Commonwealth Funding of Religious Schools is Constitutional

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Hoxton Park Residents Action Group Inc v Liverpool City Council [2016] NSWCA is a recent New South Wales Court of Appeal decision which considered the constitutional validity of the Commonwealth’s Schools Assistance Act 2008 (Cth) and the Australian Education Act 2013 (Cth) (“the Acts”). The Acts provide the framework for substantial government funding to Australian schools, of which non-government religious schools substantially benefited.

In this case, the Hoxton Park Residents Action Group (“the appellants”) sought the cessation of government funding pursuant to the Acts to an Islamic school in the residents’ area (and consequently all religious schools). They claimed that the funding was unconstitutional pursuant to sections 96 and 116 of the Australian Constitution. Under the Acts, the Malek Fahd Islamic School received an annual payment of $17, 589, 958.

The Impugned Acts and the Australian Constitution

Section 96 of the constitution allows the Commonwealth parliament to make laws which provide financial assistance to the States. Section 116 prohibits the parliament from creating laws which establish any religion, impose any religious observance or prohibit the free exercise of religion.

The appellants argued that firstly the Commonwealth Parliament could not pass the Acts under section 96 as the Acts indirectly regulated education and religion. Education and religion are matters which only the States can pass laws on. As such, the Commonwealth could not rely on section 96 as a head of power.

The appellants also argued that the Acts funded religious schools, and therefore helped establish religion and impose religious observance (activities prohibited in the Constitution). The appellants argued that the public should not be forced to pay taxes for such purposes.

The Purpose of the Acts

The Commonwealth Government passed the Schools Assistance Act and the Australian Education Act in 2008 and 2013 respectively for the purpose of elevating Australia’s education ranking internationally. The Acts operated by providing for financial grants to the States under the condition that the money was applied to eligible schools under the schemes.

It was found that 88.7% of the schools which received funding were affiliated with a particular religion from a variety of denominations. One of the schools which benefitted from the Acts was the Malek Fahd Islamic School in Hoxton Park, Western Sydney. The school adhered to the Islamic faith, and participated in compulsory rituals in line with their ethos. Comparisons could be drawn to Christian based schools where students participate in daily prayer or weekly chapel services, or where students are required to wear modest uniforms.

In 2015 the case was dismissed from the New South Wales Supreme Court. The appellants appealed to the New South Wales Supreme Court of Appeal.

Issues before the Court of Appeal

While the Court addressed a number of issues (including whether the appellant had standing to bring the action), the two main issues considered in relation to the Acts were:

  • Whether the Acts were invalid because the States have exclusive power over matters of religion and education? On the proper construction of section 96 could the Commonwealth create laws which incidentally affected these matters?
  • Whether the Acts were invalid because they contravened section 116 of the Constitution?

Held

The New South Wales Supreme Court of Appeal dismissed the appeal with costs.

Did the Acts have a Head of Power?

The appellants argued that the Acts did not have a head of power because section 96 only allows for the funding of States in so far as the Act has a purpose which the Commonwealth can legislate on (for example, education), and in so far as the Act does not infringe on explicit restrictions outlined in the constitution (religion).  Here is was argued that creating laws which granted financial assistance to the States for the purpose of affecting education was not within the scope of power of section 96; creating funding laws which indirectly affected matters which were the exclusive jurisdiction of the States – education and religion – was unconstitutional.

The Court rejected this argument.

Section 96 of the Constitution allows the Commonwealth Parliament to “grant financial assistance to any State on such terms and conditions as the Parliament thinks fit”. The Court held that this section should be construed in light of case law and other provisions of the Constitution. Particularly, Beazley P and Macfarlan JA held that section 96 be read in conjunction with sections 51 (xxxvi) and 51 (xxxix) to uphold the funding Acts. Section 51 (xxxix), in particular, states that the Parliament can pass laws on matters incidental to the execution of a power under the Constitution. Therefore, in this instance the parliament could create laws which indirectly affected education as the affect incidental to the execution of section 96. The Commonwealth can pass laws under section 96 whether or not the object of the Act (education) is outside the Commonwealth’s legislative power, as long as this law does not encroach on explicit restrictions in the constitution. This was explained to mean that:

The Commonwealth may enact laws that provide for the payment of grants to the states on specific conditions and, provided that the conditions do not contravene an express or implied limitation on Commonwealth power, there is no limit on the subject matter or type of conditions that may be imposed.”

Her honour Beazley P cited the decision of Mason J in Ex rel Black in affirming that section 96 could therefore be used to “make the State a conduit pipe in channelling the fund to the intended recipient.” Here, the State could be used as a means to channel funds for the purpose of education.

Did the Acts offend Section 116?

Basten JA discussed that there needs to be a balance between the pubic interest of not imposing religion on the public (the first limb of 116) and the private interest of protecting the free exercise of religion (the third limb); to say that the State has no concern in this private interest of religion “or should have no interest in them, is to assume that tolerance and harmony are more likely to prevail where the state maintains secular neutrality and intervenes only at the margins.”

Basten JA cited Black J in the New Jersey case of Everson to highlight that while the public should not be forced to pay a tax which will directly or indirectly fund a religion, the state should not deprive the religious sector of neutral services such as “ordinary police and fire protection”. In the same way, religious schools should not be deprived of funding of neutral services such as for core educational subjects. For this reason the Supreme Court has “upheld numerous schemes whereby government funds are distributed to schools for secular non-religious purposes”.

Both Beazely P and Basten JA (with Macfarlan JA agreeing) concluded that on the construction of the Acts, the purposes were for these secular and not religious purposes. Namely, the objects were all directed to the “education of Australian children in what I will describe as the core secular disciplines such as reading, mathematics, science, writing and numeracy.” For this reason, the Acts did not infringe on the restrictions outlined in s116.

Our Comments

Hoxton Park illustrates the Australian Constitution’s and the Court’s recognition of the role that religious bodies play in Australian society. The Constitution strikes a balance between the public and private realms, and serves to protect religious bodies from being deprived of being the delivery vehicles of education (albeit from their worldview).

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This article was written by Andrew Lind (Director).