a particular appropriation can be described as being for a purpose of the Commonwealth will seldom if ever yield an answer determinative of constitutional litigation in this Court. There are at least two reasons why that is so. First, the generality with which appropriations are ordinarily expressed will not readily permit examination of whether the purposes thus identified are purposes of the Commonwealth. Secondly, if there is a plaintiff (other than a State Attorney-General) who has standing to challenge a particular expenditure, the question at issue will be about a particular application of money to a particular purpose. That is an inquiry that will turn upon the ambit of the power (legislative or executive) that is said to be engaged if the expenditure is made.
     
     
318. All this being so, the question at issue in the present matter is not to be understood as depending upon first resolving the meaning or application of the expression "for the purposes of the Commonwealth" in s 81. Rather, validity of the Impugned Act depends upon other considerations.
     
     

(f) The decided cases

319. The argument advanced on behalf of the Commonwealth in the present matter is not substantially different in effect from the argument urged on behalf of the Commonwealth in the Pharmaceutical Benefits Case[353]. In the Pharmaceutical Benefits Case and in this case, the Commonwealth's argument treated s 81 not as directed to the regulation of the relationship between the Executive and the Parliament but as giving to the Executive a power to spend. Thus, in the Pharmaceutical Benefits Case it was submitted[354] that "the purposes of the Commonwealth" was a larger field of Commonwealth expenditure than what might be called "the domestic or governmental expenditure, the necessary expenses of carrying out the functions of the Government" encompassed by the reference in s 82 to "the expenditure of the Commonwealth". The Commonwealth further submitted[355] that the effect of the reference in s 81 to "the purposes of the Commonwealth" was analogous to the meaning attributed to Art I, §8, cl 1 of the Constitution of the United States[356] and that, consistent with certain decisions of the Supreme Court of the United States[357], the Commonwealth power to spend should be understood as being "for purposes as large as the purposes for which it is empowered to raise money"[358].
     
     
320. The validity of the premise for the Commonwealth's argument in the Pharmaceutical Benefits Case, that s 81 gives power to spend money, was not examined in that case. The decision in the case turned on consideration of the reach of the incidental power. But the premise for the Commonwealth's argument in the Pharmaceutical Benefits Case, that s 81 gives a power to spend, should not be accepted. Section 81 does not provide for spending; it regulates the relationship between the Executive and the Parliament. Section 81 provides for control by the Parliament over the purposes to which the Consolidated Revenue Fund may be applied and s 83 regulates withdrawal of money from the Treasury of the Commonwealth. The power to spend lies elsewhere.
     
     
321. Because of the way in which opinions were divided in the AAP Case, no proposition about the ambit of the Commonwealth's powers as to appropriation and expenditure can be identified as commanding the assent of a majority of the Justices in that case. Two members of the Court, Barwick CJ and Gibbs J, were of opinion that the Commonwealth's power of appropriation was limited to purposes in respect of which the Parliament has legislative power. By contrast, McTiernan, Mason and Murphy JJ were of opinion that the purposes of the Commonwealth are not limited to those purposes for which the Commonwealth has power to make laws and that it is for Parliament to determine what are the purposes of the Commonwealth. Although Jacobs J treated the purposes of the Commonwealth as being limited to purposes identified from within the Constitution, those purposes included, in his Honour's view[359], purposes implied from the existence of "Australia as a nation externally and internally sovereign" including "co-ordination of services" to meet the "various interrelated needs" of a complex society. The seventh member of the Court, Stephen J, held that the plaintiffs, the State of Victoria and the Attorney-General for that State, lacked standing to bring the proceedings.
     
     
322. For present purposes, it is useful to focus particularly upon the reasons of Mason J. First, Mason J rejected[360] the argument that the express provision of power under s 96 of the Constitution to make grants of financial assistance to the States on conditions was reason to confine s 81. Rather, in his Honour's view, s 96 was to be seen as a provision which put beyond question the power of Parliament to attach conditions to grants made to the States. For the reasons given earlier, this understanding of the purpose for including s 96 in the Constitution may not be consistent with the course of debate at the constitutional conventions. For the moment, however, it is convenient to proceed on the footing that s 96 was included for the limited purposes identified by Mason J in the AAP Case.
     
     
323. Although Mason J gave to the words "for the purposes of the Commonwealth" the meaning ascribed to them by Latham CJ in the Pharmaceutical Benefits Case (for such purposes as Parliament may determine[361]) that conclusion was not seen[362] as leading to the conclusion that the Commonwealth has an unlimited executive power or to the conclusion that a statutory appropriation provides lawful authority for the engagement by the Commonwealth in particular activities. Rather, Mason J emphasised[363] that the executive power of the Commonwealth "is not unlimited and ... its content does not reach beyond the area of responsibilities allocated to the Commonwealth by the Constitution, responsibilities which are ascertainable from the distribution of powers, more particularly the distribution of legislative powers, effected by the Constitution itself and the character and status of the Commonwealth as a national government". Having regard[364] to the provisions of s 61 taken in conjunction with the federal character of the Constitution and the distribution of powers between the Commonwealth and the States, any other conclusion was described by Mason J as "unacceptable". In the AAP Case, Mason J would have restrained[365] the Commonwealth from carrying into effect the activities for which money was appropriated and restrained the Commonwealth from expending those moneys.
     
     

(g) The executive power

324. As has been observed, the Commonwealth's submissions on s 61 and the incidental power can be understood as proceeding by three steps: (a) the Parliament has power to appropriate the Consolidated Revenue Fund for any purpose it thinks fit; (b) the Executive necessarily has power to expend any money lawfully appropriated; and (c) the Parliament may enact a law requiring that payment and regulating the conditions that are to be met before payment is made.
     
     
325. These submissions necessarily proposed a particular understanding of the structure of the Federation. It is an understanding in which the central polity has legislative power with respect to taxation (limited by the requirement "not to discriminate between States or parts of States"[366]) and an executive power with respect to expenditure limited only by the necessity to secure the approval of the Parliament for that expenditure. And because both the initiative for expenditures and the making of expenditures are matters for the Executive, the understanding of the Federation for which the Commonwealth contends is one which gives the Executive of the Commonwealth an unlimited power to propose financial expenditures and, subject to parliamentary appropriation, power to make those expenditures that is in no way limited by subject-matter or purpose. Such an understanding of the structure of the Federation does not fit easily with the long-accepted understanding of the constitutional structure, expressed in Melbourne Corporation v The Commonwealth[367] or R v Kirby; Ex parte Boilermakers' Society of Australia[368], of separate polities, separately organised, continuing to exist as such, in which the central polity is a government of limited and defined powers.
     
     
326. In The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd ("the Wool Tops Case"), Isaacs J pointed out[369] that:
     
     

"Section 61 makes three declarations as to the executive power of the Commonwealth. Observe, it is not as to the Executive Government of the Commonwealth or as to the powers of the Government, but as to the 'executive power of the Commonwealth.' As to that 'power', it declares that it (a) is vested in the Sovereign, (b) is exerciseable by the Governor-General as the Sovereign's representative, (c) 'extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth.' The reference to the Governor-General as the representative of the Sovereign must be read with sec 2 of the Constitution, which constitutes him such representative. As to the first declaration it is a renewed statement of the law and introductory of what follows. Blackstone (vol I at 190) says: 'The Supreme executive power of these Kingdoms is vested by our laws in a single person, the King or Queen.' In Halsbury's Laws of England (vol VI at 318) it is said: 'The executive authority is vested in the Crown as part of the prerogative.' The second declaration need not be further considered now. The third is very important. It marks the external boundaries of the Commonwealth executive power, so far as that is conferred by the Constitution, but it leaves entirely untouched the definition of that power and its ascertainment in any given instance. It no more solves the difficulty in the present case than would the words 'for the peace welfare and good government of New South Wales' or the words 'in and for Victoria' solve a similar difficulty in relation to the constitutional executive authority of those States. But the third declaration is an essential starting-point, and the extent it marks out cannot be exceeded." (last emphasis added)

327. Although the ambit of Commonwealth executive power is not otherwise defined by Ch II, "it is not unlimited [in scope] and ... its content does not reach beyond the area of responsibilities allocated to the Commonwealth by the Constitution, responsibilities which are ascertainable from the distribution of powers, more particularly the distribution of legislative powers, effected by the Constitution itself and the character and status of the Commonwealth as a national government"[370].
     
     
328. As Mason J had earlier observed, in Barton v The Commonwealth[371], the executive power of the Commonwealth:
     
     

"extends to the execution and maintenance of the Constitution and of the laws of the Commonwealth. It enables the Crown to undertake all executive action which is appropriate to the position of the Commonwealth under the Constitution and to the spheres of responsibility vested in it by the Constitution."

As was later explained in the plurality reasons in Davis v The Commonwealth[372], those "spheres of responsibility" vested in the Executive Government of the Commonwealth include responsibilities derived from the character and status of the Commonwealth as a national polity. In the Pharmaceutical Benefits Case[373], Dixon J made a related point in relation to the power of expenditure, when he said that the power "necessarily includes whatever is incidental to the existence of the Commonwealth as a state and to the exercise of the functions of a national government". And as Dixon J went on to say[374]:

"These are things which, whether in reference to the external or internal concerns of government, should be interpreted widely and applied according to no narrow conception of the functions of the central government of a country in the world of to-day."

329. In the AAP Case, Mason J said[375]:
     
     

"[T]here is to be deduced from the existence and character of the Commonwealth as a national government and from the presence of ss 51(xxxix) and 61 a capacity to engage in enterprises and activities peculiarly adapted to the government of a nation and which cannot otherwise be carried on for the benefit of the nation".

The establishment by the Commonwealth of the Commonwealth Scientific and Industrial Research Organisation to undertake scientific research on behalf of the nation was given[376] as an example of the capacity of the Commonwealth to engage in enterprises and activities "peculiarly adapted to the government of a nation ... which cannot otherwise be carried on for the benefit of the nation". Whether the establishment of that organisation could be supported as an exercise of the patents power need not be explored.

