Financial Framework (Supplementary Powers) Amendment (Social Services Measures No 4) Regulation 2016 [F2016L01922]-Further response required [2017] AUSStaCSDLM 129 (29 March 2017)

• Further response required

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Further response required

The committee requests further explanation or information from relevant ministers or instrument-makers with respect to the following concerns.

Correspondence relating to these matters is included at Appendix 2.

Instrument	Financial Framework (Supplementary Powers) Amendment (Social Services Measures No. 4) Regulation 2016 [F2016L01922]
Purpose	Amends Schedule 1AB to the Financial Framework (Supplementary Powers) Regulations 1997 to establish legislative authority for a spending activity administered by the Department of Social Services
Last day to disallow	9 May 2017
Authorising legislation	Financial Framework (Supplementary Powers) Act 1997
Department	Finance
Scrutiny principle	Standing Order 23(3)(a)
Previously reported in	Delegated legislation monitor 1 of 2017

Constitutional authority for expenditure

The committee commented as follows:

Scrutiny principle 23(3)(a) of the committee's terms of reference requires the committee to ensure that an instrument is made in accordance with statute. This principle requires that instruments are made in accordance with their authorising Act as well as any constitutional or other applicable legal requirements.

The committee notes that, in Williams No. 2,^[1] the High Court confirmed that a constitutional head of power is required to support Commonwealth spending programs. As such, the committee requires that the ES for all instruments specifying programs for the purposes of section 32B of the Financial Framework (Supplementary Powers) Act 1997 explicitly states, for each new program, the constitutional authority for the expenditure.

The Financial Framework (Supplementary Powers) Amendment (Social Services Measures No. 4) Regulation 2016 [F2016L01922] (the regulation) replaces table item 83 in Part 4 of Schedule 1AB to the Financial Framework (Supplementary Powers) Regulations 1997 (FFSP Regulations) which seeks to establish legislative authority for spending in relation to the Commonwealth Financial Counselling and Financial Capability – Capability Building program.

The committee notes that the objective of the Commonwealth Financial Counselling and Financial Capability – Capability Building program is:

1. To provide funding for an entity to:
(a) develop and provide online information and resources for financial counsellors, financial capability workers and consumers; and
(b) provide the national 1800 financial counselling and financial capability Helpline telephone service (the Helpline), including the development of national standards and materials for the Helpline.
2. To provide funding for services to be provided by an entity directed at supporting:
(a) attendance at national financial counselling and financial capability conferences by the following:
i. financial counsellors and financial capability workers for the Helpline;
ii. residents of a Territory; and
(b) the presentation of sessions at national financial counselling and financial capability conferences that relate to any of the following:
i. bankruptcy or insolvency;
ii. invalid or old-age pensions within the meaning of paragraph 51 (xxiii) of the Constitution;
iii. allowances, pensions, endowments, benefits or services to which paragraph 51(xxiiiA) of the Constitution applies;
iv. immigrants or aliens;
v. the Helpline;
vi. online information or resources relevant to financial counselling or financial capability;
vii. particular issues confronting the residents of Territories.
3. To provide funding for services to be provided by an entity directed at supporting the presentation of sessions at national financial counselling and financial capability conferences, to the extent that the presentation amounts to a measure designed to meet Australia’s obligations under:
i. the Convention on the Rights of the Child; or
ii. the Convention on the Rights of Persons with Disabilities; or
iii. the Convention on the Elimination of All Forms of Discrimination Against Women; or
iv. the International Covenant on Economic, Social and Cultural Rights.
4. To provide funding for services to be provided by an entity directed at supporting the following:
(a) attendance at national financial counselling and financial capability conferences by the following:
i. Indigenous persons;
ii. persons who provide financial counselling and financial capability services predominantly to Indigenous persons;
iii. the presentation of sessions at national financial counselling and financial capability conferences that relate to particular issues confronting Indigenous persons.

The ES for the regulation identifies the constitutional basis for expenditure in relation to this program as follows:

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the following powers of the Constitution:

• the communications power (section 51(v));

• the bankruptcy and insolvency power (section 51(xvii));

• the social welfare power (section 51(xxiiiA));

• the territories power (section 122);

• the invalid and old age pensions power (section 51(xxiii));

• the aliens power (section 51(xix));

• the immigration power (section 51(xxvii));

• the external affairs power (section 51(xxix)); and

• the race power (section 51(xxvi)).

The committee notes that the objective of the Commonwealth Financial Counselling and Financial Capability – Capability Building program, when read in conjunction with the constitutional authority set out in the regulation, appears to be drafted in a manner similar to 'severability provisions' in primary legislation. Severability provisions are designed to prompt the High Court to read down operative provisions of general application which are held to exceed the available heads of legislative power under the Constitution.

