Loss of supply

Loss of supply occurs where a government in a parliamentary democracy using the Westminster System or a system derived from it is denied a supply of treasury or exchequer funds, by whichever house or houses of parliament or head of state is constitutionally entitled to grant and deny supply. A defeat on a budgetary vote is one such way by which supply can be denied. Loss of supply is interpreted as indicating a loss of confidence in the government. Not all 'money bills' are necessarily supply bills. For instance, in Australia, supply bills are defined as 'bills which are required by the Government to carry on its day-to-day business'.^[1] When a loss of supply occurs, a prime minister is generally required either by constitutional convention or by explicit constitutional instruction to:

• resign immediately (allowing the majority blocking supply to form a government) or
• seek a parliamentary dissolution (so allowing the electorate to pass judgment on the issue).

Some constitutions, however, do not allow the option of parliamentary dissolution but a governmental one or requiring a resignation.

A similar deadlock can occur within a presidential system, where it is also known as a budget crisis. In contrast to parliamentary systems, the failure of the legislature to authorize spending may not in all circumstances result in an election, because some such legislatures enjoy fixed terms and so cannot be dissolved before a date of termination, which can result in a prolonged crisis.

A deadlock between a head of state and the legislative body can give rise and cause for a head of state to prematurely dismiss the elected government, requiring it to seek re-election. If a government maintains the support of a majority of legislators or the elected parliamentary representatives, the blocking of supply by a head of state would be seen as an abuse of authority and power. Many western countries have removed or restricted the right of a head of state to block supply or veto government budget unless there is overwhelming justification and cause for such action. If a government maintains the support of the elected parliament, the budget must be approved within a nominated period or else entitlement and authority for the approval of the budget is determined by a statutory majority of the parliament.

Examples of loss of supply

• In 1909, the UK House of Lords voted against the "People's Budget", precipitating two general elections and the Parliament Act 1911, which limited the power of the Lords.

• In the 1975 Australian constitutional crisis, the elected Senate wilfully delayed voting on a bill which authorized supply for the government, until the Prime Minister, Gough Whitlam, called an election for the House of Representatives. He was subsequently dismissed by the Governor-General, Sir John Kerr, on the basis of refusal to either resign or request a dissolution; his proposed course of action was instead to procure alternative supply money by non-parliamentary means. (Notably, Westminster convention requires the resignation of Government, or dissolution of Parliament, upon rejection of supply bills, which had not yet occurred--voting had simply been delayed. For this reason, among others, the validity under constitution conventions of the dismissal of the Whitlam Government continues to be debated to this day.)

• The defeat of Garret FitzGerald's government in a budget vote in Dáil Éireann in the Republic of Ireland in 1982; FitzGerald immediately sought and was granted a Dáil dissolution.^[2]

• On 9 March 2011, the Legislative Council of Hong Kong blocked a resolution for provisional appropriations, which, before 2011, had always been a matter of formality, pending the resumption of second reading debate and the third reading of the appropriation bill for the fiscal year from 1st April, which usually takes place in mid-April. Resolutions for provisional appropriations had never been voted by division until 2011. The government decided, on the following day, to table another resolution on 16th March, with the subhead for miscellaneous expenses reduced by HK$500m, merely for the sake of circumventing the requirements in Rules of Procedure that a negatived question cannot be tabled again.

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