330. Mason J distinguished[377] between the power to spend money and the power of the Commonwealth to engage in particular activities. Mason J indicated[378] that the executive power to engage in such activities, "arising as it does from an implication drawn from the Constitution and having no counterpart, apart from the incidental power, in the expressed heads of legislative power, is limited in scope". As Mason J went on to point out[379]:
     
     

"It would be inconsistent with the broad division of responsibilities between the Commonwealth and the States achieved by the distribution of legislative powers to concede to this aspect of the executive power a wide operation effecting a radical transformation in what has hitherto been thought to be the Commonwealth's area of responsibility under the Constitution, thereby enabling the Commonwealth to carry out within Australia programmes standing outside the acknowledged heads of legislative power merely because these programmes can be conveniently formulated and administered by the national government."

331. As has already been noted, the Commonwealth submitted that it was unnecessary to consider how far the power identified by Mason J in the AAP Case might extend. Rather, it was submitted that it was sufficient to conclude that the power to make the expenditure now in question was to be found in the Executive's power to spend what Parliament has appropriated, coupled with the legislative power with respect to matters incidental to the execution of the executive power to spend, giving power to enact a law making the expenditure mandatory.
     
     
332. In the course of oral argument, it was suggested that to conclude that the Commonwealth Executive did not have power to spend money that had been appropriated by the Parliament to any purpose falling within the appropriation was to return to notions of reserved powers which underpinned R v Barger[380] but were discarded in Amalgamated Society of Engineers v Adelaide Steamship Co Ltd ("the Engineers' Case")[381]. That is, it was suggested that the conclusion proceeded from an unstated assumption about the ambit of State executive or legislative power.
     
     
333. The decision in the Engineers' Case does not entail that any reference to notions of "constitutional structure" or implications based upon the division of powers between the integers of the Federation is necessarily wrong. Reference to those notions may invite attention to whether they are being used in a way that proceeds from some unstated premise about "federal balance". As pointed out in New South Wales v The Commonwealth (Work Choices Case)[382], an appeal to "federal balance" depends upon making an a priori assumption about the consequences of division of legislative powers. And the Engineers' Case established that federal legislative power is not to be determined by resorting to any assumption of that kind. As five members of the Court said[383] in the Work Choices Case:
     
     

"What was discarded in the Engineers' Case was an approach to constitutional construction that started in a view of the place to be accorded to the States formed independently of the text of the Constitution. The Engineers' Case did not establish that no implications are to be drawn from the Constitution. So much is evident from Melbourne Corporation[384] and from R v Kirby; Ex parte Boilermakers' Society of Australia (Boilermakers' Case)[385]. Nor did the Engineers' Case establish that no regard may be had to the general nature and structure of the constitutional framework which the Constitution erects. As was held in Melbourne Corporation[386]:

'The foundation of the Constitution is the conception of a central government and a number of State governments separately organised. The Constitution predicates their continued existence as independent entities.'

And because the entities, whose continued existence is predicated by the Constitution, are polities, they are to continue as separate bodies politic each having legislative, executive and judicial functions. But this last observation does not identify the content of any of those functions. It does not say what those legislative functions are to be."

And, it may be added, nor does it say what those executive functions are to be.

334. Whether the Impugned Act is a law incidental to the execution of a power vested by the Constitution in the Government of the Commonwealth depends upon the ambit of the Commonwealth's executive power. To conclude that the executive power of the Commonwealth is not unbounded is neither to revert to some doctrine of reserved powers nor to treat the new and national polity created by Federation as a cripple. It does not leave some element of executive power (let alone some essential element of such power) undistributed between the integers of the Federation, and thus unavailable to any.
     
     
335. The bound that is passed when the Commonwealth Executive seeks to spend money in the manner for which the Impugned Act provides is the boundary set by those structural considerations which informed and underpinned the decision in Melbourne Corporation. The executive power of the Commonwealth is the executive power of a polity of limited powers. The Engineers' Case decided that the powers are not to be understood as confined by a priori assumptions. But no statement of this Court suggests that the executive power of the Commonwealth is unbounded.
     
     
336. Why do structural considerations require the conclusion that the executive power of the Commonwealth in matters of spending is not unbounded? That question is best approached by examining the proposition that, in matters of raising and expenditure of public moneys, the executive power recognised in s 61 is the same as the power of the Executive in the United Kingdom at the time of Federation. There are several reasons to reject that proposition.
     
     
337. First, the ambit of the Commonwealth executive power is to be identified having regard to the whole of the constitutional structure, not only those provisions that deal directly with the subject of executive power. To do otherwise would not read s 61 in the context of the whole Constitution. In particular, identifying the scope of Commonwealth executive power in relation to raising and expenditure of public moneys requires consideration of more than the respective spheres of exercise of executive power by the Commonwealth and State governments. To confine attention to executive power is to ignore the intersection between executive and legislative power for which s 51(xxxix) expressly provides. The Parliament's legislative powers cannot be determined without regard to the engagement of s 51(xxxix) with respect to matters incidental to the execution of powers vested by the Constitution in the Government of the Commonwealth. Conversely, the powers of the Commonwealth Executive must be determined bearing in mind that there is legislative power with respect to matters incidental to the execution of that executive power.
     
     
338. Secondly, determination of the ambit of the Commonwealth Executive's power in matters of raising and expending public moneys must not ignore the carefully delineated intersection between the respective roles of the Executive and the Parliament that not only lies at the centre of a proper understanding of the provisions of Pt V of Ch I and Ch IV of the Constitution but also informs the meaning that is to be given to s 61 in matters of executive power with respect to public moneys. The central elements of the delineation of the respective roles of the Executive and the Legislature provided by the Constitution came directly from the United Kingdom practices of the late nineteenth century. But there was one fundamental alteration to those arrangements that was made by the Constitution and cannot be ignored. The Parliament which was to control both taxation and expenditure under the Australian Constitution was given only limited legislative powers. Yet when it is said that the position of the Commonwealth Executive in matters of expenditure is no different from that of the United Kingdom Executive at the time of Federation, it is asserted that the executive arm of government has unbounded powers.
     
     
339. Of course it must be understood that, as Dixon J said[387] in Melbourne Corporation:
     
     

"The position of the federal government is necessarily stronger than that of the States. The Commonwealth is a government to which enumerated powers have been affirmatively granted. The grant carries all that is proper for its full effectuation. Then supremacy is given to the legislative powers of the Commonwealth."

But it is the very fact of the supremacy of the Commonwealth's legislative power that directs attention to the consequences that follow for the continued existence of separate polities, separately organised, if the executive power of the Commonwealth in matters of expenditure is unbounded. If the executive power in this respect is unbounded, the legislative power of the Parliament in such matters, given by s 51(xxxix), is limited only by the requirement that the legislation be with respect to a matter incidental to the execution of that power.

(h) Conclusions respecting s 61 and the incidental power

340. To the extent to which the Commonwealth's submissions about s 61 and s 51(xxxix) depended upon distinguishing between the power to spend and the power to engage in activities, those submissions should be rejected as resting upon a distinction that cannot be maintained. The distinction cannot be maintained if proper account is taken of the incidental power.
     
     
341. As was said in Re Wakim; Ex parte McNally[388], "[n]o single formula will describe the relationship that must exist between a power or group of powers and some exercise of power that is said to be incidental to the execution of the principal power or is necessary or proper to render the main grant of power effective". But both the central idea and the generality of the incidental power are stated by Marshall CJ in McCulloch v Maryland[389], cited with approval in Grannall v Marrickville Margarine Pty Ltd[390]:
     
     

"Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional."

342. It would be wrong to read the incidental power as having some narrow or confined application in connection with the execution of powers vested by the Constitution in the Government of the Commonwealth. The matters incidental to the execution of the power of the Executive to withdraw from the Treasury (under an appropriation made by law) and spend the money so withdrawn are not limited to matters incidental to the withdrawal; they must include matters incidental to the execution of the power to spend what has been withdrawn. And if the Executive has power to spend money for a particular purpose, it is not to be supposed that the incidental power would not authorise the enactment of legislation facilitating and controlling that expenditure and its application. Legislation which facilitates and controls the expenditure and its application is not a narrow subject. It includes the specification (as in the Impugned Act) of conditions that must be met if the payment is to be made. But it extends to providing for terms and conditions regulating the manner and circumstances of application of the money provided. No distinction can then be drawn between cases where the money is to be spent by giving it to a third party and cases where it is to be spent directly by or on behalf of the Commonwealth. The spending of money by giving it to a third party may be classed as "spending" and spending it directly by or on behalf of the Commonwealth might be classed as the Commonwealth "engaging in activities". But even if such a classification could be made it supports no different engagement of the incidental power. That is why attention must focus on the ambit of the executive power, not upon a supposed distinction between spending money and engaging in activities.
     
     
343. The executive power of the Commonwealth extends to the execution and maintenance of the Constitution and of the laws of the Commonwealth. The Executive's power to spend money is not confined to expenditures made in accordance with a law made by the Parliament under an enumerated head of legislative power. But, for the reasons given earlier in connection with the executive power generally, the executive power to spend is not unlimited. Its limits are determined in the same manner as are the limits on the executive power generally.
     
     
344. In the present matter it will later be demonstrated that some but not all operations of the Impugned Act are supported as a law with respect to taxation. To that extent the expenditure in satisfaction of the rights created by the Impugned Act (as read down) is a valid exercise of the executive power as executing a law of the Commonwealth. To the extent to which the Impugned Act is not supported as a law with respect to taxation, it will later be shown that it is not supported by any other head of legislative power.
     
     
345. It is not shown that so much of the expenditure as is not supported by a head of legislative power is to be supported as an exercise of executive power identified as derived from the character and status of the Commonwealth as a national polity or as deduced from the existence and character of the Commonwealth as a national government. That proposed expenditure is not shown to fall within this area by demonstrating only that the expenditure in question is directed to an end that is described as a national economic emergency. It is necessary to say something in amplification of this last point.
     
     
346. It is said that, because there is a national economic crisis or emergency to which a national response must be made, the executive power under s 61, to spend money that has been lawfully appropriated, extends to spending money to meet that crisis in whatever way the Executive chooses. And it is said that the Impugned Act is valid because the Parliament may make a law providing for the execution of the power of the Executive by requiring the Commissioner of Taxation to make the payments that the Impugned Act requires.
     
