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A majority of the High Court in Williams v Commonwealth held that the Commonwealth executive does not have a general power to enter into contracts and spend public money absent statutory authority or some other recognised source of power. This article surveys the Court's reasoning in reaching this surprising conclusion. It also considers the wider implications of the case for federalism in Australia. In particular, it examines: (1) the potential use of s 96 grants to deliver programs that have in the past been directly funded by Commonwealth executive contracts; and (2) the question of whether statutory authority may be required for the Commonwealth executive to participate in intergovernmental agreements.
I INTRODUCTION
Since Federation, the scope of the Commonwealth executive power in s 61 of the Constitution has been an unsolved mystery. Many assumed that, at the very least, the power extended to the subject matters of enumerated heads of Commonwealth legislative power within the Constitution. It had also been assumed that the executive did not require any specific statutory authority to engage in activities relating to those subject matters. Over time, these assump- tions have formed the basis for Commonwealth direct spending programs implemented through executive contracts between the Commonwealth and private parties. These executive contracts now account for somewhere between 5 and 10 per cent of all Commonwealth expenditure1 and, until recently, had been used to implement a broad range of Commonwealth policy objectives without the support of legislative authority.
In Williams v Commonwealth (Williams'),2 the High Court exploded these assumptions regarding the scope of federal executive power. The case turned on the validity of an agreement entered into between the Commonwealth and a private company that provided 'chaplaincy services' in a Queensland state school. By a 6:1 majority, with Heydon J dissenting, the Court held that executive power is not coextensive with legislative power and concluded that, in most circumstances, the Commonwealth executive requires statutory authority before it can enter into contracts with private parties and spend public money.3
The majority dismissed the Commonwealth's submission that the capacity of its executive to contract was effectively unlimited. French CJ, Gummow and Bell JJ, and Crennan J also rejected a narrower submission by the Com- monwealth. That submission contended that the executive...