Cunningham & Ors v Commonwealth of Australia & Anor [2016] HCATrans 140 (16 June 2016)

Last Updated: 16 June 2016

[2016] HCATrans 140

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S140 of 2015

B e t w e e n -

BARRY THOMAS CUNNINGHAM

First Plaintiff

DR ANTONY HAMILTON LAMB OAM

Second Plaintiff

THE HONOURABLE JOHN COLINTON MOORE AO

Third Plaintiff

THE HONOURABLE BARRY COHEN AM

Fourth Plaintiff

and

COMMONWEALTH OF AUSTRALIA

First Defendant

REMUNERATION TRIBUNAL

Second Defendant

FRENCH CJ
KIEFEL J
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 16 JUNE 2016, AT 10.00 AM

Copyright in the High Court of Australia

____________________

MR A.J. MYERS, QC: May it please the Court, I appear with MR T.O. PRINCE, for the plaintiffs. (instructed by Hazan Hollander)

MR J.T. GLEESON, SC, Solicitor-General of the Commonwealth of Australia: May it please the Court, I appear for the Commonwealth, which is the first defendant, with my learned friend, MR D.F.C. THOMAS. (instructed by Australian Government Solicitor)

FRENCH CJ: Yes, Mr Myers.

MR GLEESON: There is a submitting appearance for the second defendant.

MR MYERS: Your Honours, we have provided to the Court a written outline of the submissions that will be made orally today. We also rely upon our written submissions, the primary submissions and the submissions in reply and what I will say today to the Court is supplementary to those.

The special case concerns two forms of allowance or remuneration of former members of the Federal Parliament. First, a pension under a contributory superannuation scheme which operates under the Parliamentary Contributory Superannuation Act 1948, and I should say that this scheme was closed to new members from October 2004; and second, the gold life pass that provides free travel for certain members of Federal Parliament and others, spouses and orphans in certain cases.

There are two questions for determination, or matters for determination, and we set them out in paragraph 3 of our written submissions: first, whether sections 7(1A), (1B), (1C) and (2A) of the Remuneration Tribunal Act 1973 and decisions made by the Remuneration Tribunal pursuant to those provisions were invalid by reason of section 51(xxxi) of the Constitution; and, second, whether the operation of section 11(2) of the Members of Parliament (Life Gold Pass) Act 2002 as amended in 2012 by the Members of Parliament (Life Gold Pass) and Other Legislation Amendment Act resulted in an acquisition of property within the meaning of section 51(xxxi) of the Constitution.

The two questions give rise to two matters in dispute: first, whether the respective entitlements under the Superannuation Act and the gold life pass legislation are “property” within section 51(xxxi) of the Constitution, and if yes, whether the impugned provisions – that is to say, the provisions that are mentioned in paragraph 3 of our written submissions and decisions under them – effected an acquisition of property under that provision.

. Now, before going to the relevant legislation, which I have to do in a little bit of detail without taking the Court to the history of this legislation through the aeons since 1901, could I just state in a very broad and general way what is the case for the plaintiffs. The plaintiffs contend that their remuneration included an entitlement vested in them either while they were Members of the Federal Parliament or at the time they ceased to be members to a contributory pension or to a life gold pass. Each of the pension and the life gold pass was an element of their remuneration. At once, could I remind the Court what was said by Chief Justice Gleeson in Theophanous, admittedly by way of obiter - - -.

FRENCH CJ: He was the only one to say it.

MR MYERS: Admittedly by way of obiter, he may have been the only one to say it but nonetheless he said it and we embrace it. Your Honours have probably read it already, but just in case I would like to emphasise a few words in it that seem rather good. It is paragraph 7 on page 113 of the volume of the Commonwealth Law Reports - it is case 32 in the combined list. The Chief Justice said:

Section 51(xxxvi) of the Constitution considered in the light of s 48, empowers the Parliament to legislate for the payment of allowances, including retirement allowances, to members of the House of Representatives. Such allowances, including future allowances, constitute remuneration.

We say that is correct. If I could pause there, they constitute remuneration for services actually provided as a parliamentarian. We are, in this matter before the Court, concerned with the case of persons whose services have been provided. We are not concerned in any way with services to be provided.

So the allowances, by way of pension and life gold pass, are in respect of services that already have been provided and a great deal of the Commonwealth’s case concerns a matter which is not in dispute, that of course the legislation providing for the future remuneration of parliamentarians can be amended without in any way bringing into operation section 51(xxxi) of the Constitution.

The parliamentarians who are the plaintiffs in this matter are like the labourers who have already done their work. They have earned the money. It is a debt due to them and the Commonwealth says that it can reduce the amount of that debt or the basis upon which it is calculated without contravening provisions of section 51(xxxi).

FRENCH CJ: What we are talking about is a change in the basis of calculation by reference to the exclusion of certain elements of salary, for example.

MR MYERS: We are, so - - -

FRENCH CJ: We are not actually talking about a reduction in the amounts payable to anybody, are we?

MR MYERS: It did not result in a reduction in the amount payable on this occasion, but the right that we assert is a right to a pension which is a certain proportion of the parliamentary allowance or salary. It is undoubted, as your Honour the Chief Justice says, that in the particular facts before the Court the amount in dollars of the allowance was not reduced. But the basis upon which the allowance was calculated, the nature of the right, that is to say, was altered. If I can go back to paragraph 7:

Although opinions may differ about the reasonableness of various forms and levels of remuneration, it is now generally accepted that parliamentarians should commit themselves to their duties on a substantially full-time basis -

that is true:

and that the corollary is that they should be remunerated (or, as the Americans would say, compensated) for doing so. If it were otherwise, political activity would be the preserve of the independently wealthy, or parliamentarians would need financial support and assistance of a potentially unhealthy kind. Providing schemes of retirement allowances in the nature of superannuation or pension benefits, whether such schemes are contributory (as in the case of parliamentarians) or non-contributory (as in the case of judges) -

If I could pause there. Another feature of this matter is that the pension entitlement is one to which the parliamentarians have contributed. Not only have they done the work as parliamentarians, which entitles them to it; they have themselves made a contribution to the amount that is payable.

Now, our friends hurry to say in their submissions that the contribution is modest. Well, they may think it is modest. When we have a look at the Act we will see that the amounts that are taken from parliamentary salaries are not so modest but whether they are modest or not does not affect the fact that here there are existing vested rights which constitute part of the remuneration of persons who have earned the remuneration, wholly and completely by completing their work and, secondly, have contributed to the fund from which the remuneration is paid.

We say that it would be remarkable if Parliament without complying with section 51(xxxi) could reduce or, indeed, completely abolish an entitlement to an amount to which the parliamentarian has actually contributed. If I could go on:

and whether entitlements may be commuted (as in the case of parliamentarians) or may not be commuted (as in the case of judges), is a well recognised form of remuneration of public office holders.

Again, we say, as a matter of general observation, that is correct:

Subject to the Constitution, it is for Parliament to decide the form and incidents of such schemes.

Obviously, we accept that:

Legislation may create rights, the statutory modification or extinguishment of which could effect an acquisition of property.

Now, I do not conceive that that is really in dispute from our friends and I do not propose to spend a great deal of time taking your Honours to the authorities that establish that proposition:

Whether or not s 51(xxxi) has potential application to such modification of extinguishment may depend upon the legislative context in which such modification or extinguishment occurs.

Of course, we agree with that because in the end, the question whether the rights are susceptible of alteration without, of course, falling within the terms of section 51, whether the rights are subject to such conditions or infirmities as means that the particular form of modification or extinguishment does not offend or fall within the terms of section 51(xxxi) is a matter of statutory construction.

It is a matter of statutory construction, if one may be forgiven for saying it, of a rather refined kind because the statute itself does not give any very clear express indications as to which course to take but that is the nature of cases dealing with the Constitution perhaps:

If Parliament legislated to modify or take away accrued entitlements simply for the purpose of saving money –

and that is undoubtedly our present case:

or because it was decided as a matter of policy that they were too generous, then the case may fall within s 51(xxxi).

We say it does:

It is unnecessary to decide that question. As at present advised, I would not accept that statutory superannuation or pension benefits are inherently defeasible and that, on that account alone, their modification or withdrawal could never constitute an acquisition of property.

We say that the main reasons that the rights here are not inherently defeasible are the two that I have already emphasised. First, that the work which entitled the plaintiffs to the pension is done and completed, at least by the time they resign or retire or are not re-elected and they cease to be Members of Parliament; and secondly, they themselves have contributed a sum of money to the acquisition of those rights.

FRENCH CJ: Can I just try and understand more clearly the nature of the property that you are asserting? Looking at section 7(1A) of the Remuneration Tribunal Act, as I understand it the complaint is, or one of the complaints is, that essentially what is happening is there is a carve-out from base salary of an amount which I think on the first determination was $38,000 or something - - -

MR MYERS: Yes.

FRENCH CJ: - - - which will not be parliamentary allowance for the purposes of the Superannuation Act. Would it make any difference if the Tribunal were authorised to determine a base salary plus an allowance which will not be parliamentary allowance for the purposes of the Superannuation Act?

MR MYERS: Of course it is not the case - - -

FRENCH CJ: No.

MR MYERS: - - - but it would be only a difference of form, I should think, your Honour.

FRENCH CJ: I am just trying to get to what the nature of the property is; you talk about accrued rights and so forth.

MR MYERS: The nature of the property is the entitlement under the 1948 Superannuation Legislation Act as amended. So there is an entitlement to an allowance by way of pension - - -

FRENCH CJ: Calculated by reference to base salary.

MR MYERS: - - - calculated by reference to the parliamentary salary – I will call it the “salary” for the purposes – and we say that is the right, and that right has been diminished or impinged upon by authorising the Remuneration Tribunal to determine that the salary – I am sorry, that the pension may be calculated upon a lesser amount.

FRENCH CJ: That salary, of course, may rise, as it has over a period of time.

MR MYERS: It has.

FRENCH CJ: It may rise at different rates according to what Parliament or the Tribunal acting within legislative authority sees as an appropriate combination of salary and other allowances.

MR MYERS: Well, it may rise for any number of reasons which - - -

FRENCH CJ: Or at different rates.

MR MYERS: Yes, and indeed, it can be reduced and it has been reduced from time to time, we accept that – I think in the depression years it was reduced – and then I think the Hawke Government provided for a reduction in parliamentary salary at some time. But under the superannuation legislation as it existed, at the time the plaintiffs became entitled upon leaving Parliament – I do not have to deal with whether there were accrued rights during Parliament - - -

FRENCH CJ: No, no.

MR MYERS: - - - at the time leaving Parliament they were entitled to a pension which was a proportion – we will come to the provisions in particular – a proportion of the parliamentary salary from time to time, and that is what they were entitled to when they were doing their work as parliamentarians and when they were making their contributions. So I think I have identified what we say is the right, your Honour, and we say that the - - -

FRENCH CJ: I suppose the problem is it is anchored to a rather fluid concept. I know you have deprecated the use of the term “inherently variable” but it may have some significance in the context of how the parliamentary salary itself is fixed from time to time.

MR MYERS: But it is of the nature of superannuation pensions that they are anchored to something that is changeable, it is remuneration from time to time. They relate to a base remuneration and, if I may say so, judicial pensions, as I understand it, do and many other defined benefit pensions relate in that way. It is just the nature of a superannuation pension that it has a relationship with the remuneration which existed at the time of retirement or which the office holder, succeeding office holders, have as their remuneration in later years.

There is nothing unusual about that and we accept that it leads to variability, necessarily it will, because remuneration varies, it tends to go up but it can go down. It is in the nature of the right and the Commonwealth’s submissions before this Court are almost entirely directed to showing what your Honour the Chief Justice has pointed out in asking that question of me, that parliamentary salaries change. We accept they change.

If I could just say this, too, without wandering too far from the path, the Commonwealth, in their submissions, make the point that the future salary of a parliamentarian does not constitute property. Well, of course, it does not. The right to payment only arises when the time for the payment of the salary has arrived. It is neither here nor there that the entitlements to future salary are not themselves property. We are talking about quite different rights - the superannuation rights and the life gold pass right. I always get the “gold” before “life”. I do not know why.

Could I then, without wearying your Honours, I hope, go to some of the provisions that the Court will be concerned with in determining this matter. A convenient place for most of those provisions is the schedule to the plaintiffs’ submissions and if I could invite your Honours to have that document. First of all, I should like to refer to the provisions of the Parliamentary Contributory Superannuation Act 1948.

First of all, at page 42 of the plaintiffs’ submissions, that is where the compilation of the important provisions, as the plaintiffs conceive it, commences. The short title and commencement of the Act are on page 43. As we go past, your Honours might, on page 44, notice the definitions of “office holder” and “parliamentary allowance”. I do not want to read those and the precise detail of them is not important, at least for the plaintiffs’ case. If you would be good enough to go to page 46, which deals with contributions, subsection (1) says:

A person who is entitled to a parliamentary allowance shall, during his or her period of service, pay contributions to the Commonwealth:

(a) in the case of a person whose period of service is less than 18 years-at the rate per month of 11½% of the monthly amount of the parliamentary allowance . . .

(b) in the case of a person whose period of service is not less than 18 years-at the rate per month of 5¾% of the monthly amount of the parliamentary allowance -

They are the contributions that I have referred to that must be made. There are additional contributions for a Minister of State in subsection (2) and further contributions of a different kind for an office holder – for example, the Leader of the Opposition or some other parliamentary office. There is further detail concerning the amount of the payments, which one does not need to refer to for present. Then if your Honours would go to page 49, section 14A, “Benefits to be paid by Commonwealth”:

Payments in respect of benefits (including refunds of contributions) provided for by this Act shall be made by the Commonwealth.

Then section 18 on page 50:

Subject to this Act, a member who ceases to be entitled to a parliamentary allowance shall be entitled to benefits in accordance with this section.

Now, the calculation of the benefits in accordance with the section is somewhat elaborate and, your Honours, in our respectful submission, do not need to know the detail of it. If you would be good enough to page 54, subsection (6) says:

The rate of retiring allowance payable to a person under this section is such percentage of the rate of parliamentary allowance for the time being payable to a member as is applicable in accordance with the following scale -

So the rate of the retiring allowance, the pension, is a percentage of the rate of the parliamentary allowance and the parliamentary allowance is the parliamentarian’s salary.

FRENCH CJ: That is a defined term, is it?

MR MYERS: Yes, it is a defined term. The percentage of the parliamentary allowance to be paid as a retiring allowance rises with the years of service in Parliament, complete years of service being eight it is 50 per cent, 18 or more it gets up to 75 per cent.

Could I just go back to subsection (1): “Subject to this Act”. Again, those words “Subject to this Act,” in the Commonwealth’s submission, bear an enormous burden of intellectual content. We say that the words should be taken for what they are, that it has been drawn to the reader’s attention that there are other provisions in the Act which affect the entitlement to a parliamentary allowance or the amount of it. “Subject to this Act” is nothing more or less than a signpost, a drafting signpost. It is not some sort of indication that everything by the way of an allowance is inherently defeasible.

If I could come to then section 18B. I am sorry – section 18A. It was possible to commute the retiring allowance. Section 18B – which is not reproduced here and I will not ask your Honours to go and look at the Act – abolished the ability to commute up to 50 per cent of the entitlement in 2004. Until that abolition, 18B was the provision which allowed commutation.

I am sorry, I have been too ambitious with what is here. Let me just say this. Sections 19 and 19AA provide for the payment in certain circumstances of the retiring allowance to the spouse or former spouse, I suppose, of a deceased member. And 19AA deals with the rare case of payment to an orphan of the allowance.

If I could then go to some provisions which, in particular, our friends on behalf of the Commonwealth rely. I have mentioned the words “Subject to this Act” in section 18. Section 21 provides for a reduction of benefits as a result of membership of a State Parliament or the Legislative Assembly of the Northern Territory or the Australian Capital Territory.

A provision of that kind has been in the legislation providing for this form of allowance since the beginning and it is still there. All it does, in a colloquial way, is to prevent some double dipping. Section 21B, which is on page 63, provides for reduction of certain allowances, including retiring allowances, where some offices of profit are held under the Commonwealth or a State. Again, it is a provision to prevent double dipping. On page 68 is section 22 which provides that:

A member whose place becomes vacant by reason of his or her becoming subject to any of the disabilities specified in paragraphs 44(i) and (ii) of the Constitution –

They are disabilities involving criminal offences:

or by reason of his or her having directly or indirectly taken or agreed to take any fee or honorarium for services rendered in the Parliament to any person or State within the meaning of paragraph 45(iii) of the Constitution, shall be entitled to a refund of his or her contributions, but to no other benefit under this Act.