     
347. Words like "crisis" or "emergency" do not readily yield criteria of constitutional validity. It may be accepted, for the purposes of argument, both that there is shown to be a national crisis to which a national response is required and that only the Commonwealth has the administrative and financial resources to respond. It does not follow, however, that the Commonwealth's executive power to respond to such circumstances by spending money is a power that is unbounded. Were it so, the extensive litigation about the ambit of the defence power during World War II was beside the point.
     
     
348. Though variously expressed, the argument by reference to national "crisis" or "emergency" can be summed up as being: "There is a crisis; if the Commonwealth cannot do this, who can?"
     
     
349. What that and similar forms of rhetorical question obscure is a conflation of distinct questions about ends and means. The questions are conflated because the legislative power to enact the Impugned Act is treated as depending upon the execution of a power, said to be implicitly vested by the Constitution in the Executive, to meet a national crisis (in this case a financial or economic crisis). But if that is the end to which the exercise of power is to be directed, it by no means follows that any and every means of achieving that end must be within power. To argue from the existence of an emergency to either a general proposition that the Executive may respond to the crisis in any way it sees fit, or to some more limited proposition that the Executive has power to make this particular response, is circular.
     
     
350. Describing the expenditure in issue in this matter as a "short term fiscal [measure] to meet adverse economic conditions affecting the nation as a whole" engages no constitutional criterion of a kind hitherto enunciated by this Court. It is a description that conflates the distinction between ends and means that this Court must maintain. It is for the political branches of government, not this Court, to fix upon the ends to be sought by legislative or executive action. It is for the Court, not the political branches of government, to decide whether the means chosen to achieve particular political ends are constitutionally valid and it is for the Court to identify the criteria that are to be applied to determine whether those particular means are constitutionally valid.
     
     
351. The question for decision is whether the response that has been made (by the enactment of the Impugned Act) is within power. That question is not answered by pointing out why the Impugned Act was enacted.
     
     
352. Reference to notions as protean and imprecise as "crisis" and "emergency" (or "adverse effects of circumstances affecting the national economy") to indicate the boundary of an aspect of executive power carries with it difficulties and dangers that raise fundamental questions about the relationship between the judicial and other branches of government.
     
     
353. It was noted at the start of these reasons that no party or intervener disputed that there is a global financial crisis, or sought to suggest that Australia stands apart from the crisis or is immune from its effects. It was, therefore, not necessary in this case to identify the relevant constitutional facts. In particular, it was not necessary to examine whether it is for this Court to decide what constitutes a "crisis" or an "emergency", or whether it is sufficient that the Executive has concluded that circumstances warrant such a description. If it is for the Court to decide these matters, questions arise about what evidence the Court could act upon other than the opinions of the Executive, and how those opinions could be tested or supported. Yet, if it is to be for the Executive to decide whether there is some form of "national emergency" (subject only to some residual power in the Court to decide that the Executive's conclusion is irrational), then the Executive's powers in such matters would be self-defining.
     
     
354. The difficulties that are presented by such an understanding of executive power are real and radical. They are difficulties that have their immediate origins in two different sources. The first is the conflation of ends and means. The second is that reference is made to crisis or emergency to invoke (at least inferentially) that notion of which Dixon J wrote in Australian Communist Party v The Commonwealth[391] when speaking of the source of the legislative power to put down subversive activities and endeavours as[392] "the necessary power of the federal government to protect its own existence and the unhindered play of its legitimate activities". But as Dixon J went on to say[393], "[t]he extent of the power which I would imply cannot reach to the grant to the Executive Government of an authority, the exercise of which is unexaminable, to apply as the Executive Government thinks proper".
     
     
355. The different ways in which a fiscal stimulus can be delivered were described in several documents which were produced by international organisations and upon which the Commonwealth relied as demonstrating both the existence of an international financial crisis and the degree of international agreement about how it should be met. Those documents show that a fiscal stimulus can be delivered in a number of different ways, including direct government investment as, for example, in capital works and provision of additional disposable income to some or all members of the community, by reduced taxation and taxation instalments, rebates in respect of taxation that has not yet been paid, refunds of taxation that has been paid, increased social security benefits or other direct payments to recipients.
     
     
356. Legislative measures with respect to taxation and social security benefits would find ready support in s 51(ii), s 51(xxiii) and s 51(xxiiiA). Legislation for some other forms of direct payments to recipients may likewise be supported by other heads of power within s 51. The question is whether a direct payment not otherwise supported by legislation made under an enumerated head of power may be made in exercise of the executive power of the Commonwealth.
     
     
357. In the end the Commonwealth's submissions about the executive and incidental powers came down to the proposition that the Commonwealth's power to spend is limited only by the need to obtain parliamentary approval for the proposed expenditure. That contention should be rejected. The matters of history described earlier in these reasons do not require its acceptance. Its acceptance would not be consistent with what Mason J referred[394] to as "the broad division of responsibilities between the Commonwealth and the States achieved by the distribution of legislative powers" and would, by "enabling the Commonwealth to carry out within Australia programmes standing outside the acknowledged heads of legislative power merely because these programmes can be conveniently formulated and administered by the national government", effect a radical transformation in what has hitherto been thought to be the constitutional structure of the nation. To hold that the Commonwealth power to spend does not extend so far is consistent with what was decided in the Pharmaceutical Benefits Case and, after the AAP Case, in Davis v The Commonwealth[395].
     
     

Nationhood

358. The Commonwealth submitted that the Impugned Act is to be supported as an exercise of legislative power with respect to matters that follow from the Commonwealth's status as the national government. Many of the matters urged in this regard have already been dealt with in connection with executive power and the treatment of those matters need not be repeated here. Rather, it is necessary to deal with a more particular expression of the Commonwealth's argument under this heading, namely, that it should now be recognised that the Commonwealth has legislative power with respect to the national economy.
     
     
359. The Commonwealth advanced the argument in two forms. First, it was submitted that a legislative power with respect to the "national economy" was created and sustained by s 92 of the Constitution together with the aggregation of specific heads of legislative power with respect to trade and commerce, taxation, bounties, borrowing, banking, currency, insurance, corporations and external affairs, and the exclusive power under s 90 to impose duties of customs and of excise. Secondly, the Commonwealth submitted that a legislative power with respect to the national economy is a necessary implication from the Commonwealth being the national government. Both submissions should be rejected.
     
     
360. With respect to the first argument, it is enough to say that the aggregation of separate heads of power yields no greater power than the sum of the parts.
     
     
361. With respect to the second of the arguments, it may readily be accepted that the Constitution recognises that there is a national economy. Where once there may have been six separate markets, one of the chief elements of the design of the Constitution (and in particular Ch IV concerning Finance and Trade) was to create and foster national markets[396]. But the implication of legislative power with respect to a subject-matter described as the "national economy" by no means follows from the observation that there is a national economy.
     
     
362. First and foremost, despite the evident constitutional intention to create and foster national markets the Parliament was given no express head of power with respect to such a subject-matter.
     
     
363. Secondly, the expression "national economy" is anything but certain. Its uncertainty is demonstrated by the fact that a central premise of the present litigation was that Australia's economic wellbeing is not isolated from global economic influences. That may suggest that there is only limited utility in treating (or at least in continuing to treat) the Australian national economy as if it is a separate and distinct unit. It is not necessary, however, to examine that subject further. More particularly it was not explained what areas the asserted power would cover beyond such subject-matters as now fall within s 51(i) ("trade and commerce with other countries, and among the States"), s 51(ii) ("taxation; but so as not to discriminate between States or parts of States") and s 51(xiii) ("banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money"). Rather, the power which it was said should be implied was treated as sufficiently described by its alleged connection with the fact of the existence of Australia as a nation. But that connection does not create or give content to such a power.
     
     
364. As is apparent from what has already been said in these reasons, it may be accepted that there is some implied legislative power in the Parliament that follows from the existence of the national polity. That power extends to laws putting down subversive activities and endeavours[397]. But that implied legislative power does not extend so far as to encompass the general subject of the "national economy".
     
     
365. Not only is the content of such a power too uncertain to permit its implication, but, even if the power could be given sufficiently certain content, its implication is not necessary. As will later be shown, in all but a small part of its operation, the Impugned Act is a law with respect to taxation. There is no lack of power to provide for refunds of taxation paid by those who paid tax for the 2007-08 income year; no lack of power to provide for reduction in taxation instalments payable in respect of those who are "Pay as you go" taxpayers[398]; no lack of power to provide for reduction in rates of direct or indirect taxation. And no other aspect of the three "fiscal stimulus packages" mentioned at the start of these reasons was said to be dependent upon the implication of the power now under consideration.
     
     
366. These considerations apart, the argument that power with respect to the national economy is a necessary implication from the constitutional text and structure amounted ultimately to no more than the proposition that the economic circumstances that now exist require national action. That provides no sufficient basis for the implication of the asserted power.
     
     
367. The Impugned Act is not supported by considerations stemming from the position of the Commonwealth as the central government of the nation.
     
     

External affairs

368. The Commonwealth submitted that the Impugned Act is a law with respect to external affairs on either of two different bases. First, it was submitted that the Impugned Act is an appropriate and adapted response to what is an external matter or thing, namely, the global financial crisis. Secondly, it was submitted that the fiscal stimulus (including the provision of the tax bonus) implements an international agreement or understanding. Neither argument should be accepted.
     
     
369. The causes of the financial difficulties which now confront Australia may be found in events occurring outside Australia. Those events and their consequences have affected many countries. The Impugned Act provides for payments to Australian taxpayers with a view to reducing the domestic consequences of those events. The Impugned Act is directed, and directed only, to providing a fiscal stimulus to the Australian economy. It is not a law with respect to any matter or thing external to Australia[399].
     
