Constitutional, legal and Government framework

Australia is a constitutional monarchy. The Head of State is the Queen of Australia, represented in Australia by the Governor-General who acts on the advice of the Federal Executive Council (established under the Australian Constitution).

This section covers:

• The Constitution
• The Australian legal system
• Legislative power
• Executive power
• Judicial power
• The rule of law
• Preparing legislation and legislative instruments
• Guidance on Government and parliamentary matters
• Machinery of Government

The Constitution

Australia has a federal system of government, with powers distributed between the national, state and territory governments.

Chapters I, II and III of the Constitution confer the legislative, executive and judicial powers of the Commonwealth of Australia on three different branches of government established by the Constitution as follows:

• The Commonwealth Parliament, which consists of the Senate and the House of Representatives. The Queen is also formally part of the Parliament.
• The federal Executive. While the Queen does not play a day to day role in Australian government, executive power is formally vested in the Queen. The power is exercisable by the Governor-General as the Queen’s representative. The Federal Executive Council advises the Governor-General in the government of the Commonwealth of Australia.
• The federal Judicature. Federal j udicial power is vested in the High Court of Australia, various federal courts created by the Commonwealth Parliament, and those state and territory courts that have been invested with federal jurisdiction.

Legislative power is the power to make laws. Executive power is the power to administer laws and carry out the business of government through bodies such as Government departments, statutory authorities and the defence forces. Judicial power is the power exercised by courts in interpreting and applying the law.

The Constitutional Policy Unit of the Attorney-General’s Department provides assistance and advice on matters of constitutional policy development and litigation

The Australian legal system

In Australia, the law consists of:

• Acts passed by the Federal Parliament acting within the scope of its powers under the Australian Constitution, and delegated or subordinate legislation made under those Acts.
• Ordinances made for the Territories, and delegated or subordinate legislation made under those Ordinances.
• Acts passed by state Parliaments and the Legislative Assemblies of the Northern Territory, the Australian Capital Territory and Norfolk Island, and delegated or subordinate legislation made under those Acts.
• The Australian common law, which developed from the English common law and is interpreted and modified by the courts.
• Any statute law of England that was received into Australian law and which remains unchanged.

Legislative power

Before a proposed law (a Bill) becomes an Act of Parliament it must be passed in the same form by both the House of Representatives and the Senate. The Bill becomes an Act of Parliament when it receives assent by the Governor-General.

The Constitution sets out the subjects on which the Federal Parliament can make laws. These include matters such as defence, external affairs, interstate and international trade and commerce, taxation, immigration and social security.

Executive power

Executive power is in some cases exercised by the Governor-General, most often acting with the advice of the Federal Executive Council. The Constitution provides that all Ministers of State are Executive Councillors. Since March 2000, parliamentary secretaries have also been appointed as Ministers of State for the purposes of the Constitution, and so are Executive Councillors.

Commonwealth Ministers and parliamentary secretaries must sit in Parliament, as Senators or Members of the House of Representatives, and are appointed by the Governor-General on the recommendation of the Prime Minister. Ministers and parliamentary secretaries are sworn to administer the Department(s) of State in the portfolio to which they have been appointed. Each portfolio may contain one or more agencies. The composition of portfolios may change over time as Governments review their policy priorities.

Very broadly, the executive power of the Commonwealth can be seen to fall into three categories:

• power can be conferred by statute
• the power exercised by the Australian Government is a legal person (it  can, through its officials, do many of the things an ordinary person can do such as enter into contracts)
• the powers that historically were vested in the Crown (for example, in relation to entering treaties).

Judicial power

Chapter III of the Constitution establishes the federal Judicature. The role of the courts is to interpret the law and apply it. The High Court is Australia’s court of final appeal. Its functions are to interpret and apply the law of Australia, to decide cases of special significance including challenges to the constitutional validity of laws and to hear appeals, by special leave, from Federal, state and territory courts. The other federal courts are the Federal Court of Australia, the Family Court of Australia and the Federal Magistrates Court of Australia.

Rule of law

The rule of law is basic to Australia’s system of Government. The rule of law requires that individuals are not subject to any arbitrary or capricious exercise of power by Government officials. Government officials cannot act contrary to Acts and Regulations, nor can a Government official exercise coercive powers against an individual without statutory authority.

