By Professor Simon Evans

Williams [No 2] Case Page

The National School Chaplaincy Program (NSCP) was struck down in Williams [No 2] because, the High Court concluded, the Commonwealth legislation that purported to authorise it was not a law with respect to ‘benefits to students’.

Williams [No 2] does not determine the fate of this legislation more generally or of the myriad other programs it was enacted to validate following Williams [No 1].

Nor does it deal a permanently fatal blow to the NSCP. But it does raise serious issues for Commonwealth laws and schemes that deal with students and education. This post is an initial sketch of some of those issues and the questions that will have to be addressed in coming months.

The legislation
The legislation enacted after Williams [No 1] purported to give the executive the power to make, vary or administer certain arrangements or grants (Financial Management and Accountability Act 1997 (Cth) s 32B(1) (FMA Act)) including the program described as follows:

National School Chaplaincy and Student Welfare Program (NSCSWP) Objective: To assist school communities to support the wellbeing of their students, including by strengthening values, providing pastoral care and enhancing engagement with the broader community: item 407.013, pt 4, sch 1AA of the Financial Management and Accountability Regulations 1997 (Cth) (FMA Regulations))

The Commonwealth argued (among other things) that this legislation (operating in relation to the agreements with and payments to Scripture Union Queensland) was supported by s 51(xxiiiA) of the Constitution.

Section 51(xxiiiA) was inserted into the Constitution by an amendment made in 1946. It provides that the Commonwealth has power to make laws with respect to ‘the provision of’ certain social welfare benefits, services and allowances — ‘maternity allowances, widows’ pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances’. It extended the range of social welfare benefits authorised by s 51(xxiii) (‘invalid and old-age pensions’).

Benefits to students
Benefits not limited to financial benefits and include services
It might have been open to the High Court in Williams [No 2] to adopt a narrow approach to ‘benefits to students’ — to distinguish between the reference in s 51(xxiiiA) to provision of medical and dental ‘services’ and the reference to provision of (direct financial) ‘benefits’ to students. However, the Court treated that possibility as foreclosed by its own earlier decisions on hospital and sickness benefits, Alexandra Private Geriatric Hospital Pty Ltd v Commonwealth [1987] HCA 6 (Alexandra Private Geriatric Hospital Case); and the earlier British Medical Association v Commonwealth [1949] HCA 44 (BMA Case) on which it was seen to rest: ‘the concept intended by the use in [s 51(xxiiiA)] of the word “benefits” is not confined to a grant of money or some other commodity’ and that the concept ‘may encompass the provision of a service or services’.

Thus, the joint judgment in Williams [No 2] observed of the payments considered in the Alexandra Private Geriatric Hospital Case, ‘payment of money to the proprietor of an approved nursing home, in respect of each qualified nursing home patient, for each day on which the patient received nursing home care in that nursing home, was provision of a “sickness and hospital benefit”’. It was not necessary to determine whether the benefit was the money paid to the nursing home proprietor or the services provided to the patient in return.

Thus far the decision in Williams [No 2] takes an expansive approach to Commonwealth power.

Benefits must be individualised
But then the reasons take a narrower path. The law considered in the Alexandra Private Geriatric Hospital Case provided for individualised benefits to particular patients. Whether the benefit was the payment or the service, ‘each description reflected the central fact that the intended ultimate beneficiary of the benefit was a particular patient: the identified patient in respect of whom a particular payment was made’. This was not just a fact about the particular law considered in the earlier case but a constitutional requirement.

Thus the first of two reasons that the NSCP was invalid: ‘It does not provide material aid in the form of any service rendered or to be rendered to or for any identified or identifiable student. There is no payment of money by the Commonwealth for or on behalf of any identified or identifiable student.’ (In Crennan J’s separate judgment, ‘prescribed and identifiable beneficiaries’: [102].) Rather, there is a payment to an intermediary ‘to be applied in payment of the wages of a person to ‘support the wellbeing’ of a particular group of children’. (For Crennan J, benefits do not ‘include services provided to undifferentiated persons — recipients or beneficiaries who cannot be identified as entitled to some benefit — whether the services are provided in a group setting or individually’: [107].)

And benefits must be relieve against human wants which the student has by reason of being a student
The path narrows further, yielding a second reason for invalidity. The benefits authorised by section 51(xxiiiA) are ‘occasioned by and directed to the identified circumstances’, usually in the ‘form of material aid to relieve against consequences associated with the identified circumstances’: [46]:

Provision of the benefit will relieve the person to whom it is provided from a cost which that person would otherwise incur. In the case of unemployment and sickness benefits, the aid will relieve against the costs of living when the individual’s capacity to work is not or cannot be used. That aid may take the form of payment of money or provision of other material aid against the needs brought on by unemployment or sickness. Pharmaceutical and hospital benefits provide aid for or by the provision of the goods and services identified. And in the case of benefits to students, the relief would be material aid provided against the human wants which the student has by reason of being a student.

