Opinion Number. 390

Subject

BORROWING BY COMMONWEALTH EXTENT OF TREASURER'S POWER TO ARRANGE ADVANCES FROM BANKS

Key Legislation

AUDIT ACT 1901-1909, s. 20

Date
Client
The Treasurer

The Treasurer has asked for my opinion as to whether section 20 of the Audit Act 1901-1909 gives the Treasurer power to arrange for bank overdrafts to an unlimited amount without further authority from Parliament.

Section 20 of the Audit Act is as follows:

20.(1) The Treasurer may agree with any bank upon such terms and conditions as he may think fit for the receipt custody payment and transmission of public moneys within or without the Commonwealth, and for advances to be made and for the charges in respect of the same, and for the interest payable by or to the bank upon balances or advances respectively, and generally for the conduct of the banking business of the Commonwealth.

(2) No such agreement shall be made for a period of more than one year unless it contains a provision that the same may be terminated at any time after a notice of not exceeding six months.

The principal objects of the Audit Act are to make provision for the collection and payment of Commonwealth moneys (including loan moneys), and for the keeping, audit and inspection of the Commonwealth Accounts.

There is no doubt that the wording of the section is wide enough, if read without limitation, to enable the Treasurer to arrange for advances to any extent, but to so read the section would be to confer upon the Treasurer unlimited powers of borrowing, and I do not think that Parliament could have intended to confer upon him such powers.

Section 20 of the Audit Act was in the Audit Bill as introduced into Parliament in 1901, and was passed without amendment.

Sir George Turner, in moving the second reading of the Audit Bill in the House of Representatives, described the Bill as a machinery Bill, and so also did Senator Drake in moving the second reading in the Senate.

In view of the debates, and looking at the Act as a whole, I think that Parliament undoubtedly intended the Act to be a machinery Act, and I think it should be construed as a machinery Act accordingly.

I am of opinion therefore that, in construing section 20 as a machinery section, it should be read only as authorising the Treasurer to arrange for such advances as may be considered incidental to the objects of the Act.

Advances for the payment of accounts pending the transfer of moneys from some other place would undoubtedly come within the section, and I think also advances pending the collection of moneys payable or becoming payable to the Commonwealth in the financial year.

But I am doubtful as to whether the section would cover advances which would leave the Commonwealth in debt to the bank at the close of the financial year. On the whole, I think it would not.

The exact limit of the amount of advances cannot be stated, as it would depend upon the circumstances as existing at the time.(1)

[Vol. 8, p. 131 ]

(1) This opinion was published in Commonwealth of Australia, Pari. Papers 1911, Vol. II, p. 943.