Now, that is the anti-corruption provision and our friends rely upon that. What we say about it is simply that it is a provision that one would expect to see and it has been in this legislation since its commencement. That is in protection of the integrity of the system of retiring allowances.

Then, if one can look at section 22T - this is on page 69 - and what it provides, in substance, is if as a result of a decrease in the parliamentary allowance or some other element of the calculation of the retiring allowance, there would otherwise be a decrease in the retiring allowance, there should not be any decrease and the rate of the underlying payment upon which the retiring allowance was calculated is to be preserved for the purposes of calculating the retirement allowance. They are, I believe, the provisions dealing with allowances that one needs to consider.

Could I then go back to page 28 of the submissions? There commence some extracts from the Remuneration Tribunal Act 1973. On page 30 there is a definition of “parliamentary base salary” down at the bottom of the page:

means so much of the allowances determined under subsection 7(1) as:

(a) represents the annual allowance payable for the purposes of section 48 of the Constitution; and

(b) is identified in the determination as base salary.

So this is distinguishing between the annual allowance under section 48, the parliamentary salary and the determination of base salary. Over the page on page 31 under the heading “Inquiries and reports by Tribunal” is section 6(1):

The Tribunal shall, from time to time as provided by this Part, inquire into, and report to the Minister on, the question whether any alterations are desirable in the salaries payable to Ministers of State out of public moneys of the Commonwealth.

Then section 7, “Inquiries and determinations by Tribunal”:

The Tribunal shall, from time to time as provided by this Part, inquire into, and determine, the allowances (including allowances in accordance with section 48 of the Constitution) –

that is parliamentary salaries:

to be paid out of the public moneys of the Commonwealth to members of the Parliament by reason of their membership of the Parliament or by reason of their holding particular offices, or performing particular functions, in, or in relation to, the Parliament or either House of the Parliament.

So there can be inquiries into the salaries payable to ministers, inquiries into the parliamentary allowance under section 48, and inquiries into moneys payable to members by reason of holding particular offices, three categories. Now we come to the provisions that we say are valid by reason of the operation of section 51(xxxi) of the Constitution.

FRENCH CJ: Now, for each of the plaintiffs we are looking at the effect on their property right as at the date of their retirement. That is the date that defines it, that is the date on which it is crystallised.

MR MYERS: Yes, it does. Section 7(1A):

The Tribunal may determine that a portion of parliamentary base salary is not parliamentary allowance for the purposes of the Parliamentary Contributory Superannuation Act 1948.

So, that determination which contemplates a decrease, and it could be a decision that none of the parliamentary salary is part of the parliamentary allowance, is what affects the property that the plaintiffs held before the operation of this enactment. Subsection (1B) - - -

FRENCH CJ: That property was defined by the Parliamentary Superannuation Act - - -

MR MYERS: It was, yes.

FRENCH CJ: - - - as at the date of their retirements.

MR MYERS: That is so. Yes, we are dealing certainly with a property right which exists by virtue of an enactment, legislative enactment as at that date.

FRENCH CJ: I was wondering whether, I have not tracked it all through, but whether some of the provisions you took us to in the Superannuation Act have been introduced since that time. I think certainly some of them have.

MR MYERS: I am sorry, I just did not hear what your Honour said on that.

FRENCH CJ: Some of the provisions you took us to in the Superannuation Act have been introduced since that time, since the dates of your clients’ retirements.

MR MYERS: Yes, I think that is probably right.

FRENCH CJ: Because you were taking us to the 2016 print, 21T for example and - - -

MR MYERS: Yes, I was, but I do not think in any material way it affects what I am putting to your Honour, yes.

FRENCH CJ: No, I just wondered why we were taken to those particular provisions if they came in - - -

MR MYERS: Well, because our friends rely on them. If I may say, do not blame me as it were for taking you - I am just taking - - -

FRENCH CJ: Well, your position is that all we need to look at for the purpose of identifying your property rights is the Superannuation Act as at the respective dates of the time of the plaintiffs’ - - -

MR MYERS: Indeed, but our friends rely upon other provisions and I have taken your Honours -- - -

FRENCH CJ: Yes, all right.

MR MYERS: - - - to those because otherwise what I am saying will not be sensible. Then going back to page 32, (1B) deals with a determination in relation to a portion of additional parliamentary officeholder salary, the same issue so far as that forms part of the pension entitlement, and (1C) makes it clear that what can be determined under (1B) is 100 per cent.

FRENCH CJ: The current is 20 per cent, I think, is it not?

MR MYERS: Yes, it is 20 per cent at the moment, and if I can go across the page to 33 to (2A):

The Tribunal may determine that a portion of a salary referred to in subsection 6(1) is not salary for the purposes of the Parliamentary Contributory Superannuation Act 1948.

Then I think I have to - - -

GORDON J: That is dealing with Ministers.

MR MYERS: Yes, it is. Then I have to take your Honours to subsection (9), begins on page 38:

Remuneration (including salary) or allowances to which a subsisting determination applies shall . . . [be] subject to the succeeding provisions of this section -

Then (b), having dealt with lots of cases that are not pertinent to the matter before your Honours, says:

in any other case–be paid in accordance with the determination out of the Consolidated Revenue Fund.

So it is squaring the circle to point out that the remuneration is paid out of the Consolidated Revenue Fund, the remuneration that is effected by the determination.

In due course I will refer your Honours to the determinations, but perhaps it is easier to first deal with the life gold pass. If your Honours would be good enough, in this case, to look at volume 1 of the bundle of papers referred to in the special case. I am going to take your Honours to page 1, but really page 5, where the Members of Parliament (Life Gold Pass) Act 2002 is set out.

Until this time, until the enactment of this provision, a life gold pass entitled the holder to unlimited free travel of the kind described. There was no limit on the number of journeys and so forth. There may be an exception to that but, for the present purposes, let us make the assumption that what I said is substantially true.

Now, this Act had the effect in relation to former members, which one can see from section 11, which is on page 15 of the volume – it reduced the former member’s entitlement to 25 domestic return trips a year. If one goes back a page, one sees that former Prime Ministers were reduced to 40 and if one goes back as far as page 7 one has the very helpful, simplified outline in section 3 of the Act. On page 8 there is a definition of “holder of a Life Gold Pass”. It means:

a former member who, on retirement from the Parliament, was qualified to hold a Life Gold Pass.

There are two notes:

A person who retired from the Parliament after the commencement of this section may have been qualified to hold a Life Gold Pass under a determination of the Remuneration Tribunal.

A person who retired from the Parliament before the commencement of this section may have been qualified to hold a Life Gold Pass under a determination of the Remuneration Tribunal or under a scheme that was in existence under the executive power of the Commonwealth.

I will come to those determinations in a little while. Then, having dealt with the primary position of former members on page 15, if your Honours can go to page 17 you see what is done with spouses and pro-rata adjustments and so forth and I do not think one needs to be concerned with all the detail of that – stopovers of more than 24 hours and all those sorts of things. But if your Honours would go to page 32 to section 32, there is, I think, what is called an Historic Shipwrecks Act provision, described as a constitutional safety net and your Honours will grasp its significance at a glance.

KIEFEL J: By what provisions do you say there was an unqualified entitlement to a life gold pass before the determinations?

MR MYERS: Before this determination, there was no statutory basis.

KIEFEL J: No statutory basis at all.

MR MYERS: No, no statutory basis but there is a statutory basis created here in this provision and then in 2012 there was another enactment and could I ask your Honours to go back to our submissions. The 2012 Act is annexed to the plaintiffs’ submissions, page 77, and on page 79 you can see at a glance what has happened:

Omit “25 domestic return trips”, substitute “10 domestic return trips”.

So there is a reduction of the entitlement from 25 to 10.

KIEFEL J: At what point do you say the entitlement became fixed then and what was the entitlement?

MR MYERS Well, the entitlement after 2002 was to 25 trips. Your Honours, I think the best way of identifying these determinations is to go to the special case.

FRENCH CJ: I think we are looking here at the position of the third and the fourth plaintiffs only, are we not, in relation to the life gold passes?

MR MYERS: Yes, we are. I am sorry, I should make that clear, there are only two who are affected by the life gold pass.

FRENCH CJ: It is paragraphs 68 and 84.

MR MYERS: Yes. Would your Honours be good enough to have a look at the special case? At the end of the special case, the questions of law are set out. That is on pages 31 and 32, and six determinations are mentioned on page 32. I believe they are the determinations which it is, sufficient at least for the purposes of my submissions, to ask - - -

FRENCH CJ: This is 88 in the special case book, I think.

MR MYERS: I beg your pardon, your Honour – page 88. If I can just say this - these are the determinations which we ask the Court to say are void and have no effect and that appears from the orders that we seek set out - there is no need for your Honours to go to it. I just make it clear why these are significant. They are the determinations which we asked the Court to declare to be void and of no effect.

It may be useful to just make a note of each of these determinations, where they are to be found. I am going to take your Honours to them. The first determination of 2 of 2012 is on page 460 of the book of documents accompanying the special case and it is in volume 2. Your Honours will see on page 461 that it is a very spare communication:

Members of Parliament – Base Salary and Related Matters

This determination sets out the base salary for members of parliament and related matters.

. . .

PART 2 – PARLIAMENTARY BASE SALARY AND RELATED MATTERS

2.1 A member of parliament shall be paid a base salary of $185,000 per annum.

2.2 The portion of the base salary that is not parliamentary allowance for the purposes of the Parliamentary Contributory Superannuation Act 1948 is $38,620 -

and that is what your Honour the Chief Justice was referring to.

FRENCH CJ: Just before we move from the life gold pass, can I just go back for a moment to - paragraph 67 of the special case at page 66, and paragraph 84 each speak of the third and fourth plaintiff respectively becoming eligible upon retirement. Now, again, the date specified there, 5 February 2001 in the case of the third plaintiff and 19 February 1990 in the case of the fourth plaintiff, are they said to be the dates upon which their property rights in relation to a life gold pass is crystallised?

MR MYERS: Yes, they are.

KIEFEL J: And what were the entitlements at that time?

MR MYERS: They were entitlements under – I have to take your Honours to, to answer that - the life gold pass was first put on a statutory basis by a determination, which is in volume 2, at pages 337 and 338. It is Determination 6 of 1976.

BELL J: I am sorry, what was that page number again?

MR MYERS: Page 337.

BELL J: Thank you.

MR MYERS: This is part of the determination that begins right back on page 321, the first document in this volume. Paragraph 2.28 deals with:

A senator or member . . . eligible for the issue of a Life Gold Pass –

on retirement from Parliament. Paragraph 2.29:

The following qualifying periods shall apply to eligibility –

Prime Minister, one year; President of the Senate, Speaker, Leader of the Opposition, six years; senators and members, 20 years or the life of seven Parliaments. Then, at 2.34:

The Life Gold Pass issued to a sitting senator or member shall be suspended until he retires from the Parliament.

So it contemplates the issue upon satisfying the qualifying period, even though one is still a Member of Parliament.

FRENCH CJ: Where does the authority of the Remuneration Tribunal to make that determination come from, back in 1976?

MR MYERS: Section 7(1) that I took your Honours to, because you recall that section 7(1) is in quite general terms, dealing with allowances generally.

FRENCH CJ: Yes.

GORDON J: I understood from the special case that the Minister requested the Tribunal to inquire – it says at paragraph 43:

By a notice in writing dated 4 March –

and there was a request by:

the Minister for Administrative Services . . . to enquire into . . . the Life Gold Pass –

under section 7(4)(b) of the Tribunal Act, and up until that point in time there had been no statutory base for it.

MR MYERS: That may be correct, your Honour. The determination came out of that request, that the power to make the determination rests in the terms of 7(1) of the Act. Have I answered your Honour’s question? I think I have dealt with it but that is the way – the question I was first directing attention to was where was the legislative power and it is found in 7(1). The request to make the determination, your Honour, is correctly identified.

GORDON J: The point that follows or precedes that is until that point either by way of request or determination there was nothing but an administrative scheme in place.

MR MYERS: Yes.

KIEFEL J: While you are interrupted from your sequence, could I take you back to the outline – your outline of argument, paragraph 3, where you talk about the right to receive moneys – 3(a), the “right to receive” moneys prior “to the enactment of the impugned laws”. You call it a:

fixed percentage of the annual amount paid from time to time to members of Parliament –

Would it be more accurate to call it a percentage which is fixed from time to time?

MR MYERS: I am sorry, your Honour, could you just – just tell me what - - -

KIEFEL J: What I am saying is has it been - - -

MR MYERS: Could you tell me again what your Honour is directing my attention to?

KIEFEL J: The reference in paragraph 3(a)(i) of the outline, the reference to a “fixed percentage of the annual amount” and what I am asking is whether it would be more accurate to describe the entitlement as being a percentage which is fixed from time to time by the statute, that is, whether or not it is recognising that it is capable, that you recognised before that variations can be made to entitlements under the statute. What I am saying is – what I am asking is the percentage that you refer to is not fixed for all time, it is capable of modification by the statute itself. It would have been, it would have been prior - - -

MR MYERS: Well, it is capable of modification by the statute - - -

KIEFEL J: Yes.

MR MYERS: - - - but subject to complying with the provisions of the Constitution.

KIEFEL J: Quite.

MR MYERS: The question is once having been fixed by the statute and someone having acquired a vested right under the statute as it stood at a certain time by serving in Parliament and by contributing, would – the question for the Court is would a change need to satisfy the requirements of section 51(xxxi)?

KIEFEL J: Well, are you saying that the percentage could not move down?

MR MYERS: Yes. Without complying with 51(xxxi), for the reasons that we adumbrate, the allowance upon which it is based we acknowledge can vary. We do not gainsay that.

KIEFEL J: Yes, I just wanted to be clear about what you are saying.

MR MYERS: Yes. Certainly, the whole burden of our case is that having acquired a vested right under a statutory scheme in consideration for having done some work as a parliamentarian and made contributions we cannot be deprived of that by legislation without complying with 51(xxxi). So, for the moment I will stick by what we say in the outline.

KIEFEL J: Yes, I follow.

MR MYERS: But that is not to say that by complying with section 51(xxxi) Parliament cannot alter the laws.

GAGELER J: Could you be deprived of the gold pass by a further determination of the Tribunal in the exercise of its power to make determinations from time to time?

MR MYERS: Well, we say no, because having acquired an entitlement to a gold pass with certain characteristics by operation of the legislation which was in force which led to a particular determination, we cannot be deprived of that by another determination unless the requirements of section 51(xxxi) are observed.

GAGELER J: So the determinations, as I read the Remuneration Tribunal Act at that time, were to be made from time to time and ordinarily annually. So your position is, as I understand it, that once a determination has been made the Remuneration Tribunal could not change the determination in any subsequent year.

MR MYERS: It could not reduce our entitlement, yes, I mean without some compensation and – no, I think I have answered the question, I will not - - -

NETTLE J: Could not reduce it after the qualifying period?

MR MYERS: No, correct, yes.

NETTLE J: For you, after the qualifying period is completed.

MR MYERS: That is our case, yes. Now, I was just going to take your Honours to the determinations which, I think, one needs to be alive to. I have referred to the first determination concerning gold life passes. Could I go back to – I had gone to page 460 of the second volume of the book of documents accompanying the special case. I will try to be quick with this.

The next determination is at 462 or 463 deals with – that is 2012/03 - that deals with parliamentary office holders and Ministers of State. Part 2.3 is “Parliamentary Office Holders”. The “20 per cent portion”, as your Honour the Chief Justice pointed out, you will see that in the last sentence of 2.3. Over the page, 464, “Ministers of State”, the first sentence “20 per cent” and then the next determination - page 507, this is No 15 of 2012 - another determination in relation to “Base Salary” under Part 1. The “$185,000” becomes “$190,000” and the portion that is determined becomes “$39,770”.

Then 510, on page 511, “Part 2 - Parliamentary Base Salary”, your Honours will see at a glance the $195,130 and $40,730 is the amount that is excluded. Over the page, 3.3, the 20 per cent portion still applies to the additional salary for parliamentary office holders and 3.4, Ministers of State still the 20 per cent. Determination 2013/13, which is on page - - -

GORDON J: I think that is the one we just - - -

MR MYERS: Determination 2014/10 is the next one that we attack. On page 517, “Part 2 - Parliamentary Base Salary”, your Honours will see at a glance what it does. Over the page, 3.3, “additional parliamentary office holder salary” still the 20 per cent; Ministers of State, 4.1, still the 20 per cent. Finally, the determination that we attack is 2015/06 at 523, 2.1. Again your Honours see at a glance “Parliamentary Base Salary”, 3.3, 20 per cent; 4.1, Ministers of State 20 per cent.

