The High Court has decided the special case arising out of and brought by the same applicant in the recent landmark constitutional law decision, Williams v Commonwealth  HCA 23, and has ruled that the SUQ Funding Agreement is not supported by the legislative or executive power of the Commonwealth.
Both the present challenge and Williams [No 1] revolved around the Commonwealth’s power to enter into an agreement to fund the public company Scripture Union Queensland’s (SUQ) delivery of chaplaincy services to the Darling Heights State Primary School (attended by Mr William’s children). In Williams [No 1], a majority of the Court held that the executive power of the Commonwealth could not support its entry into the agreement with SUQ in order to fund the chaplaincy program because the executive does not have a broad power to enter into contracts or spend public money without the support of legislation (absent another recognised source of power).
This challenge related to the new funding arrangement with SUQ for the renewed and renamed chaplaincy program, funded by a new series of appropriations acts (which also purportedly support the Commonwealth’s entry into the arrangement). Following the decision in Williams No 1, the Commonwealth Parliament inserted s 32B into the Financial Management and Accountability Act 1997 (Cth), which (in conjunction with associated regulations) purports to grant the Commonwealth a general power to make, vary or administer arrangements and grants, where those arrangements or grants are specified in regulations.
The stated case raised eight questions to be answered by the Full Court. The central issues are whether the Commonwealth’s entry into the SUQ funding agreement is authorised by various appropriation acts, and if not, whether s 32B (and its associated regulations) is wholly invalid as going beyond the ambit of the Commonwealth’s executive power, and if not, whether those provisions are supported by a head of legislative power in the Australian Constitution (specifically, ss 51(xxiiiA), 51(xx) or 51(xxxix), operating in conjunction with s 61).
The Court held that the scheme was not supported by s 51(xxiiiA) because the provision of chaplaincy services is not a ‘benefit’ within the meaning of s 51(xxiiiA) in the sense of material aid (as interpreted by the Court in British Medical Association v Commonwealth  HCA 44 or Alexandra Private Geriatric Hospital Pty Ltd v Commonwealth  HCA 6) directly made to students. Payments to be applied as wages to chaplains who are to ‘support the wellbeing’ of students are not ‘benefits’ to students within the meaning of s 51(xxiiiA): at . Nor was it supported by s 51(xx) as the scheme does not regulate or permit any act by or on behalf of a corporation: ‘[t]he corporation’s capacity to make the agreement and receive and apply the payments is not provided by the impugned provisions’ (at ). The Court also declined to reopen Williams [No 1] on the basis that the Commonwealth’s submissions here were ‘no more than a repetition of the “broad basis” submissions’ on executive power rejected by the majority in Williams [No 1], and noting that the Commonwealth’s arguments rested on a ‘false assumption’ about the ambit of federal executive power (see at –). Finally, the Court rejected the s 51(xxxix) argument as being contrary to Pape v Commissioner of Taxation  HCA 23 and Williams [No 1]: appropriations do not necessarily bring the expenditures within the power of the Commonwealth. Crennan J agreed with the majority but made a reservation regarding s 51(xxiiiA) noting that it was unnecessary for the Court to come to any conclusions on the wisdom of the scheme (at ); instead it was only necessary to find that the scheme did not provide government assistance to or for students as prescribed and identifiable beneficiaries: , .