The High Court’s decision yesterday on the Williams schools chaplains case isn’t exactly a bombshell, but it will make life for the Commonwealth a little more difficult — and unnecessarily so. It also strengthens the case for constitutional recognition of local government.

In short, the court found that by simply assuming it was able under the constitution to fund anything that it could have funded if there was legislation for it, the Commonwealth had erred: there didn’t just need to be a sort of possibility of legislation, but actual legislation. Nor was simply appropriating the money via an appropriation bill sufficient to do the trick.

The result is that any expenditure that lacks authorising legislation, or doesn’t flow via the states, is now problematic under the constitution.

This is the second reversal for the Commonwealth’s spending powers in recent years. The court only narrowly ruled against the effort by the National Party’s Bryan Pape to stop the Rudd government providing economic stimulus during the financial crisis in 2009, in a decision that narrowed the constitutional capacity of the government to spend. It’s a marked contrast to the support the court gave to the Howard government’s spending of money on WorkChoices advertising despite there being no appropriation for it in the budget, in a broad interpretation of the outcomes and outputs framework for Commonwealth appropriations challenged by Nicola Roxon and Greg Combet (then at the ACTU).

The school chaplains program was also a Howard government program, and confirms just how fast and loose that government played with its expenditure. There was another, notorious example that never went before the High Court but that the ANAO later revealed: the Howard government’s internal advertising committee illegally spent tens of millions of taxpayer dollars handing large WorkChoices marketing contracts to Liberal Party mates, in a scandal that the mainstream media have remained strangely uninterested in ever since.

And this is the second big posthumous legal defeat for the Howard government. In 2009, the High Court demolished an entire judicial structure put in place by that government in an effort to curry favour with the military — a seven-zip verdict against the constitutionality of the Australian Military Court, just as predicted by virtually everyone when it was legislated, including some Coalition senators.

Perhaps coincidentally, today Nicola Roxon and Stephen Smith jointly issued a media release announcing the bill to establish the replacement structure for the AMC would be introduced into Parliament. Unsurprisingly, they didn’t skip the bit about “the High Court’s decision in Lane v Morrison, which found the Australian Military Court established by the previous Government to be unconstitutional”.

Labor may be inclined to feel a little gypped by the tides of jurisprudence; the Howard government’s carefree attitude to pork-barrelling was never pulled up short by the High Court during its life; instead, Labor must wear the results. It means it will have to seek legislation for spending more often, meaning more programs will be hostage to the crossbenches and the Senate, or rely on the states, who clip the ticket on any Commonwealth funding they get before actually directing it to the intended recipients.

Much of the attention following the decision has focused on the implications for directing Commonwealth funding to local governments. Local government, such as the Scripture Union Queensland in the Williams case, has no constitutional significance, despite being considered the third level of government. The case for constitutional recognition of local government is therefore strengthened by the outcome of Williams, just as it was strengthened by the Pape case. The Gillard government is committed, via its agreements with the crossbenchers, to a referendum on recognition of local government.

The Coalition, however, appear to be at sixes and sevens — Barnaby Joyce is a strong advocate of it, but some Liberals aren’t; at the moment Coalition support is only “in principle”.

The last time the issue got an airing was in 1988, when John Howard set out to wreck recognition by conjuring a vast conspiracy that would have seen the Hawke government replace Australian states with “socialist republics” such as the Australian Capital Territory. It was absurd stuff, but sufficient to see the defeat of the referendum. No one would suggest Tony Abbott is above a similar stunt.