     
370. It is not shown that Australia has undertaken any international obligation sufficient to found the Impugned Act in the external affairs power. It was submitted that there is an international agreement or understanding to make a co-ordinated international response to a global economic problem. The agreement or understanding was said to have two sources. First, reference was made to a Declaration of the Summit on Financial Markets and the World Economy made by the leaders of the Group of Twenty ("the G-20") on 15 November 2008 in Washington DC. Australia is a member of the G-20. Secondly, reference was made to some recommendations of the IMF and the Organisation for Economic Co-operation and Development ("the OECD"). Australia is a member of each of those organisations.
     
     
371. As was pointed out in Victoria v The Commonwealth (Industrial Relations Act Case)[400] legislation may be supported under the external affairs power if the legislation gives effect to some international obligation. But as also pointed out in that case, what is said to be the legislative implementation of a treaty may present some further questions for consideration, including whether the treaty in question sufficiently identified the means chosen in legislation as one of the ways in which parties to the treaty are to pursue some commonly held aspiration expressed in the treaty. In the present case, however, it is not necessary to examine these questions. It is sufficient to observe that neither the Declaration by the leaders of the G-20, nor the recommendations of either the IMF or the OECD, imposed any obligation on Australia to take action of the kind now in question.
     
     
372. The chief focus of the Declaration by the leaders of the G-20 was the articulation of some "common principles for reform of financial markets" and the statement of an "action plan to implement principles for reform". Whether the statement of these principles, or the settling of an action plan, are to be understood as imposing obligations on participants need not be considered. What the Commonwealth submitted to be the relevant obligation was not contained in these parts of the Declaration. Rather, the relevant obligation was said to be contained in a part of the Declaration that described "Actions Taken and to Be Taken". Under that heading, the Declaration recorded that the nations represented had taken certain actions and would take a number of steps to "restore growth, avoid negative spillovers and support emerging market economies and developing countries". Six steps were set out. One of them was:
     
     

"Use fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conducive to fiscal sustainability".

Read in the context of the Declaration as a whole it is evident that none of the six steps described was intended to bind the nations whose leaders signed the Declaration to any particular course of action. Rather, the document as a whole made plain (by its use of expressions like "as appropriate") that it was for each nation to chart its own course in responding to the circumstances that have arisen. The Impugned Act was not enacted in fulfilment of any obligation on Australia recorded in the Declaration of the leaders of the G-20.

373. The recommendations made by the IMF and the OECD are of a similarly advisory or hortatory character. In a World Economic Outlook Update, published in January 2009, the IMF said that "[m]onetary and fiscal policies need to become even more supportive of aggregate demand and sustain this stance over the foreseeable future, while developing strategies to ensure long-term fiscal sustainability" and further, that "the timely implementation of fiscal stimulus across a broad range of advanced and emerging economies must provide a key support to world growth". But these and similar statements made by staff of the IMF in a paper presented to a meeting of the Deputies of the G-20 did no more than point to the perceived need for action to be taken by individual nations if there was to be a durable recovery in global economic activity. They imposed no obligation upon any nation.
     
     
374. The Impugned Act is not a law with respect to external affairs.
     
     

Trade and commerce with other countries and among the States

375. It may be accepted that the Impugned Act was promoted and passed with the hope that many recipients would spend the sum paid. Those who do spend the money may spend it in a way that constitutes international or interstate trade and commerce. But neither the legal nor the practical effect of the Impugned Act is such as to make it a law with respect to either or both of international or interstate trade and commerce.
     
     
376. The Commonwealth did not press for any reconsideration of the accepted doctrine of the Court about the trade and commerce power. The Commonwealth submitted that the question critical to the engagement of s 51(i) in this case was one about the practical effect of the Impugned Act. In particular, would the Impugned Act have "a substantial economic effect on the flow of commercial transactions, goods, services, money, credit, among the States?"
     
     
377. It is not necessary to decide whether an affirmative answer to the question posed by the Commonwealth would suffice to show that the Impugned Act is a law supported by s 51(i). It was not submitted that the material in the Special Case directly answered the factual question posed by the Commonwealth. The material in the Special Case showed that the "$42 billion Nation Building and Jobs Plan" announced in February 2009 (of which the Impugned Act was one component) was designed to provide "a boost to the economy of around ½ per cent of [Gross Domestic Product] in 2008-09 and around ¾ to 1 per cent of GDP in 2009-10". About $12.77 billion of the total sum of $42 billion is intended to be spent in 2008-09. Sums expected to be payable under the Impugned Act during 2008-09 total $6.95 billion and this would account for more than half of the expenditure of $12.77 billion to be made during 2008-09. But the material in the Special Case shows no estimation of how the increase in Gross Domestic Product relates to trade and commerce with other countries, or among the States. As the Commonwealth acknowledged in argument, "nobody has modelled the precise effect on the flow [of transactions] among the States".
     
     
378. The Impugned Act is not a law with respect to trade and commerce with other countries, and among the States.
     
     

A law with respect to taxation?

379. Although the Commonwealth, in its written submissions, had sought to support the whole of the Impugned Act as a law with respect to taxation, that submission was not maintained in oral argument. The parties agreed that it was expected that, of those taxpayers who on the face of the Impugned Act were eligible for payment of a tax bonus, about 11 per cent would be entitled to a bonus greater than the amount of the taxpayer's adjusted tax liability for the 2007-08 income year. In oral argument, the Commonwealth submitted that only so much of the Impugned Act as provided for the payment of amounts less than or equal to the amount of a taxpayer's adjusted tax liability for the 2007-08 income year was properly characterised as a law with respect to taxation. It was submitted that if the Impugned Act was not otherwise supported as a valid law, s 15A of the Acts Interpretation Act 1901 (Cth) was engaged and the Impugned Act was to be read down. This submission should be accepted.
     
     
380. New South Wales, intervening, submitted that the Impugned Act, in all its operations, was a law with respect to taxation. New South Wales submitted that the Impugned Act was to be characterised in this way because s 5 of the Act gives those who were taxpayers for the 2007-08 income year a right to recover the amount of the tax bonus. The submission should be rejected; the Impugned Act is not, in all its operations, a law with respect to taxation.
     
     
381. For the purposes of considering the New South Wales submission that the Impugned Act is a law with respect to taxation in all its operations it is convenient to put on one side the questions of reading down presented by the Commonwealth submissions.
     
     
382. The Impugned Act raises no revenue. It requires the making of payments to persons who were liable to pay income tax for the immediately preceding financial year. As explained at the start of these reasons, on the face of the Act, the amount to be paid is fixed by reference to the taxable income of that person in that financial year but is not fixed by reference to the amount of tax that was paid. Only those who have lodged their taxation return are eligible for the payment.
     
     
383. The Court's decisions about the ambit of the taxation power have focused, at least for the most part, upon whether a law requiring payment of a sum to government is a law with respect to taxation. It is to be recalled that Kitto J expressed his often-quoted propositions[401] about characterisation of a law in the context of deciding whether the statutory provisions then in question were to be supported as a law with respect to taxation. The law at issue in Fairfax v Federal Commissioner of Taxation provided for trustees of superannuation funds to pay tax at a higher rate if the fund was not invested to a specified level in public securities including Commonwealth bonds. The question was whether the law was, as the plaintiffs in that case contended, a law with respect to investment in public securities and not a law with respect to taxation[402]. Subsequent decisions, including Australian Tape Manufacturers Association Ltd v The Commonwealth[403], Northern Suburbs General Cemetery Reserve Trust v The Commonwealth[404], Airservices Australia v Canadian Airlines International Ltd[405] and Luton v Lessels[406], have also focused upon whether particular forms of compulsory exaction are properly described as taxation. By contrast, the question in this case is whether a law which requires payment of money to those who have been taxpayers is a law with respect to taxation.
     
     
384. In Mutual Pools & Staff Pty Ltd v The Commonwealth[407], the Court held, subject to a qualification that is not now material, that a law regulating and defining rights of refund of amounts unnecessarily or mistakenly paid to the Commonwealth in discharge of asserted taxation liabilities was a law with respect to taxation. But that is not this case. If the Impugned Act operated according to its terms, there would be no necessary connection between the amount that was paid as tax and the amount to be paid as a tax bonus.
     
     
385. Rather, the argument that the Impugned Act, in all its operations, is a law with respect to taxation may be understood as the reflex of the argument considered and rejected in Fairfax. In Fairfax, it was submitted that consideration of what "seems most likely to have been the main preoccupation of those who enacted"[408] the law then in question showed that the law was a law with respect to that subject-matter (promotion of investment in government securities) not a law with respect to taxation. This was said to follow from the need to distinguish between form and substance, and extensive reference was made not only to R v Barger[409], but also to McCulloch v Maryland[410] and other United States decisions. But as Kitto J rightly pointed out in Fairfax[411], an inquiry into the ultimate indirect consequences of the operation of a law can yield no conclusion except about the motives of the legislators. And those motives, even if they could safely be identified, are beside the point.
     
     
386. Here, it is said that the Impugned Act, in all its operations, is a law with respect to taxation because it takes as the critical criterion for its operation the identification of a person as one who has paid tax for the most recently completed financial year. And because those, and only those, who have paid tax (and whose taxable income for that year did not exceed $100,000) are eligible for the payment, the law is said to be a law with respect to taxation. But as in Fairfax, that fact, standing alone, directs attention to why the legislators may have enacted the Impugned Act. While it may readily be accepted that the Impugned Act seeks to single out certain taxpayers for the benefit for which it provides, that does not make the Impugned Act a law with respect to taxation. Further, although the payment to be made under the Impugned Act is called a "tax bonus", attribution of that name adds nothing to the debate about characterisation. The character of the Impugned Act depends upon "the nature of the rights, duties, powers and privileges which it changes, regulates or abolishes"[412].
     
     
387. The amount to be paid depends upon a person's taxable income for 2007-08. On the face of the Impugned Act there is no direct connection, in all operations of the Act, between the amount of the bonus and the amount that has been paid in tax. As the Act is written, the amount that is paid under the Impugned Act may be more or it may be less than the amount of tax the person paid for that year. By the time payments must be made under the Impugned Act it will not be known whether a person to whom the payment is made will be liable to pay income tax for 2008-09.
     
     
388. The Commonwealth was right to accept that the Impugned Act is not a law with respect to taxation in all its operations.
     