Severability provisions operate in conjunction with section 15A of the Acts Interpretation Act 1901, which provides that Acts shall be read and construed so as not to exceed the legislative power of the Commonwealth. Section 13(1)(a) of the Legislation Act 2003 applies section 15A of the Acts Interpretation Act 1901 to legislative instruments.

With respect to section 15A of the Acts Interpretation Act 1901, the committee notes that the Office of Parliamentary Counsel, Drafting Direction No. 3.1 on constitutional law issues, provides the following guidance for drafting severability provisions:

Section 15A does not mean that a provision drafted without regard to the extent of Commonwealth legislative power will be valid in so far as it happens to apply to the subject matter of a particular power. The High Court has held that section 15A is subject to limitations. To be effective, a severability provision must overcome those limitations.^[2]

Noting that section 15A is subject to limitations, the committee's consideration of legislative instruments that appear to rely on the ability of a court to read down provisions must involve an assessment of the effectiveness of any severability or reading down provisions to enable a legislative instrument to operate within available heads of legislative power.

Drafting Direction No. 3.1 also provides the following example of one of the limitations of section 15A:

...if there are a number of possible ways of reading down a provision of general application, it will not be so read down unless the Parliament indicates which supporting heads of legislative power it is relying on. For a discussion of this limitation, see Pidoto v. Victoria [1943] HCA 37; (1943) 68 CLR 87 at 108‑110 and Strickland v. Rocla Concrete Pipes Ltd (1971) 124 CLR 468. The Concrete Pipes case concerned a severability provision which was held to be ineffective because the list of supporting heads of legislative power did not exhaust the purported operation of the operative provision in question.^[3]

With reference to the committee's ability to effectively undertake its scrutiny of regulations adding items to Part 4 of Schedule 1AB to the FFSP Regulations, the committee notes its preference that an ES to a regulation includes a clear statement of the relevance and operation of each constitutional head of power relied on to support a program or initiative.

In this respect it is unclear to the committee how each of the constitutional heads of power relied on in the regulation supports the funding for the Commonwealth Financial Counselling and Financial Capability – Capability Building program, and the ES to the regulation does not provide any further information about the relevance and operation of each of the constitutional heads of power relied on to support the program.

The committee requests the advice of the minister in relation to the above.

Minister's response

The Minister for Finance, on behalf of the Minister for Social Services, advised:

The Financial Wellbeing and Capability (FWC) funding supports a range of services and programs to assist people in time of immediate financial crisis, as well as help them build longer-term financial capability to manage serious debt, move out of financial difficulty and/or provide basic budgeting and financial literacy support. This includes the provision of free access to professional financial counselling and financial capability services to those most at risk of financial and social exclusion and disadvantage. The Commonwealth Financial Counselling and Financial Capability – Capability Building program within the FWC activity aims to build and maintain the capability of financial counsellors and financial capability workers to provide consistent and quality services to individuals and families experiencing financial difficulties.
Communications power
Under section 51(v) of the Constitution, the Commonwealth has power to legislate with respect to 'postal, telegraphic, telephonic and other like services'.
The Commonwealth Financial Counselling and Financial Capability – Capability Building program provides funding for the management of the National Debt Helpline 1800 007 007, in addition to developing and making available national standards and materials for the Helpline.
The Financial Counselling Australia annual national conference brings together financial counsellors and capability workers, consumer lawyers and community sector workers along with government agencies, universities, regulators and other organisations interested in financial counselling. The conference program includes a range of current topics and issues focusing on bankruptcy and insolvency, social welfare,
the National Debt Helpline and information and resources for workers and consumers. The 2017 program includes sessions dealing with consumer credit law, mortgage stress, banks, the National Disability Insurance Scheme and consumer centred care, refugee financial counselling, and problem gambling.
The program also provides funding for a range of onJine information tools and materials for consumers, financial counsellors and capability workers, which are available on the www.ndh.org.au and www.financialcounselling
australia.org.au websites. Additional information and resources for financial capability workers and consumers are available online during the operation of the Financial Counselling Australia annual national conference.
Bankruptcy and insolvency power
Section 51(xvii) of the Constitution supports legislation with respect to 'bankruptcy and insolvency'. The program supports financially vulnerable people by funding specific sessions of the Financial Counselling Australia annual national conference that relate to bankruptcy and insolvency.
Social welfare power
The program supports financially vulnerable people by funding sessions of the Financial Counselling Australia annual national conference that relate to social welfare payments with in the meaning of section 51(xxiiiA) of the Constitution.
Territories power
The provision of funding for activities in or in relation to a Territory is supported by section 122 of the Constitution. The program supports people living in the Territories to attend sessions of the Financial Counselling Australia annual national conference.
The program also funds sessions of the Financial Counselling Australia annual national conference that relate to particular issues confronting residents of the Territories.
Invalid and old age pensions power
The program supports financially vulnerable people by funding sessions of the Financial Counselling Australia annual national conference that relate to invalid and old age pensions within the meaning of section 51(xxiii) of the Constitution.
Aliens and immigration powers
The program funds sessions of the Financial Counselling Australia annual national conference that relate to relevant social welfare issues faced by financially vulnerable migrants and refugees. In doing so, the program assists persons within the reach of the aliens and immigration powers in sections 51(xix) and (xxvii) of the Constitution.