It is not enough that the ‘desirable ends’ [47] are pursued in the course of the school day — the service must be ‘directed to the consequences of being a student’ [48]. The NSCP did not do so because (at [47]):

There is no more than the payment of an amount (in this case to an intermediary) to be applied in payment of the wages of a person to ‘support the wellbeing’ of a particular group of children: those who attend an identified school. And the only description of how the ‘support’ is to be given is that it includes ‘strengthening values, providing pastoral care and enhancing engagement with the broader community’.

Valuable though those ends might be (and indeed accepting that ‘some students would derive advantage from using the services and, in that sense, should do so’: [42]), the legislation identified no nexus between them and the needs of students as students.

Reflections and implications

The intent of both narrowings — requiring individualised benefits that address the needs of students as students — appears to be to guard against treating the power as a ‘persons power’ that supports the provision of any kind of benefit to a student (and regulation of any matter incidental to that person). Section 51(xxiiiA) is not a power with respect to education, the Court appears to be saying, but a power supporting programs that enable students to access and complete education by providing for their material needs as students. (The joint judgment insists ‘the constitutional expression “benefits to students” cannot be construed piecemeal’. It ‘is not to be approached as if it presented separate questions about whether there is a “benefit” and whether that “benefit” is provided to or for “students”’: [45]. Members of the Court have previously said much the same thing about ‘acquisition of property on just terms’. What this trope adds to the interpretive process is not clear — as the analysis inevitably steps through the component elements of the phrase.)

The judgment draws attention to the fact that the NSCP involves payments to an intermediary ([47]) and (in passing) that the benefits are provided at rather than by a school ([42], [43], [47], [48]). It is unlikely that these are intended to be factors pointing towards invalidity. After all, it was accepted in the Alexandra Private Geriatric Hospital Case that the benefits could be the payments to the hospital — an intermediary that delivered services to individual patients. Material aid in the form of services will almost always be delivered by an intermediary. (Crennan J at [109] expressly contemplates indirect funding of tertiary education through subsidies to universities though with a significant qualification discussed below.) And there is no readily apparent reason that the intermediary should be the student’s school or the patient’s hospital: the benefits need not be provided by the school or hospital. Equally there is no readily apparent reason that they should be provided at the school or hospital so long as (assuming the result in Williams [No 2]) they are directed to the consequences of the student being a student or the patient a patient. Thus, while the program described in the FMA Regulations as Helping Children with Autism (item 407.014) might not be supported by s 51(xxiiiA) for similar reasons to the NSCP (in failing to identify how the program addressed the needs of the children as students), programs that provided for the costs of school-employed teaching assistants or for out-of-school learning support by private providers to address the learning challenges of students with autism should equally be supported by s 51(xxiiiA).

The judgment also draws attention to the fact that the benefits of the NSCP were directed in part to the wider school community. The signs are not good for such programs: ‘if the program, properly understood, permitted the provision of services not only to students but also to the wider “school community”, this broader understanding of its content would appear to point away from characterising the program as providing benefits to students’: [41]. For many years, education policy has sought to address the implications of the fact that student learning is embedded in a wider social context, of family and community; improving the wider ‘learning environment’ is seen to improve the learning outcomes of students in school. But, on the basis of Williams [No 2], it would not be possible to conclude that benefits provided to improve that learning environment were ‘benefits to students’. The emphasis on relieving against the human wants of individual students is simply too clear. This is unfortunate. Many believe, and much current policy reflects the assumption, that community and social context matters to students’ experience of education and their educational attainment (see here, here and here). However, the High Court need not disagree — it can simply observe that these are matters that must be addressed through mechanisms other than the provision of benefits addressed to the community under s 51(xxiiiA) — through benefits targeted to individuated students or through the States, with or without the financial support of the Commonwealth under s 96. (And in some circumstances, providing benefits to the community might be seen as an incidental means to providing benefits to individuated students. Presumably the power to provide benefits to students is not so limited as to provide only for benefits hypothecated to individual students who demonstrably require relief against particular ‘human wants’; presumably the incidental power supports a both program that, while defined to provide benefits for individual students, benefits some whose need is less; and presumably it supports the incidental systems and structures that support the provision of the benefits to individual students.)

