PARLIAMENTARY CONTROL OF PUBLIC MONEY William Angus Bateman Gonville and Caius College July 2018 This dissertation is submitted for the degree of Doctor of Philosophy ABSTRACT: “PARLIAMENTARY CONTROL OF PUBLIC MONEY” This dissertation analyses the idea that parliament controls public money in parliamentary constitutional systems of government. That analysis proceeds through an historical and contemporary examination of the way legal practices distribute authority over public money between different institutions of government. The legislative and judicial practices concerning taxation, public expenditure, sovereign borrowing, and the government financing activities of central banks are selected for close attention. The contemporary analysis focuses on the design and operation of those legal practices in the United Kingdom and the Commonwealth of Australia, in the context of the boom-bust-recovery economic conditions experienced between 2005 and 2016. The dissertation’s ultimate claims are explanatory: that “parliamentary control” is a poor explanation of the distribution of financial authority in parliamentary systems of government and should be jettisoned in favour of an idea of “parliamentary ratification”. An empirically engaged methodology is adopted throughout the dissertation and (historical and contemporary) public sector financial data enrich the legal analysis. The dissertation acknowledges the impact of, but remains agnostic between, different economic and political perspectives on fiscal discipline and public financial administration. The dissertation makes a number of original contributions. It provides a detailed examination of the historical development, legal operation and constitutional significance of annual appropriation legislation, and the legal regimes governing sovereign borrowing and monetary finance. It also analyses the way that law interacts with government behaviour in situations of economic emergencies (focusing on the Bank of England’s public financing activities since 2008), and the institutional and doctrinal obstacles facing judicial involvement in disputes concerning public finance (focusing on the Australian judiciary’s recent engagements with public expenditure legislation). PREFACE I declare that this dissertation is the result of my own work and includes nothing which is the outcome of work done in collaboration except as declared in the Preface and specified in the text. I also declare that this dissertation is not substantially the same as any that I have submitted, or, is being concurrently submitted for a degree or diploma or other qualification at the University of Cambridge or any other University or similar institution except as declared in the Preface and specified in the text. I further state that no substantial part of my dissertation has already been submitted, or, is being concurrently submitted for any such degree, diploma or other qualification at the University of Cambridge or any other University or similar institution except as declared in the Preface and specified in the text. I further declare that this dissertation does not exceed the prescribed word limit for the relevant Degree Committee. ACKNOWLEDGEMENTS I extend deep thanks to Professor David Feldman for supervising my research. Without his generosity, patience and support this project could not have been completed. I also wish to thank the funders and administrators of the Cambridge Australia Scholarship and the Cambridge Commonwealth Trust Scholarship, which supported me financially throughout my PhD. I acknowledge the following people who have (over many years) shared their wisdom with me: Jason Allen, George Blades, Timothy Boyle, Edward Cavanagah, Ben Folit- Weinberg, Mike Forster, Stephen Gageler, Mike Grainger, Georgia Huxley, Jonathan Ketcheson, Nicholas Kelly, John Liddicoat, Lachlan McCalman, Johannes Meyer, Leighton McDonald, Cameron Miles, Jacqualine Myint, Claire O'Callaghan, Felicitas Parapatis, Julia Powels, Jens van't Klooster, Barry Solaiman, James Stellios and Stefan Theil. Marion Poerio provided boundless emotional, logistical and typographical support, for which I am extremely grateful. Mark Hammond, Kelsey Kerridge Fitness Centre, Tempelhofer Feld, Steak and Honour, Jack’s, Seven Wolves and the Yim Wah Express held together body and soul in the home stretch. I dedicate my dissertation to Clara and Selena Bateman, and the memory of Alan Bateman. CITATION AND STYLE GUIDE Secondary sources First citation: Author (Year), [Title of book or ‘Title of article’], pinpoint. Subsequent citations: as above, omitting the title. Cases First citation: Case name (Year), pinpoint. Subsequent citations: Abbreviated case name (Year), pinpoint Legislation All citations: Title and year (Jurisdiction), section