Then, your Honours, there is a supplementary book of documents to accompany the special case. At page 107 there is an additional determination which has been made since the proceedings were commenced and obviously we have not claimed relief in relation to it but it would be affected by any decision in favour of the plaintiffs that your Honours might make and you will see “Parliamentary Base Salary” $199,040, excluded amount $41,540; 3.3, 20 per cent still; 4.1, 20 per cent still. Subject to anything else that may arise, they are the references to the legislation that I wish to make.

Could I now re-join our written outline? We deal in the written outline – and I mean to deal with these things rather briefly because I do not apprehend that they are seriously in issue, but if I am wrong about that I will have to deal with them if it arises. Under Part I dealing with the parliamentary superannuation contribution, the first proposition that we rely upon is paragraph 1, laws enacted pursuant to section 51(xxxvi), read with sections 48 or 66, are subject to the guarantee of acquisition of property on just terms implied from 51(xxxi) of the Constitution.

Now, the first thing that we say just by way of introduction to the authorities there, the Commonwealth case seems to be that benefits payable under the Superannuation Act could be extinguished entirely. Thus it is a necessary part of the Commonwealth’s case – and they will probably try and wriggle on this hook – that if a parliamentarian, by way of example, had made contributions to superannuation for 30 years, the Commonwealth could legislate, without being affected by section 51(xxxi), to extinguish all rights including any right to repayment of contribution.

I am not saying that they have done that, but it is a consequence of the case that is advanced, and we say that casts doubt on the whole of the Commonwealth’s case. The Commonwealth argues that 51(xxxvi) is wholly outside the scope of section 51(xxxi). Now, this contention is contrary to the observations of the Court in ICM Agriculture, where four members of the Court concluded that section 96, read with 51(xxxvi), was subject to section 51(xxxi), and I do not want to read it but your Honour the Chief Justice and Justices Gummow and Crennan at paragraphs 30 to 46 of the ICM Case so decided and Justice Heydon agreed at paragraph 174.

In Wurridjal, which is case 35 on the list, ICM is case 13 by the way, the Court decided that section 122 was subject to the operation of section 51(xxxi) - a fortiori we say that in our case. That is all I want to say about the first proposition. We say that the law on this subject is really not in doubt.

The second proposition that we advance is that each plaintiff held that the very least from the time that he finally ceased to be a Member of Parliament, and that is the case of all the plaintiffs that are before the Court - there may be other former parliamentarians who have a different situation - that each plaintiff had a bundle of rights under the Superannuation Act that was property within the meaning of section 51(xxxi) of the Constitution.

Now, again it is established, we say, that a right to payment of money can be property under 51(xxxi), and we cite in our outline precisely the authorities upon which we rely, and that choses in action as established by Georgiadis, one of those workers’ compensation cases which there seem to have been so many that came to the High Court in relation to 51(xxxi), Mewett and Smith v ANL, all so determined.

It is trite to point out, perhaps, that 51(xxxi) does not make a distinction between different kinds of property, it just says property, and there is no reason why, therefore, a right created by legislation cannot be property for the purposes of section 51(i) and, really, that is the position which the Court has arrived at, particularly in Chaffey and Telstra. Again, I do not concede that it can seriously be an issue and we refer simply to paragraph 33 of our written submissions where we refer to the authorities. Then, we can move to - - -

FRENCH CJ: The point is made by the Commonwealth, of course, that the - I am not sure how this feeds into the constitutional argument – that on your argument each retiring plaintiff has a set of rights defined by reference to the state of the legislation at the time of their retirement and their length of service and so forth and the relevant formula, so in other words you may have a whole array of different kinds of vested rights, depending upon when people retire - - -

MR MYERS: Yes.

FRENCH CJ: - - - and, similarly, you might have had people who have retired and then come back and been elected a few years later.

MR MYERS: Yes. They make that point, but where does it go, how does it - - -

FRENCH CJ: Well, that is what I am asking.

MR MYERS: - - - determine what constitutes property and the extent of the constitutional protection? It is an observation, and we would say one thing about this, because the Commonwealth wants to talk about, you know, the real world and so on and what is really happening. Anyone who has contributed to a superannuation fund, as some of us may have for upwards of 40 years, will know that in order to calculate one’s entitlement, having regard to changes in the tax law from time to time, you would need Big Blue operating at high power on a good day.

There have been so many changes to the laws affecting superannuation entitlements that any computation of someone’s superannuation entitlement based upon contributions over many years involves complex computations and different persons who have contributed to the same fund at different times will have their rights determined according to different rules. Again, it is just a consequence of what happens with any superannuation scheme over a period of time.

FRENCH CJ: I suppose it feeds into the argument about the inherent fluidity to get away from the notion of inherent variability which you do not seem to like which characterises whether this is property the subject of an acquisition.

MR MYERS: Well, all I can say is that in some areas of human activity the laws do change from time to time and so different entitlements will arise. To make that observation does not suggest that those entitlements as they arise are not property. That requires an analysis of the law that exists at the time when the entitlement arises. We accept that there might be different Members of Parliament who have different rights according to what the law was at different times but, with respect to the observations that your Honour is testing me with, we say that is just in the nature of superannuation.

I do not know whether I really need spend more time on proposition 3. I have, in effect, dealt with it in submissions concerning what we say is our vested right or vested rights according to the legislation to which I have taken your Honours. Now, we state it as it is. I cannot add to it.

Then, if we go to paragraph 4 and this may be the sort of killing ground as far as the case is concerned - no, I am sorry, could I just mention one thing in addition to what we mentioned in our outline of oral submissions? Could I draw the attention of the Court to the decision in JT International which is case 15 on the list - that is the Tobacco Case - in particular to paragraphs 133 to 136, I am not going to read them, in the reasons for decision of Justice Gummow, and paragraph 174 in the reasons for decision of Justices Hayne and Bell. In those paragraphs of those reasons, Georgiadis, Mewett, and Smith v ANL were referred to without disapproval, indeed, adopted.

Now, could I once again come to point 4? The question here is whether there has been an acquisition of property which is it is said inherently susceptible of variation or modification? That is a way of saying that the rights granted, say under the 1948 superannuation legislation, to a pension calculated by reference to the parliamentary allowance from time to time are rights that are subject to a condition that Parliament can vary those rights at any time.

Now, no such condition is mentioned in the legislation. It has to be implied in some way. The Commonwealth wants to tell the Court that it should be implied because the parliamentary allowance can be varied from time to time. Well, that misses the point completely. We acknowledge that the parliamentary allowance can be altered from time to time.

The parliamentary allowance, whatever it may be from time to time, is the basis of our entitlement to superannuation, in common with any superannuation, or pretty much any superannuation of a defined benefits kind, which is based upon a salary of an officer holder which varies from time to time. If I may so without offence, your Honours will be perfectly familiar with that.

So the case that the Commonwealth sets up is one which does not go to the point. We do not contest the proposition that it is at the basis of their contentions, and when they refer to all sorts of changes in the legislation affecting the amount of parliamentary allowances they say, “Aha, well, because the parliamentary allowance can be changed from time to time, the superannuation can be too”.

But the difference is in relation to superannuation there is a vested right. In relation to a parliamentary allowance there is no vested right except to last week – the pay for last week’s service. In a constitutional sense, the difference is in one case there is no property and in the other case there is.

KIEFEL J: But you accept that in relation to the percentage rate referred to in the Superannuation Act that it could be altered upwards, it is just that you say it cannot be altered downwards.

MR MYERS: Yes, of course, because - - -

KIEFEL J: Well, it can be varied, it is just that your case is really that your benefits cannot be reduced, that is really what you are saying, is it not?

MR MYERS: Yes, of course, because that is the constitutional guarantee.

KIEFEL J: But that is not what – well, what do you make of the distinction then in the Constitution between certain constitutional officer holders where it is expressly provided that their remuneration cannot be lessened?

MR MYERS: During the term of office?

KIEFEL J: Yes.

MR MYERS: Well, “during the term of office” – they are the words that those officer holders should beware of, if I may say so. It is no different, in substance, the position here. During their term of office as parliamentarians, their remuneration can be altered, except for last week’s pay presumably. Legislation which said you are not going to be paid next week what you earned by serving last month would run foul of 51(xxxi). So we say there is no real difference.

NETTLE J: Could I ask, what would be the case if, by legislative amendment, the conception of parliamentary allowance were abolished and say, for example, it was put on an hourly rate - $70 per hour for parliamentary attendance in Parliament or in the electorate, so that there would no longer be a parliamentary allowance as such within the meaning of the Superannuation Act?

MR MYERS: We would lose our superannuation.

NETTLE J: That is just the risk, is it?

MR MYERS: If there were no parliamentary allowance, there would be nothing. I think one must concede that. I was going to say that the likelihood of that happening is - - -

NETTLE J: One you can live with.

MR MYERS: We will take our chances, yes. There are cases where one could see that rights to remuneration may disappear. It is always risky dealing with questions, if I may say so, like your Honour’s that are hypothetical. I am not sure that I have grasped every possible consequence of it but I think I must accept that parliamentary allowances could be abolished.

NETTLE J: It would not be a colourable device; it would just be the fact that they had decided to change the way things go.

MR MYERS: If it is not a colourable device, yes.

NETTLE J: Thank you.

MR MYERS: My learned junior is very helpfully pointing out that the parliamentarians still have a salary but your Honour was, I thought, suggesting the possibility where parliamentarians have no salary.

NETTLE J: Correct.

GAGELER J: Or simply, what about the possibility that parliamentary allowance, as defined in the Parliamentary Contributory Superannuation Act 1948, at the relevant earlier date, no longer exists – that is, there is a different form of parliamentary allowance, not meeting the description in that statutory definition ?

MR MYERS: I think I would have to concede likewise that we may have lost our entitlement. It depends if it is a device or not, but just taking your Honour’s question on the assumption that there is nothing that can be described as a salary, I have to make the same answer as I do to Justice Nettle’s question.

Your Honour is putting a slightly more refined version of the question, “What if there is no salary?” Well, if there is no salary on the basis of the right we assert we do not have a right to superannuation. It is hard to imagine that something would occur of that kind that your Honour Justice Gageler is putting to me where there might not be a hint of it being a device to evade, for example, the constitutional protection. I do not know. It looks as though it might be a bit of clever drafting that could be attacked in some other ways, but, as it is put to me, that is the answer that I make.

GORDON J: It raises issues about legislative context, Mr Myers, which you have not addressed so far and that is that the history of these provisions were preventative measures as a result of the joint report by the committee to simplify parliamentary salaries and that these measures were introduced in order to avoid topping up by reference to allowances which had no reference to retired parliamentarians - for example, electorate allowances, book allowances – in order to improve governance, transparency, simplicity. What are we to do with that history in that legislative context?

MR MYERS: Your Honour, I do not believe the amount of the pension was ever calculated on book allowances - - -

GORDON J: That is my point. So what was to happen was that - the provisions that you attack as the impugned provisions were inserted to enable the Remuneration Tribunal to excise out, in a sense, the increases in the parliamentary salaries to take account of these allowances so that you were not topped up. So, in terms of looking at it in terms of acquisition of 31, what is at least arguable is that we are not even dealing with an acquisition. We are not even in the field of acquisition.

MR MYERS: But section 31 deals with rights and if it is acknowledged that there is – I can only give the lawyer’s answer to it that we have this right to superannuation on a proportion of the salary and that is that. For whatever reason Parliament increases or decreases the salary is neither here nor there.

GORDON J: I see.

MR MYERS: We are not sitting as – your Honours are not sitting as Parliament but as a court of law to determine how a constitutional provision operates. I was dealing with our fourth proposition. Our submissions in relation to this, our written submissions, are at paragraphs 38 to 43 and I really do not want to repeat them. They are detailed references to the authorities. In particular we refer to Theophanous and I have already read that paragraph from Chief Justice Gleeson’s submissions.

In relation to Attorney-General v Chaffey which is case 3 in the combined list, the paragraphs that we particularly rely upon for a description of the sort of things that constitute remuneration are paragraphs 9, 18, 21 and 30 in the plurality’s judgment and paragraph 55 of the reasons of Justice Callinan who deals with a similar circumstance.

The matter really gets down to this and I am repeating myself and I am going back to the beginning. Are the rights that we have identified inherently susceptible of variation? It is, in the end, a question of statutory construction. The rights that we rely upon were vested without any expression of relevant contingency in the terms of the statute.

It is nothing to the point to refer to the provisions dealing with misconduct or the provisions dealing with double dipping. They are not the conditions that are relied upon. They do not show that these rights are inherently variable. They are just sensible provisions to deal with the two subjects that they deal with, double dipping or misconduct.

The opening words of section 18, which I referred to, are no more than a signpost. They do not carry the vast burden of implication which the Commonwealth would put on them. The two crucial facts, we say, are these. The remuneration constituted by the superannuation pension payments are a payment in return for services which have been rendered. They are not gratuitous. They are in payment also in consideration of contributions that were made by the pensioner.

The notion that someone makes contributions to a superannuation scheme, the rights of which are inherently variable, we say is nonsense. No one expects that the person would contribute, or would be expected to contribute, to a superannuation scheme where even the contributions can be taken away without compensation. That is what I wish to say in relation to the pension entitlement.

In relation to the life gold pass, it is a benefit of a different kind. But we do say that the analysis of it, as a right, which arises under legislation, is essentially the same as in relation to the superannuation. There is no notion of contribution to it, as there is in relation to a superannuation scheme where the Members of Parliament are putting in money by deduction from their salary. But it is still part of the reward for services that have been rendered.

There is nothing inherent in the notion of the life gold pass that suggests that it is susceptible of variation or modification. It can be abolished for future members – and it has been modified pro tanto for future members – but when someone has attained a vested right to it, it is a vested right. It is a vested right that springs from the period of service as a parliamentarian and it is protected by section 51(xxxi).

FRENCH CJ: Why does the Tribunal use the language of eligibility in the determination in relation to that? Does that have some reference to its origins in an executive scheme?

MR MYERS: Yes, it does. But when it became a matter for determination by the Remuneration Tribunal it acquired a statutory status.

FRENCH CJ: You say that is rooted in 7(1).

MR MYERS: Yes. Your Honours, that is the case that we wish to put and if your Honours have no questions - - -

BELL J: The gold life pass answers the description, you say, of allowances to be paid out of the public moneys of the Commonwealth.

MR MYERS: Yes.

BELL J: Yes.

MR MYERS: Yes, that was the point of referring to it, yes.

GAGELER J: You do not challenge the amendment to the definition of parliamentary allowance in 2011, that is, the amendment to the Parliamentary Contributory Superannuation Act, insofar as it amended the definition of parliamentary allowance?

MR MYERS: Just excuse me, your Honour. We do not, and the question is why we do not. We took the view that it was not necessary to do so because if the provisions that we challenge avoid the legislation that the definition hangs there, I suppose one could say that for neatness of dealing with it, we ought to have challenged it but it has nothing to operate on if our primary challenges are successful. I think that is the thought that was behind - - -

GAGELER J: Meaning that there is another bit of the definition that is engaged and that you can rely on to say that you have present statutory property. Is that so? I just do not know how that arises. You might be right. I just cannot - I do not see it - - -

MR MYERS: I am sorry to do this, your Honour, can I have a look at this?

GAGELER J: Yes.

MR MYERS: We will be here over the luncheon adjournment, I think, and maybe I could have leave to just answer that question properly in reply.

GAGELER J: Yes. You understand my difficulty?

MR MYERS: Yes, I do. If your Honours please.

FRENCH CJ: Thank you, Mr Myers. Yes, Mr Solicitor.

MR GLEESON: Your Honours, the Commonwealth seeks to answer Mr Myers’ case in relation to the retiring allowance at three levels. I will identify them and then deal with them in turn. The first and the broadest answer is simply from the Constitution, that is before one even opens the statutes. It is the submission about the scope of section 48, read together with section 51(xxxvi) which is that the breadth of that power does not engage a limitation under section 51(xxxi).

I will deal with that submission first. Can I indicate at the outset, Mr Myers has mischaracterised our submission in two important respects. Firstly, he has said we are making a submission about section 51(xxxvi) in any or all of its operations, that is, that it can never engage section 51(xxxi). That is not our submission and that is clear from our written submissions at paragraphs 57 to 65. The submission is a narrower one. It is about section 51(xxxvi) operating together with section 48.

The second mischaracterisation is that he says the tenor of our argument is that the Parliament could confiscate all contributions made by retired members. That is not the Commonwealth’s argument. If there were such a statute, it would raise acutely the question whether the power in section 48, which is a power to fix allowances, is a power which allows you to confiscate contributions made by persons, and it would raise acutely whether the proper characterisation of such a law is that it would be a law in respect of taxation, in which event it would have to stand or fall as a law on taxation. We ask the Court to decide this case without contemplating a hypothetical law confiscating contributions.