     

Reading down

389. The principles governing whether s 15A of the Acts Interpretation Act is to be applied to read down a statutory provision that in some operations would be beyond legislative power are not controversial. They are conveniently described in the joint reasons of five Justices in the Industrial Relations Act Case[413]:
     
     

"Section 15A of the Interpretation Act may fall for application in two distinct situations. It may fall for application in relation to 'particular clauses, provisos and qualifications, separately expressed, which are beyond legislative power'[414]. It may also fall for application in relation to general words or expressions[415]. It is well settled that s 15A cannot be applied to effect a partial validation of a provision which extends beyond power unless 'the operation of the remaining parts of the law remains unchanged'[416]. Nor can it be applied to a law expressed in general terms if it appears that 'the law was intended to operate fully and completely according to its terms, or not at all'[417].

Where a law is expressed in general terms, it may be more difficult to determine whether Parliament intended that it should, nonetheless, have a partial operation. And there is an additional difficulty if it 'can be reduced to validity by adopting any one or more of a number of several possible limitations'[418]. It has been said that if, in a case of that kind, 'no reason based upon the law itself can be stated for selecting one limitation rather than another, the law should be held to be invalid'[419]."

The critical question in this case is whether it appears that "the law was intended to operate fully and completely according to its terms, or not at all"[420]. The metaphor of "intention" must not be permitted to mislead[421]. It may greatly be doubted that legislation is ever passed with legislators intending less than full and complete operation of the statute according to its terms. And in the present matter it may be observed that an important motive for the Impugned Act being directed to taxpayers with low adjusted tax liabilities was the expectation that those taxpayers are more likely to spend the tax bonus than others. But if the question identified in the Industrial Relations Act Case is to be understood, as it must, as directing a comparison between the legal and practical operation of the Act according to its terms and its legal and practical operation as read down, the Impugned Act should be read down in the manner submitted by the Commonwealth. The operation of the Impugned Act as read down is not so different from its operation in accordance with its terms as to lead to the conclusion that it is not intended to operate in that restricted fashion. In particular, because the Impugned Act was evidently intended to provide an urgent stimulus to the economy by putting money in the hands of the intended recipients quickly, it is not to be assumed that the legislative "intention" was that there were to be no payments at all unless those who had paid the least amount of tax for the 2007-08 income year received the whole of the intended amount.

390. That is, the reading down that is required is of the second class identified by Dixon J in R v Poole; Ex parte Henry [No 2][422]. Provision is made which, in relation to a limited class of persons, might validly have been enacted, but "is expressed to apply ... to a larger ... class of persons than the power allows". It is intended that "the particular command or requirement expressed in the provision should apply to or be fulfilled by each and every person within the class independently of the application of the provision to the others"[423]. It is not to be supposed that none were to receive unless all did.
     
     
391. As the Commonwealth rightly submitted, the simplest and most elegant drafting expression of the valid operation of the Impugned Act would be to read s 6 as if it provided that the amount of a person's tax bonus is the lesser of the amount of the person's adjusted tax liability for the 2007-08 income year and the amount specified in s 6 as the amount of the tax bonus. But in fact the reading down that is required concerns the entitlement to a tax bonus, not its amount.
     
     
392. The valid operation of the Impugned Act depends upon reading down the class of those who are entitled to the payment. In particular, what is necessary is the reading down of one of the five cumulative requirements set out in s 5(1) as conditions to be satisfied for entitlement to a tax bonus: the requirement of par (c) that "the person's adjusted tax liability for that income year is greater than nil". The class of persons that s 5(1)(c) identified is larger than the legislative power with respect to taxation allows[424] to the extent that it entitles a person to payment of a tax bonus that is greater than the amount of the person's adjusted tax liability.
     
     
393. Read down in the manner indicated, the Impugned Act provides for payment to taxpayers whose taxable income for the income year 2007-08 did not exceed $100,000 (and who are not within one of the exceptions provided by s 5(2)) of the amount of that person's adjusted tax liability for that income year or the amount of the tax bonus fixed under the Act, whichever is the less. Read with that operation, the Impugned Act provides for repayment to certain taxpayers of some or all of the amount the taxpayer was liable to pay for income tax for the last complete income year. With that operation the Impugned Act is a law with respect to taxation.
     
     

Question 3

394. For the reasons given earlier, s 16(1) of the Administration Act responds to the valid operation of the Impugned Act and appropriates the Consolidated Revenue Fund to the necessary extent.
     
     

Conclusion

395. For these reasons we would have answered the questions in the Special Case as follows:
     
     

1. Yes.

2. The Tax Bonus for Working Australians Act (No 2) 2009 (Cth) is a valid law of the Commonwealth to the extent to which it provides for the payment to a person entitled to a tax bonus of the lesser of the amount of the person's adjusted tax liability for the 2007-08 income year and the amount of the bonus fixed in accordance with that Act. Otherwise, no.
   
   

3. Yes.

4. In accordance with the agreement of the parties announced on the second day of the hearing of the Special Case, there is no order for costs.
   
   

396. HEYDON J. I dissent.
     
     
397. The preferred arguments of the defendants in these proceedings advanced wide constructions of s 61[425] of the Constitution read with s 51(xxxix)[426] and of s 81[427] read with s 51(xxxix). These were arguments capable of producing very extreme results[428]. If correct, they would cause the "incidental" legislative power in s 51(xxxix) to be wider in its effects than any of the non-incidental legislative powers, and perhaps wider than all of them taken together. What s 1 of the Constitution calls a "Federal" Parliament would have a power to enact legislation of the kind usually associated with non-federal parliaments.
     
     
398. The defendants started with s 16[429] of the Taxation Administration Act 1953 (Cth) ("the Taxation Administration Act"). They submitted that s 16 was a standing appropriation which authorised the payment of "tax bonuses" under the Tax Bonus for Working Australians Act (No 2) 2009 (Cth) ("the Tax Bonus Act"). Let that be assumed. The remaining issues are whether the plaintiff had standing to challenge the constitutional validity of the Tax Bonus Act, and, if so, whether there was legislative power to enact it. All the defendants' submissions on these remaining issues are erroneous. For that reason, since success for the defendants on any one issue would have been sufficient to bring them victory, it is necessary to deal with them all. The reasons why the defendants must fail are set out in the following order.
     
     

STANDING [399]-[402]

CONSTITUTIONAL CONSTRUCTION [403]-[435]

The defendants' preamble [403]-[410]

O'Connor J's approach considered [411]-[425]

Two "constitutional facts" [426]-[432]

Deliberate creation by the framers of a national

economy? [433]

The United States and Canada [434]-[435]

SECTION 51(i): TRADE AND COMMERCE POWER [436]-[448]

The key distinction [436]

The key question [437]

The controversial proposition [438]-[439]

The purposes of the government [440]-[442]

The likely effects of the legislation [443]-[447]

Conclusion [448]

SECTION 51(ii): TAXATION POWER [449]-[457]

Section 51(ii) was available [449]

The defendants' submission on the taxation power [450]

The plaintiff's submission on the taxation power [451]

A gift? [452]

Tax liability issues [453]-[454]

Incentive to lodge tax returns? [455]

Refund of mistaken payment? [456]

Reading down [457]

SECTION 51(xxix): EXTERNAL AFFAIRS POWER [458]-[486]

One: origins of crisis physically external to

Australia – the submission [459]

Two: matter of international concern – the submission [460]

Three: pursuit and advancement of comity with

foreign governments – the submission [461]

Four: implementation of international commitment –

the submission [462]-[464]

One: origins of crisis physically external to

Australia – consideration [465]-[470]

Two: matter of international concern – consideration [471]-[473]

Three: pursuit and advancement of comity with

foreign governments – consideration [474]

Four: implementation of international commitment –

consideration [475]-[485]

Conclusion [486]

IMPLIED LEGISLATIVE "NATIONHOOD POWER" [487]-[510]

Classifying the defendants' remaining arguments [487]-[488]

The defendants' arguments on the "nationhood power"

and the "power to manage the national economy":

outline [489]-[490]

Implied legislative "nationhood power" [491]

The defendants' arguments: some authorities [492]-[498]

The Commonwealth v Tasmania [499]-[504]

Davis v The Commonwealth [505]

Supposed examples of the implied legislative

"nationhood power" [506]

Which nation? [507]

The problem of vagueness [508]

Implication not necessary [509]

Conclusion on implied legislative "nationhood power" [510]

SECTION 61 EXECUTIVE POWER INCLUDES

OR SUPPORTS A "NATIONHOOD POWER" [511]-[546]

Mason J's test: "and which cannot otherwise

be carried on for the benefit of the nation" [511]

Non-satisfaction of Mason J's test [512]-[518]

Mason J's test: "peculiarly adapted to the government

of a nation" [519]-[520]

Davis v The Commonwealth [521]

Competition with the powers of the States [522]

The Commonwealth v Colonial Combing, Spinning

and Weaving Co Ltd [523]-[528]

Barton v The Commonwealth [529]-[537]

Jacobs and Brennan JJ: "the idea of Australia as a

nation" [538]-[544]

Correctness of Mason J's test [545]

R v Hughes [546]

SECTION 61 EXECUTIVE POWER TO MANAGE

NATIONAL ECONOMY [547]-[552]

The broad argument: management of national

economy in good times and bad [547]

The narrow argument: national fiscal emergency [548]

The broad argument considered [549]

The narrow argument considered [550]-[552]

SECTION 51(xxxix) READ WITH SECTION 61

INDEPENDENTLY OF A "NATIONHOOD POWER"

OR POWER TO MANAGE THE NATIONAL ECONOMY [553]-[570]

The defendants' argument [553]-[558]

The argument of New South Wales [559]-[562]

The key question [563]

Width of s 61 [564]-[570]

SECTION 51(xxxix) READ WITH SECTION 81 [571]-[612]

The defendants' arguments: outline [571]-[577]

The defendants' arguments: authorities [578]-[583]

The defendants' arguments: the Constitutional

Commission [584]

The defendants' arguments: "purposes of the

Commonwealth": seven factors [585]-[593]

The defendants' seven factors considered [594]-[599]

No independent head of legislative power in s 81 [600]-[607]

"For the purposes of the Commonwealth" has a

narrow meaning [608]

The Tax Bonus Act is not incidental to the

appropriation [609]-[612]

VALID APPROPRIATION [613]

CONCLUSION [614]

STANDING

399. The defendants accepted that the plaintiff had standing to seek two forms of relief. One was a declaration that "the tax bonus [payable to him] is unlawful and void". The other was an interlocutory injunction restraining the first defendant from paying the tax bonus to the plaintiff. But the defendants contended that the plaintiff did not have standing to obtain a declaration that the Tax Bonus Act was invalid. They contended that the plaintiff had no special interest which would allow him to challenge the validity of the Tax Bonus Act in its application to other persons. They also contended that, for example, the plaintiff could not argue that the Tax Bonus Act was invalid in its application to persons who would receive a tax bonus of a greater amount than the tax that they paid, given that the plaintiff himself would not be in that class of persons.
     