External affairs power
The external affairs power in section 51(xxix) of the Constitution supports legislation implementing treaties to which Australia is a party. Under the program, funding can be provided for the presentation of sessions at the Financial Counselling Australia annual national conference to the extent that they are measures that are designed to meet Australia's obligations in relation to children under the Convention on the Rights of the Child, the Convention on the Rights of Persons with Disabilities, or in relation to women under the Convention on the Elimination of All Forms of Discrimination Against Women. Funding can also be provided for the presentation of sessions to the extent that they are measures that are designed to meet Australia's obligations under the International Covenant on Economic, Social and Cultural Rights.
Race power
The race power in section 51(xxvi) of the Constitution supports laws with respect to Indigenous Australians. The program provides funding for Indigenous persons and persons who provide financial counselling and financial capability services predominantly to Indigenous persons, particularly those living in remote communities, to attend the Financial Counselling Australia annual national conference. The program also funds the presentation of sessions at the Financial Counselling Australia annual national conference that relate to particular social welfare issues confronting Indigenous persons.
This answer is provided on the understanding that successive governments have been careful to avoid action that might effectively waive legal privilege in legal advice and thereby potentially prejudice the Commonwealth's legal position.

Committee's response

The committee thanks the ministers for their detailed response.

While the minister's response is generally helpful in providing a clear and explicit statement of the relevance and operation of the majority of the constitutional heads of power that the regulation seeks to rely on to support the Commonwealth Financial Counselling and Financial Capability – Capability Building program, the committee notes that, in relation to the external affairs power, the minister's response does not specify the articles of the international treaties on which the program seeks to rely.

The committee understands that, in order to rely on the external affairs power in connection with obligations under international treaties, legislation must be appropriately adapted to implement relatively precise obligations arising under that treaty.^[4] The committee therefore expects that the specific articles of international treaties being relied on are referenced and explained in either the regulation or the ES.

The committee requests the further advice of the minister in relation to the above.

The committee also notes the minister's advice that '[t]his answer is provided on the understanding that successive governments have been careful to avoid action that might effectively waive legal privilege in legal advice and thereby potentially prejudice the Commonwealth's legal position.'

The committee takes this opportunity to note that any claims to withhold information from Senate committees require the minister to 'state recognised public interest grounds for any claim to withhold the information' that can be considered by the committee and the Senate.

With respect to claims that legal professional privilege provides grounds for a refusal to provide information in a parliamentary forum, Odgers' Australian Senate Practice states:

It has never been accepted in the Senate, nor in any comparable representative assembly, that legal professional privilege provides grounds for refusal of information in a parliamentary forum.
...the mere fact that information is legal advice to the government does not establish a basis for this ground. It must be established that there is some particular harm to be apprehended by the disclosure of the information, such as prejudice to pending legal proceedings or to the Commonwealth's position in those proceedings. If the advice in question belongs to some other party, possible harm to that party in pending proceedings must be established, and in any event the approval of the party concerned for the disclosure of the advice may be sought. The Senate has rejected government claims that there is a long-standing practice of not disclosing privileged legal advice to conserve the Commonwealth's legal and constitutional interest.^[5]

The committee draws the above to the minister's attention.

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^[1] Williams v Commonwealth (No. 2) [2014] HCA 23; (2014) 252 CLR 416.

^[2] Australian Government, Office of Parliamentary Counsel, Drafting Direction No. 3.1 Constitutional law issues, https://www.opc.gov.au/about/docs/drafting_series/DD3.1.pdf (accessed 2 February 2016), p. 9.

^[3] Australian Government, Office of Parliamentary Counsel, Drafting Direction No. 3.1 Constitutional law issues, https://www.opc.gov.au/about/docs/drafting_series/DD3.1.pdf (accessed 2 February 2016), p. 9.

^[4] Victoria v Commonwealth (1996) 187 CLR 416.

^[5] Odgers' Australian Senate Practice, 14th Edition (2016), pp 668-669.