So, your Honours, that will be the first level of our answer. The second level will be a closer look at the statutes which created the rights, and the proposition will be that the bundle of rights under those statutes, which is said to constitute property, were inherently liable to variation at all times such that there could be no acquisition within section 51(xxxi) by a law responding to that inherent variability; that I will call the “Chaffey proposition”. We put that in the manner in which Chaffey was argued and the manner in which it was decided, and that will require us to look at the statutes creating the rights.

Your Honour the Chief Justice asked whether Mr Myers’ case crystallises around the statutes at the time each of the plaintiffs left office and I will take your Honours to those statutes to show that he has not fully accounted for the rights. But it will also be necessary to note that while the plaintiffs were in office there was also substantial variability in the statutes, the very thing contemplated by section 48, and I will seek to show through that variability while in office one of the answers to Mr Myers’ proposition that if you have done the work you have earned the money and it cannot be taken away from you. One of the answers is that even as each parliamentarian was serving in office, the relevant statutes were liable to variation and were frequently varied, such that at no point in time could a parliamentarian say “I have a property right within 51(xxxi) to be paid as per the current statute”.

Your Honours, the third level of our answer will be that in addition to those matters, if one focuses on the impugned provisions, and taking up your Honour Justice Gordon’s question, if one looks at what they actually did in 2011 and 2012 and what was their context. They did not effect any acquisition, and that is in addition to the inherent variability point, that is, looking at what actually happened under those provisions, including the fact that no-one’s entitlement in money terms went down, and also including the important fact that Mr Myers has overlooked that section 22T, particularly as amended in 2012, made sure that the amount could never go down, and therefore made sure indirectly contributions could never be imperilled.

So in those circumstances, that part of the plaintiffs’ case which says the impugned provisions could see us receiving nothing mischaracterises the 2011 and 2012 provisions. Your Honours, after that we will deal more briefly with the life gold pass case.

Your Honours, could I start then with the constitutional proposition and ask your Honours to open section 48, the provision which provides that:

Until the Parliament otherwise provides, each senator and each member of the House of Representatives shall receive an allowance of four hundred pounds a year, to be reckoned from the day on which he takes his [or her] seat.

That is to be read together with section 51(xxxvi) providing power to make laws in respect to:

matters in respect of which this Constitution makes provision until the Parliament otherwise provides –

So, looking at section 48 one can see that it is reserving to the Parliament the ability from time to time to determine whether the constitutional amount of four hundred pounds a year should be increased up or down and what form any allowances should take. It is accepted that section 48 is broad enough to allow Parliament to structure an allowance so that it is paid in part after the person ceases to hold office. One of Parliament’s choices from time to time is how much of the allowance will be paid while in office and how much afterwards.

GAGELER J: The problem with this argument is that section 48 is not the source of power. The source of power is under section 51(xxxvi) and that is subject to this Constitution, including subject to section 51(xxxi).

MR GLEESON: Yes, and there are a number of cases where, when one looks at the heads of power in 51(xxxvi) - and in this case it has to be read together with 48, they sit hand in glove - it is of the very nature of that power that it contemplates exercise in a manner which does not trigger acquisition of property. I will come to those cases in a moment after I have outlined the general argument. But it is a Nintendo type argument, that it is of the very essence of the power in section 48, taken together with 51(xxxvi) that it contemplates exercise and re-exercise from time to time in such manner as the Parliament from time to time thinks best suited for the nation.

So your Honours will see in paragraph 2 of our outline, the flexibility that we submit is within sections 48 plus 51(xxxvi) includes determining the nature and form of the allowance, the method, the formula or the reference point, the amount or value of the allowance and whether there will be increases or decreases over time.

KIEFEL J: But not taking the allowances away.

MR GLEESON: I just need to be clear how your Honour is using that because there are two examples from history, at least, where the Parliament from time to time has determined that the current allowances, including in respect of work done, need to be reduced and, indeed, there may need to be repayment by the members, or the former members to the Commonwealth.

I will give your Honours two examples. The Commonwealth would submit that they are within the power in section 48. If I could show your Honours the two examples - first, in volume 1 of the book of documents accompanying the special case, commencing at page 72, the Financial Emergency Act 1931, where the preamble indicates the need for common sacrifice, contained on page 74 in section 9, a reduction of the annual allowance for the Members of the House of Representatives by various percentages and those are the annual allowances which, at that point in time, were set by the 1920 Act, page 70, section 3, £1,000 a year was the basic allowance.

So as an annual allowance people who had done their work serving in Parliament during 1931, their amount was reduced. The same occurred in the 1932 Act at page 91, where the reductions for the 1932 year were more extreme than the 1931 year. So persons who have commenced to do their work for the year and have done part of their work receive a lesser amount because Parliament has this flexibility.

A third example is the 1986 Act which Mr Myers mentioned, which is at pages 171 and 174. On page 171 in section 4 of the 1986 Act, the Parliament modified the Remuneration Tribunal determination to reduce salary below the Remuneration Tribunal, and, as seen on page 174, section 15, the result was that:

Where –

(a) a person has been paid an amount by way of –

salary, that is the one Mr Myers says can always be changed up or down or be done away with, or superannuation benefit, and it exceeds the entitlement, following this further law, there is a liability to repay the Commonwealth the amount of the excess. So the Commonwealth would submit that those three provisions I have taken you to, those three provisions are illustrations of the scope of section 48, the flexibility within it, and none of those provisions attracts a difficulty under section 51(xxxi).

NETTLE J: Was this 1986 legislation enacted under section 48 of the Constitution or 51(xxxvi)?

MR GLEESON: Your Honour, I am taking those two provisions together, as in it is 48 plus 51(xxxvi) that gives the power.

NETTLE J: So, 48 continues to operate even though Parliament has otherwise provided?

MR GLEESON: Yes, together. It is not an independent power but each time Parliament makes a provision under section 48, that is firstly an exercise of the combined power and then it is a base upon which the power might be re-exercised another time. So the matter under 51(xxxvi) - - -

NETTLE J: Is otherwise provided, pursuant to section 48?

MR GLEESON: Yes.

NETTLE J: I see. Thank you.

KEANE J: The entitlement, which Mr Myers’ clients have, under section 18 of the Superannuation Act – the source of that entitlement is section 48 and 66 in the case of Ministers, and section 51(xxxvi). So the source of the entitlement to make provision for allowances is the source of the entitlement to the superannuation payments rights. So a power to make law in relation to the allowances is the power to make laws from time to time in relation to the superannuation entitlements and it cannot be otherwise, because otherwise there would be no power to make the laws giving them their rights to start with.

MR GLEESON: The argument is, before one descends to stage 2, which is to see the variability in the particular statute at stage 1, which is section 48, plus 51(xxxvi), you have seen the Constitution has said this is a matter where it is proper for the Parliament to be able to keep it under continuous review and the review could alter decisions which previous Parliaments have made by way of granting of an allowance.

What that means, in answer to Mr Myers’ proposition, it looks a bit unfair if you are doing the work, you are earning the reward and it gets taken away from you at the end of the day. For every day a serving Member of Parliament performs duty, one knows that the allowances one will be entitled to will be those determined by the Parliament from time to time under the formula or method or amount which appeals to the Parliament from time to time.

So Mr Cohen, who served from 1969 to 1990 – and I will come to his statutes in a moment – he knew on a correct understanding of the law that what he was entitled to would depend upon the will of Parliament from time to time in respect to the appropriate allowances, having regard to – and, your Honours, that is the next step in the proposition, “having regard to” – in paragraph 3 of our outline that what is peculiar and important to 48, 31 and 51(xxxvi) is that it is a provision which confers flexibility in order to balance a range of considerations which may pull in different directions in different ways from time to time.

The first of those, the most obvious, is the need for parliamentarians, whether serving or past, to receive allowances – that is Mr Myers’ remuneration point – but, equally, the ability of the community to fund these allowances are matters which may change from time to time. These are amounts coming out of consolidated revenue. They have to be appropriated under section 81. There is a range of factors there already where successive Parliaments may make different judgments.

The second matter we would point to is that it is not unimportant that public attitudes on parliamentary allowances can impact upon the reputation and the efficacy of the Parliament itself. We know, from the record, that there is nothing which has excited interest, anger or unhappiness from the public over time than what is considered now to be an excessive benefit in the form of a life gold pass.

GAGELER J: Mr Solicitor, does that mean that you would not dare to make such an argument in relation to old-age pensions or sickness and hospital benefits? Are you distinguishing, somehow, the subject matter of section 48 from those other forms of payment for which section 51 of the Constitution provides?

MR GLEESON: What I am submitting is that for each of this category of powers, of heads of power, one does an analysis of its true purpose to see whether it contains within it the degree of flexibility to which the current submission is directed.

I will come to briefly deal with that because Justice McHugh has discussed those head of powers in WMC and he has made some submissions that we would – he has made some observations that we would advance that in a case on those heads of powers there is likewise a significant flexibility in the ability of Parliament to say, as per the 1931 or 1932 Act, we cannot afford the pension which the previous Parliament thought appropriate, and the 1931 and 1932 Act are perhaps a very clear example of where the Parliament across a range of heads of power reduced, and retrospectively reduced, what would otherwise have been statutory entitlements to people all across the community, parliamentarians, public servants, members of the community.

So in each case, one has to see whether there is a true abstraction by 51(xxxi) from the power in question and we are urging that be done on a case-by-case basis. We are not putting the broader argument that Justice McHugh put that all statutory rights are inherently variable if they find no source in the common law.

We are putting the narrower argument that one looks at the head of power to see its purposes, and it is the effect of Mr Myers’ argument that those three statutes I took you to triggered section 51(xxxi) and that is a way of testing the scope of these provisions. We submit those three statutes did not and they are the very decisions that are reserved for the Parliament under these provisions.

NETTLE J: Just before you go, I am sorry to be obtuse about this, to take Mr Cohen’s example, if say he had completed a week of work at the current rate and subsequently because the Commonwealth were embarrassed about the amount of money it was paying to politicians it changed the legislation, could it have drawn back the salary already paid without invoking 51(xxxi)?

MR GLEESON: Yes, and that is what the 1986 Act did.

NETTLE J: Whether lawful is another matter but that is what it did.

MR GLEESON: Yes. But the answer to your Honour’s question is yes, it could have done that without triggering section 51(xxxi) because of the whole purpose of section 48 which is to say this matter must remain under the review of Parliament. That is the third – if I could just complete, your Honours this third point in paragraph 3, which are the factors which require the flexibility, and taking up what your Honour Justice Kiefel raised, there is a critical difference in the way the Constitution treats federal judges, the Governor-General and the way it treats parliamentarians. What it has done in respect to federal judges, under section 72, of course, is to say that they will:

receive such remuneration as the Parliament may fix; but the remuneration shall not be diminished during their continuance in office.

Now, Mr Myers made a submission as if “continuance in office” there only refers to the days until one ceased to be a judge. The Court has rejected that proposition. I will refer to Austin v The Commonwealth (2003) 215 CLR 185 at paragraph 72, where the Court in the judgment of Justices Gaudron, Gummow and Hayne, said that section 72(iii) includes a protection or pensions “accruing under the federal judicial pensions statute”.

So the effect of 72(iii) is to provide the protection for independence of federal judges. One does not look to section 51(xxxi); one says there is the protection in 72(iii). If the Parliament seeks to diminish remuneration, whether in terms of the amounts actually paid during office or in the pension phase, Parliament would contravene section 72(iii), so there is the protection, and that is necessary for independence. The Governor-General in section 3, the protection is that:

The salary of a Governor-General shall not be altered –

that is, up or down:

during his continuance in office.

There is the protection, again necessary to secure independence. When one comes back to section 48, reading it together with 51(xxxvi), what this has said is the ability to decide what is the appropriate amount from time to time shall rest with the persons who comprise that very body.

NETTLE J: Are you sure that extends to clawing back what has already been paid under an extant obligation?

MR GLEESON: Yes.

GAGELER J: Was this argument put in Theophanous?

MR GLEESON: In Theophanous Mr Bennett put what was described as a broader and a narrower argument. Theophanous [2006] HCA 18; 225 CLR 101, the relevant argument is at page 109 over to about point 3 on 110, and Mr Bennett distinguished a submission having:

two independent aspects: At a general level, the entitlement to benefits is inherently subject to modification or extinguishment by subsequent legislation. More specifically, the entitlement is subject to a condition which contemplates the potential forfeiture of those benefits upon conviction of a corruption offence.

Then, dropping down to about 10 lines from the bottom:

There are statutory rights which are subject to subsequent modification or extinguishment without involving an acquisition for the purposes of s 51(xxxi): This is consistent with the general principle that a Parliament cannot bind its successors.

What I am seeking to do is to take the higher level argument and pin it back to sections 48, 51(xxxvi) and the reasons for those provisions being in there and to contrast them with sections 3 and 72(iii) of the Constitution. I would also refer over on page 110, Mr Bennett argued:

The plaintiff is entitled to benefits in accordance with the Act and any other applicable law in force from time to time, but does not have a vested right to the payment of particular amounts. The difference is between something owned and something expected, the fulfilment of the expectation being dependent on the continued will of the Parliament.

Reference Peverill. At this point he is putting a submission based on the statute, not on the Constitution, and that is our second proposition. We do not depart from this submission as an independent submission. I would just note two sentences down, Mr Bennett argued:

At least in relation to future benefits that have not been paid, a modification or extinguishment would not involve an acquisition of property –

Now, coming back to your Honour Justice Nettle’s question, that is a more modest proposition than the one I put - - -

NETTLE J: Yes, it is.

MR GLEESON: - - - in the answer to your Honour. It is a sufficient one for this case because, in this case, it is future benefits that have not been paid but I have not resiled from the broader proposition because I have shown your Honour that these three statutes went further than Mr Bennett’s argument on this page. So that is what was argued.

The point about Theophanous is that the Court did not decide the broader proposition. That is apparent on page 127, paragraph 67, and that leaves the observations of Chief Justice Gleeson that were heavily relied upon at paragraph 7. Our submission about that is, first of all, that that is one judgment only; secondly, his Honour did not decide any point - that is apparent from the top of page 14 - and thirdly, he was dealing with a larger genus, namely, superannuation or pension benefits of a variety of characters which he referred to on page 113 and he was saying he was not prepared to accept the proposition on the broadest level that they could never constitute an acquisition of property. His Honour was not ruling on the submission that I am here putting.

So, your Honours, to complete this first broad proposition then, if I could come to paragraph 4. The plaintiff in writing and then several times this morning says that the allowance for serving parliamentarians is not property that is protected and “can be decreased or abolished over time”. Perhaps that proposition has been revised this morning that you can decrease or abolish what Mr Myers was describing as next week’s pay but not this week’s pay.

Our proposition is that there is no principle basis within section 48 whereby Parliament has a different degree of flexibility in respect to allowances for serving or retired Members of Parliament and the question is not, have you done the work. The question is, what does the Parliament, from time to time, consider to be the appropriate allowance.

NETTLE J: Well, might not the question be that the Commonwealth has the power under section 48 to create different rights from time to time but once having created them, has no more any power than anybody else to take them away?

MR GLEESON: We would not put it that way, your Honour. We would put that the power that is there is a power to create an allowance, and having created it, the Parliament remains with the ability to vary or modify that allowance provided it is doing so in an exercise of an allowances power; not in the exercise of a taxation power or a confiscation power, but in an exercise of a power designed to determine what are the appropriate allowances. The particular effect of that is that when a person leaves Parliament, if there is provision for an allowance by way of pension, it remains within the ability of the Parliament from time to time to determine whether that allowance remains the appropriate one, having regard to a range of circumstances including, importantly, the ability of the community to pay and the other matters that I have mentioned in paragraph 3 of the outline.

NETTLE J: Well, in effect, the parliamentary superannuation scheme is no different in principle to a social service pension, and infinitely variable at any time by the Commonwealth according to changing policy.

MR GLEESON: Crudely, that is where the proposition comes down to but what is important to it is to recognise the reason that there is the flexibility within section 48. The reason for the flexibility may produce those outcomes. Could I take your Honours then to the authorities on this proposition? We have given references to these in our written submissions. Firstly, in terms of the text writers, Quick and Garran, at page 499 said that:

neither the principle nor the amount of payment are permanent constitutional provisions. Without an amendment of the Constitution, the Federal Parliament may at any time either abolish payment of members or reduce or increase the allowance which each member is to receive, or alter the method of apportioning the allowance –

subject to proviso 4, travelling. The position in Harrison Moore in the 1902 version is set out at the foot of page 113, and we would place some reliance on the 1891 version of Story between sections 851 and 858, all of those paragraphs but particularly 858 on page 627 where it is explained that in America the decision as to the appropriate compensation was to be:

ascertained from time to time by Congress. If fixed by the Constitution, it might, from the change of the value of money and the modes of life, become too low and utterly inadequate. Or it might become too high, in consequence of serious changes in the prosperity of the nation.