     
400. This last submission lost its foundation when, late in the oral argument, the defendants made an inevitable concession. They conceded that if the validity of the Tax Bonus Act depended on s 51(ii), the taxation power, the Act could not be supported to the extent to which it would authorise payment to an individual of a tax bonus in excess of that person's adjusted tax liability. But the other submissions, too, must fail.
     
     
401. On the defendants' approach, even if the Court held the Tax Bonus Act invalid in relation to the plaintiff, the Commonwealth could continue to treat it as valid in relation to all other persons to whom it applies, and make payments under it even though the duty to do so depended on a statute which had been enacted beyond power, unless each of those persons instituted proceedings similar to those instituted by the present plaintiff. The defendants contemplated that bizarre and unimaginable state of affairs with remarkable equanimity. In fact, it would not arise. The concession that the plaintiff has standing in relation to his own position entails the conclusion that he has standing for all purposes. The defendants' submissions rest on the theory that the Tax Bonus Act could be void in relation to the plaintiff but not in relation to all other persons to whom it applies. That theory is wrong. If the Act is void in relation to the plaintiff, it must be void for all similarly placed persons upon whom an entitlement is conferred. The defendants and the interveners cited numerous well-known authorities on standing[430]. But in none of them did the problems created by the defendants' argument and concession arise. None of them say anything about those problems.
     
     
402. The plaintiff submitted that the law in relation to standing to challenge unconstitutional legislation was too narrow and ought to be widened[431]. Given that under the existing law the plaintiff has sufficient standing, it is not necessary to examine that submission.
     
     

CONSTITUTIONAL CONSTRUCTION

The defendants' preamble

403. The defendants made six points as part of a preamble to their substantive constitutional arguments.
     
     
404. The first step was to say that "a constitutional grant of power is to be read with all the generality that the words used admit"[432] (emphasis added).
     
     
405. The second step was to contend that the reason for that rule was explained by O'Connor J's celebrated words in Jumbunna Coal Mine NL v Victorian Coal Miners' Association[433]. The defendants quoted two passages. One was: "[The] broad and general ... terms" of the Constitution are "intended to apply to the varying conditions which the development of our community must involve." The other was:
     
     

"For that reason, where the question is whether the Constitution has used an expression in the wider or in the narrower sense, the Court should ... always lean to the broader interpretation". (emphasis added)

406. The third step was to assert that:
     
     

"the historical reality is that the framers of the Constitution, as they emerged from the very significant depression that the Australasian colonies went through in the 1890s, could have had no concept of macroeconomic policy."

407. The fourth step argued that nobody had discovered or understood that concept "until the Keynesian revolution of the 1930s in the wake of the Great Depression".
     
     
408. The fifth step was the statement that:
     
     

"what the framers did quite consciously, deliberately and expressly was, by the constitutional restraints and structures that they created, establish a single national economy".

409. The sixth step contended:
     
     

"[T]o the extent that competing constructions may be [open] in respect of the structures which they created a construction ought not be chosen ... which would deprive national institutions of the ability to manage the national economy in the interests of the Australian people as a whole and with the same flexibility as national institutions in other developed nations, including, in particular, Canada and the United States, both of which have sophisticated federal systems."

410. Although those points were made in relation to a supposed constitutional power to manage the national economy[434], they pervaded the defendants' approach to other issues. For this reason they require early attention.
     
     

O'Connor J's approach considered

411. The breadth of O'Connor J's approach. The first and second steps in the defendants' preamble talk of the construction of "words", "terms" and "expressions". They do not speak of drawing implications, but analysing the meaning of express language. Generally that is how the courts have applied O'Connor J's statement in the Jumbunna case[435]. However, properly understood, it has some application to the drawing of implications as well.
     
     
412. O'Connor J's approach in its totality. There is a forensic technique which is becoming increasingly common. The technique takes a particular statement by a judge like O'Connor J, who was one of the framers of the Constitution, who is revered as one of the finest constitutional lawyers in our annals, whose judgments are much-cited by persons of all constitutional persuasions, whose character is deeply admired, whose "work has lived better than that of anybody else of the earlier times."[436] But it sets it out incompletely. It ignores the totality of the judge's position as stated in a particular case. It ignores the totality of the judge's position over a judicial lifetime.
     
     
413. The defendants adopted that technique in these proceedings. They, not the Court, interrupted their reading in the middle of the last sentence they quoted from O'Connor J's judgment in the Jumbunna case. Their quotation omitted the following important words: "unless there is something in the context or in the rest of the Constitution to indicate that the narrower interpretation will best carry out its object and purpose."[437] The meaning of the first half of the sentence considered in isolation is thus totally different from its meaning when read with the second half.
     
     
414. For O'Connor J, the expression "context" was not limited to the local context of the words being construed or even to the content of the Constitution as a whole. In another important passage to which the defendants did not refer, O'Connor J had said four years earlier in State of Tasmania v The Commonwealth and State of Victoria[438]:
     
     

"I do not think it can be too strongly stated that our duty in interpreting a Statute is to declare and administer the law according to the intention expressed in the Statute itself. In this respect the Constitution differs in no way from any Statute of the Commonwealth or of a State. ... The intention of the enactment is to be gathered from its words. If the words are plain, effect must be given to them; if they are doubtful, the intention of the legislature is to be gathered from the other provisions of the Statute aided by a consideration of surrounding circumstances. In all cases in order to discover the intention you may have recourse to contemporaneous circumstances – to the history of the law ... In considering the history of the law ... you must have regard to the historical facts surrounding the bringing [of] the law into existence. ... You may deduce the intention of the legislature from a consideration of the instrument itself in the light of these facts and circumstances, but you cannot go beyond it."

There are many other decisions of O'Connor J revealing his concern to look at context, to view the Constitution as a whole, and to examine the circumstances surrounding its enactment[439]. For him, a key element in the "context", the "other provisions" and the "historical facts surrounding the bringing [of] the" Constitution into existence was the federal nature of the Constitution. That was a matter which O'Connor J made plain in yet another of his observations not referred to by the defendants. In Huddart, Parker & Co Pty Ltd v Moorehead[440] O'Connor J said:

"[I]t will be well to bear in mind the principle now firmly established in this Court that the Constitution, like any other instrument, must be construed as a whole. Where it confers a power in terms equally capable of a wide and of a restricted meaning, that meaning will be adopted which will best give effect to the system of distribution of powers between State and Commonwealth which the Constitution has adopted, and which is most in harmony with the general scheme of its structure."

415. As Callinan J said in New South Wales v The Commonwealth[441], O'Connor J was there being "careful to make clear, a matter of which sight has at times been lost, that generality must make way to context and other limiting provisions in the Constitution". And as Callinan J also pointed out[442], it is the "object and purpose" of each particular constitutional expression under examination which is material.
     
     
416. What Dawson J said in The Commonwealth v Tasmania is, with respect, compelling[443]:
     
     

"No doubt it is true that in the construction of the Constitution an expression should, where possible, be given a wider rather than a narrower construction. But it is only possible to do so where the context, which above all else emphasizes the federal nature of the Constitution, does not suggest that a narrower interpretation will best carry out the object and purpose of that instrument: see Jumbunna Coal Mine NL v Victorian Coal Miners' Association[444]. No doubt the legislative powers of the Commonwealth should not be construed with any preconception in mind of the residual powers of the States, but that does not mean that Commonwealth powers should receive an interpretation which has no regard to the federal context in which they are found. The notion that Commonwealth legislative powers are to be given the widest interpretation which the language bestowing them will bear, without regard to the whole of the document in which they appear and the nature of the compact which it contains, is a doctrine which finds no support in [the Engineers' case][445] and is unprecedented as a legitimate method of construction of any instrument, let alone a constitution."

417. The defendants' submissions would, in Callinan J's words, give the Court a "constitutional role ... no different from the role of an umpire of a cricket match, who, by the rules of that game, is obliged to give the batsman, at the expense of the bowler, the 'benefit of the doubt'."[446] As bowlers have often lamented, that rule is extremely favourable to batsmen. The defendants urged an approach equally favourable to the Commonwealth.
     
     
418. Misapplication of O'Connor J's approach. At one point in their oral address, the defendants observed that nothing is unarguable. That is not so. But the observation was significant. The defendants' reading of the statements of O'Connor J in the Jumbunna case which they quoted was that where there is a controversy between parties about a constitutional expression, one of whom advocates a "wide" meaning (however irrational or unlikely, and however inconsistent with other parts of the Constitution), and the other of whom advocates a "narrow" meaning (however intrinsically more likely that meaning may be), the former should always be adopted. That is not what his language means, whether one looks at the Jumbunna case by itself or other cases in which he explained his approach. Plainly O'Connor J had in mind a contest between two meanings, neither of which had unmistakably compelling force, but each of which was reasonably available. Only in those circumstances did his reasoning come into play.
     
     
419. It is not hard to find decisions where a broad view of a constitutional power was available, but a narrower view was selected for particular reasons, even though judicial minds differed about the merits of those reasons[447]. On that ground it may be said that Sir Harry Gibbs spoke with some exaggeration, though understandably so, when he said[448]:
     
     

"The fact that the Constitution is a federal one has been allowed to play no significant part in determining the meaning and scope of the various powers conferred by s 51 of the Constitution."

