In October 2006 the government established the National Schools Chaplaincy Program. This program, announced by John Howard, established funding of $60M for the placing of chaplains in public schools to minister, among other activities, to the spiritual well-being of students and the community. The expectation was that these chaplains would be church members, who, while they were not to evangelise, were, according to many parents, promoting their religious beliefs. The Labor Government has since expanded funding to over $500M. The program was based on the presumption that the Executive (via a Minister) could make such a payment. This was despite the Financial Management and Accountability Act section 26. Section 26 states that:
An official or Minister must not do any of the following except as authorised by a valid drawing right:
(a) make a payment of public money;
(b) request that an amount be debited against an appropriation;
(c) debit an amount against an appropriation.
Maximum penalty: Imprisonment for 2 years.
Section 27 goes on to say that a drawing right is issued by the Finance Minister and authorises an official or Minister to make a payment of public money. It goes on to say that 'A drawing right has no effect to the extent to which it purports to authorise the making of a payment of public money for which there is no available appropriation.' Thus, without 'available appropriation' the making of a payment of public money by a Government official or Minister was not only legally ineffective, it was an offence punishable by imprisonment.
It was possible, then, that the Secretary of the relevant Department, or the Minister administering that Department was guilty of an offence in funding the NSCP. According to the law (Criminal Code) one can be guilty of an offence if one knowingly intends to break the law, or if one is reckless as to whether one is breaking the law or not (section 5.6). Indeed, over 400 current funding programs are in question under section 26, ranging from assistance to industry, environmental and welfare groups to payment of current and former Prime Ministers.
What is 'available appropriation'? Well, after the establishment of the NSCP, on 3 April 2009, the High Court in the case of Pape v Commissioner of Taxation considered the validity of the 'stimulus package', Government grants to individuals to ameliorate the effects of the global financial crisis. The Court considered Government's power under the Constitution to spend public moneys, and emphasised the need in most cases to ensure proper authorisation for the spending by adequate identification in legislation. The Government was thus warned of the possible constitutional invalidity and criminal illegality of such programs as the NSCP.
In August 2011 the Government appeared in the High Court case of Williams v Commonwealth. Ron Williams claimed the NSCP funding was unconstitutional, alleging that the payments were made without the requisite authority by law. The hearing provided not only a warning that the funding may have been unconstitutional and invalid, it also provided further warning that those responsible for the funding could be committing an offence, even if the validity of the funding was in doubt, through either intention or recklessness as to the offence.
In fact, the Government showed that it had noted the possibility of breaches of s.26. While awaiting the Court's decision in Williams. In March 2012, the Government pushed through legislation removing the penalty provision. A spokeswoman for Finance Minister Penny Wong said this section had never been prosecuted, and that other offences and penalties existed for misuse of public money. A quick scan of the this (very complex) legislation appears to require 'dishonesty' (to be interpreted by its commonly accepted meaning) in such misuse. Section 26 did not require dishonesty, and it would be hard to argue that the Government was 'dishonest' in setting up the NSCP.
Section 26 is now the same as it was, but with no penalty attached. The Commonwealth Crimes Act 1914 sect 4F provides that a reduction (and presumably removal) of a penalty extends to offences committed before the alteration took place.
The removal of penalty shows that the Government was aware it had potentially broken the law, by retrospectively removing the penalty. In effect the Government has given itself a 'get-out-of-gaol-free' card.
The Government also renamed the NSCP the 'National Schools Chaplaincy and Student Welfare Program' (NSCSWP) to nominally mask its religious character, as Williams had challenged this as well.
On June 20th 2012, the High Court issued its decision in the Williams case. The Court held that public spending by the Executive must be specifically authorised by legislation (not just a general law) and according to constitutional requirements. This, the Court said, was to ensure proper Parliamentary scrutiny and participation in such funding, to prevent a 'deficit in the system of representative government'. Relevant to this, it held, the issue was one of States' rights under the Constitution, and State Government responsibility for education.
The funding of the NSCP was not provided for under legislation, but under a series of arrangements administered by the Commonwealth. The Court held that the NSCP had indeed been established without the requisite authority by legislation and was therefore invalid under the Constitution.