That foreshadows the 1931, 1932 Australian Acts:

It is wisest, therefore, to have it left where it is, to be decided by Congress from time to time, according to their own sense of justice and a large view of the national resources. There is no danger that it will ever become excessive without exciting general discontent, and then it will soon be changed from the reaction of public opinion.

Now, that is a recognition, we would submit, of one of the proper factors the parliamentarians can take into account and may be particularly relevant with pensions and life gold passes. So, there is a good explanation there for why this power was left to the Parliament from time to time with the broadest degree of flexibility.

So, your Honours, coming to proposition 5, we reconcile this proposition with section 51(xxxi) because its protection arises from a rule of construction and is subject to a contrary intention made manifest in the other grants of power. We rely upon Nintendo v Centronics [1994] HCA 27; (1994) 181 CLR 134, the relevant passage at page 160 where the Court said at about point 4:

That operation of s. 51(xxxi) to confine the content of other grants of legislative power, being indirect through a rule of construction, is subject to a contrary intention either expressed or made manifest in those other grants. In particular, some of the other grants of legislative power clearly encompass the making of laws providing for the acquisition of property unaccompanied by any quid pro quo of just terms. Where that is so, the other grant of legislative power manifests a contrary intention which precludes the abstraction from it of the legislative power to make such a law.

Then the Court gives the example with copyright. Our proposition is that section 48 read together with 51(xxxvi) is an example of the Nintendo approach to the construction of the Constitution. The power of allowances has to be broad enough to be exercised without need to provide just terms compensation.

Your Honours, the other authority to complete this first point is Justice Gummow’s observations in McGinty [1996] HCA 48; 186 CLR 140, particularly at page 280 and 281. His Honour at the foot of 280 was speaking of the deeper significance of the recurrent phrase “until the Parliament otherwise provides” being:

to accommodate the notion that representative government is a dynamic rather than a static institution –

It is an accommodation “effected in the Constitution”:

It is by this means that the Constitution continues to speak to the present and allows for development of the institution of government by changes which may not have been foreseen a century ago –

Now, pensions for parliamentarians is an example of that. There was no pension prior to 1948. After the war there was a conception that it was an appropriate way to provide part of the allowance under section 48 and over time the method has changed in many ways. The Court then sees on 281 a recitation of the many provisions within Chapter I of the Constitution where until “Parliament otherwise provides” is used, and we submit that section 48 should be understood in its larger role within Chapter I. It is part of the design of representative government and its flexibility follows from that.

GAGELER J: Is Peverill relevant to this argument?

MR GLEESON: Yes, your Honour, Health Insurance Commission v Peverill [1994] HCA 8; (1994) 179 CLR 226. If I could go first to Justice McHugh at pages 259 through to 264? On 259, his Honour notes some of the areas where the heads of power have been construed as falling outside the scope of section 51(xxxi). On 260 under the heading “The s. 20 entitlement”, his Honour stated in his summary conclusion:

In my opinion, no acquisition of property for the purposes of s. 51(xxxi) occurs when an enactment of the Parliament amends or repeals a gratuitous statutory entitlement conferred by the Parliament.

A little further down he refers to Allpike v The Commonwealth [1948] HCA 19; (1948) 77 CLR 62 as authority that there was:

no breach of s. 51(xxxi) occurred where, pursuant to the authority of a Commonwealth legislative provision, a Commonwealth officer directed that the undrawn and deferred pay . . . should be divided in a way which conflicted with the deceased’s will.

His Honour at point 5 on 261 says that:

Allpike is authority for the proposition that, without infringing s. 51(xxxi), the Commonwealth can regulate a federal statutory entitlement to a payment even after the beneficiary of the payment has fulfilled the conditions entitling that person to the payment provided that the entitlement was made subject to the condition that it could be regulated. It need hardly be said that such a condition may be imposed expressly or by implication or by inference from all the circumstances of the enactment.

Now, we rely upon that and the circumstances from which there is the implication. I am firstly placing a lot of weight on section 48 itself and then, secondly, I will place weight on the statutory scheme. Importantly, his Honour then refers to the United States authorities that:

statutory gratuities are not property for the purpose of the Takings Clause . . . and can be altered or revoked -

I note the next words, your Honour Justice Nettle:

before payment.

So that is the - - -

NETTLE J: Yes. It is the same too in Justice Dixon’s observation in Allpike and the passage cited. There is a clear distinction between what is accrued and what is to come.

MR GLEESON: Before payment, your Honour, I am not - - -

NETTLE J: Well, I was thinking more of the death of a soldier in Allpike.

MR GLEESON: Well, in Allpike, notwithstanding the soldier had died and notwithstanding the pay was undrawn and deferred - that is, pay that was accrued, he had done what he could do to earn the pay - notwithstanding that, a statute which then provided for the property to be divided contrary to his will was held not to infringe section 51(xxxi).

GAGELER J: But this is not the abstraction point, is it? This is a subsequent stage in your argument about the nature of the rights conferred. Chief Justice Latham from my memory in Allpike adopted a non-abstraction view which Justice McHugh appears at this stage not to be supporting.

MR GLEESON: Your Honour, we certainly embrace it at that next stage - - -

GAGELER J: Yes.

MR GLEESON: - - - and it is enough to dispose of this case, of course, but - - -

GAGELER J: Of course, but you are starting with proposition one.

MR GLEESON: I am starting at the Constitution, your Honour.

GAGELER J: Yes.

MR GLEESON: Mr Ellicott would have said you do not go any further, you just open that document. You do not look at the book of documents. But I am relying upon Justice McHugh because if one reads the whole of this, it is a very useful extract then of the US position where:

statutory gratuities are not property for the purpose of the Takings Clause . . . and can be altered or revoked before payment. The governing principle was stated by Pitney J. in New York Central R.R. Co. v. White:

“No person has a vested interest in any rule of law entitling him to insist that it shall remain unchanged for his benefit.”

Now, that proposition, plus those stated on page 262, including in Teller’s decision 1882 and Justice Brandeis in Lynch in 1934, really are propositions at the higher level of the Constitution, your Honours. They are not just about the statute. They are saying that the power to grant these sorts of creatures just will not engage the Takings Clause in the United States. If one comes on page 262 to the last paragraph, his Honour really is embracing both the statute and the Constitution because his Honour says:

The entitlement under s. 20 . . . must be taken to be conferred subject to repeal or alteration — including retrospective repeal or alteration — at the discretion of the Parliament. The plenary power conferred by s. 51(xxiiiA) extends to altering or repealing the entitlement to a gratuitous benefit conferred under that paragraph even where a person has met the conditions giving rise to the entitlement.

Now that, we would submit, is a proposition about the scope of 51(xxiiiA) and that is my answer to your Honour Justice Gageler’s question a little earlier about where this arguments sits with 51(xxiiiA). We embrace what Justice McHugh said. In the next paragraph he deals directly with your Honour’s question:

It could not be maintained, for example, that a person who had turned sixty-five had a vested right, protected by s.51(xxxi), to receive an age pension or that, consistently with the guarantee, the Parliament could not change the conditions upon which the pension was payable.

It is true, over on page 263 at the top, his Honour is then bolstering his argument from the statute because what he says is:

Nothing in s. 20 specifically, or in the Principal Act generally, indicates a legislative intention by the Parliament that it will not alter, reduce or abolish s. 20 entitlements . . . In the absence of any legislative expression to the contrary, the entitlement conferred by s. 20 – like any other statutory entitlement – must be taken to be subject to the condition that it may be altered, reduced or revoked at any time.

It may be – to return to one of your Honour Justice Nettle’s questions – if Parliament exercised a power within section 48 in the manner that Justice McHugh refers to here, namely, expressly sought to give it the quality that it could never be reduced over time – e.g., by adding a contract embracing a right known to the private law – then one might be in different territory.

Your Honours, I then come to the statutes. We have provided the Court with a chronology, which was filed on 7 June. What I want to do in this statutory construction exercise is to establish these propositions. If I can just put the proposition at the outset and then come to the detail. The first is the formula or the method for establishing the statutory entitlement changed repeatedly and significantly while each of the plaintiffs was in office, which bears on the variability point.

The second proposition will be that the correct characterisation of the entitlement at any point in time is not what is in paragraph 3(a) of Mr Myers’ outline because what is in 3(a) asserts a fixed percentage of an annual amount paid to the current Members of Parliament.

Your Honour Justice Kiefel has raised questions about the fixed element in that proposition. The point I wish to take further is that the reference point, which was parliamentary allowance, was itself not just variable but was a creature calculated under a method or a formula which repeatedly changed. So the creature of parliamentary allowance – that is, for serving members – was itself calculated under a method or a formula which was repeatedly changed under sections 48 and 51(xxxvi).

So all that a member had at any point in time was an expectation that their rights in the future would depend upon a range of decisions – what percentage to apply, what was the method for calculating the allowance for serving Members of Parliament and, indeed, a range of discretions exercised under that method. That is the second point I want to show.

The third point is that, focusing on your Honour the Chief Justice’s question of the plaintiffs’ case being crystallisation on the date of retirement, it will be seen that there were substantial changes in the formula and the method between the date of retirement of each of the gentlemen and the impugned legislation, which was further evidence of the variability of the property.

To give the dates, your Honours, and I will come back to it, a critical date is February/March 1990, on which the second plaintiff and the fourth plaintiff retired and the first plaintiff retired for the first time. I am going to look at some legislation but leading up to seeing exactly where the statute stood in its variability at February/March 1990.

The second critical date is 1 March 1996 when the first plaintiff retired. I will show the changes occurring in that period. The third critical date is 2001 when the third plaintiff retired. I will then show further changes even between that date and the impugned legislation.

Your Honours, where I would then wish to start, if your Honours could have what is described as the Commonwealth’s book of supplementary authorities, first of all volume 1, at page 55, you have the parliamentary retiring allowances of 1948, as at 1968. This is the point in time statute when Mr Cohen entered Parliament in 1969. So this shows what the rights were on the assumption that this Act remained in force. At page 71 we have section 18(1) and we have the words which are in the Act throughout, that it is:

Subject to this Act, a member who ceases to be entitled to a parliamentary allowance shall be entitled to benefits form the Fund in accordance with this section.

We do not rest the whole of our construction case on those words. Nor do we resile from them. They are one part of the language that led to the result in Chaffey and I will show you the other part is here as well but they are important words indicating the susceptibility of change and then under section 18(6):

The rate of pension . . . is such percentage of the rate of the parliamentary allowance to which that person was entitled immediately before he became entitled to pension –

Now, Mr Myers has put some rather general submissions that all defined benefit schemes are the same. They always are done by reference to certain creatures. What you can see from 18(6) is that if Mr Cohen was looking at his prospective entitlements in 1969 they would depend upon what, if any, parliamentary allowance he was entitled to at the date he retired, an inherently variable creature, by reference to what decisions Parliament made on parliamentary allowance at that single point in time in the future.

In the original Act, could I refer to section 21 on page 81? Mr Myers made a submission that a provision in that form has always been in the Act. In fact, that provision has changed over time. In the original form that you have before you, there was no deduction if the person served in a Territory Parliament. That came in later. So, that is an adverse affectation of the right. The provision in subsection (2A) which creates a flaw was removed later on, so that was another adverse affectation of the right.

Importantly, section 24 on page 93 indicates that the pension is inalienable. It does not completely destroy their character as constitutional property but it is relevant to the exercise. So if Mr Cohen was looking forward in 1969, the most he could say is, assuming Parliament remains with this exercise of power under section 48, what I might get if I qualify is a percentage.

One sees the percentages on page 73 of whatever is parliamentary allowance “at the time I retire” and as to what is parliamentary allowance at the time he retires Mr Cohen could have looked at the statute at pages 6 and 7 which told him what the current allowance was under section 48 which he would know was capable of going up or down.

So the point of this is that the bundle of rights that was created by the statute at the very outset had as an essential feature to it independent discretions that the Parliament would make under section 48 as to the parliamentary allowance from time to time. So it had that degree of variability built squarely into the formula.

So everything would depend on what form did the 1948 Act take when Mr Cohen left Parliament, and what form of exercise of power did the Parliament make in respect of serving allowances. It is obvious from that analysis that the amount to which Mr Cohen might become entitled could go up or down. That is not disputed by the plaintiffs.

GORDON J: And there was an age hurdle, which we do not have.

MR GLEESON: There was an age hurdle. So one could not say at this stage he was entitled to any definite sum of money or that there would even be any definite formula fixed in stone at the time he qualified, if he qualified. That is stage 1. Then if your Honours could go in this same volume to page 103, the 1973 Parliamentary Retiring Allowances Act made a critical change to the method.

We see in section 18(6) on page 113 that the retiring allowance is now linked to the parliamentary allowance for the time being payable under the Parliamentary Allowances Act in accordance with a scale. So it was a critical change by Parliament to the formula. It will not be linked to what Mr Cohen is receiving on the day he leaves Parliament; it will be linked to what from time to time thereafter serving parliamentarians happen to receive under separate discretions which are exercised.

Now, this already allows us to test the plaintiffs’ property case. Mr Myers speaks about vested rights and so on. What we have already seen is that the statutory rights are not only subject to potential variation, have been varied in a manner which may or may not be more beneficial than the scheme when he entered Parliament.

Now, if your Honours could go to page 132 of the bundle, there is an important retrospective change in 1978 on page 134 at the top. What this made clear was that the parliamentary allowance for the time being payable, which would be the reference point, would be determined by the Remuneration Tribunal. The Tribunal came into existence in 1973, it was not until 1978 that the statutes were matched up.

So what we now see is that the reference point – that is, parliamentary allowance – is not just whatever happens to be payable to people after Mr Cohen leaves Parliament, but it is whatever discretion is exercised by an executive body, the Remuneration Tribunal, subject to disallowance by Parliament that determines the reference point. So in terms of the variability of the method and the formula, it is no longer simply linked to a separate decision of Parliament; it is linked to a decision of the Remuneration Tribunal.

Now, an error in Mr Myers’ case is when he tries to answer your Honour the Chief Justice and says what is his property, he says his property is his right to receive a fixed percentage of whatever a serving parliamentarian gets from time to time. He says he is not interested in what that is or how that is calculated. In fact, if they get nil, he gets nil.

That is not a fair characterisation of the property. The property as of 1973/1978 is a right to receive a percentage as set from time to time of a separate creature, set by the Remuneration Tribunal, as what it thinks appropriate for a serving member subject to this allowance. That is a more complete description of the bundle of rights, to use the language in Chaffey, which is said to be protected property.

Now, I have taken your Honours to the retrospective reductions in 1986 at page 174 of volume 1 and one can now see where they sit in this context. That was the Parliament considering what the Remuneration Tribunal had done and deciding it was too much and lowering it retrospectively affecting serving members and retiring members.

Your Honours, just then to complete Mr Cohen’s position just before he left Parliament - that is in the bundle before you at page 235, that is the 1948 Act, it is a 1984 compilation but it is relevantly the position at February 1990 and on page 240, one can see that the definition of “parliamentary allowance”, that is the reference point, could be any of, depending on the person’s age, the position under the 1920 Act, the 1952 Act or most relevantly be section 4 of the Parliamentary Allowances Act 1952. That is the reason I took you to page 37 of this bundle which takes you into the Remuneration Tribunal.

So the position immediately prior to 1990, if one asks what were the rights, the bundle of rights that Mr Cohen might look forward to in his retirement, you would need to look at five elements together. You would have to firstly look at the 1948 Act, which is the creature in front of you, particularly the definition on page 240 and the provision on page 258. Secondly, that would take you into the 1952 Act. Thirdly, it would take you into the Remuneration Tribunal Act. Fourthly, it would take you into executive decisions by the Remuneration Tribunal and fifthly, it would take you to where the Parliament did or did not override such decision.

So they are the elements in the formula which comprises the bundle of rights and it is tolerably clear, not only has that changed radically from the rights when he entered Parliament, but the degree of variability in each of those integers were such that the rights were inherently subject to variation for the purpose of section 51(xxxi).

FRENCH CJ: Section 51(xxxi) has been held from time to time to be inapplicable in areas where it would be incongruous, as it were, with the relevant purpose of taxation or forfeitures or penalties and so forth. Is this a case of incongruity?

