National School Chaplaincy Program still invalid: Williams wins again

In 2012 the High Court in Williams v Commonwealth (No 1) (2012) 248 CLR 156 held that an agreement the Commonwealth Government had made to pay money for the provision of chaplaincy services in schools, and the payments the Commonwealth had made under that agreement, were not supported by the executive power of the Commonwealth under section 61 of the Constitution. Soon after, the Parliament enacted legislation intended to provide legislative authority to make not only the agreement and payments which had been held to have been invalidly made, but also many other agreements and arrangements for the outlay of public money and the payments made or to be made under those agreements or arrangements.

Today, in Williams v Commonwealth (No 2) [2014] HCA 23 the High Court has ruled that this remedial legislation is itself invalid in its operation in relation to the school chaplaincy program.

The Commonwealth sought to defend the legislation, insofar as it related to the School Chaplaincy Program, as a law with respect to the provision of benefits to students under section 51(xxiiiA) of the Constitution.  The Scripture Union of Queensland also sought to defend the legislation as a law with respect to trading and financial corporations, on the grounds that the recipients of the funding were required to be an organization incorporated under Commonwealth or State law.  In addition, the Commonwealth effectively sought to advance arguments it had unsuccessfully advanced in Williams (No 1).

The High Court’s consideration of the validity of the remedial legislation began with an understanding of two earlier decisions.  The first was Pape v Federal Commissioner of Taxation (2009) 238 CLR 1, in which the High Court ruled that sections 81 and 83 of the Constitution did not confer a substantive spending power upon the Commonwealth. The power to spend appropriated moneys must be found elsewhere in the Constitution or in legislation made under it. (the majority of the Court in Pape held that the determination of the Executive Government that there was a need for an immediate fiscal stimulus to the national economy enlivened legislative power under s 51(xxxix) to enact laws supporting the stimulus package as a law incidental to that exercise of the executive power).

The second important decision was Williams (No 1) itself.  That decision confirmed the conclusions in Pape that the appropriation of moneys in accordance with the requirements of sections 81 and 83 of the Constitution did not itself confer a substantive spending power and that the power to spend appropriated moneys must be found elsewhere in the Constitution or in statutes made under it.  It also held that the agreement providing for payments to SUQ was invalid, because it was beyond the executive power of the Commonwealth under section 61 of the Constitution, and that the making of the relevant payments by the Commonwealth to SUQ under that agreement was not supported by the executive power of the Commonwealth under section 61.  Consistent with what had been held in Pape, six members of the Court held that there was no authority in the Constitution or in statutes made under it to spend the moneys appropriated for the purposes of what was then called the National School Chaplaincy Program.

The Court then turned to consider whether the remedial legislation could be supported as a law with respect to the provisions of benefits to students under section 51(xxiiiA) of the Constitution.  The Court held that the use of the term “benefits” in section 51(xxxiiiA) referred to the provision of aid to or for individuals for human wants arising as a consequence of the circumstances identified in the section: being unemployed, needing pharmaceutical items such as drugs or medical appliances, being sick, needing the services of a hospital, or being a student.  In the usual case, the benefits will take the form of material aid to relieve against consequences associated with the identified circumstances. Provision of the benefit will relieve the person to whom it is provided from a cost which that person would otherwise incur. For example, in the case of unemployment and sickness benefits, the aid relieves against the costs of living when the individual’s capacity to work is not or cannot be used. That aid may take the form of payment of money or provision of other material aid against the needs brought on by unemployment or sickness. Pharmaceutical and hospital benefits provide aid for, or by the provision of, the goods and services identified. In the case of benefits to students, the described benefit is material aid provided against the human wants which the student has by reason of being a student.

The majority of the Court held that providing the services of a chaplain or welfare worker was not provision of “benefits” for the purposes of section 51(xxiiiA). Providing those services did not provide material aid to provide for the human wants of students. It did not provide material aid in the form of any service rendered to or for any identified or identifiable student. There is no payment of money by the Commonwealth for or on behalf of any identified or identifiable student. The service provided is not directed to the consequences of being a student. There is no more than the payment of an amount (in this case to an intermediary) to be applied in payment of the wages of a person to “support the wellbeing” of a particular group of children: those who attend an identified school. And the only description of how the “support” is to be given is that it includes “strengthening values, providing pastoral care and enhancing engagement with the broader community”.  While the Court regarded these as desirable ends, the facts that they are to be achieved in the course of the school day does not give them the quality of being benefits to students. 

Crennan J, in separate reasons otherwise agreeing with the majority, held that the National School Chaplaincy and Student Welfare Program was not a scheme for the provision of government assistance by way of the provision of services to, or for, persons who had a personal entitlement to a benefit.  No student was required to be identified as a prescribed recipient or beneficiary entitled to a social security benefit. Payments made to SUQ (or other providers) out of public moneys were not made in respect of government assistance to persons with a personal entitlement to some benefit. Accordingly, the National School Chaplaincy and Student Welfare Program is not a scheme for the provision of “benefits” within the meaning of section 51(xxiiiA).

The argument advanced by SUQ that the remedial legislation was relevantly a law with respect to trading or financial corporations was rejected on the grounds that the remedial legislation did not authorize or regulate the activities, functions, relationships or business of constitutional corporations generally, or any particular constitutional corporation.  Nor did it regulate the conduct of those through whom a constitutional corporation acts, or those whose conduct is capable of affecting its activities, functions, relationships or business.  The mere fact that the recipient of the funds was a constitutional corporation was not sufficient to engage that head of power.

The Commonwealth sought leave to re-open Williams (No 1), which application the High Court rejected.  In doing so, the Court in short form re-affirmed what had been said in Williams No 1.  However, in the course of doing so it made an interesting observation about the extent of Commonwealth Executive Power that will no doubt provide fruitful areas for argument into the future.  This observation was to the effect that there was no proper basis for assuming that he executive power of the Commonwealth should be assumed to be no less than the executive power of the British Executive.  Why, the Court asked rhetorically, should the executive power of the new federal entity created by the Constitution be assumed to have the same ambit, or be exercised in the same way and same circumstances, as the power exercised by the Executive of a unitary state having no written constitution?  The fact that the British Executive had a power to spend and contract without legislative authority did not mean the Commonwealth executive has the same power. 

Accordingly, insofar as it purported to authorize the National School Chaplaincy and Student Welfare Program the remedial legislation was not a valid exercise of Commonwealth legislative power, and neither the entry into the funding agreements nor the expenditure of funds was authorized by the remedial legislation.