Reasons submitted by the Managers for the Legislative Council in support of the View of the Legislative Council.

A question has arisen between the Legislative Council and the House of Representatives of New Zealand, upon which the opinion of the Law Officers of the Crown in England is sought to be obtained. The Legislative Council amended a Bill by striking out a clause. The House of Representatives insisted that the Bill was of that class in which the Legislative Council is, by constitutional usage, debarred from making amendments.

The facts of the case are as follows:—

Under various Acts for regulating the public revenues of New Zealand, certain principal branches of revenue—namely, the duties of Customs, Post Office, stamps, &c.—are thrown together, and form the consolidated revenue of the colony, out of which the annual supplies for the public service are appropriated.

By "The Payments to Provinces Act, 1870" (of which a copy is herewith), certain capitation allowances, determined according to the population of each province, were made payable to the respective provinces of New Zealand out of the consolidated revenue for a period of seven years, the amount payable to each province being fixed on a gradually descending scale, varying in amount according to the population in the respective provinces each year. In the current year the rate per head page 81 of the population payable under such Act would have been £1 18s.

In the same Act was also contained a provision that, in every year during the same period of seven years, a sum of £50,000 should be paid out of the consolidated revenue to the provinces, in the ratio of their respective population, for distribution amongst the various Road Boards within such provinces, according to a scale fixed by the Act,

In the same session (1870) another Act was passed, intituled "The Immigration and Public Works Act, 1870 "(a copy of which is herewith), whereby provision was made for various objects—namely, the construction of railways, immigration, the construction of water-races on goldfields, the purchase of lands from the Natives, the extension of telegraphs, the formation of roads in the North Island.

This amount was authorized to be raised by issue of debentures—the interest and sinking fund not to exceed 6 per cent.—and the same were to be a charge upon the consolidated revenue. The 14th section provided that "the moneys raised under the authority thereinbefore contained should and might, subject to the provisions thereinafter contained, and to the provisions contained in 'The Immigration and Public Works Act, 1870,' be issued and applied to the purposes mentioned in the Act, and no other; and, as to purposes men- page 82 tioned in the said schedule, should be issued and applied in sums not exceeding the amounts in the said Schedule respectively provided."

It was further provided by the 19th section that, in the event of the Imperial Parliament passing an Act to guarantee any loan raised by the Colony of New Zealand for all or any of the purposes for which the loan thereby authorized might be applied, the Governor, or any such Agents as might be appointed under the Act, might raise any portion of the loan, with such guarantee, upon and subject to all or any of the terns, conditions, and stipulations expressed in such Act of the Imperial Parliament; and the Governor or such Agents as aforesaid was further empowered to enter into any such contract or arrangement as he might think fit with the Lords Commissioners of Her Majesty's Treasury in England, with regard to any portion of the loan, and the guarantee thereof; and in and by any such arrangement or contract the Governor or such Agent as aforesaid might fix the order of priority of charge on the Consolidated Fund of New Zealand which the loan so guaranteed, or any part or parts thereof, should take with relation to any other part or parts of the loan: and in and by such arrangement might provide for the transmission to England and investment of the sinking fund (if any) of the loan so guaranteed: Provided that such contract or arrangement was not inconsistent with the purposes for which such loan was authorized to be raised.

In the session of the General Assembly just past (1871) the Government introduced in the House of Representatives a Bill intituled "The Payments to Provinces Bill, 1871" (a copy of which is herewith), the object of which was to alter the financial arrangements between the colony and the provinces, to reduce the amount of capitation allowance payable out of the consolidated revenue from £1 18s. per head to 15s. per head, and, in lieu of the £50,000 per annum payable, under the Act of last year, out of the consolidated revenue, to the provinces for the service of the Road Boards, to apply £100,000 out of the moneys authorized to be raised by loan under "The Immigration and Public Works Loan Act," and which are referred to in the Bill as "the Public Works Fund," to the provinces for distribution amongst the Road Boards, page 83 "to be expended by them in the construction of new roads, bridges, and culverts, and in the maintenance thereof, for one year, and the completion of such works commenced last year as were not finished." And there was added in the Bill as sent up to the Legislative Council from the House of Representatives a clause which has given rise to the question now raised, upon which the opinion of the Law Officers of the Crown in England is requested. The clause was as follows:—

28. Notwithstanding anything herein contained, it shall be lawful for the Minister of Public Works, if he think fit, on the application of the Superintendent of any province, to expend any sum not exceeding one-half of the money to be allotted to such province for the year ending the thirtieth of June, one thousand eight hundred and seventy-two, under section cloven of this Act, in payment of or in repayment to such province of the cost of permanent works in such province: Provided, however, that, except in the County of Westland, such works shall have been authorized by any Act of the Superintendent and Provincial Council of the province now in force.

