Opinion Number. 427

Subject

SUPPLY WHETHER COMMONWEALTH MAY ARRANGE WITH BANK TO PAY CREDITORS PENDING PASSING OF

Key Legislation

CONSTITUTION, s. 83 : AUDIT ACT 1901-1906. ss. 31. 57

Date
Client
The Treasurer

The Treasurer asks to be advised on the question raised in the following memorandum:

As it seems certain that the amount of £.200,000 voted as an advance to the Treasurer in the 'Special Supply Bill' passed for this financial year will be exhausted before the date fixed for the re-assembling of Parliament, and as all new works are now being carried on, and all wages paid out of this fund, I should like to be advised whether it is lawful for the Treasurer to incur an obligation-say, with a bank, to meet the claims of the admitted creditors of the Commonwealth, prior to the passing of further supply.

I understand that the nature of the arrangement contemplated is that a bank should pay the claims of certain creditors of the Commonwealth-for which there are no funds of the Commonwealth at present legally available-and that on the passing of a Supply Act the bank should be recouped.

In my opinion there is nothing unlawful in such an arrangement. It is not unlawful for the Treasurer, on behalf of the Commonwealth, to incur pecuniary obligations to meet which no funds are as yet available.

It is unlawful to draw money from the Treasury without an appropriation made by law: Constitution, section 83; Audit Act 1901-1906, sections 31, 57. But the proposed arrangement does not involve drawing money from the Treasury; it only means incurring a debt to the bank, in consideration of the bank paying creditors of the Commonwealth. It was not unlawful to incur the original obligation to the creditors-for which money was not yet legally available-and there is certainly nothing unlawful in an arrangement which merely substitutes one creditor for another.(1)

[Vol. 9, p. 117]

(1) But see Opinion No.512.