Financial Framework (Supplementary Powers) Amendment (Social Services Measures No 4) Regulation 2016 [F2016L01922]-Response required [2017] AUSStaCSDLM 13 (8 February 2017)

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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)

Constitutional authority for expenditure

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 the minister in relation to the above.

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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.