(a) Is the making of reasonable inquiries under s 71(1) of the PGPA Act an objective jurisdictional pre-condition?
47 The applicant contended that s 71(1) has two steps. The first is that the Minister makes reasonable inquiries. The second is that the Minister is satisfied, after doing so, that the expenditure would be a proper use of relevant money. The applicant contended that the first step under s 71(1) relating to the making of reasonable inquiries is framed as an objective requirement and not as a requirement which turns merely on the Minister's subjective judgment or opinion.
48 The applicant contended that, because the first step in s 71(1) is objective (and not subjective), it is a matter for the Court to determine whether reasonable inquiries had in fact been made in all the circumstances, rather than the scope of judicial review being confined to the review of the Minister's subjective opinion on the matter. In short, the applicant contended that the requirement that there be "reasonable inquiries" was an objective pre-condition to an exercise of power to which s 71 applied (citing inter alia Plaintiff M96A v Commonwealth [2017] HCA 16; 261 CLR 582 at [39] per Gageler J).
49 The applicant relied upon the following five primary matters in support of that contention. First, it pointed to [347] of the Revised Explanatory Memorandum to the Public Governance, Performance and Accountability Bill 2013 (Cth) (PGPA EM) which states:
A Minister must make reasonable inquiries to determine whether a proposed expenditure is a proper use of relevant money.
50 Secondly, it submitted that [349] of the PGPA EM reinforced the special significance of s 71:
Most provisions in the Bill do not apply to Ministers, which is appropriate given their constitutional role and the ability for Parliament to hold them to account for their decisions. However, this provision is considered appropriate because rules for expenditure approval are fundamental to ensure good government, the public interest, transparency and accountability.
51 Thirdly, the applicant relied upon the text and structure of s 71(1) and the fact that the making of reasonable inquiries was an anterior matter for the Minister's consideration before turning to the second step as to whether or not the Minister is satisfied that the proposed expenditure is proper (citing Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422; 61 NSWLR 707).
52 Fourthly, the applicant challenged the Commonwealth's argument that it was unlikely that the first step was intended to be objective because of the difficulties a Court would experience in assessing and judging objectively whether reasonable inquiries had been made. The applicant emphasised that no practical difficulty is presented in this particular case because the Minister had made no inquiries at all into climate change or related risks.
53 Fifthly, the applicant challenged the weight to be given to the Commonwealth's submission that the characterisation of the provision should take into account the prospect of applicants challenging approved expenditures and the practical ramifications and inconvenience potentially posed by such challenges.
54 For the following reasons, while acknowledging that the applicant's position is reasonably arguable, I reject it.
55 First, as the applicant acknowledged in oral address, it may be inappropriate to use the language of "jurisdictional fact" in determining this issue, having regard to what was said in cases such as Gedeon v Commissioner of the New South Wales Crime Commission [2008] HCA 43; 236 CLR 120 at [43] and Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] 78 NSWCA 190; 78 NSWLR 393 at [34]-[36] per Spigelman CJ. This is because s 71(1) imposes a prohibition rather than a positive requirement. Gedeon and Chase Oyster Bar both highlight the distinction between a provision which conditions the conferral of a power on the existence of a fact and a provision which prohibits the exercise of a power in particular circumstances. As Kourakis J (as his Honour then was) stated in Ilic v City of Adelaide [2010] SASC 139; 107 SASR 139 at [58], in the former instance it is a more open question whether the satisfaction of the decision-maker as to the existence of the fact is sufficient to enliven it whereas, in the latter case, "the very nature of a legislative prohibition suggests that it is the objective existence of the circumstances which will deny the power". That is not to say, however, that where there is a statutory prohibition on the exercise of a power, it necessarily constitutes an objective pre-condition. Other matters relevant to the task of statutory construction may point in a different direction. As Spigelman CJ said in Pallas Newco at [61] after referring to various authorities on what constitutes a jurisdictional fact (emphasis added):
… in each case it was the overall statutory context that proved determinative as to whether or not Parliament intended the existence of the fact to both objectively exist and be essential, notwithstanding the element of fact and degree, or even of judgement, that was required in the process of determining whether or not the relevant fact existed.
56 I will approach the question on the basis of whether or not the first step in s 71(1) imposes an objective jurisdictional pre-condition to an exercise of power to which that provision applies. In addressing that question, it may be relevant to take into account principles which have developed concerning the question whether or not a matter constitutes a jurisdictional fact, while not losing sight of the relevant observations regarding nomenclature in cases such as Gedeon and Pallas Newco.