The object of this clause, as it appeared to the Legislative Council, was, under colour of a repayment to the provinces of former outlay on public works, really to place in the Provincial Treasuries additional funds for provincial appropriation.

The Legislative Council objected to this clause. Though ready to give effect to the financial arrangements of the Government so far as they properly could, they considered that to divert £50,000 of the money authorized to be raised by loan last year for new public works specifically defined by the Act, to other services of a wholly different kind—namely, to replace in the Provincial Treasuries moneys already expended—was objectionable in principle, and in manifest violation of the spirit and intention of the Act authorizing the loan to be raised. Accordingly, they expunged the clause, and the Bill in this amended form (and with some other unimportant amendments) was returned to the House of Representatives.

Thus the difference between the two Houses was terminated. The Bill was passed in the form agreed to, and the present statement (prepared on behalf of the Legislative Council) is submitted to the Law Officers of the Crown in Eugland, in accordance with the arrangement come to between the two Houses.

A case will, it is understood, be also submitted to the Law Officers of the Crown, embodying the views taken by the House of Representatives in support of their reasons. This mode of submitting the question to the Law Officers of the Crown lias been adopted by the Managers on either side as most convenient.

The broad denial by the House of Representatives of the power of the Legislative Council "to vary or alter the management or distribution of any money as prescribed by the House of Representatives," by the assertion of their sole right "by Act of one session to vary the appropriation or management of money prescribed by Act of a previous session," obliges the Legislative Council to examine the principles which ought to govern the two branches of the Legislature in dealing with money questions.

As regards the legal right of the House of Lords to reject money Bills, their power "as a co-ordinate branch of the Legislature to withhold their assent from any Bill whatever to which their concurrence is desired," is unquestionable. It is a power, however, rarely exercised. The last memorable instance was that of the Paper Duties Repeal Bill. Under what circumstances such a power may constitutionally be exerted cannot, it would seem, be exactly defined. "The constitutional power of the Commons to grant supplies without interference on the part of the Lords has," as Mr. May points out, "been occasionally abused by tacking to Bills of Supply enactments which, in another Bill, would have been rejected by the Lords, but which, being contained in a Bill which their Lordships had no right to amend, must either have been suffered to pass unnoticed, or have caused the rejection of a measure highly necessary for the public service. Such a proceeding is as great an infringement of the privileges of the Lords as the interference of their Lordships in matters of Supply is of the privileges of the Commons, and has been resisted by protest, by Conference, and by the rejection of Bills."

Such appear to be the leading principles governing the two branches of the Imperial Legislature in respect of money Bills; and they do not appear to justify the propositions maintained by the House of Representatives.

The question in the particular case is, whether the Legislative Council has a right to amend the Bill for altering the capitation allowance to provinces, and applying part of the Public Works Loan to the service of Road Boards, by striking out a clause the effect of which will be to apply part of such loan to the aid of the Provincial Treasuries.

Is such a Bill a Bill of Aid or Supply?

The answer may, it is conceived, be given by referring to the character and functions of "the Committee of Supply." Whatever is within the province of the Committee of Supply must form the subject-matter of a Bill of Supply; whatever is out- page 88 side the functions of that Committee cannot, it is presumed, have that character. The functions of the Committee of Supply are stated by Mr. May (at pp. 556 and 557, "Treatise on Law, &c., of Parliament ") as follows:—

The Committee of Supply votes every sum which is granted annually for the public service, the army, the navy, and the several civil and revenue departments. But the fact already explained should be constantly borne in mind—that, in addition to these particular services, which are voted in detail, there are permanent charges upon the public revenue secured by Acts of Parliament, which the Treasury are bound to defray as directed by law. In this class are included the interest of the national funded debt, the Civil List of Her Majesty, the annuities of the Royal Family, and the salaries and pensions of the Judges and some other public officers. These are annual charges upon the Consolidated Fund; but the specific appropriation of the respective sums necessary to defray those charges, having been permanently authorized by statutes, is independent of annual grants, and is beyond the control of the Committee of Supply.

