– Parliament’s retaliation against the High Court’s correction of its spending abuses.
Voters on 14 September 2013 are likely to be asked to approve a change in the Constitution to allow the Commonwealth Parliament to make grants of financial assistance to Councils ‘on such terms and conditions as the Parliament thinks fit.’ The Bill to bring this about is the Constitution Alteration (Local Government) Bill 2013 and was read for the first time on 29 May 2013.
The preamble to the Bill says that it is, a Bill for an Act to alter the Constitution to recognise local government by stating that the Commonwealth can grant financial assistance to local government, including assistance for community and other services. (My emphasis). Section 13(2)(b) of the Acts Interpretation Act 1901 (Cth) now makes the preamble part of the Act. It strikes at the heart of the federation. It smacks of bringing back the notorious Whitlam Government’s ‘Australian Assistance Plan’ for Regional Councils.
Presently, the Parliament can lawfully make such grants indirectly to Councils by giving the money to States which under the terms of the grant (so called ‘tied grants’) the money is directed to be paid to Councils; (s.96 of the Constitution). The aim of the proposed amendment is to bypass the States to give the money directly.
As ‘Tip’ O’Neill, a former speaker of the United States House of Representatives said, “all politics is local.” Both the Government in proposing a Bill for a referendum to amend the Constitution and the Opposition in supporting it now embrace this contrivance. All up at a cost of $55.6 million, $44 million to hold the referendum and $11.6 million for a so called national civics education campaign of doubtful validity.
For about forty years, the Parliament has been making grants directly to Councils, the most infamous being the Roads to Recovery (‘R2R’) Programme. Signs showing that the road work was financed by the Commonwealth were displayed long after it was done from Hunter Street in the Sydney CBD to Manangatang in the Victorian Mallee. All of this ended on 7 July 2009, when the High Court unanimously held that the mere appropriation of moneys under s. 81 did not give the Parliament authority to spend on whatever it liked. Its effect was that all such previous payments were also unlawful. Contemptuous of this ruling the Parliament and the Government have kept on throwing money at Councils.
Amendments last year to the Financial Management and Accountability Act 1997 (Cth.) and its regulations were a pathetic attempt by the Parliament to give itself the power to spend when it did not otherwise have the constitutional power to do so; s.32B. For example, ‘to build capacity in local government and provide local and community infrastructure’; Item 421.002 of Schedule1AA of the Regulations. ‘A stream cannot rise higher than its source.’ If these were valid amendments there would be no need for the proposed referendum.
Like Banjo Patterson’s “Mulga Bill from Eaglehawk who caught the cycling craze”, the Government in 2009 decided to yet again stimulate the economy by spending $40 million on a ‘National Bike Path Project’. Grants of $611,659 to Kwinana for 10.138km at $60,333 per km and $135,000 to Tamworth for 13.5km at $10,000 per km are good examples. The total cost to Kwinana was reported as $1.2 million ($120,000 per km) of which half was gifted by the Commonwealth. Could the six times $ per km disparity between Kwinana and Tamworth and twelve times in the comparative cost per km show that some ‘padding’ occurred?
Illustrations of ‘vote buying’ abound. In the 2010 election campaign the Prime Minister promised to set up a fund of $225 million to pay $15 million to a selected group of 15 Councils to build houses. This was trumped by the Government’s Regional Development Australia Fund of $1,000,000,000 to give largesse to 55 Regional Development Committees across Australia. Round 4 recipients are to be announced from 12 July 2013. No doubt as part of the election campaign. The Prime Minister’s recent stay in Rooty Hill resulted in the map being redrawn to include Greater Western Sydney as an eligible region. $175 million for ‘prizes’ is available for projects ranging from $500,000 to $15 million. Such grants are beyond Commonwealth power. They are responsibilities of the States.
Amending the Constitution in the way in which the Parliament is proposing would be to undermine its working. Councils are established by State laws. If tied grants were made directly to Councils, the power of the Parliament would be further increased to enable it to enter any chosen field of activity. Effectively it would end the federation and bring about a unitary Government.
There would be conflict between the States and the Commonwealth as who was the master. Where there is an inconsistency between a State law and a Commonwealth law, the latter prevails and to the extent of the inconsistency the former is invalid; s.109.
The cause of the present problem is that the Commonwealth raises far more money than it needs to discharge its responsibilities. As the eminent constitutional lawyer Professor Geoffrey Sawer put it so eloquently long ago, “those who tax do not have to justify the expenditure, and those who spend do not have to justify the taxation.”
Unless the Parliament exercises proper fiscal discipline and stops overreaching its powers the present federal-state fiscal fiasco will continue. The Commonwealth’s primary responsibilities are in defence, trade and external affairs and social security. Health in the main and education, including universities, are State responsibilities.
Surpluses could be substituted for deficits, if the Commonwealth focussed on only raising the taxes it needs to fulfil its constitutional functions. It should give up its use of tied grants to control activities otherwise beyond power.
Remember the saying that, ‘when it is not necessary to change, it is necessary not to change.’
30 May 2013