MR GLEESON: Well, it is a case where the inherent nature of the power, we would submit, under 48 and 51(xxxvi), is such that it must remain under Parliament’s review the appropriateness of the allowances and of the method, and that is exactly what Parliament is doing here. It is changing the method over various points in time and Parliament is deciding where the discretions will be exercised.

So in this model, the model when Mr Cohen left Parliament, it is a model which ultimately says we are giving primary weight to what the Remuneration Tribunal thinks about a serving member’s appropriate allowances together with a percentage which we the Parliament has fixed from time to time.

FRENCH CJ: Do you accept that at the point that many of these plaintiffs retired, in terms of the entitlements as they then existed, there were statutory rights and choses in action and so forth?

MR GLEESON: Yes, and as it then existed, if Mr Cohen said to himself “what have I got”, what he had was a right under a statute, assuming it remained in that form of the 48 one, which was effectively to a percentage of whatever parliamentarians might be paid in the future, that being a function of decisions of the Remuneration Tribunal plus parliamentary decisions whether to override the Remuneration Tribunal. That is the bundle that he had, as a result of which he could not be sure with certainty he would get anything or that he would get more one year than another year.

So, your Honours, where I have got to is that is the position just immediately before Mr Cohen, and the others I have mentioned, retire from Parliament. Really, that is the set of the rights that need to be looked at to see whether they have sufficient variability in them that the impugned provisions are no more than a response to that implicit variability. After the adjournment I will seek to show that within a couple of months the scheme set by those rights had already radically changed in a totally different direction.

FRENCH CJ: All right, that will be a convenient moment then. The Court will adjourn to 2.15.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.16 PM:

FRENCH CJ: Yes, Mr Solicitor.

MR GLEESON: Your Honours, I had reached the point where, in February/March 1990 when the second and fourth plaintiffs retired and Mr Cunningham, the first plaintiff, retired for the first time, the bundle of rights consisted of a right to a proportion of an amount set by the Remuneration Tribunal.

The change which occurred shortly after that can be seen in the Commonwealth supplementary authorities, volume 1 at page 313, which indicates that this provision took effect on 1 July 1990 and page 336 at the top. A new paragraph (c) was added to the definition of “parliamentary allowance” in the 1948 Act which took one to clause 1, Schedule 3 of an Act passed in 1990 called the Remuneration and Allowances Act.

Just as a clarification, that was an addition of paragraph (c). It did not delete the previous paragraphs (a) and (b) and, therefore, from 1990, there were, in fact, two ways that parliamentary allowance could be set for the purpose of the retiring allowance provisions. You could still do it through the Remuneration Tribunal but the primary way it was now expected to be done was under this paragraph (c), clause 1, Schedule 3 of the 1990 Act.

If your Honours could go to the volume 1 of the main bundle of six volumes to page 191, that is clause 1 of Schedule 3 of the 1990 Act and the effect of it was that Parliament set a salary of $58,300 with immediate effect, 6 per cent increase in 1991 but after that the salary was to be the “SES Band 1 annual salary”.

So the result shortly after the date the property is said to have crystallised is that the method has radically changed. The method is now, primarily, a percentage of an SES Band 1 annual salary, that being the way of calculating serving allowance.

Now, the plaintiffs’ property case has to grapple with this change in some fashion. Mr Myers said to your Honour the Chief Justice that the property was crystallised in February 1990. Here we see, six months later, the form of the rights linked to a senior public service salary and, implicitly, his case must be that one element of the linkage was property which could never be detrimentally interfered with, namely, the link to whatever was the serving parliamentary salary.

But every other element of the formula, namely, how that serving salary was calculated, was inherently variable, which attributes peculiar intent to Parliament to allow the critical reference point to be variable in any manner it later liked but to keep a linkage to that, fixed in stone as property, even though one could not necessarily say you would do better or worse depending on how the different elements were varied.

So that is the immediate change shortly after the first critical date in the case. The first plaintiff, Mr Cunningham, retired for the second time on 1 March 2006 and by that date further changes had occurred to the bundle of rights. If I could give two examples - firstly, your Honours still have volume 1 of the main bundle. At page 204, in 1994 Parliament decided to link the retiring allowance effectively to SES Band 2 - that is, a lower band. That affected the nature of the rights. The second change is if your Honours have the Commonwealth’s supplementary bundle volume 2 at page 793 - - -

NETTLE J: Mr Solicitor, you just said that at page 204, in 1994 the Parliament linked the retiring allowance to a lower SES Band 2 rather than 1.

MR GLEESON: Yes.

NETTLE J: Is that by reason only of varying the parliamentary salary?

MR GLEESON: Yes.

GORDON J: What was that second page, Mr Solicitor?

MR GLEESON: Commonwealth’s supplementary book volume 2, page 793.

GORDON J: Thank you.

MR GLEESON: That is an example of what I described as the route which had not been removed in 1990 and was still there available, namely, that the Remuneration Tribunal would also determine parliamentary allowances as well as the clause 1, Schedule 3 route, so yet further evidence of how the reference point, in fact, had two different variable routes within it. So in 1996 when Mr Cunningham retired for the second time, if one asked what were his rights, his rights were a right to a percentage of parliamentary allowance determined by reference to SES Band 2.

Your Honours, I will just prove my ignorance of matters of the Commonwealth. SES Band 2 is, of course, known to everyone to be higher than SES Band 1, so I apologise for that – but that is the variability, in any event. So that is what Mr Cunningham had as his rights the second time, different to what he had the first time and by this stage the second and the fourth plaintiff’s rights have changed.

Your Honours, the next step in the chronology is the insertion of section 22T in July 1996. Could I ask your Honours to go to that in volume 1 of the main bundle at page 312? The effect of this was to place a flaw under the retiring allowance by reference to the parliamentary allowance from time to time. If parliamentary allowance is decreased then that could not operate to decrease the retiring allowance. So that is an example of parliamentary use of the power under section 48 to fortify or improve or protect the value of the existing right, and it is an example of the ample power under section 48.

Mr Myers’ case presumably is Parliament can do that. They can fortify the rights from time to time but they can never alter them in any other fashion and it really is a good example of our proposition about section 48, that section 48 allows variations of different types, of which this is one. So that is the 1996 qualification and then, if we come to the final plaintiff in retiring order, which is the third plaintiff who retired in 2001, by that date the scheme has changed in significant fashion again, which your Honours will see in volume 2 of the Commonwealth’s supplementary book at page 620 at the top.

What has happened is that clause 1 of the Schedule 3 of the 1990 Act has been amended so that there is a means to set the Members of Parliament’s salary in two ways - either as SES Band 2 or by a regulation prescribing a “percentage of the reference salary”. So, by this stage, if that second route is adopted, one needs to go to a regulation to find a percentage of a reference salary and that is done at page 733 of this bundle where it is a percentage of a reference salary which is set as Band A of a Principal Executive Office classification which in turn depends upon a Remuneration Tribunal determination.

So, under this system, which is the position when the third plaintiff retires, the elements in the variable formula include, starting with the 1948 Act, going to the 1990 Act - clause 1, Schedule 3 - going to a regulation and finally going to a Remuneration Tribunal decision on a reference salary which is at page 797 of this book.

NETTLE J: Is this establishing anything more than that over the period that you have just covered the Parliament changed the basis for calculation of parliamentary salaries several times and in significant ways?

MR GLEESON: Several times and in significant ways and in doing so utilised a range of different discretions, whether involving legislative discretion or executive discretion. So, one thing remained the same. There was a linkage to whatever was serving parliamentary salary, radical changes occurred within how one set serving parliamentary salary including utilising different discretionary factors and different executive and legislative bodies playing different roles in the process.

Now, what that does is then set the frame for the question, can one find property protected by section 51(xxxi) when Parliament has employed these elements of variability in the statutory formula from time to time and because what – the point I have reached is essentially the point immediately prior to the impugned legislation.

At that point, I would like to take your Honours to Chaffey, to map Chaffey on to this statutory scheme. The submission I am making is that this scheme is on all-fours or even more variable than the Chaffey scheme. In Chaffey [2007] HCA 34; 231 CLR 651, paragraph 9, the judgment of four Justices set out the key provisions of the Act and emphasised the key parts which would later be picked up in the judgment. They were that section 53 of the Work Health Act commenced with the words “subject to this Part” thereby indicating this part as amended from time to time. It included the words “in accordance with this Part” which had the same connotation and then, critically, for my argument:

such compensation as is prescribed . . . The term “prescribed” means prescribed by the Work Health Act or by an instrument of a legislative or administrative character made under that statute.

Now, those features, those three features that are there identified are what the Court ultimately relied upon as creating the inherent variability in the scheme. I might just note at paragraph 10 section 65 established compensation by reference to “normal weekly earnings” and in turn that was by reference to “remuneration”. What the case turned on, of course, is paragraph 12. It changed the way in which “normal weekly earnings” would be calculated for the purpose of superannuation.

It is on all-fours with the present case because, for normal weekly earnings, one can substitute parliamentary allowance from time to time. But the linkage between the compensation payment and normal weekly earnings was there and remained the same. What changed was that a critical element in the method of calculating that changed.

If the Court goes to paragraph 18, the appellants’ argument is summarised which, effectively, relied upon these three expressions in the statute as creating an inherent variability. At paragraph 20 the Court summarily said it accepted that argument and then the reasons were developed. At the foot of paragraph 21, the Court said the case turned not so much on the notion of acquisition but the anterior question of an identification of the property to which the guarantee would be said to apply. At paragraph 22:

the first task is to identify that bundle of rights –

Paragraph 23:

Where the asserted “property” has no existence apart from statute further analysis is imperative.

Paragraph 24, not all statutory rights are immune from section 51(xxxi). At paragraph 25, the way in which this legislation was constructed was “to subject”, as in WMC “the scope and incidents”, in that case of the licences:

to the form of the legislation from time to time. In WMC –

as with this Act:

by express legislative stipulation in existence at the time of the creation of the statutory “right”, its continued and fixed content depended upon the will from time to time of the legislature which created that “right”.

Applying that analysis, one would start, we would submit, not simply on the last day the person left office but on the time upon which the right first came into existence. But whatever date one analyses the right, it has the features set out in the last sentence of paragraph 25. The judgment concludes to that effect in paragraph 30. And I note the reservation in paragraph 31 of an issue which the Court did not need to reach as to complete abolition, as in this case.

In the judgment of four Justices of the Court it is that close attention to language in the statute, replicated in the present statute, which Mr Myers criticises us for placing reliance on, which resolved the case. I would simply add in the other judgments additional matters which are important and we would rely upon here. If one goes to Justice Callinan’s judgment in paragraph 55, his Honour said:

It is not merely the inherent quality of legislative change that will defeat a right to compensation, but also the nature and quality of the object of the legislation –

His Honour then went on to identify that the subject or the object of the legislation was something which brought to account a range of factors, pulling in different directions, which would need to be responded to by variation, up or down, over time. And they are the same sorts of factors that we submit are found in section 48 and are carried through into the statute.

Equally, in Justice Heydon’s judgment, which goes beyond merely the text of the statute, his Honour looked closely in paragraph 60 at the history where the legislation has required “frequent and often extensive amendment in the light of changes”. Paragraph 61, the legislation reflects a balance of interests. And in 64 and following there is reciprocity in the scheme. We submit those elements of history, balance and reciprocity can all be mapped amply onto the sort of provisions your Honour is dealing with. Justice Heydon used those larger matters in paragraph 67 to reach the same construction and conclusion as did the plurality.

So we would rely upon text but also object, purpose and history to reach the conclusion that the nature of the right here is a right to receive such amount of money as calculated in accordance with the relevant formula from time to time.

FRENCH CJ: That argument can rest, can it, upon the statutory scheme itself, even without reference to its constitutional origin?

MR GLEESON: Yes.

FRENCH CJ: Or do you find that an indispensible part of the argument?

MR GLEESON: The answer is yes, but when one looks to the statute and sees just textually, the variability that I have spoken to, the sort of factors that it is dealing with are the very factors that section 48 has permitted the Parliament to take into account, but the argument is a freestanding argument.

The parallel is that in the Workers Compensation Case, Justice Heydon says, I look at the history of how these schemes have developed over time, and they have needed to adjust up and down to balance a whole range of conditions, including what employers and in effect the community can afford to pay. So his Honour finds that context by looking at how the statutes have developed over time. We do the same exercise by what I have done today but you can add to that the proposition that that is the sort of response by Parliament from time to time which is the very reason section 48 was constructed the way it was.

Your Honours, in terms of our outline, that is almost the end of the second proposition. In relation to the Commonwealth v WMC Resources, given time could I simply indicate the key paragraphs we relied upon - 15 to 16, 86 and 182 to 203. Your Honours, could I then move to the third proposition, which approaches the matter from the perspective of the impugned legislation and looks at what it actually does, and the submission is that it neither effects an acquisition nor has the character of a law with respect to an acquisition.

That is critically because the impugned provisions were part of a scheme which involved an overall restructure of parliamentary allowance and retiring allowance. One cannot look at the provisions without looking at the overall scheme. As to parliamentary allowance, a decision was made to replace the link, as I have shown you, through the regulation and the Remuneration Tribunal to a reference salary for a senior public service position with a direct decision of the Remuneration Tribunal as to appropriate parliamentary allowance and in the course of that to allow, as your Honour Justice Gordon raised, the possibility of folding into a single parliamentary allowance matters which had been dealt with unsatisfactorily as separate expenses. So that is one part of the scheme.

Another part of the scheme, as to retiring allowance, was to modify the reference point so that it would be the Remuneration Tribunal decision on parliamentary base salary, together with such adjustment as the Remuneration Tribunal should make. That is looking at the scheme broadly. Can I then add some elements to it which are important to the no acquisition case? I will go straight to paragraph 15.

The first element is, as your Honour the Chief Justice put to Mr Myers, the retiring allowance has not gone down for any of these gentlemen, and that is special case paragraphs 96 to 102. The second point, which is more fundamental, is it cannot go down because of section 22T. Could I ask your Honours to go to the 1948 Act in its current form, if your Honours have that somewhere handy, to see how section 22T now reads?

KIEFEL J: Did section 22T come in at the time something else was happening? What accounts for it?

MR GLEESON: It came in in 1996 as a fortification at that point in time of the right, but what did come in in section 22T as part of these amendments was the new subsections (5) and (6) and they are expressed to be for the avoidance of doubt. But the purpose for those provisions is to seek to prevent a situation where the Rem Tribunal, determining part of parliamentary based salary not to be relevant for retiring allowance, could detrimentally impact anyone. They allow one to take the net effect of determinations and then apply that net effect back into the protective formula in 22T.

So the result is that what I have described as the floor of the provision is retained after the impugned provisions, and I should also say it is the Commonwealth’s submission that 22T operates as a floor and a ratchet, so that if at any point in time parliamentary allowance goes up, then 22T comes in to protect that higher parliamentary allowance and it can never drop back to the lower level.

These first two elements we are feeding into the no acquisition argument, no one has gone backwards, no one can go backwards and, following from that, there can be no prospect under this scheme of imperilling a return of contributions made by the plaintiffs. That is the paragraph 15 point.

Could I then just go back to the paragraph 14 point, which takes up some of the matters raised by your Honour Justice Gordon as to what was the purpose of this overall scheme? The purpose is a little broader than Mr Myers has indicated. If your Honours can go to something called the supplementary book of documents to accompany the special case, volume 1, that is the plaintiffs’ supplementary book. Firstly, at pages 72 to 73, the supplementary EM in the Senate, on page 72 at lines 25 to 30, indicated that the Parliament was responding to the report of the committee to:

take preventative measures so that any folding-in of allowances does not flow to the retirement benefits of members of - - -

the pre-2004 scheme. So, one of the purposes of allowing the Remuneration Tribunal to determine part of parliamentary base salary is not relevant for superannuation is to ensure that there is no windfall benefit in that sense, that folding in expenses into parliamentary base salary leads to retired people getting more. The next paragraph makes that point clear, but could I just observe in the next paragraph it says it is to:

give the Tribunal the discretion to determine that those amounts do not form part of salary used to determine contributions of current members and benefits payable to former members under the 1948 Act. Those amounts would, however, form part of the salary for superannuation purposes of members elected –

post-October 2004. So, one of the effects of the change is that for people in the pre-2004 scheme, their contributions are also now calculated by reference to parliamentary base salary, less the discount. So it is not just a change that is targeted at retired pre-2004 parliamentarians. It is saying for people in that pre-2004 scheme as a whole, the reference point, both for contributions for those still making contributions and for benefits for those who have left Parliament, whether to date or in the future, will now be done on this basis where the Remuneration Tribunal can identify an appropriate discount off parliamentary base salary.