An individual whose rights or interests are affected by a decision made by a Government official may seek to have the decision reviewed.

An Australian Government official may be subject to both common law rules and legislative rules when undertaking any given action.

Common law

Common law, or judge-made law, is a body of law that has been formulated, developed and administered by courts, over time. Examples include the duty of care in giving advice, misfeasance in public office and the implied duties of employers and employees under the common law contract of employment. Principles developed under the common law can be displaced, amended or codified by legislative action.

Commonwealth, state and territory laws

A Government official may be subject to both Commonwealth law and state or territory laws when undertaking any given action. An example of the interplay between Commonwealth and state or territory law can be seen in the area of anti-discrimination legislation in which both Commonwealth and state or territory laws may have application. The relationship between Commonwealth laws and the laws of the states and territories is a complex issue and legal advice should be obtained when specific issues are raised in this area.

Similarly, the operation of Commonwealth immunities is a complex issue on which legal advice should be sought. There is a presumption against the Crown being bound by statutes but sometimes a statute expressly provides that the Crown is bound. For more information, see: Hogg & Monahan, Liability of the Crown (3^rd edition, 2000).

Criminal law

A Government official may be subject to the criminal law when undertaking any given action. Provisions of particular relevance to Australian Government employees include:

• section 14 of the Financial Management and Accountability Act 1997, which makes it a criminal offence for a Commonwealth official or Minister to misapply, or improperly dispose of or use, public money
• key sections in the Crimes Act 1914 such as section 70 which relates to the disclosure of information by Commonwealth officers and section 79 which relates to official secrets
• the Criminal Code Act 1995 (incorporating the Criminal Code) which establishes a range of offences, including theft, fraud, abuse of public office, bribery and unauthorised access to, or modification of, restricted data.

Preparing legislation and legislative instruments

Legislation Handbook

The Legislation Handbook provides information about the procedures involved in preparing Commonwealth legislation, especially the procedures coordinated by the Department of the Prime Minister and Cabinet (PM&C). The handbook is intended as a guide for public servants on processes for the development and passage of new or amending legislation.

Working with the Office of Parliamentary Counsel (OPC) - A Guide for Clients

Working with OPC - A Guide for Clients provides guidance on developing drafting instructions and working on legislative projects in general.

Best practice regulation, regulation management and review

Finance deregulation requirements

 To drive continuous improvement in regulation-making, address regulatory creep and reduce regulatory costs to the economy, the Australian Government has introduced requirements for agencies intending to introduce new regulatory measures. These requirements are administered by Finance and are separate from the regulatory impact analysis requirements administered by the OBPR (see below).

In bringing forward regulatory proposals, Ministers are required to address the availability of regulatory offsets, that is, whether any regulation or regulatory process can be removed, repealed or amended in a manner that would result in a net reduction in the cost of regulation. Ministers must provide evidence that the opportunity for offsets has been considered.

Agencies are also required to notify Finance of all proposals for new regulation, proposed changes to existing regulation or changes to policy or implementation detail with regulatory implications.

Advancing the Deregulation Agenda: Guidance Note addresses the requirements in detail and outlines other deregulation initiatives which may from time to time impose reporting obligations on agencies and Ministers.

Office of Best Practice Regulation requirements

The OBPR administers the Government’s best practice regulation requirements and assists departments and agencies in meeting the requirements by advising on the level of impact analysis required and in assisting policy officers to quantify compliance costs and prepare BCC reports and RISs. The OBPR is also required to monitor and report on compliance with the best practice regulation requirements.

All regulations that have an impact on business and individuals or the economy, including those developed by agencies and boards with administrative or statutory independence, are required to comply with the Government’s best practice regulation requirements, which are administered by the OBPR. 

The Government’s requirements are set out in the Best Practice Regulation Handbook. It provides guidance on the analysis and consultation which must be undertaken when developing regulatory proposals. The initial steps that policy officers need to follow are summarised in the Handbook’s companion documents, Users Guide to the Best Practice Regulation Handbook and Quickstart to Regulatory Impact Analysis (RIA).