420. The arguments of the defendants treat both the legislative and the executive power of the Commonwealth as having great width. When the thinking of O'Connor J is invoked in support of these quite extreme submissions, it is time to pause. Despite their invocation of O'Connor J's approach, the submissions of the defendants are fundamentally inconsistent, it will be seen, with that element of the approach which called attention to the constitutional division of powers between the Commonwealth and the States[449].
     
     
421. Original meaning. The defendants' submissions are inconsistent with O'Connor J's approach in another way. Some of the defendants' submissions rested on an assumption that the Constitution has changed since 1901: that the Executive has powers now that it did not have in 1901, and that either for that reason, or independently of that reason, the legislature has wider powers as well. Whatever that assumption rests on, it cannot rest on the sources which the defendants assigned to it – the propositions stated by O'Connor J in the Jumbunna case. O'Connor J's reference to applying the broad and general terms of the Constitution to the varying conditions which the community would face
     
     
     
     
     
     after 1901 does not stand alone in his judgments[450]. And it had both precursors and successors. In 1816, Story J said in Martin v Hunter's Lessee[451]:
     
     

"The [Constitution] was not intended to provide merely for the exigencies of a few years, but was to endure through a long lapse of ages, the events of which were locked up in the inscrutable purposes of Providence."

In similar vein, in 1819 Marshall CJ said in McCulloch v Maryland that "we must never forget that it is a constitution we are expounding"[452]. In the same case he said that constitutions are "intended to endure for ages to come, and consequently, to be adapted to the various crises of human affairs."[453] In 1884, Gray J, in delivering the opinion of the Supreme Court of the United States, said[454]:

"A constitution, establishing a frame of government, declaring fundamental principles, and creating a national sovereignty, and intended to endure for ages and to be adapted to the various crises of human affairs, is not to be interpreted with the strictness of a private contract."

Griffith CJ, Barton and O'Connor JJ quoted Story J's statement in Baxter v Commissioners of Taxation (NSW)[455]. Barton J quoted Gray J's dictum in Farey v Burvett[456]. The passages from Marshall CJ set out above were echoed by Dixon J in Australian National Airways Pty Ltd v The Commonwealth[457]:

"[I]t is a Constitution we are interpreting, an instrument of government meant to endure and conferring powers expressed in general propositions wide enough to be capable of flexible application to changing circumstances."

422. These passages do not suggest that their authors believed that the meaning of either the United States or the Australian Constitution changed over time. They rather suggest that their authors believed that, while the meaning did not change, the meaning was broad. As Justice Scalia wrote[458]:
     
     

"Marshall was saying that the Constitution had to be interpreted generously because the powers conferred upon Congress under it had to be broad enough to serve not only the needs of the federal government originally discerned but also the needs that might arise in the future. If constitutional interpretation could be adjusted as changing circumstances required, a broad initial interpretation would have been unnecessary."

And Marshall CJ himself specifically said that the American Constitution was "designed to be permanent" and was "unchangeable by ordinary means"[459].

423. Certainly O'Connor J was no adherent to any theory that the meaning of constitutional language changed through time. Thus in R v Barger[460], a judgment in which he joined with Griffith CJ and Barton J, he said:
     
     

"What is the meaning of the word 'taxation' as used in the Constitution, an instrument which became law in the year 1900?

It is possible that since that time the word may have been used in Australia in a wider or more limited sense, but whatever it meant in 1900 it must mean so long as the Constitution exists, so far as regards the nature and extent of the power conferred on the Parliament with respect to it."

This rests on the view that the Constitution is a statute, to be construed as a statute. For the idea that a statute can change its meaning as time passes, so that it has two contradictory meanings at different times, each of which is correct at one time but not another, without any intervention from the legislature which enacted it, is, surely, to be polite, a minority opinion. The disfavouring of certain aspects of R v Barger in later cases does not affect the correctness of the passage just quoted.

424. O'Connor J's approach: conclusion. Striking aesthetic effects can be achieved by selecting semi-precious stones, splitting them into fragments, jettisoning some fragments, fine-chiselling the remainder, and placing them into a fore-ordained pattern in the manner of a Byzantine mosaic, or a Florentine table of pietra dura, or that type of Mughal craftsmanship involving the inlaying of marble known as parchin kari. The employment of analogous processes in relation to legal propositions, however, rarely leads to convincing conclusions. The defendants appear to think that some parts of O'Connor J's approach suit their interests: these they rely on. They appear to dislike other parts: about these they are silent. But it is not rationally possible to embrace the first and enfold them in the radiant glory of O'Connor J's name while shunning the second.
     
     
425. It is true to say that not every part of O'Connor J's constitutional thinking accords with the authorities. His view that the Constitution should be read down on an assumption that some specific heads of power were reserved to the States[461] was rejected in the Engineers' case[462]. But that view was not an essential aspect of the approach to statutory construction described above. It is one thing to construe the Constitution on the presumption that some specific heads of power are reserved to the States. It is another thing to construe it without any such presumption, but bearing in mind that sometimes a narrower rather than a broader meaning for Commonwealth powers will best give effect to the construction of the federal compact considered as a whole. In all relevant respects other than the reserved State powers doctrine, O'Connor J's approach survives. The Engineers' case does not alter the present relevance of his approach to construction. Nor does the fate of his opinions on the substantive point in Huddart, Parker & Co Pty Ltd v Moorehead[463]. His approach to construction does not rest on any discredited idea of "federal balance"[464]. Far from supporting the defendants, O'Connor J's approach to construction is fatal to their position at numerous points[465].
     
     

Two "constitutional facts"

426. Failure to demonstrate constitutional facts. The third step in the preamble to the defendants' arguments asserted that the framers had no concept of macroeconomic policy. The fourth step made a related assertion – that no-one else did either, until Keynes.
     
     
427. It must be conceded that the fourth step corresponds with popular myth. But is the myth true? The fact is that the defendants made no endeavour at any stage of their argument to demonstrate the truth of these two assertions. In the absence of demonstration, they cannot be accepted. The defendants tender for consideration two "constitutional facts". The consideration calls for inquiry into "the general facts of history as ascertained or ascertainable from the accepted writings of serious historians"[466] – here economic or intellectual historians. This may require agreement between the parties on what are accepted writings and who are serious historians[467]. The defendants took the Court to no writings of any historians or anyone else – to no "serious studies and inquiries and historical narratives."[468] That may not be fatal, because there are other ways of establishing constitutional facts[469]. But what is fatal is that the defendants did not rely on those other ways or advance any other reason for accepting the accuracy of the constitutional facts relied on.
     
     
428. The 1937 Royal Commission. In similar vein, the defendants contended that the:
     
     

"whole notion of monetary policy in respect of the national economy ... really was not around as a macroeconomic concept, but it could not have had any implementation before the common currency was introduced by the Commonwealth in 1910[[470]]. It was 1924 when the Commonwealth Bank came to have control over the issue of currency[[471]]."

The defendants contended that fiscal policy only "creeps in ... [,] was invented, and started being used ... in 1937 and following". The sole material relied on was the following passage in the Report of the Royal Commission on Monetary and Banking Systems in Australia[472], published in August 1937:

"In general, the proper policy for the governments to pursue if a depression is developing is to expand public works, refrain from increasing taxation, and avoid a general contraction of government expenditure, even although deficits are incurred. When conditions have improved as private enterprise revives and full employment is approached, the proper policy is to contract public works expenditure, maintain or increase taxation, budget for surpluses, and reduce the debt which has been incurred through the depression policy. ... The assistance which can be given by the central bank in meeting or preventing a depression is to expand or control credit in conformity with the general policy. If an expansion of central bank credit is to be successful in promoting recovery, the credit must be used, and this comes about mainly through government spending as a supplement to private spending."

The defendants submitted that this passage was a reference to the treatment of fiscal policy in Keynes's General Theory of Employment, Interest and Money. Some of the ideas in that work had been propounded in the circles in which Keynes moved a little before it was published in January 1936[473]. But the proposition that what was discussed in the courts and combination rooms of Cambridge or the squares of Bloomsbury had come to the attention of the Commissioners at the other end of the earth needs demonstration if it is to be relied on. Further, Keynes's General Theory itself is not easy or simple to absorb[474]. In truth, for all that appears on its face, the quoted passage seems to have origins quite independent of Keynes. The passage does not present itself as containing some insight never before perceived in the history of economic thought. Rather its authors evidently conceived themselves to be referring to well-understood commonplaces in a matter-of-fact way. The passage suggests that "Keynesian" methods had been employed by governments in earlier times, even though those governments may not have appreciated the subtleties of the theoretical framework Keynes erected to defend those methods. There were, indeed, distinguished reviewers who thought that Keynes's work was not a landmark, but in part a symptom of trends and in part a reversion to mercantilism[475]. In truth, Keynes's brilliance and originality may have lain in places other than those suitable for the defendants' arguments. Whatever the truth, it is not possible to accept the third and fourth steps in the defendants' preamble: the Court was not directed to any consideration which might support them.

429. Original intent. There are two further difficulties with the third and fourth steps.
     
     
430. One difficulty is that recourse to history, so far as Cole v Whitfield[476] permits it, is limited to "identifying the contemporary meaning of language used, the subject to which that language was directed and the nature and objectives of the movement towards federation from which the compact of the Constitution finally emerged." Reference to history is not permitted for the purpose of substituting for the meaning of the words used in the Constitution the scope and effect which the framers subjectively intended the Constitution to have. Whether or not this type of reasoning is limited to the construction of express language[477], the third and fourth steps appear to be "originalist" assertions. What is more, as United States lawyers would say, they seem to be laying the groundwork for inferences about "original intent", not "original meaning". The unusual course of drawing originalist inferences from negatives to support conclusions about the mental state of the framers is impermissible.
     