Mr. May then proceeds to consider the functions of the Committee of Ways and Means.

The Committee of Ways and Moans votes general grants from time to time out of the Consolidated Fund "towards making good the Supply granted to Her Majesty;" and Bills are founded upon these resolutions of the Committee, by which the Treasury receives authority to issue the necessary amounts from the Consolidated Fund for the service of the year.

Bills of this class are, it is presumed, properly Bills of Supply, which it is against parliamentary usage for the upper branch of the Legislature to alter.

But as regards Bills not of this class, but affecting charges more or less permanent, already created by law, on the consolidated revenue, and which are beyond the control of the Committee of Supply, the Legislative Council insists that there is no rule debarring it from exercising its ordinary legislative functions. Were it otherwise, it might be compelled to submit to, without the power of varying, changes of a fundamental character in the Civil List, or to reductions in the salaries of Judges, with a condition altering their tenure of office, or, as in the present case, to the diversion of money authorized to be raised by loan for specific services, to a wholly different purpose.

The parliamentary precedent which appears to be most in point is that of the West India Bishoprics Bill in 1868, reported in Hansard (Lords, July page 89 7, 13; Commons, July 27, 28). In that case a charge had been made on the Consolidated Fund, by way of endowment for bishoprics in the West Indies, to the amount of £20,800 a year. It was proposed to rescind such grant, and a Bill for that purpose was sent up to the House of Lords from the House of Commons. An amendment was proposed in the House of Lords, the effect of which was to extend the saving of vested interests to a case not provided for by the Bill, and so to diminish the saving to the Consolidated Fund. The Bill so amended was returned to the Lower House, where the Lords' amendment was taken into consideration, and an amendment was proposed upon the Lords' amendment, the effect of which, if carried, would have been to diminish still further the saving to the Consolidated Fund. Upon this the question was raised whether such proposed amendment ought not to have been previously sanctioned by resolution of the House. A double question, therefore, seems to have presented itself—namely, as to the power of the Upper House to amend the Bill, and the power of the Lower House to amend the Lords' amendment in the way proposed; the effect of which would, it was argued, be practically to make a new grant out of the Consolidated Fund. The Speaker ruled as follows:—

It appears to me, as far as the privileges of the House are concerned, the question turns upon whether there is any new charge upon the Consolidated Fund; and, while the Bill proposes to relieve the Consolidated Fund of £20,000, this amendment would relieve it of £18,000 only. The question of the merits of the Bill is a matter for the consideration of the House. The honourable member for Edinburgh (Mr. McLaren) has asked me whether, in point of form, this amendment can be put. The question is whether it is relevant; and it appears to me that it is relevant to the amendment of the Lords. I do not mean to say it is not a somewhat complicated question. I adhere to the substance of the opinion I gave last night, that, as there is no new charge upon the Consolidated Fund, therefore I think it is a matter more to be decided by the House on its merits than by any opinion from the chair.

The Lords' amendment was agreed to.

There is a special ground in the present case for maintaining the right of the Legislative Council to amend the Bill as they did. It has been pointed out that by "The Immigration and Public Works Loan Act, 1870," it was provided that, in the page 90 event of the Imperial Parliament passing an Act to guarantee any loan raised by the Colony of New Zealand, for all or any of the purposes for which the loan thereby authorized might be applied, the Governor or his agents might raise any portion of the loan so authorized, with such guarantee, upon and subject to all or any of the terms, conditions, and stipulations expressed in such Act of the Imperial Parliament. He was also authorized to fix the order of priority which such guaranteed portion of the loan should have over other parts of the loan. By an Act of the Imperial Parliament (1870, chap. 40) the Imperial Treasury was authorized to guarantee, in such manner and form as they might think fit, payment of the principal of all or any part of any loan, not exceeding £1,000,000, raised by the Government of New Zealand for the purpose of the construction of roads, bridges, and communications in that country, and of the introduction of settlers into that country, and payment of the interest of any such loan at a rate not exceeding 4 per cent.

