Academic journal article Melbourne University Law Review

Government Contracts and Public Law

Academic journal article Melbourne University Law Review

Government Contracts and Public Law

Article excerpt

CONTENTS  I    Introduction II   Government Contracts III  Assumptions about Government Contracting IV   Some Accepted Principles V    More Difficult Issues VI   Administration of the Departments of State VII  When Is Legislation Necessary? VIII Executive and Legislature: Separate Organs of Government  IX   High Court Authority      A Colonial Ammunition      B PJ Magennis      C Australian Woollen Mills      D Placer Development      E Port of Portland      F The Central Question X    'Major' or 'Substantial' Contracts XI   Contract as an Indirect Fetter XII  Conclusion 


How, if at all, do principles of public law affect government contracting by the federal or state governments in Australia? The short answer seems commonly to be assumed to be 'not much. If that was ever right, it is time to reconsider. It is time to ask at least three more particular and basic questions. What boundaries are there to the kinds of contract (or contractual promise) which Australian governments can make? What processes must Australian governments follow when making a contract? Which organs of Australian governments must be engaged to make contracts that are binding?

It is time to reconsider how principles of public law affect government contracting not only because governments are making larger and more complicated contracts but also because the contracts that are made may have national and international consequences. Large resource and infrastructure developments provide obvious examples of circumstances in which the contracts that developers make with government may be very important domestically. Inevitably, the larger the contract and the more complicated its terms, the more likely it is that the contract will provoke legal and political controversy. And, if the developer is not an Australian entity, free trade agreements and other international arrangements will often give the contract an important international dimension.

The time is right to undertake these inquiries because, as the practices of executive governments have changed over recent years, the courts have been grappling more closely with the nature and extent of executive power. Some of the issues have now been resolved by the High Court's decisions in Pape v Federal Commissioner of Taxation, (1) Williams v Commonwealth ('Williams [No 1]') (2) and Williams v Commonwealth [No 2] ('Williams [No 2]'). (3) But not all issues have been resolved. And the Commonwealth and state governments continue to rely on executive power to make promises on behalf of the polity which go beyond 'the rights and obligations of government'. (4) The promises that are made are intended to be given legal force and effect and, in some cases, to have consequences for the rights and duties of others (both in Australia and elsewhere).

As will later be explained, the answers that are given to questions about types of contract or promise and governmental processes and powers depend upon, and are to be derived from, Australian constitutional instruments and principles. And, although it is beyond the scope of this article, it will be instructive to observe recent developments in other legal systems which, like Australia, are exploring the limits of executive power and, in particular, dealing with governments making larger and more complicated contracts. (5)

It is useful to begin by saying something about the kinds of contracts that Australian governments make.


Australian governments make many contracts which take many forms. Apart from employment and quasi-employment (6) contracts, governments make:

* procurement contracts for the acquisition of goods or services or for the provision of works;

* contracts with private entities for the provision of services to the public generally or some section of the public; and

* contracts with private entities for the construction--and in some case operation--of capital assets for the use of which the relevant private entity may receive public moneys or may charge users. …

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