     
431. The other difficulty is that even if, as the defendants assert, the framers were unaware of macroeconomic policy, and even if, contrary to Cole v Whitfield, material revealing the framers' actual mental states may be considered, acceptance of the third and fourth steps would suggest that there had not been a conferral on the Commonwealth of general powers of control over the economy. If the mental states of the framers are relevant, as distinct from the meaning of the words they used at the time they used them, any ignorance they had of macroeconomic policy would suggest a complete failure to advert to the question whether the Commonwealth should have general powers of control over the economy. That in turn would support the conclusion that there was no intention to confer the relevant power on the Commonwealth, and no conferral of it in fact.
     
     
432. What in fact was the defendants' purpose in seeking to establish the propositions stated in the third and fourth steps of their preamble? They seem to have had in mind an argument against them that while the Commonwealth legislature is expressly granted many particular powers to manage the national economy, there is no general power to manage the national economy, because none was expressly granted. The defendants appear to have been seeking to rebut that argument by saying that the absence of an express grant of a general power can be explained by the framers' ignorance of macroeconomic policy, and by hinting that the Constitution would have contained an express grant of a general power had the framers been aware of macroeconomic policy. This enterprise seems to assume that the words which the framers might have used in the Constitution had their knowledge been greater than it was, but which they did not use, is relevant to the construction of the words they actually did use. This novel approach to the interpretation of the Constitution must be rejected.
     
     

Deliberate creation by the framers of a national economy?

433. The fifth step in the preamble asserted that the framers deliberately established a "single national economy". This is problematic because it is not possible for constitutions to establish economies or prevent them from being established, whether they be "single national economies" or otherwise, outside Colbertian mercantilist states or totalitarian regimes of the Nazi or Stalinist type – and even in those systems it is very hard to do so. The Constitution made possible the eventual emergence of a national economy. The fact that a national economy eventually emerged – a very general phenomenon resulting from many imponderable factors and processes independent of the will of the framers – has no significance in determining whether the Commonwealth has an exclusive, as distinct from a very substantial, power to manage it.
     
     

The United States and Canada

434. The sixth step contended that the Commonwealth Government should have the same powers as the central governments in the United States and Canada. The problem with the sixth step is that it purports to apply the rules of construction set out in steps one and two to the "construction" either of express words, or of "structures ... created" by the Constitution which, if in fact created by the Constitution, must have been created by express words. The defendants did not point to any express words which could profitably be exposed to the rules of construction stated in the first two steps. Nor did they at any stage compare the express words of the Constitutions which created the "sophisticated federal systems" of the United States and Canada with the express words of the Australian Constitution to see what, if any, difference there was.
     
     
435. Further, the sixth step, when taken with other parts of the defendants' arguments, can be seen to rest on two fallacies underlying many of those arguments. One is velleity. The defendants persistently advocated conclusions which corresponded with what the defendants desired, irrespective of any difficulties in the path of achieving that desire. Their motto was: "We want it to be so, therefore it is so." The other fallacy is the Panglossian belief that what is said to have evolved over time as a matter of governmental practice corresponds with the Constitution. It holds, not only that everything which exists is for the best in the best of all possible worlds, but also that what exists in that world is constitutionally valid. It fails to face up to the fact that, magnificent though the framers' achievement was, the Constitution is not consistent with every human desire[478]. If it is to be changed, s 128 is a means, and the sole means, of doing so.
     
     

SECTION 51(i): TRADE AND COMMERCE POWER

The key distinction

436. Section 51(i) of the Constitution gives power to make laws with respect to "trade and commerce with other countries, and among the States". It compels a distinction between trade and commerce with other countries, and among the States, on the one hand, and other forms of trade and commerce, on the other[479]. It does not permit an argument that trade and commerce in Australia is one indivisible whole. Nor does it permit an argument that any legislation having an effect on trade and commerce in Australia must inevitably have an effect on trade and commerce with other countries, and among the States. While it may not be necessary to demonstrate that the Tax Bonus Act is exclusively related to trade and commerce with other countries, and among the States, it is necessary to show at least that it has some definable relationship with that class of trade and commerce.
     
     

The key question

437. To establish this relationship, the defendants posed the key question as being: "does this law have a substantial economic effect on the flow of commercial transactions, goods, services, money, credit, among the States?"
     
     

The controversial proposition

438. The defendants' argument was, in summary, that the intended practical operation of the Tax Bonus Act was to inject $7.7 billion into the Australian economy and give around 8.7 million recipients the means to participate directly in trade or commerce "thereby affecting both directly and indirectly trade and commerce among the States and with other countries." The only controversial part of this proposition is what appears in quotation marks.
     
     
439. The defendants supported this part with two submissions.
     
     

The purposes of the government

440. Explanatory Memorandum. The first of the defendants' submissions appeared to rest, whether or not legitimately, on the intentions or purposes of those who introduced the legislation. The submission was that the Explanatory Memorandum to the Bill for the Tax Bonus Act explained it as part of a package to give effect to the government's "Nation Building and Jobs Plan", which was "introduced to assist the Australian people [to] deal with the most significant economic crisis since the Second World War and [to] provide immediate economic stimulus to boost demand and support jobs."[480] However, the Explanatory Memorandum does not establish the legislative purpose necessary to support the submission, namely a purpose that the trade and commerce in which recipients of the bonus will participate will be trade and commerce with other countries, and among the States.
     
     
441. "Updated Economic and Fiscal Outlook". The same is true of other indications of legislative purpose. Thus the government's "Updated Economic and Fiscal Outlook" (February 2009) contended that a purpose underlying the decision to provide for tax bonuses was, together with all the other elements in the "Nation Building and Jobs Plan", to "support economic growth and jobs in Australia", and, taken with certain other bonus payments, was to "deliver an immediate stimulus to the economy to support growth and jobs now". These goals are neutral as between the impact on trade and commerce with other countries, and among the States, on the one hand, and other types of trade, on the other. It was not demonstrated to be the case that if there is a significant impact on the latter types of trade and commerce it will merely be a collateral and unintended result of endeavouring to provide the former type.
     
     
442. The Tax Bonus Act itself. Leaving aside s 15AB of the Acts Interpretation Act 1901 (Cth) and the capacity at common law to resort to other material giving contextual background, the only evidence of statutory purpose is that to be found by construing the statute. The Tax Bonus Act does not reveal a purpose of having an impact on trade and commerce with other countries, and among the States, as distinct from other kinds of trade. This point demonstrates weakness in the defendants' second submission on s 51(i) as well.
     
     

The likely effects of the legislation

443. The submission. The second submission advanced by the defendants appeared to turn not on the purposes of those who promoted the legislation, but on its likely effects. The submission was that "[i]t can reasonably be anticipated that the spending generated by the payments made under the Act will have a material effect on the amount of" trade and commerce with other countries, and among the States.
     
     
444. The silence of the Tax Bonus Act. As South Australia pointed out, nothing in the provisions of the Tax Bonus Act reflects any criterion ensuring that particular recipients are more likely to make expenditures, if they make expenditures at all, in trade and commerce with other countries, and among the States. The Act is structured so as to target a class – persons with taxable incomes between nil and $100,000, divided into three subclasses. The class as a whole is not inherently likely to favour trade and commerce with other countries, and among the States, as the object of their expenditures. The same is true of each subclass.
     
     
445. "Updated Economic and Fiscal Outlook". The defendants pointed to the following passage in "Updated Economic and Fiscal Outlook" (February 2009):
     
     

"Well-designed discretionary fiscal policy should work in conjunction with monetary policy to provide an immediate boost to demand. The most effective fiscal policy measures to achieve this in the current circumstances are those that can be implemented quickly and are targeted to those who are most likely to spend additional income.

Like the Economic Security Strategy, the Nation Building and Jobs Plan includes measures that can be implemented quickly, so that it will support growth through to June 2009, and has been targeted towards those low- and middle-income households who are most likely to spend additional income and who are most vulnerable during an economic slowdown. To the extent that these payments are saved rather than spent immediately, they will accelerate balance sheet repair and underpin consumption over time."

This passage does not indicate that the bonus payments will have an impact on trade and commerce with other countries, and among the States, as distinct from other forms of trade and commerce.

446. Absence of financial modelling. At other points in their arguments the defendants referred to the financial modelling underlying the "Nation Building and Jobs Plan". But no financial modelling was cited to support the alleged reasonable anticipation that the expenditure of the bonus payments would have a material effect on the amount of trade and commerce with other countries, and among the States. Indeed the defendants specifically conceded that no financial modelling of that kind had been done. All they pointed to was modelling indicating an effect on gross domestic product of 0.5 percent by June 2009 and another 0.75 to 1 percent by June 2010. The tax bonuses were to be paid across the country. The country has, as the defendants rightly agreed, a fairly homogeneous character geographically in terms of distribution of wealth. The payments are to poor or relatively poor people, or "low- and middle-income households" (or as "Updated Economic and Fiscal Outlook" (February 2009) more euphemistically still puts it, "liquidity constrained households"). The problem is that while these figures measure an impact on trade and commerce, they do not measure any impact on trade and commerce with other countries, and among the States.
     
     
447. Sufficient practical connection? The defendants accepted that the payments were "not focused on interstate trade and commerce", but were focused on trade and commerce in general. However, they submitted that the desired effect on gross domestic product gave the payments a sufficient practical connection with trade and commerce with other countries, and among the States. That submission must be rejected. It ignores a necessary distinction. It fails to bridge a gap not otherwise bridged. It could not be correct unless s 51(i) were rewritten by leaving out the last seven words.
     
     

Conclusion

448. The answer to the question posed by the defendants as the key one[481] is "no". But even if it is assumed that the spending of the bonus payments will have some eventual connection with trade and commerce with other countries, and among the States, it has not been demonstrated that the connection is more than "insubstantial, tenuous or distant". Hence "[the legislation] cannot be described as made with respect to" that kind of trade and commerce[482].
     
     

SECTION 51(ii): TAXATION POWER

Section 51(ii) was available

449. Section 51(ii) of the Constitution gives power to make laws with respect to "taxation; but so as not to discriminate between States or parts of States". There is no doubt that a law supported by s 51(ii) could have been employed to achieve the goals of the Tax Bonus Act. For example, a law could have made a retrospective downward adjustment of tax liability and provided for corresponding repayment of excess sums assessed[483]. Nothing in the materials before the Court