As a substantive matter, the individuation and particularisation of the experience of being a student reflected in Williams [No 2] appears quite unattractive. Equally as a framework for policy design, individuation and particularisation will appear quite unattractive to those who would prefer to enact policies that fund institutions to deliver localised services that address the complex and varied challenges of their student cohort. This is not to suggest that this aspect of the judgment will significantly reduce the ambit of the policies that can be pursued through programs established and funded under s 51(xxiiiA) though it will affect their design — requiring definition and pricing of services on a per student basis. Assuming that the Commonwealth prefers s 51(xxiiiA) to s 96 as the vehicle for delivering these programs, there may need to be a shift from away from some programs that provide retrospective or target-based funding of institutions towards those that address the needs of individuated students.

The requirement that benefits address the needs of students as students is easier to defend than the individuation requirement. However, there will be ongoing challenges in defining the precise contours of ‘benefits which are directed to the consequences of being a student’ or ‘material aid … against the human wants which the student has by reason of being a student’. The High Court wisely eschews the task in Williams [No 2] at [45]. Some programs should be relatively easy to rule in, including those that provide aid in meeting the costs of tuition, learning materials and living costs that students would otherwise bear. This should include Commonwealth payments to institutions of tuition costs that students borrow from government under the various Higher Education Loan Program (HELP) programs.

Presumably aid can be provided to anticipate and forestall the emergence of ‘human wants’.

What of those programs that might support participation in optional extra-curricular activities, activities that ‘no student … must do’ (though some may and perhaps ought)?

What of programs for university students that address ‘human wants’ prevalent among young adults, including university students but not confined to them? (Counselling and sexual health services are possible examples.)

And what of the funding provided to institutions by way of block grants not linked to particular students? Crennan J’s observation aligns with the thrust of the joint judgment: ‘[I]ndirect assistance, for example to students, such as subsidies paid to universities, must relate to education services provided to real or actual persons as prescribed recipients or beneficiaries entitled to those education service’: [109]. Assuming that block grants for delivery of teaching programs were quantified in a way that was adequately individuated (identifying ‘a prescribed recipient or beneficiary entitled to a social security benefit’: [110]), there would be a benefit to students in the delivery of the teaching. But unlike the HELP funding component advanced to institutions, these grants do not correspond to or relieve against a liability the student would otherwise bear. Given that ‘[p]rovision of the benefit … relieves the person to whom it is provided from a cost which that person would otherwise incur’ [46], does this constitute a benefit within the meaning of s 51(xxiiiA)? Is there a difference between providing ‘benefits’ and providing ‘material aid … against … human wants’? The latter could be read as addressing more basic needs in Maslow’s hierarchy — much as hospital and sickness benefits do. (Career services might perhaps be a benefit but not aid against a human want.) ‘[M]aterial aid … against … human wants’ is McTiernan J’s language from the BMA Case (at [2]). Notwithstanding its re-endorsement in the Alexandra Private Geriatric Hospital Case and Williams [No 2], it does seem rather time worn, reflecting the thinking about welfare at the dawn of the modern welfare state. And despite its invocation in Williams [No 2], there is little to suggest that s 51(xxiiiA) is confined to basic needs — and nothing to commend that position.

Corporations power
SUQ invoked a second possible source of power to support the legislation challenge in Williams [No 2], s 51(xx), relevantly, the power to make laws with respect to trading and financial corporations. Even assuming that the party contracted to deliver the NSCP was required by the legislation to be such a corporation, the High Court held it was not supported by s 51(xx):

The law makes no provision regulating or permitting any act by or on behalf of any corporation. The corporation’s capacity to make the agreement and receive and apply the payments is not provided by the impugned provisions. Unlike the law considered in [New South Wales v Commonwealth [2006] HCA 52 (Work Choices Case)] the law is not one authorising or regulating the activities, functions, relationships or business of constitutional corporations generally or any particular constitutional corporation; it is not one regulating the conduct of those through whom a constitutional corporation acts or those whose conduct is capable of affecting its activities, functions, relationships or business.

The Commonwealth already regulates Australia’s universities on the assumption that they are trading or financial corporations and there is support for this in the Federal Court (see Quickenden v O’Connor [2001] FCA 303). However, Williams [No 2] makes clear that funding universities on this basis would face the same difficulties as the NSCP.

AGLC3 Citation: Simon Evans, ‘Williams [No 2] Symposium: Simon Evans on s 51(xxiiiA)’ on Opinions on High (23 June 2014) <https://blogs.unimelb.edu.au/opinionsonhigh/2014/06/23/evans-williams/>.

Simon Evans is Professor of Law at Melbourne Law School and Pro Vice-Chancellor (International) at The University of Melbourne.

Work on this note was supported through ARC Discovery Project DP1092671 (Executive Power Under the Australian Constitution: Definition, Delimitation and Accountability).