Opinion Number. 310



Key Legislation

CONSTITUTION, ss. 89, 93 : AUDIT ACTS 1901-1906. ss. 36, 63

The Auditor-General

The following case has been forwarded to me by the Auditor-General for opinion:

For some years past, I have, in my annual reports to Parliament, drawn attention to the fact that large remittances have been, and are being, made from the Commonwealth to England, for the purpose of being expended by the Agents-General, or the Commonwealth Officer in London, the remittances being charged to Parliamentary Appropriations as soon as the cheques are drawn for the purpose of obtaining drafts and for making payments to the State Treasuries, or when other means are adopted to make the money available.

  1. In my report on the accounts for the year 1906-7 included in Financial Paper, pages 152-3, it is shown that on 30 June 1907, there were balances against the Agents-General amounting to £43,932.13.4, and against the Commonwealth Officer in charge, in London, amounting to £232,954.19.4; no vouchers had been seen by me for the expenditure in England of any part of these sums. Of these amounts a portion had been in hand as far back as the year 1901-2, still unexpended.
  2. These remittances have all been charged definitely to the Parliamentary Appropriations of the several years, and were accompanied for the greater part by indents
  3. for supplies, but in a number of instances they consisted of lump sums estimated to cover various expenses.

  4. I have now the honour to request the favour of an opinion on the following:
    1. Is the charging of these remittances as 'expenditure' in accordance with the provisions of sections 89 and 93 of the Constitution?
    2. Can the amounts be considered as 'expenditure' under the provisions of section 36 of the Audit Acts 1901-1906, and thus prevent the amounts, actually unexpended in England, from lapsing at the end of the financial year?

    In this connection reference is made to the provisions of section 63 of the Audit Acts, quoted, which provisions, it is understood, are, to a certain extent, relied upon by the Treasury as justifying the present procedure.

I am of opinion that the word 'expenditure' in sections 89 and 93 of the Constitution should receive a broad construction, and that the charging of the remittances as 'expenditure' is in accordance with the provisions of those sections-assuming that the remittances are in pursuance of a lawful appropriation, and the money is drawn for the definite object of meeting an actually accruing obligation. Subject to this assumption, question (a) should, I think, be answered in the affirmative.

Question (b) stands on a somewhat different footing, because its answer depends on the construction of a section of the Audit Acts, and not on the construction of the Constitution. Section 36 of the Audit Acts 1901-1906 enacts that every appropriation made out of the Consolidated Revenue Fund for the service of any financial year shall lapse and cease to have any effect for any purpose at the close of that year, and any balance of the moneys so appropriated which may then be unexpended shall lapse, and the accounts for the year shall be then closed.

Section 36 is very plain and definite; and under its provisions, after the close of the financial year, the Appropriation Act for the service of that year ceases to have effect and (except in certain cases expressly provided for) is no longer available as a warrant or authority for the payment of money. If it applies to unexpended balances in England, they would lapse at the close of a financial year to the same extent as balances in Australia unless some statutory provision keeps alive their appropriation.

It is suggested that section 63 of the Audit Acts takes these balances out of the operation of section 36.

Section 63 is as follows:

Notwithstanding anything in this Act contained the Governor-General may make such arrangements as he considers necessary for the collection receipt custody issue expenditure due accounting for care and management of any money belonging to the Commonwealth outside the territory of the Commonwealth and for the keeping of books and accounts and furnishing statements returns and vouchers and for the examination inspection record and audit of such books accounts statements returns and vouchers.

An appropriation is necessary for every item of expenditure and must be a valid subsisting appropriation at the time the expenditure is made. A lapsed appropriation can in no case be taken as an authority for any expenditure made after the lapse occurred. Now, money actually in the hands of an officer has not been paid away, so it cannot be regarded as having been expended unless a cheque or money document has been issued entitling the creditor to draw it. The moneys referred to in England, if still in the hands of officers or agents, and if the appropriations under which they might have been expended have lapsed, are balances which are unexpended. Such balances are simply Commonwealth moneys, and can only be expended under a new appropriation.

The object of section 63 is to give certain powers to the Governor-General in relation to the expenditure etc. of money outside Australia. It does not purport to deal with the appropriation of money, and as far as I can see it in no way keeps alive with regard to money in England an appropriation which would have been held to have expired if the money were in Australia. I think, therefore, that section 36 applies to appropriations and unexpended balances in the case of money outside Australia to the same extent as to money in Australia.

I may add that validating legislation to meet the case was prepared for introduction at the close of last session, but owing to the pressure of business could not be proceeded with(1)

[Vol. 6, p. 393]

(1) This opinion was published in Commonwealth of Australia,Parl.Papers 1908,Vol.II,P.1080.