The Treasury were restricted, by the terms of the Act, from guaranteeing more than £200,000 in any one year, and were bound, before guaranteeing page 91 any portion other than the first, to satisfy themselves that the portion already guaranteed had been or was being spent for the purposes mentioned in the Act.

It was further provided that every Act passed by the Legislature of New Zealand which in any way unpaired the priority of the charge upon the consolidated revenue of New Zealand created by that Legislature in respect of the loan, and the interest and sinking fund thereof, should, so far as affecting such priority, be void unless reserved for Her Majesty's pleasure; and that the Treasury should cause to be prepared and laid before both Houses of Parliament a statement of any guarantee given under the Act, a copy of any accounts received by them respecting the expenditure of the said loan, and an account of all sums issued out of the Consolidated Fund of the United Kingdom for the purposes of the Act.

On the 19th April, 1871, Messrs. Vogel and Julyan, Agents appointed by the Governor for the purpose, intimated to the Treasury the acceptance by the colony of the guarantee offered by the Imperial Government, upon the terms stipulated in the Imperial Act.

The Treasury assented by letter of the 20th May, 1871; and under the arrangement so made debentures to the value of £200,000 have been issued with the Imperial guarantee, and are now held at the disposal of the Colonial Government.

But the claim now made by the House of Representatives, of the right, of its sole authority, "by Act of one session to vary the appropriation or management of money prescribed by Act of a previous session," and by virtue of such right to divert at pleasure the moneys raised under the Loan Act of 1870 to other purposes than those prescribed by such Act, if admitted, might possibly have the effect of subverting the objects of the loan, and might conflict with the conditions imposed by the Imperial Act.

Another distinct question has been raised as to the constitutional powers of the Legislative Council under an Act passed in the year 1865, entitled "The Parliamentary Privileges Act," a copy of which is herewith. The object of this Act was to define more exactly by statute the powers and privileges of the two Houses of the Legislature, and page 92 the respective members thereof, which had been partially defined by a former Act of 1856, a copy of which is herewith.

By the 4th section of the Act of 1865 it is enacted that "the Legislative Council or House o Representatives of New Zealand respectively shall hold, enjoy, and exercise such and the like privileges, immunities, and powers as on the 1st January, 1865, were held, enjoyed, and exercised by the Commons House of Parliament of Great Britain and Ireland, and by the Committees and members thereof, so far as the same are not inconsistent with or repugnant to such and so many of the sections and provisions of the Constitution Act as, at the time of the coining into operation of this Act, are unrepealed, whether such privileges, immunities, or powers wore so held, possessed, or enjoyed by custom, statute, or otherwise; and such privileges, immunities, and powers shall be deemed to be and shall be part of the general and public law of the colony; and it shall not be necessary to plead the same, and the same shall in all Courts, and by and before all Judges, be judicially taken notice of."

It has, ever since the passing of this Act, been maintained and insisted on by the Legislative Council that its effect is to invest that body with all the constitutional authority of the House of Commons, and so to place it on an equal footing with the House of Representatives as regards the power of dealing with money Bills.

The only unrepealed clause in the Constitution Act which touches this question is the 54th, by which it is enacted that "it shall not be lawful for the House of Representatives or the Legislative Council to pass, or for the Governor to assent to, any Bill appropriating to the public service any sum of money from or out of Her Majesty's revenue within New Zealand, unless the Governor, on Her Majesty's behalf, shall first have recommended to the House of Representatives to make provision for the specific public service towards which such money is to be appropriated."

All supplies for the public service are, or are presumed to be, recommended by the Governor to the House of Representatives, either by message or by the mouth of a Minister.

Practically, the Legislative Council, though it has from time to time claimed co-ordinate power with the House of Representatives in the matter of money Bills, under "the Parliamentary Privileges Act, 1865," has governed itself by the usage of the House of Peers in the Imperial Parliament.