57 Whether something is an "objective" pre-condition is a question of statutory construction. In Australian and International Pilots Association v Fair Work Australia [2012] FCAFC 65; 202 FCR 200 (AIPA v FWA) (relying upon Black CJ's dissenting judgment in Australian Heritage Commission v Mount Isa Mines Ltd (1995) 60 FCR 456 at 466-467, which was unanimously approved by the High Court in Australian Heritage Commission v Mount Isa Mines Ltd [1997] HCA 10; 187 CLR 297 at 303-304), Perram J explained at [147] (in the context of determining whether or not a matter is a jurisdictional fact) that where compliance with a stipulated condition:
… is a difficult and complicated [task] involving the careful assessment of complex facts and the formation of opinions and value judgments on a potentially wide range of matters, this will suggest that Parliament intended that the decision-maker would have power to make its own determination of that matter …
Justice Perram also stated that the "the inconvenience which may attend the conclusion that a matter is a jurisdictional fact is itself an indicator that this is unlikely to have been what Parliament had intended".
58 I do not accept the applicant's submission that the observations of Perram J in AIPA v FWA are inapplicable to the present case because they were made in the specific context of a decision made by a federal industrial tribunal. Justice Perram's observations have been applied with approval in different statutory contexts: see, for example, Director of Public Prosecutions (ACT) v Martin [2014] ACTSC 104; 9 ACTLR 1 at [258] per Murrell CJ, Katzmann and Wigney JJ and Chattaway v Minister for Health and Ageing [2020] SASCFC 63; 136 SASR 347 at [18] per Kourakis CJ, Peek and Stanley JJ.
59 The following features of s 71 should be emphasised. First, the applicant correctly emphasised the primary importance of the text. It submitted that it was significant that the reference in s 71(1) to the Minister's satisfaction relates to the second step (i.e. whether the expenditure would be a proper use of relevant money), as opposed to "after making reasonable inquiries", which provides for an ancillary step. As Spigelman CJ stated in Chase Oyster Bar at [40]:
The first textual indicator that is always of significance is the mode of expression of the element directly in issue. Substantial, indeed often, but not always, determinative, weight must be given to language which is in mandatory form. See, for example:
David Grant v Westpac supra esp at 276-277, where the formulation was "may only".
City of Enfield supra at [6], [28] and [32]-[33], where the formulation was "must not be granted".
SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24; (2005) 228 CLR 294 at [68], [136], [173] and [206], where the language "must give" was described as "imperative".
60 Secondly, and perhaps most significantly, the context in which the issue of the making of reasonable inquiries in relation to the proper use of relevant money falls to be determined by a Minister will vary greatly, may be finely balanced, and may be infused with complex policy considerations. The requirement that "reasonable inquiries" be made is necessarily intertwined with the Minister's determination of whether the proposed expenditure is a "proper use" of the relevant money. It is also not without significance that the provision is directed towards a Minister, who is politically accountable for the exercise of that power in familiar ways. That is an important indicator that the question whether or not reasonable inquiries have been made is one for the Minister to determine subjectively, albeit subject to general judicial review principles but not on the basis that the matter is to be determined objectively.
61 Thirdly, and relatedly, it is important to recognise that s 71(1) is an ambulatory provision in the sense that its application is not confined to the particular statute in which the provision arises. Rather, both the particular statutory provision and the PGPA Act itself have the potential to apply across the whole range of Commonwealth ministerial expenditure decisions. That is to be contrasted with statutory provisions of the kind considered in cases such as Gedeon, Pallas Newco and Chase Oyster Bar (and the cases referred to at [40] of that latter decision). Those cases all involve the construction of a statutory prohibition which operated within the context of the particular enabling statute (albeit with respect to a potentially wide range of factual circumstances). That is a significant point of distinction. Section 71(1) of the PGPA Act is to be construed in a way which accommodates the fact that the prohibition and requirements of that statutory provision have the potential to apply in an extremely wide range of circumstances with reference to different kinds of projects which may attract expenditure of public money as determined by the appropriate Minister. The different subjects of such expenditures will necessarily affect the nature and scope of the "reasonable inquiries" which are to be made before the Minister determines that a particular expenditure constitutes a proper use of public money. In my view, this strongly supports the Commonwealth's construction that s 71(1) is not an objective jurisdictional pre-condition but rather is one which turns on the Minister's opinion or judgement (which is, in turn, subject to judicial review but not on the basis of the matter being objective). In other words, the opinion or judgement will need to be reasonably and rationally formed and be based on probative material (see, for example, SHJB v Minister for Immigration and Multicultural Affairs [2003] FCAFC 303; 134 FCR 43 at [22] per Carr, Finn and Sundberg JJ).
62 Fourthly, it is relevant to note that "proper" is defined in s 8 of the PGPA Act to mean "efficient, effective, economical and ethical" - all of which, in the context of government expenditure of public money in an extensive range of circumstances, involve matters about which reasonable minds may differ. This is inconsistent with the notion that an "objective" standard of "reasonable inquiries" was intended to govern the lawfulness of decisions by Ministers to approve expenditures of money. Moreover, the assessment of what is "efficient, effective, economical and ethical" potentially raises the need to weigh competing considerations, some of which will have a heavy policy or political content.
