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Stimulus challenge hits a nerve

Stimulus challenge hits a nerve

Most Australian taxpayers entitled to the Rudd bonus have probably already spent the cash, but, following a challenge by legal academic Bryan Pape, the High Court only this week ruled the…

Most Australian taxpayers entitled to the Rudd bonus have probably already spent the cash, but, following a challenge by legal academic Bryan Pape, the High Court only this week ruled the stimulus package constitutional.

Passed by Federal Parliament in February, the Tax Bonus for Working Australians provided a $7.7 billion pool, of a total $42 billion package, of funds for consumers in a move to stimulate the economy.

Barrister and academic Bryan Pape took on the Rudd Government in a bid to prove his point that the bonus was invalid and that any payment made to him - he is entitled to receive $250 - was "unlawful and void."

High Court Chief Justice Robert French found that section of 61 of the Constitution, "extends to the power to expend public moneys for the purpose of avoiding or mitigating the large-scale adverse effects of the circumstances affecting the national economy disclosed on the facts of this case, and which expenditure is on a scale and within a time-frame peculiarly within the capacity of the national Government."

In a 176-page decision, of the seven High Court judges only four upheld the full payment, while another two said it could be paid but not distributed as widely across taxpayers as the manner in which the Federal Government sought. One judge, Justice Dyson Heydon, said the Tax Bonus Act was invalid, and claimed that the idea that the Commonwealth inherits increased powers to deal with an economic emergency held the potential for abuse.

Overall, the reasons behind the ruling published this week raised doubts over the Commonwealth's power to spend the money in areas not contained within its constitutional power.

Pape told The Australian that the case still presented some limitations on the Commonwealth's power in terms of its ability to spend money on various activities - spending which had previously not been challenged.

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