number. UK legislation: Regnal years replaced with “(UK)” for post-1801 legislation and all chapter numbers are omitted, unless necessary to distinguish Acts of the same calendar year. Full citations appear in the bibliography. Government documents All citations: Institution, Title (Year), pinpoint. General rules Subsequent un-broken citations: ibid. Cross-references: marked by in-text parentheses: eg, “(see text at chapter 2, heaDing 2.2.2)” is marked as “(§2.2.2)”. Abbreviations AGBP – Australian Government Budget Papers. ABS GFS — Australian Bureau of Statistics, Government Finance Statistics’ ABS NA — Australian Bureau of Statistics, Australian System of National Accounts. BHS — Mitchel (1998), British Historical Statistics ONS NA — Office of National Statistics, National Accounts. ONS PSF — Office of National Statistics, Public Sector Finance Statistics. PESA — HMTreasury, Public Expenditure Statistical Analysis. 1 PART I INTRODUCING PARLIAMENTARY CONTROL OF PUBLIC MONEY ..................... 2 CHAPTER 1 SETTING THE PARAMETERS ................................................................................ 3 1.1 “PARLIAMENTARY CONTROL” .................................................................................................................. 3 1.2 “PUBLIC MONEY” IN “PARLIAMENTARY CONSTITUTIONAL SYSTEMS” ............................................ 17 1.3 “MAKING SENSE” OF PARLIAMENTARY CONTROL .............................................................................. 36 PART II LEGAL PRACTICES OF PUBLIC MONEY: HISTORICAL DEVELOPMENT ......... 48 CHAPTER 2 GROWING PARLIAMENTARY GOVERNMENT WITH PUBLIC MONEY .... 49 2.1 STATUTORY FINANCIAL AUTHORISATION ............................................................................................ 49 2.2 PUBLIC DEBT, FINANCIAL INITIATIVE AND AUDIT .............................................................................. 75 2.3 JUDGES AND PUBLIC MONEY ................................................................................................................... 96 CONCLUSION .................................................................................................................................................. 114 CHAPTER 3 PUBLIC MONEY IN MODERN PARLIAMENTARY GOVERNMENT .......... 116 3.1 EXPORT OF THE LEGAL PRACTICES .................................................................................................... 117 3.2 TWENTIETH CENTURY EXPANSION .................................................................................................... 130 3.3 PUBLIC MONEY IN THE MODERN STATE ............................................................................................ 156 CONCLUSION .................................................................................................................................................. 176 PART III LEGAL PRACTICES OF PUBLIC MONEY: CONTEMPORARY ANALYSIS ...... 178 CHAPTER 4 LEGISLATIVE PRACTICES (I): FISCAL AUTHORITY .................................. 182 4.1 LEGISLATIVE DESIGN ............................................................................................................................ 182 4.2 OPERATION OF THE LEGISLATIVE PRACTICES .................................................................................. 210 4.3 DISTRIBUTION OF FINANCIAL AUTHORITY ....................................................................................... 226 CONCLUSION .................................................................................................................................................. 233 CHAPTER 5 LEGISLATIVE PRACTICES (II): DEBT AND MONETARY AUTHORITY . 235 5.1 LEGISLATIVE DESIGN ............................................................................................................................ 235 5.2 OPERATION OF THE LEGISLATIVE PRACTICES .................................................................................. 252 5.3 DISTRIBUTION OF FINANCIAL AUTHORITY ....................................................................................... 263 CONCLUSION .................................................................................................................................................. 269 CHAPTER 6 JUDICIAL PRACTICES ......................................................................................... 271 6.1 LOPSIDED JUDICIAL INVOLVEMENT .................................................................................................... 272 6.2 EXPENDITURE AND THE JUDICIARY .................................................................................................... 281 6.3 TAXATION AND THE JUDICIARY ..........................................................................................................