The Best Practice Regulation Handbook outlines regulatory best practice procedures and processes for making, reviewing or amending ‘regulation’. It has been endorsed by the Australian Government, and compliance with its requirements is mandatory for all Australian Government agencies making, reviewing or amending Australian Government regulation. Similar requirements, endorsed by COAG, apply to all regulations considered and made by ministerial councils and national standard setting bodies. COAG requirements are provided in the COAG-endorsed Council of Australian Governments (COAG) Best Practice Regulation: A Guide for Ministerial Councils and National Standard Setting Bodies.

The Best Practice Regulation Handbook defines regulation as “Any ‘rule’ endorsed by government where there is an expectation of compliance, for example primary legislation (Acts), subordinate legislation (legislative or non-legislative instruments), treaties and quasi‑regulation.” It also defines quasi-regulation as “a wide range of rules or arrangements where governments influence business and individuals to comply, but which do not form part of explicit government regulation.”

There is a three-tiered system for assessing all regulatory and quasi-regulatory proposals.

To determine which level of analysis is appropriate, a preliminary assessment must be undertaken for all regulatory proposals.

• For proposals that will have no or low impacts on business and individuals or the economy (including no or low compliance costs), no additional regulatory analysis or documentation is required;
• For proposals that are likely to involve medium business compliance costs, a full (quantitative) assessment of the compliance cost implications must be carried out using the Business Cost Calculator (BCC) or approved equivalent.  The BCC is the Government’s software tool for calculating compliance costs;
• For proposals that are likely to have a significant impact on business and individuals or the economy (whether in the form of compliance costs or other impacts), a more detailed analysis must be undertaken and documented in a Regulation Impact Statement (RIS).  If the impacts include medium or significant business compliance costs, the RIS should include a full (quantitative) assessment of these costs using the BCC or an approved equivalent.

There are no exemptions from the RIA process for any Australian Government regulatory proposal and very limited exemptions from the COAG RIA processes, which apply to regulations made by national bodies. 

Under the Australian Government RIA framework, a regulatory proposal cannot proceed to Cabinet or other decision-makers unless it has complied with the best practice regulation requirements. These requirements recognise that for urgent proposals, the Prime Minister may grant exceptional circumstances. Where exceptional circumstances have been granted, the regulation will be subject to a post‑implementation review within one to two years of implementation. Where a proposal proceeds (either through Cabinet or another decision‑maker) without an adequate RIS or quantification of compliance costs, the resulting regulation must also be subject to a post-implementation review within one to two years of implementation.

The OBPR reports publicly on compliance with the requirements in the Best Practice Regulation Report which is released around December each year. The report lists which departments and which regulatory decisions have not complied with the Government’s regulatory impact analysis requirements.

Departments and agencies are encouraged to contact the OBPR early in the policy development process.

Publications and further information are available from the OBPR’s website <www.finance.gov.au/obpr>.

Legislative Instruments Act

The Legislative Instruments Act 2003 establishes a comprehensive regime for the registration, tabling, scrutiny and sunsetting of Commonwealth legislative instruments. The Act came into effect on 1 January 2005 ..

Section 5 of the Act defines a legislative instrument for the Act. A legislative instrument is a written instrument of a legislative character made in the exercise of a power delegated by the Parliament. An instrument is taken to be legislative if it determines or alters the law, rather than applying it in a particular case, and has the direct or indirect effect of affecting a privilege or interest, imposing an obligation, creating a right, or varying or removing an obligation or right.

Section 6 declares certain instruments to be legislative, such as regulations, statutory rules, Ordinances of non-self-governing territories, disallowable instruments and proclamations.

Section 7 of the Act declares certain kinds of instruments not to be legislative instruments. In addition, Schedule 1 of the Legislative Instruments Regulations 2004 lists a number of commonly found instruments which are not legislative instruments, for example, instruments of appointment and delegations. Sections 7, 44 and 54 of the Act and various Schedules of the Regulations contain a range of exemptions from the whole or parts of the Act.

In practice, a provision that enables an instrument to be made will usually specify whether or not the instrument is legislative in character unless section 6 or 7 of the Legislative Instruments Act 2003 applies.

If the maker of a proposed instrument is not certain whether the instrument will be legislative or not, the Act allows the Attorney-General to determine the matter and issue a certificate (under section 10 of the Act).

Instruments which are not legislative may still be subject to disallowance. In order to be disallowable, such instruments must be specifically identified as disallowable non-legislative instruments for the purposes of section 46B of the Acts Interpretation Act 1901.