63 Fifthly, the central concern of s 71, in the context of making reasonable inquiries, is making a decision that "proposed" expenditure "would be" a "proper use" of public money, a matter which is inherently prospective and contingent on future events which might not occur for some time. Moreover, as has been mentioned, the concept of "reasonable inquiries" in the context of determining a "proper use" of money is highly evaluative and may involve a weighing of competing policy and political considerations.
64 Sixthly, the "making" of reasonable inquiries is a procedural and facilitative step wholly directed to the formation of the Minister's state of satisfaction about the propriety of spending public money on that proposal. That is not to say that "reasonable inquiries" is appropriately described as an essential "preliminary", that is "extrinsic" or "ancillary", to the Minister's state of satisfaction (see Pallas Newco at [48] and Chase Oyster Bar at [44]). As stated by Spigelman CJ in Pallas Newco at [47], "[t]he word preliminary does not, in this context, refer to the chronological sequence of events, but to a matter that is legally antecedent to the decision-making process" (emphasis added). I do not accept that "reasonable inquiries" is legally antecedent to the Minister's state of satisfaction under s 71 of the PGPA Act. Therefore, contrary to the applicant's contention, the fact that "making reasonable inquiries" must chronologically occur before the Minister's decision as to "proper use" does not support the construction of "reasonable inquiries" as an objective jurisdictional pre-condition.
65 Seventhly, and perhaps less significantly, s 71 contains no requirement for the Minister to record or report upon what inquiries were made, were not made, why, when, and with what results. Section 71(2)(a) simply requires the terms of an approval itself to be recorded in writing. I accept the Commonwealth's submission that, if the legislature intended to impose an obligation of compliance with an objective standard of reasonableness it could readily have stipulated reporting requirements to enable the Auditor-General, Parliament itself, courts and members of the public to assess and enforce compliance. That is not to say, however, that familiar avenues of political accountability are not available in the absence of any reporting requirement.
66 Eighthly, I accept the Commonwealth's submission that s 71 does not refer to a Minister making "all reasonable inquiries with respect to all relevant matters". While not determinative, this perhaps reflects a legislative recognition that the nature and extent of any inquiries will necessarily be influenced and informed by the Minister's then-subjective state of mind and understanding.
67 I accept the Commonwealth's submission that it is most unlikely that the Parliament intended that:
(a) s 71 would operate by reference to such a such an uncertain interplay between objective and subjective requirements; and
(b) the lawfulness of any expenditure to which s 71 applies would ultimately depend upon an ex post facto judicial assessment of the objective reasonableness of inquiries made by the Minister.
68 Moreover, as the Commonwealth submitted, a subjective approach accords with following other features of the PGPA Act: see Chase Oyster Bar at [42] per Spigelman CJ.
69 First, s 50, which sets out a guide to Part 2-4 of the PGPA Act, including Div 9, states that s 71 "has requirements that apply to a Minister when the Minister is approving proposed expenditure". It does not provide that s 71 seeks to impose objectively based pre-conditions on decision-making by Ministers, nor does it say "before" or "if", which might have indicated a pre-condition to the valid exercise of power by the Minister.
70 Secondly, the PGPA Act does not define the meaning of "efficient", "effective", "economical" and "ethical" or make it clear whether they comprise a composite expression. These words should be given their ordinary meaning.
71 These words apparently have their origins in s 44 of the (now repealed) Financial Management and Accountability Act 1997 (Cth) (FMA Act) (the predecessor to the PGPA Act), which was headed "Promoting efficient, effective and ethical use of Commonwealth resources". Section 44 provided that "[a] Chief Executive must manage the affairs of the Agency in a way that promotes proper use of the Commonwealth resources for which the Chief Executive is responsible" and defined "proper use" to mean "efficient, effective and ethical use". The Explanatory Memorandum to the Financial Management and Accountability Bill 1996 explained (at [45]) that:
… Recognition of the need to manage to achieve qualitative outcomes has underpinned many of the public sector reforms of recent years and will continue to be a feature of future management focus. This clause seeks to reflect and reinforce that focus within the ambit of Commonwealth financial management.
72 The PGPA EM at [100] explains that the definition of "proper" in the PGPA Act is similar to the definition in s 44 of the FMA Act, save for the phrase "not inconsistent with the policies of the Commonwealth" (which was inserted into s 44(3) of the FMA Act by item 49 of Sch 1 of the Financial Framework Legislation Amendment Act 2008 (Cth)).
