One of the more interesting matters discussed at Senate estimates in recent times was the Treasury’s ‘unauthorised’ expenditure of $2.3 billion as part of the Energy Bill Extension Program. The answers given by the Treasury to the senators’ questions gave us a good idea of what the program is, what went wrong, and what Commonwealth entities can do to make sure that they have proper authorisation for their expenditure. This article will explore each of these issues.

What is the Energy Bill Extension Program? 

For several years the Australian Government, in partnership with the State and Territory Governments, has been subsidising many households’ and small businesses’ energy costs by paying rebates to energy companies, which are then passed through to customers’ accounts as bill credits (Program). The Australian Government’s contribution was made in bi-monthly payments by the Treasury from the consolidated revenue fund (CRF) to each State and Territory Government.

The Program originally commenced in 2023 and has been extended twice, including with the introduction of the Energy Bill Extension Program in the 2024-2025 financial year.

What went wrong? 

Section 83 of the Constitution mandates that no money may be drawn from the CRF except under appropriation made by law. Additionally, the decisions of the High Court of Australia in Williams v Commonwealth [No 1] (2012) and [No 2] (2014)^[1] established that the Commonwealth Executive cannot spend money or enter contracts merely because it has funds appropriated, even if the subject lies within legislative power. Rather, expenditure generally requires specific supporting legislation (which must, in turn, fall under a relevant constitutional head of power of the Commonwealth). This means that the Australian Government may (generally) only spend money from the CRF when it is authorised to do so by statute (which may be in the form of a legislative instrument made by the relevant Minister), and payments must be made in accordance with that legislative authority.

The Treasury stated in its 2025 Annual Report that it had ‘identified 8 instances during the period in which payments were made without written ministerial authorisation for a specific senior official to approve the payments on the minister’s behalf’. The Annual Report described these ‘approval errors’ as being technical in nature and stated that the Treasury had changed its processes to minimise the likelihood of reoccurrence.

When questioned about this at Senate estimates, the Treasury explained that the authorising instrument for the Program in force during the previous (2023-2024) financial year permitted an official holding the position of Senior Executive Service (SES) Band 1 to authorise payments from the CRF to the State and Territory Governments. However, when the Energy Bill Extension Program came in force during the 2024-2025 financial year, the new authorising instrument only permitted an official holding the position of SES Band 2 (that is, a more senior official) to authorise payments, but the Treasury continued to follow the previous process (in error) – the same SES Band 1 who had authorised payments previously continued to do so until June 2025, when the error was identified. 

Additionally, in the case of two payments made in 2024, the relevant instrument did not specifically identify the Energy Bill Extension Program as being the subject of authorised expenditure.

The Treasury did not realise that these mistakes had occurred at the time, and made some $2.3 billion worth of payments over this period. Those payments may have contravened section 83 of the Constitution, at the time that they were made, as the relevant Treasury officials who approved them were apparently not authorised to do so by the Treasurer under the relevant legislative instruments. 

However, the Treasury subsequently corrected this technical error by obtaining the Treasurer’s written authorisation under the relevant legislative instruments for those payments to be made.

What can agencies learn? 

As acknowledged in the Senate estimates hearing, there have been many other occasions on which Commonwealth entities have made payments without proper authorisation, contrary to section 83 of the Constitution. When asked at the Senate estimates what is the best practice for Commonwealth entities that identified potential breaches of section 83 of the Constitution, the Australian National Auditor’s Office (ANAO) suggested that Commonwealth entities should:

1. seek to understand what happened and, if possible, remedy the breach as soon as possible; and
2. report the breach through the appropriate channels – generally, to the accountable authority, the responsible Minister and the ANAO. Public disclosures should also be made through annual financial statements.

The ANAO also emphasised that the fundamental first steps to take, before spending any Commonwealth funds, are to check that:

1. there is an available appropriation; and
2. all appropriate authorisations have been obtained. 

We would add that it is (generally) necessary that there be appropriate (constitutionally valid) legislative authority under which that authorisation is made.

The appropriate level of financial controls will depend on what kind of entity is involved and the assessed level of associated risk, including the likelihood of potential fraud or misappropriation.

The Treasury’s errors, and the ANAO’s words, in this case are a timely reminder to Government entities to ensure that appropriate legislative instruments are in place, and correctly applied, when making (or entering into a commitment to make) payments. This is particularly important to check before making payments as part of a new or changed Government program.