A legislative instrument made on or after 1 January 2005 is not enforceable unless the instrument is registered on the Federal Register of legislative instruments.

A legislative instrument made before 1 January 2005 must have been lodged for registration under section 29 of the Act to remain in force.

The requirements for registration are set out in Part 4, Division 2 and 3 of the Act.

The Act emphasises the importance of consultation by encouraging rule makers to consult experts and those likely to be affected by an instrument before it is made.

The explanatory statement for the instrument, which will be tabled in the Parliament and accessible on the register, must also contain a description of any consultation undertaken, or if not undertaken, an explanation for its absence.

Almost all registered legislative instruments will sunset after 10 years, on either a 1 April or a 1 October. Section 54 of the Act provides for limited exemptions. Exemptions may also be set out in other Commonwealth legislation.

The Attorney-General must, 18 months before the sunset date, table in Parliament lists of the instruments that are due to sunset. Either House of Parliament can, by resolution, exempt an instrument from sunsetting for a further 10-year period.

In most cases, the requirement to register a legislative instrument under the Act replaces any requirement under enabling legislation to notify or publish the instrument in the Gazette.

The Federal Register of Legislative Instruments is an electronic database, incorporated in the ComLaw website.

Guidance on Government and parliamentary matters

The following publications set out the framework in which the issues relating to Ministerial and parliamentary matters are to be managed:

Cabinet Handbook

The Cabinet is the apex of executive Government. Meeting regularly, it sets the broad directions of Government, makes important decisions facing a Government and resolves potential conflicts within Government. It is for the Government of the day, and in particular the Prime Minister, to determine the shape and structure of the Cabinet system and how it is to operate.

The Cabinet Handbook lays down the principles and conventions by which the Cabinet system operates. It also outlines the procedures designed to ensure that the Cabinet process fulfils its central purposes of contributing to consistency in public policy formulation, supporting Ministers in meeting their individual and collective responsibilities, facilitating coordinated and strategic policy development and enabling informed decision making on all issues requiring collective determination.

The Drafter’s Guide (for Cabinet documents)

The Drafter’s Guide aims to assist Ministers’ senior advisers, departmental policy advisers and Cabinet Liaison Officers in the preparation of Cabinet submissions and memoranda. The Guide is available from the Cabinet Liaison Officer in each agency.

Federal Executive Council Handbook

The Federal Executive Council is established by section 62 of the Australian Constitution to “advise the Governor-General in the Government of the Commonwealth’. Under section 63, any functions or powers vested in the “Governor-General in Council’ by the Constitution must be carried out or exercised with the advice of the Federal Executive Council.

Legislation can also confer powers on the Governor-General — such as making regulations or appointing statutory office holders— that are exercised “in Council’.

The Federal Executive Council Handbook is issued by the Federal Executive Council Secretariat in the Department of the Prime Minister and Cabinet, for the convenience of Ministers and officials who prepare Executive Council documents. The Handbook aims to give an overview of the process and operations of the Executive Council that will assist users in preparing and submitting documents for consideration.

The appendices to the Handbook provide models for the presentation of generic documents, including for regulations and appointments. The Executive Council Secretariat can provide examples and models illustrating more complex points of process and presentation.

Guidelines for the Presentation of Government Documents, Government Responses, Ministerial Statements and Other Instruments to the Parliament

The Guidelines for Presentation of Government Documents, Government Responses, Ministerial Statements and Other Instruments to the Parliament provide advice to agencies on the procedures to be followed when preparing Ministerial statements for presentation in Parliament and arranging for the tabling in Parliament of reports and other documents, including annual reports and responses to parliamentary committee reports.

Rights and responsibilities of witnesses before parliamentary committees

The Guidelines for Official Witnesses before Parliamentary Committees and related matters require public servants to assist Ministers to fulfil their accountability obligations.

Guidance on Caretaker Conventions

The Guidance on Caretaker Conventions explains and provides guidance to agencies on the conventions and practices for handling of the business of Government during the “caretaker period’. The caretaker period begins at the time the House of Representatives is dissolved following the calling of an election and continues until the election result is clear or, if there is a change of Government, until the new Government is appointed.