So, one can see immediately that the rights and interests being balanced here are not simply, although they may include the question of how much public money is being paid, but they are balancing rights and interests of members of the pre-2004 scheme, whether currently in Parliament or already retired and at that point, over on page 73 is confirmed under amendment 1 - indeed it seems to be one of the primary purposes of the change, near the end, last sentence:

a person covered by the 1948 Act would not be required to make contributions on the portion determined under section 7(1A) of the Remuneration Tribunal Act 1973 and they would not be entitled to receive superannuation benefits on those amounts.

So, in effect, Mr Myers’ acquisition case is that when Parliament decided to make this adjustment it was required to create a further bifurcation within the 2004 scheme where, if you had already left Parliament, your reference point would be different to those who had not yet left Parliament and that is a choice Parliament chose not to make, the very sort of choice, we would submit, is within, certainly within section 48.

Now, the next piece of explanatory material is at page 78, the second reading speech in the House of Representatives, and the whole of that page is a good explanation of the changes that had been made over history, including that one of the real drivers for this change in relation to parliamentary allowance was a desire to give the job back to the Remuneration Tribunal on a non-disallowable basis which was perceived to make it more independent from the Executive.

So, there is Parliament under section 48 saying here is a good reason to make a fundamental change to how we calculate serving allowance and that throws up under section 48 a consequential question, does that simply flow through to people under the 2004 scheme or are the reasons which are justifying this change not necessarily entirely applicable on a flow through basis.

If your Honours could then go to volume 5 of the main six volumes. At page 1813 is the critical report of the Remuneration Tribunal in December 2011 which set out the reasoning which ultimately became the basis of the decision by the Tribunal in 2012 and could I just highlight some further points indicating the balance in the overall adjustment, particularly on page 1816 at lines 30 to 40.

One of the inequities that the Tribunal was dealing with was that members and senators under the post-2004 scheme had lost the benefit of the generous pre-2004 scheme and had not received any compensating adjustment to their annual earnings. Effectively, they had gone backwards in total terms. So, one of the reasons for the increase in parliamentary base salary from about 145,000 to 185,000 was a measure to restore some equity into the balance so that the post-2004 people were not as badly affected by being excluded from the scheme.

Of course, there can be no perfect equity in this because 185,000 became the parliamentary base salary for everyone including serving pre-2004 people. Then, we leap back to the adjustment I have mentioned that for all pre-2004 people, serving or post, the alteration and the reference point was applied across the board.

So, one can, in fact, see that the balancing going on here is between various categories of members and senators present and past, pre-2004 and post-2004, seeking to establish an appropriate equity between them and having regard to the work being done by serving parliamentarians on the present day and having regard to what the community could afford.

Now, that sort of balance, we would submit, takes one well outside any concept of acquisition, and if I could just complete that by page 1821 at line 40, the concept of unintended windfall is referred to by the Tribunal. Page 1829, there is more detail on the transparency expenses point, and the ultimate reasoning which leads to the first determination is page 1850, and particularly in paragraph 6.25. The decision by the Tribunal is that the reference point, the ultimate reference point for people under the pre-2004 scheme, should be the “current value of Reference Salary A” – that is, the very reference point that it was before the change.

So, coming back to one of your Honour Justice Nettle’s questions, if one looks at the whole of the formula before and afterwards and looks at every discretion being exercised by everyone in the process, what they have got afterwards is a percentage of Reference Salary A, the very thing they had beforehand. What has changed, of course, is that certain of the steps to getting there and certain of the possible outcomes have changed. But one sees that exercise of power under section 48 which, we would submit, does not bespeak acquisition independent of our argument about inherent variability.

So, your Honours, concluding that point with paragraph 16 of the outline, these arguments about non-acquisition, when one gets to that stage of a case, sometimes they are put as the law does not affect an acquisition, sometimes they are put as the law does not have the character of a law with respect to acquisition of property, but we rely upon each of the matters I have identified in paragraphs 13 to 16 as leading to one or other of those conclusions.

Your Honours, at that point, we will move separately to the life gold pass case which I am going to ask Mr Thomas to present the submissions on which will be through the same framework as the propositions I have put to date, if that is convenient to the Court, unless there are any questions at the moment on the first part of the case.

FRENCH CJ: Thank you, Mr Solicitor. Yes, Mr Thomas.

MR THOMAS: Your Honours, as Mr Gleeson has just indicated, I propose to address the Court with respect to the life gold pass scheme using the same three stages of analysis as the Solicitor-General adopted. The first of those stages was to analyse this question by reference to the relationship between section 48, 51(xxxvi) and 51(xxxi). The submissions that have been made on that issue apply equally, we say, to the life gold pass scheme for this reason.

The property alleged to have been acquired by the 2002 Life Gold Pass Act was property found in determinations of the Remuneration Tribunal and it is common ground on the submissions that the Remuneration Tribunal Act 1973, insofar as it authorised determinations with respect to the life gold pass, was sourced in or grounded in section 48 of the Constitution and section 51(xxxvi), and it is paragraph 22 of the plaintiffs’ submissions and we accept that position in our submissions at paragraph 96. So, as a result, the constitutional framework that your Honours have been taken to applies equally here.

Can I then move straight to the second stage in the analysis, which focuses on the nature and the characteristics of the bundle of rights alleged to have been the property said to have been acquired in this case. We say that the non-application of 51(xxxvi) is reinforced by considering the legislative regime, the statutory regime under which the life gold pass entitlements relied upon by the third and fourth plaintiffs were conferred.

As I have indicated, that legislative regime is the Remuneration Tribunal Act 1973. Your Honours have been taken to one version of that Act already. There are a number of versions before the Court. In my submission, the most appropriate version for present purposes is in the book of Commonwealth supplementary authorities, volume 2 at page 496. I say “most appropriate” because this is the version of the Act closest in time to the 1976/6 determination, which was the first Tribunal determination that gave rise to a life gold pass entitlement. So this is the legislative regime in force when that 1976/6 determination was made.

Can I turn then to section 7, the book of Commonwealth supplementary authorities, page 501, section (7)(1). This subsection has remained in a materially identical form throughout the life of the 1973 Act:

The Tribunal shall, from time to time as provided by this Part -

and we rely upon that expression – “from time to time as provided by this Part”, shall:

inquire into, and determine, the allowances (including allowances in accordance with section 48 of the Constitution) -

One then reads section 7(1) with 7(4) across the page on 502:

Where the Tribunal inquires into a matter referred to in subsection (1) - - -

relevantly:

the Tribunal may also inquire into, and either determine . . . any matter that is, or is considered by it to be, significantly related to the first-mentioned matter -

In subparagraph (b), as Justice Gordon has indicated earlier today, there is a provision for the Minister to direct the Tribunal to inquire into and determine particular matters. One then goes to the disallowance provisions in subsections (7) and (8) and the fact of disallowance, we say, is a relevant feature of determinations.

FRENCH CJ: Is there any significance attaching to the Tribunal’s use of the word “eligible” in its determination? It rather suggests another step to complete the statutory right.

MR THOMAS: Yes, and I will come to the determinations themselves momentarily. One then comes to subsection (9):

Remuneration or allowances to which a subsisting determination applies shall, notwithstanding the provisions of any other law –

then across in subparagraph (b) – subsection (b):

in any other case–be paid in accordance with the determination out of the Consolidated Revenue Fund.

Some significant reliance is placed in the plaintiffs’ written submissions on this section as founding the entitlement but we make the point that – we make a number of points with respect to this subsection. First, it can only apply where there is a subsisting determination. Secondly, the amount is required to be paid out of the Consolidated Revenue Fund and as Mr Gleeson noted earlier today, that feature, which is also found in a retiring allowance scheme, we say, is by no means determinative but an indicia of a right which is not property liable to be acquired for the purposes of 51(xxxi).

Each of the features that I have just indicated remains in the Act today as do two additional features that I wanted to take the Court to. The first is section 8 on page 504:

Subject to this section, the Tribunal shall, as soon as practicable after the commencement of this Act, and at subsequent intervals of not more than 1 year –

make various determinations including in subsection (b):

determinations in respect of the matters referred to in subsections 7(1) - - -

So one has here a legislative regime which both expects and requires, we would say, continual review by the Tribunal of the appropriateness of determinations and then the making of any necessary modifications to those determinations from time to time. The final section that I wanted to draw the Court’s attention to is section 11(1) which, particularly in subsection (a):

the Tribunal may inform itself in such manner as it thinks fit -

which, we say, highlights the flexibility that the Tribunal has exercising legislative or the power conferred upon it by the legislature to make determinations from time to time.

We say adopting a Chaffey or WMC Resources analysis that those provisions demonstrate the following matters. Firstly, the Tribunal had the power to make determinations concerning the life gold pass as and when the Tribunal considered appropriate and we say that power necessarily included a power to abolish the life gold pass scheme by or via a determination to that effect.

Secondly, we say that the entitlement to a life gold pass only existed for so long as the Tribunal continued to permit it to exist via a determination under section 7 of the Act. Thirdly, we say that any determination with respect to the life gold pass was, therefore, liable to subsequent variation by the Tribunal conferring the entitlement. That, in a very real sense, the entitlement to a life gold pass subsisted only at the pleasure of the Tribunal from time to time. So, in both form and substance we say that the effect of the legislative framework is not relevantly different from that considered by the Court in Chaffey.

Now, in addition, we say this that given that the Tribunal was merely exercising powers it had been delegated effectively to it by the Parliament it always remained open to Parliament itself to disallow a determination or to directly legislate with respect to matters the subject of a determination. Your Honours were taken to an example of that which I wanted to go back to if I could with respect to the Remuneration and Allowances Alteration Act 1986 which is in the book of documents volume 1 at page 171.

At point 8 on the page in item 4, under the heading “Allowances to be paid to members of the Parliament” the mechanism adopted by the Parliament we say is significant:

Determination No. 8 of 1986 of the Remuneration Tribunal dated 6 June 1986 is modified by omitting paragraph 1 and substituting the following paragraph -

So, the Parliament was not disallowing a tribunal determination. It was modifying the contents of that determination by an Act of Parliament and we say another example in the same volume of a different strategy, adopted by Parliament, can be found at page 177 which is the Remuneration and Allowances Act 1990 and at the bottom of page 177, section 3:

This Part has effect in spite of:

(a) anything in any Determination of the Remuneration Tribunal -

So, we say that is an alternative mechanism that Parliament itself could have used or utilised at any time to modify a determination with respect to the life gold pass scheme.

FRENCH CJ: Well, everything you have been saying so far is generally applicable, is it not? We are not just talking about life - any allowance.

MR THOMAS: Yes, any - - -

FRENCH CJ: Base salary, everything.

MR THOMAS: The subject of a Remuneration Tribunal determination, yes. Can I then turn briefly to the determinations themselves? The first of those is in volume 2 of the book of documents at page 321.

BELL J: I am sorry, what page?

MR THOMAS: Page 321, your Honour. I should say it formally starts on page 322 and what this determination does is it divides itself into two parts. First part, Part 1, deals with what are described as salaries and allowances but at page 330 in Part 2, we have the determination with respect to what are called entitlements - page 330. Your Honours will see at the top of that page that the Tribunal identifies the relevant power pursuant to which the determination, or it considered the determination to be made which in this determination is section 7(4)(b) - - -

GAGELER J: But is that right?

MR THOMAS: Yes, but what I was saying, implying sub silentio, is that in subsequent determinations inconsistent references are made to the relevant subsections.

GAGELER J: Well, after Brown v West, I think.

MR THOMAS: Well, I am not sure I can take that further other than to say that we think that properly characterised, section 7(1) plus 7(4) together confer a power with respect to life gold passes, if reliance need be had on section 7(4) which expands the power of the Tribunal to make allowances under section 48.

GAGELER J: Well, you say this is an allowance within section 48.

MR THOMAS: Yes, and that is common ground.

GAGELER J: Which would make it a section 7(1) - - -

MR THOMAS: Yes, that is right.

GAGELER J: - - - you do not go to 7(4).

MR THOMAS: One does not need to go to 7(4). That is the Commonwealth’s position, but reliance is placed on it in the documents. We note the following with respect to this part. It is concerned not merely with the life gold pass but with a range of entitlements, privileges or benefits that one would not normally characterise as entrenched property rights.

So it begins with travel warrants, determination with respect to air travel, rail travel on page 331, use of official cars at page 333, private vehicle allowances at page 335, and even excess luggage at the bottom of page 336. It is only then that one gets to the life gold pass itself at paragraph 2.28 on page 337, and the operative provision is paragraph 28:

A senator or member, on retirement from the Parliament, shall be eligible for the issue of a Life Gold Pass entitling the holder to travel at official expense –

The qualifying periods are identified in 2.29. Can I just note that in (ii) there is a deeming provision effectively which doubles in this determination the time of service of a Prime Minister, minister, presiding officer or Leader of the Opposition. I will come to a later determination in which that doubling is tripled. Across the page at 2.31 there is a conferral of entitlement to:

first class travel on all modes of transport other than air travel, and –

I will come to a change in a subsequent determination concerning that matter. Then we note in 2.34 something of some significance, we say:

The Life Gold Pass issued to a sitting senator or member shall be suspended until he retires from the Parliament.

So, acknowledging that there were a number of persons who were currently, as at 1976, in possession of a life gold pass under an executive administrative scheme, one of the first steps that the Tribunal did in its determination was to suspend the ability of those persons to utilise that pass for the provision of free post-retirement - or free travel during their life or service as a Member of Parliament.

Determination 1976/6 was subsequently modified on at least four further occasions before the third plaintiff retired in February 1990. The next determination is 1977 at 347 of the same volume, and at page 356 the determination deals with a life gold pass. Can I just note that if one goes to 349, just to pick up a point I made to Justice Gageler, the reference now is to 7(4)(a) as opposed to 7(4)(b) so there is a lack of consistency there.

At page 357, at the top of the page, the deeming has been “trebled”, as I have indicated, and in 6.3 the entitlement or ability to travel first class or in first class has been denied to members. It is now subject to the determination of the Tribunal as applicable to sitting senators or members.

Another or further determination was made in 1980 and no relevant changes were made to the life gold pass scheme in that determination. But in 1981 a number of changes were made. That determination could be found at 392. At 402 to 403 a life gold pass is adopted. There is an amendment to eligibility in a new Roman (iv) on page 403 where the “life of seven parliaments” is deemed to include “the life of six parliaments plus . . . three years”.

Then in 1984, at page 414 of the same volume, and at page 427, the entitlements of a spouse of a life gold pass holder are modified. At page 428, paragraph 6.4, formerly the spouse of a life gold pass holder was entitled to accompany the holder at government expense on all modes of transport. Now that person cannot do so “on metropolitan rail, bus and tram services”.

So on the material before the Court, your Honours, this is the relevant determination that was in force at the time that the fourth plaintiff retired. Just looking at this determination, and particularly at page 427, one does see a reference, as your Honour the Chief Justice has noted, to eligibility, although I should note that it has now been changed in this particular operative determination:

A senator or member, who, on retirement from the Parliament, has completed the qualifying periods set out in 6.2 shall be issued with a Life Gold Pass entitling the holder to travel at government expense –

So we would say, in a sense, even the language of the key provision of the determination concerning eligibility/entitlement has altered over time.

FRENCH CJ: So this is all in support of your submission at paragraph 100?

MR THOMAS: Yes. I should note one matter here. I will come to it immediately in relation to the 1993 determination. Up until this moment in time, as your Honours have seen, each of the relevant determinations has conferred an unlimited right to travel at Commonwealth Government expense on life gold pass holders. That unlimited right was denied to future life gold pass holders by the 1993/18 determination, which can be found behind page 438 of the second volume of the book of documents. Your Honours note that, on page 438, we now finally have a reference to section 7(1) in relation to these matters.

At page 451 we see the entitlement and your Honours will see in the sixth line “up to a maximum of 25 return trips per annum”. That is the cap and the first time at which the Tribunal itself imposes a cap. It is important to note that this determination did not purport to apply to persons who had retired from Parliament as at the date on which the determination came into effect and that is why one has the distinction between the unlimited entitlement that the fourth plaintiff relies upon and the 25 cap entitlement that the third plaintiff relies upon, the third plaintiff having retired in 2001.

The reason for that distinction appears to be, and an understanding on the part of the Remuneration Tribunal itself, that it did not have a power to make allowances or determinations with respect to retired Members of Parliament, and one sees a reference to that at page 683 of this volume. In paragraph 26:

The Tribunal has been given legal advice that its jurisdiction does not extend to retired Members and, therefore, that it cannot make a determination to restrict the use of the gold pass by retired Members.