73 With the legislative history in mind, I accept the Commonwealth's submission that, in the context of provisions about financial management, and having regard to their ordinary meanings, the relevant words should be understood as being directed to matters such as probity, integrity, honesty and value-for-money in the pursuit of policy choices. The requirement of "proper use" guards against the squandering or pilfering of public money. The expressions do not encompass matters which go to whether or not a particular policy choice should be pursued. I accept the Commonwealth's submission that governments are entitled to make policy choices informed by ideological or political values and preferences: see generally, in different statutory contexts, the High Court's statements in Wilkie v Commonwealth [2017] HCA 40; 263 CLR 487 at [109]-[120], [129]-[131] and [134]-[138] and Australian Broadcasting Corporation v Redmore Pty Ltd [1989] HCA 15; 166 CLR 454 at 458-459 per Mason CJ, Deane and Gaudron JJ.
74 Thirdly, there is considerable force in the Commonwealth's submission that the applicant's position threatens to draw the Court into a form of merits-based assessment of Ministerial expenditure decisions across the full gamut of Commonwealth policy areas. The applicant's preferred construction would require a Court to consider whether a matter is "relevant" or "of significant consequence", whether funding "represents value for money" and/or is "efficient, effective, economical and ethical", the objective "reasonableness" of inquiries into such matters, as well as whether the Minister is or should have been on notice of a particular matter. These are all matters which may impermissibly draw courts into merits review.
75 I accept the Commonwealth's submission that the applicant's position is inconsistent with the difficulty, contestability and complexity of the notion of "objectivity" in this context. The Court is not being asked to identify "relevant considerations" as a matter of statutory construction (a task with which it is familiar). In essence the Court is being asked to assess whether, and to what extent, matters of apparent or potential "relevance" or "significance" to good decision-making should have been inquired into, noting that any assessment of actual "relevance" or "significance" is itself likely to be informed, quite iteratively, by what inquiries are made and the outcome of them.
76 Generally speaking, courts lack the institutional competence to determine such questions. Their resolution is ordinarily vested in the executive arm of government. Had the Parliament intended courts to superintend administration of Commonwealth expenditure in the manner contended by the applicant, one would expect clear language and explicit reference to the factors to be taken into account.
77 Another relevant consideration is the practical inconvenience which may result if the applicant's position is accepted. Ministers, third party stakeholders and the public could not be sure, in many cases, that "proposed" expenditure of relevant money was validly authorised until after a court decision. Even after downstream "commitment" decisions, recipients of money under contracts entered into in the exercise of executive power (or pursuant to statutory powers predicated on compliance with s 71) could never be sure that they might not be exposed to a claim for money had and received on the basis recognised in Auckland Harbour Board v R [1924] AC 318. The extent of the uncertainty and risk may vary, emphasising again that s 71 potentially applies in a wide range of subject areas across the spectrum of Commonwealth ministerial expenditure decisions.
78 The applicant's position is also inconsistent with the following passage in the Explanatory Statement which accompanied the insertion in 2010 of the expression "after making reasonable" in place of "after reasonable" into reg 9 of the Financial Management and Accountability Regulations 1997 (Cth) by item 13 of Sch 1 to the Financial Management and Accountability Amendment Regulations 2010 (No 3) (Cth):
Item [13] inserts "after making reasonable" instead of "after reasonable". This insertion clarifies the action that is required, that is, "making" reasonable inquiries. Regulation 9 does not require external inquiries to be made where approvers, in the absence of any such inquiries, can satisfy themselves that giving effect to the spending proposal would be a proper use of public money. The primary meaning of 'inquiry' is 'an investigation into a matter'. Accordingly, as a matter of ordinary language regulation 9 simply requires an approver to reasonably investigate whether the proposed expenditure would be a proper use of public money. The reference to 'reasonable inquiries' indicates that there are limits to the extent to which approvers need to satisfy themselves that proposed expenditure is proper.
This passage continues to carry weight in the construction of s 71 of the PGPA Act, which uses the identical phrase "after making reasonable inquiries", in circumstances where [345] of the PGPA EM made clear that s 71 "elevated into primary legislation … duties on Minister like those imposed by FMA Regulations 9 and 12".
79 I accept the Commonwealth's submission that this passage indicates an intention that expenditure approvers be self-directing as to the making of reasonable inquiries. Indeed, if they are able to "satisfy themselves that giving effect to the spending proposal would be a proper use of public money" without making any "external inquiries", expenditure could be approved on the basis of their subjective, cognitive evaluation.
80 For all these reasons, I do not accept the applicant's contention that the requirement in s 71(1) that reasonable inquiries be made before determining whether an expenditure of public money would be a proper use of relevant money constitutes an objective jurisdictional pre-condition on the exercise of the Minister's power. As I have already emphasised, however, that does not mean that the Minister's subjective assessment of what inquiries need to be made is insusceptible of judicial review on other grounds.