Australian Government branding design guidelines

All Australian Government agencies are required to comply with the Australian Government Branding Design Guidelines. Further information can be obtained from the Awards and Culture Branch of the Department of the Prime Minister and Cabinet, telephone (02) 6271 5601 or email governmentbranding@pmc.gov.au

Australian Government websites should comply with minimum requirements relating to content, format and accessibility.

Machinery of Government changes

The terms “machinery of Government changes’ (MOG) and “administrative re-arrangements’ are interchangeable and are used to describe a variety of organisational or functional changes affecting the Commonwealth.

Some common examples of administrative re-arrangements are:

• changes to the Administrative Arrangements Order (AAO) following a decision by the Prime Minister to abolish or create a department or to move functions/responsibilities between departments/agencies (these commonly occur after an election but can also happen at other times);
• the creation of a new statutory agency or executive agency, or the abolition of such agencies
  or
• the movement of functions into, or out of, the APS.

Not all administrative re-arrangements involve a change to the AAO but the Prime Minister’s agreement will be required on each occasion and action may also need to be taken to move employees under section 72 of the Public Service Act 1999 or to transfer amounts that have been appropriated under section 32 of the Financial Management and Accountability Act 1997.

This section covers:

• Administrative Arrangements Order
• Financial/resource management aspects of an administrative re-arrangement
• Movement of employees as a result of an administrative re-arrangement
• Workplace relations aspects of administrative re-arrangements

Administrative Arrangements Order

Under the Constitution, the Governor-General, on the advice of the Prime Minister, appoints Ministers, establishes Departments of State and formally allocates executive responsibility among Ministers through the Administrative Arrangements Order (AAO).

The AAO is published in the Commonwealth Gazette. It sets out the matters dealt with by each Department of State and the legislation administered by a Minister of State administering a Department. The AAO entry for each Department of State covers the principal matters and legislation administered by all agencies (including statutory agencies and executive agencies) within the relevant portfolio.

The Department of the Prime Minister and Cabinet (PM&C) is responsible for the provision of advice to the Prime Minister on machinery of Government changes and the preparation of the documentation necessary to give effect to those changes. PM&C also maintains the AAOs.

Financial/resource management aspects of an administrative re-arrangement

Section 32 of the FMA Act

Where a machinery of Government (MOG) change results in partial or full transfer of a function to another agency, the losing agency will need to make arrangements for the transfer of any remaining annual departmental and administered appropriations relating to the function to the gaining agency. Section 32 of the Financial Management and Accountability Act 1997 (FMA Act) allows for the transfer of an amount that has been appropriated under an Appropriation Act where a function becomes a function of another FMA Act agency, either because an agency is abolished or for any other reason.

The Finance Minister, or his or her delegate, may issue a determination to transfer from the losing agency to the gaining agency some, or all, of an amount that has been appropriated for performing that function by the losing agency.

Agency Advice Units in the Department of Finance and Deregulation should be contacted for assistance.

Transfer of functions between FMA Act agencies and CAC bodies

Section 32 transfers can only occur between FMA Act agencies. That is, where a function has been transferred from a body subject to the Commonwealth Authorities and Companies Act 1997 (CAC Act) to an FMA Act agency or vice versa, section 32 of the FMA Act has no application. Agencies should contact the relevant AAU in the Department of Finance and Deregulation to discuss specific circumstances and it is possible that agencies may need to seek legal advice on these issues.

Where legal issues are likely to take some time to resolve, Finance will consider if interim measures may need to be put in place to enable continuation of service delivery. Agency advice units in the Department of Finance and Deregulation should be contacted for assistance.

Transfer of Special Accounts

A Special Account is an appropriation mechanism that sets aside an amount within the Consolidated Revenue Fund (CRF) to be expended for specific purposes. The appropriation authority is section 20 or 21 of the FMA Act.

Section 20 Special Accounts are established, varied or abolished by determinations made by the Finance Minister. Determinations to establish or vary a section 20 Special Account must be tabled in both Houses of the Parliament and only take effect after a disallowance period of five sitting days. A determination to abolish a section 20 Special Account takes effect when signed by the Finance Minister.

Section 21 Special Accounts are established by separate Commonwealth legislation. They can be varied or abolished only by amending or repealing the legislation which established the Special Account. The Minister responsible for a section 21 Special Account is responsible for undertaking changes to the enabling legislation for the Special Account.