Can I pause there. The Commonwealth’s position is that the Remuneration Tribunal has had, at all times, a power to make determinations under section 7(1) with respect to retired Members of Parliament and the submission I just made is entirely consistent with the acceptance by the parties in this Court and this Court’s holding in Theophanous that section 48 itself is the source of the power for retiring allowance. That founds the ability of the Parliament to confer rights upon or entitlements upon retired Members of Parliament. We say that that understanding was incorrect. Can I then go on though, in paragraph 26:

In these circumstances it remains the responsibility of the Government and the administering Department to take appropriate action to curtail the use of current gold pass holders beyond that judged appropriate to future pass holders.

So even if, which we do not accept, that the Tribunal itself somehow lacked the power to make a determination with respect to retired Members of the Parliament, as I have indicated, the Parliament itself clearly and manifestly had that entitlement, or that ability, and the Remuneration Tribunal itself is inviting the Parliament to take such action, as we will see that it ultimately did. While I am at this page of the volume, can I direct your Honours’ attention to paragraph 20:

The public submissions have expressed the most serious concern about entitlements of gold pass holders. The Tribunal made it clear in discussions with the Government and the various Parties that it considered that restrictions would need to be placed on the use of the gold pass in the light of the extensive use of the pass by a handful of retired Members.

There is a consistent theme, which I will come to when I am dealing with the characterisation of the impugned provisions, of the great - the failure of the life gold pass theme to meet community standards, if I can put it neutrally, and I may need to put it less neutrally when I come to some of the other material.

So, we say in concluding this analysis of the determinations in their legislative context, we say that once analysed in the context of the 1973 Act itself, each determination was liable to be set aside by the Remuneration Tribunal at any time and that no person would have confidence that entitlements conferred by one determination would survive amendment or abolition in any subsequent determination.

Can I then briefly touch on matters of context? One looks in this context, as Mr Gleeson has already indicated, not only at the texts of the relevant legislative regime but also as regard to the nature of the benefit being conferred or the nature of the entitlement being conferred. We rely on the following additional characteristics of the life gold pass itself. The first, we say, is that it is a statutory entitlement. It is not otherwise known to the general law. The cases which we have referred to in our written submissions indicate that that fact is not, by no means, determinative but it is an indicia of an entitlement that is not property for the purposes of 51(xxxi).

Secondly, the second feature is, we say, it is a classic gratuitous benefit. By “gratuitous” what I mean is a – I mean that in two senses. Firstly, that it is an entitlement provided in the absence of any contract or agreement and so in the US position the Court was taken to Justice McHugh’s judgment in Peverill’s Case where he looked at the US position. That is a gratuitous benefit like a pension. But it is gratuitous in a second sense. This is a perquisite, we say, this is a reward for long and faithful service. We say that description as a reward for long and faithful service is entirely consistent with the status of the benefit as a gratuity. It exists by the grace and favour of the Commonwealth and it is entirely within the Commonwealth’s power to modify the nature and availability of that award from time to time.

Thirdly, we say that the life gold pass forms part of a scheme likely to require modification from time to time which is another indicia of property that is unlikely to be liable to acquisition under section 51(xxxi) as Justice Crennan recognised in Wurridjal. Fourthly, we stand back from this and invite the Court to look at the history of the life gold pass scheme. A great deal of that history is summarised, we say, hopefully helpfully for the Court in the special case, paragraphs 103 to 144 commencing at page 71 of the special case book.

Can I just identify a couple of features of that history and I can do it by reference to the special case book. The first of those features is this. One sees at paragraph 125 the life gold pass itself was a gold medallion, historically, that was issued to eligible Members of Parliament and entitled them not to pay a ticket on the relevant scheduled rail service or bus service by reason of holding that pass.

Significantly, in paragraph 140, it is common ground that that medallion itself, in the last line, “remained the property of the Railways Commissioners”. So the pass itself was produced by the Railways Commissioners - firstly, the States, then the Commonwealth - issued to eligible parliamentarians but at all times property in the pass itself remained with the entity that had made it.

Now, of course we do not say that that is determinative because there are rights under the Tribunal determinations by way of choses in action that operate consistently with that pass, but the fact remains that we are talking about, we say a - a physical object that gave rise or conferred rights, and property in that pass remained with a person or entity other than the plaintiffs.

The second feature that we point to is the regular changes that were made to the eligibility requirements for the issue of a life gold pass during the period up to 1976, and one sees examples of that in paragraph 129 of the special case where Federal Cabinet extended the eligibility of the life gold pass; in paragraph 130, where the pass was issued “immediately” to sitting members, which continued up until 1956; in 138 on page 76 where “air travel privileges were extended” to persons holding a life gold pass; and in 142 where there were reductions made by Cabinet in “the qualifying periods of Ministerial service”. The third feature we note is that there were regular negotiations - - -

FRENCH CJ: Well, a lot of these things are historical features of a kind similar to those which we have been taken to in relation to benefits and allowances including reductions during particular periods. I think the main point of distinction that you have drawn, as it were, in support of a characterisation of a life gold pass as somewhat more fragile than the benefits is the sort of historical character of it as a gratuity or something in the nature of a gratuity, but beyond that, are you saying anything more than has already been said about the nature of allowances generally for parliamentarians and associated benefits?

MR THOMAS: I do not need to take it much further, but we would say this, that this particular perk, or benefit, because of the way in which it had to operate on State railways and Commonwealth railways required a great deal of negotiation. Your Honours will see, if you care to go to the primary documents, a great deal of disputation between premiers concerning that benefit and that those matters were in force are the submissions I have been putting.

Can I then turn to the third stage in the analysis which is, as Mr Gleeson put it, looking now from the perspective of the impugned provisions themselves, having analysed the case by reference to the entitlements, looking at the impugned provisions, we say that properly characterised, the 2002 Act and the 2012 Act do not affect any acquisition of property and do not have the character of a law with respect to the acquisition of property.

Your Honours have already been taken to the 2002 Act by Mr Myers in volume 1 of the book of documents, page 2 – can I just briefly identify the features that we consider to be significant. The relevant operative provision is at page 15. Item 1 of the table imposes the cap and says “This person”, being:

a former member who is the holder of a Life Gold Pass –

is entitled to:

a maximum of 25 domestic return trips per year.

That expression, “domestic return trip” is defined on page 8, to mean a trip:

(a) wholly within Australia; and

(b) not for a commercial purpose; and

(c) on a scheduled transport service or on a combination of scheduled transport services.

The definition of “transport service” itself - - -

FRENCH CJ: We have been taken through this already.

MR THOMAS: Yes, I am sorry, your Honour. The points I want to make are these. The first is that in section 30 of the statute there remains a role for the Remuneration Tribunal itself. So the Remuneration Tribunal itself retains the ability to determine eligibility for the life gold pass but Parliament determines the content of the pass. One sees here a relationship between the Tribunal and the Parliament which we say highlights the fragility.

The other point we know on acquisition is that while a “25 return trip” cap has been imposed, there is no net cost imposition. So why I wanted to take the Court to the definition of “scheduled transport service” is that includes a ferry. So the life gold pass, in its statutory form under the 2002 Act, would entitle a member either to travel on a scheduled bus or ferry service 25 times or to travel from Sydney to Perth on an airline 25 times. It is a curious entitlement that has a very difficult value to ascribe and we say again that that is a characteristic which suggests that it is not - - -

GAGELER J: Has section 30 anything to do with former members?

MR THOMAS: Yes. Well, if need be had to 30(1), that would have the effect of denying any relevant operation of the 1976/6 determination as modified – that is, the determination is that conferred unlimited life gold pass rights. But, in my respectful submission, no reliance need be had in circumstances where section 11, item 1 applies to all former members who are holders of a life gold pass.

GAGELER J: Yes, and is your argument worse off if section 7(1) of the Remuneration Tribunal Act is properly interpreted as the Remuneration Tribunal was advised, so that it does only apply to existing Members of Parliament?

MR THOMAS: No, for the reasons that I indicated which is that Parliament retained an ability at all times to modify either determinations themselves or to legislate away the effect of determinations. I took your Honours to the 1986 Act and the 1990 Act where there were two different mechanisms used by Parliament to reach that outcome. We say that Parliament must retain the ability to modify the determinations themselves or the effect of those determinations.

Can I then just briefly deal with the intrinsic material. If your Honours have the supplementary book of documents to accompany the special case - - -

FRENCH CJ: What proposition are you taking us to now?

MR THOMAS: This goes to the characterisation of this legislation. Is it, as Mr Myers says, a law with respect to the acquisition of property, or is it more fairly characterised, as we say, as a law with respect to an amendment of a regulation of parliamentary entitlements?

FRENCH CJ: Well, I suppose the question is are you going to say anything different from what has already been said about benefits by your leader, because otherwise it is getting a bit like Groundhog Day?

MR THOMAS: I understand, your Honour. Perhaps I can deal with it this way. Your Honours will see at page 50 of the supplementary book of documents the second reading speech for the 2002 Act. I would simply invite your Honours to read the whole of that page. There is an emphasis on the need for a standardised basis for entitlements, a need for an overall systematic framework and a need to ensure equally that there is sensible flexibility.

This document is preceded by the 1993 annual review, which I have taken your Honours to. Then one sees, with respect to the 2012 Act, which imposed a cap of 10 trips, at page 100, a similar concern with the need for a systematic framework of entitlements. Your Honour sees at page 100, point 3 on the page:

This bill represents the next stage in the government’s reforms to the parliamentary entitlements framework.

Reference is made in this document to two previous reviews. If I could just give your Honours the references, your Honours may care to put those next to page 100. The first is to a 2011 Remuneration Tribunal review, which can be found at volume 5, page 1866 and the Belcher report, which can be found at volume 5, page 1748. In the first of those two documents the life gold pass was described as an anachronism and the Tribunal noted that it had previously submitted that:

[t]here is possibly no single issue on which there is such a disconnect between parliamentarians and their constituents as the Life Gold Pass . . . the public view of actual LGP usage seems to be one of derision.

Your Honour, we say that having regard to community impressions and standards such as that and concerns such as that, this is precisely the type of context in which section 48 power to make necessary changes to the life gold pass scheme would be enlivened. Unless there are any questions, those are our submissions.

FRENCH CJ: Yes, thank you. Yes, Mr Myers.

MR MYERS: Mr Prince will reply and also answer the question your Honour Justice Gageler asked.

FRENCH CJ: Yes, Mr Prince.

MR PRINCE: If I can start by addressing Justice Gageler’s question about why we only challenge the validity of subsections (1A) and so on of the Remuneration Tribunal Act rather than the definition of “parliamentary allowance” in the Superannuation Act. The reason is that if there is no valid power to determine a portion, which is excluded from the definition, then the portion excluded will necessarily be zero and therefore there will be no effect upon our rights under the legislative scheme. There will, therefore, have been no acquisition.

GAGELER J: But they are not the same rights then as existed before the 2011 Act. I think you need paragraph (d) of the definition as inserted then, minus the words that follow the comma. I may be wrong but you want a “bit”. You want a “bit” of the new legislation and you want to cast the other bit away.

MR PRINCE: What we had before was a right referable - a fixed percentage referable to the salary that is paid to parliamentarians from time to time. With the changing definition, it is correct that we need a (d) to refer to the new mechanism by which the salary was going to be calculated - - -

GAGELER J: And a new concept, parliamentary base salary.

MR PRINCE: Correct.

GAGELER J: A new concept.

MR PRINCE: Well, in our submission, it was not a new concept in the sense that it was the salary payable to parliamentarians by reason only of their membership of the House of Representatives or the Senate. That is what the nature of base salary is.

GAGELER J: So, if you do not have base salary, or if it is – paragraph (d) is all or nothing, given that it is a new provision, is there any other part of the definition that you can rely upon?

MR PRINCE: No, but in a sense that would be a circuitous device by - I think that some of the questions that your Honour and Justice Nettle raised with my leader earlier about whether you could effectively delete the definition and therefore there is no parliamentary salary for the purposes of the Superannuation Act when, in fact, we know that there is parliamentary base salary which continues to be paid to parliamentarians.

The way we characterise the right that we had before was a fixed percentage of the salary, effectively the base salary, it is the same concept. It is a new statutory definition but, in our submission, it is the same concept as a matter of substance, as opposed to form.

GAGELER J: All right.

MR PRINCE: If I can then move to the first issue dealt with by the Solicitor-General, that is, whether 48 and 66 read with 51(xxxvi) lie outside 51(xxxi). The submission seemed to hinge on the idea that section 48 gives the broadest flexibility to Parliament. In my submission, that can only come from the words, the text and the relevant words are “until Parliament otherwise provides”. That is where the flexibility comes from.

That then sends you off to 51(xxxvi) and that is subject to 51(xxxi) and there is nothing in the nature of the benefits granted under section 48 that are like tax or bankruptcy laws or of that nature which are inconsistent with 51(xxxi) applying or at least the implication from it.

I just wanted to point out in Austin at paragraph 72 when one looks at what the Court actually – the Judges actually found, they did not suggest that pensions of judges were permanently preserved forever. They said that the pensions of judges were remuneration and that while they were in office they could not be affected. They did not address the question of a judge who has left office could lose their pension. If I can then move to the second point, the inherent - - -

FRENCH CJ: Section 48 would have authorised the Parliament to abolish the allowance which the Constitution provided absent an otherwise - - -

MR PRINCE: Absent a 51(xxxi) argument, yes.

FRENCH CJ: There would have been no 51(xxxi) argument, would there? Section 48 says “Until the Parliament otherwise provides, the allowance will be” and so the allowance is provided by the Constitution. So, the first Act of a Parliament could have been to abolish the allowance?

MR PRINCE: Yes.

FRENCH CJ: No worries about 51(xxxi)?

MR PRINCE: Well, only in respect of the salary which had accrued from time to time because that would be a property right - the earned salary as opposed to the unearned future salary. In relation to the inherent variability argument, the arguments from the Commonwealth conflate two concepts. One is the change to how the salary is calculated, the parliamentary salary, and the other are the changes to the Superannuation Act and the rights conferred by that Act. The fact that parliamentary salaries change from time to time has no effect on the nature of the rights under the Superannuation Act.

The Solicitor-General took the Court to various amendments to the Superannuation Act. We accept that Parliament can amend the Superannuation Act from time to time provided that the amendments do not acquire property other than on just terms. That is the point.

The fact that there were changes does not demonstrate the nature of the rights was inherently variable or, in fact, that the changes were valid at any time. The only change that seemed to be mentioned which was a cutting down of rights seemed to be the suggestion that section 21 was amended to refer to Northern Territory and ACT parliamentarians. Well, they did not exist before – that self-government comes in in 1978. There were not any. That is the reason for that change.

We note in our submissions at paragraph 63 in fact the rights over the period increased with successive amendments to the legislation.

In relation to the Chaffey point, the right in that case was a right to be paid an amount, such amount as is prescribed. That is not what we have

here. We have a right here to be a fixed percentage as specified in the Act of whatever, by whatever means, whatever mechanism the Parliament determines the parliamentary salary should be, what parliamentarians are paid from time to time. That is the way we have expressed the right in our oral outline.

In relation to the relevance of “Subject to this Act”, I just draw the Court’s attention to the statement of Justice Toohey in Commonwealth v WMC Resources at paragraph 55 where his Honour noted that such expressions are really just a matter of common sense and did not add anything to the point.

In relation to the third argument in relation to the Superannuation Act, this is the point that there was a sort of restructuring of the scheme or a balance of competing interests between different classes of persons. Factually it is not made out. We have given the Court the references in paragraph 19 of our primary submissions and paragraph 21 of the reply which deal with the background to the scheme.

In fact, the electoral allowance which was contemplated might be folded in was not folded in. It did not get folded in, and for that I refer the Court – just give the reference – volume 5 of the book of documents, page 1858. The fundamental nature of the restructuring was to determine parliamentary salary with respect to a work value assessment and that was what was done and it was increased to $185,000 because for the last 20 years there had not been a work value assessment of parliamentary salary.

In relation to section 22T, there was a submission in writing that that provided just terms. It was not dealt with orally, and we rely on our written submissions that 22T does not provide just terms in this case. In relation to life gold pass, we accept that a prospective withdrawal of a determination could occur but, in our submission, there is nothing in the text of section 7 to suggest that there is any power in the Remuneration Tribunal to affect vested rights.

Finally, in relation to the point that it is a gratuitous benefit, in our submission, a reward for services is not a gratuitous benefit. Salary allowances are all taxed. They are all in the nature of benefits for services. They are not a gratuitous benefit. Unless there are any questions, those are my submissions.

FRENCH CJ: Yes, thank you, Mr Prince. The Court will reserve its decision. The Court will adjourn to 9.15 tomorrow for pronouncement of orders and otherwise to 9.30 am.

AT 3.42 PM THE MATTER WAS ADJOURNED