Machinery of Government (MOG) changes may result in the transfer, abolition, variation or establishment of Special Accounts. In most cases, when a function transfers between agencies, the management of any related Special Accounts follows the movement of the function. Section 21 Special Accounts transfer automatically to the gaining agency when the enabling legislation is assigned to the gaining Minister through the Administrative Arrangements Order (AAO). Agencies should consult with their relevant Agency Advice Unit in Finance on all proposals to establish, transfer, vary or abolish Special Accounts as a result of AAO changes.

Further information about Special Accounts is available on the Finance website at Guidelines for the Management of Special Accounts, October 2003

For further detail on managing MOG changes, refer to Implementing Machinery of Government Changes: A Good Practice Guide.

Special appropriations

A special appropriation is an appropriation that appears in an Act (other than those in the annual appropriation Acts), which appropriates money from the Consolidated Revenue Fund for a particular purpose.

When a MOG change occurs, portfolio Departments should review the allocation of responsibilities for administering relevant special appropriations to ensure the responsibilities lie with the appropriate agency. If responsibility for administering a special appropriation is to be transferred, the portfolio Department should ensure that the gaining agency is able to comply with its statutory responsibilities. Further guidance can be found on the Finance website at Finance Circular 2005/13: Allocation of responsibilities for special appropriations.

Transfer of assets and liabilities between FMA Act agencies

The process for determining the amount of appropriation that is to be transferred is separate and distinct from the process of transferring assets and liabilities. FMA Act agencies should identify those assets and liabilities that are to be transferred, preferably under a Memorandum of Understanding (MoU). This identification needs to consider those assets (including cash) and liabilities that belong to the function that is to be transferred. Cash to be transferred may include amounts of cash that have been accumulated to meet future commitments, including provisions, make good and funding of depreciation. Accounting for the transfer should be in accordance with relevant accounting standards and the Financial Management and Accountability (Financial Statement) Orders.

Superannuation Arrangements

Since 1 July 2005, most new Australian Government employees and statutory office holders are covered by the choice of superannuation fund arrangements (choice) under the Superannuation Guarantee (Administration) Act 1992. 

Choice has allowed agencies to have different superannuation arrangements, such as contribution rates, salary sacrifice contributions and employer (default) funds, agencies should consider the implications to superannuation arrangements under a MOG change. Agencies should consult with the Department of Finance and Deregulation on Australian Government superannuation scheme issues and consult with the Department of Education, Employment and Workplace Relations on industrial instruments.

Movement of employees as a result of an administrative re-arrangement

Section 72 of the Public Service Act 1999 gives the Public Service Commissioner certain powers in relation to administrative re-arrangements. Under this section the Commissioner may:

• move APS employees to another APS agency (without anyone’s consent) by a determination in writing
• determine in writing that APS employees cease to be APS employees and become employees of a specified non-APS Commonwealth authority
• determine in writing that non-APS Commonwealth employees cease to be employed as non-APS employees and become APS employees in a specified agency
• on behalf of the Commonwealth, engage any person as an APS employee in a specified agency.

There is no power under the Public Service Act to move employees out of the APS to non-Commonwealth employment.

The movement or engagement of employees under section 72 of the Public Service Act is not subject to normal APS merit selection requirements.

The principle that “staff follow function’ generally applies to the movement of employees within or into the APS or between the APS and non-APS Commonwealth employment in order to give effect to an administrative re-arrangement.

• Under this principle, affected employees are generally moved with their function and for those that remain under the Public Service Act, their employment status under section 22 of the Public Service Act remains the same.

Workplace relations aspects of administrative re-arrangements

Section 72 of the Public Service Act 1999 and regulations 8.1 and 8.2 of the Public Service Regulations 1999 set out specific provisions relating to remuneration and other conditions of employment of persons moved between APS agencies, or between the APS and other Commonwealth employment as a result of an administrative re-arrangement.

In addition, the transmission of business provisions of the Workplace Relations Act 1996 may be relevant where an administrative re-arrangement involves the movement of functions and employees into, or out of, the APS.

The operation of these provisions can vary depending on the circumstances of each administrative re-arrangement. As such, agencies should contact the Department of Education, Employment and Workplace Relations for advice in these circumstances.