Over the last 25 years, governments of all persuasions in western democracies have increasingly resorted to contract as a means of carrying out governmental tasks and achieving policy outcomes. The use of contract by government is not a new phenomenon but, in more recent times, the increasing use of contract in areas that were traditionally the province of direct government action has been a marked feature of public administration. This movement has spawned a vast literature covering many disciplines and has generated new theories about public administration. One of the difficult issues to resolve in connection with this phenomenon is the sometimes awkward mixture of a private institution – contract – to achieve public purposes.

This paper is one of a group of papers on the theme of the interaction between the government's executive power and legislation. This paper is about contract and the executive power. Combining these together, it is appropriate to discuss the interaction between legislation and the use by government of the executive power to make contracts.

The Commonwealth has since federation formed and controlled many corporations, both statutory and those created under companies legislation. In this article we explore the constitutional basis for the Commonwealth forming and controlling a Corporations Law company. This is a topic which has received little attention but it is becoming increasingly clear that a proper understanding of the Commonwealth's constitutional position, when it forms and controls companies, is necessary because of the increased emphasis on commercialisation and entrepreneurialism and the sometimes drawn-out process of privatisation of Commonwealth bodies.

It is generally assumed in this article that the Commonwealth will make use of a company for some commercial purpose, but we acknowledge this is not always the case. It is possible, and quite common, for the Commonwealth to use a company for the implementation of a policy or for some other governmental purpose not directly related to commercial activity. The use of the company form by the Commonwealth in any situation raises important questions about government responsibility and accountability. While we do not address these questions directly in this paper, our underlying concern nevertheless is that the use of a company by the Commonwealth for ordinary commercial purposes has the potential to erode the notion of governmental responsibility.

“…the concept of the Crown is…deeply ambiguous.”

The ambiguity surrounding the concept of the Crown stems from the very many functions that it has been required to perform. One tends to forget that it is merely a type of hat, as Maitland and Lord Simon have observed, so bound up in the symbolism of that headgear has the word become. So important was this symbolism that Oliver Cromwell ordered that the regalia should be totally broken. This symbolism, in its turn, metamorphosed from representing the person of the king or queen to the artificial person of a corporate body, though it was not clear whether the Crown was a corporation sole or corporation aggregate. This corporate manifestation was needed to explain how it was that government continued without being dependent on the person of the sovereign. The Crown was the government occupying a role not dissimilar to the Holy Trinity, being the executive, judicial and legislative arms of government in one. Each of these arms to this day, both in England and Australia, does things in the name of the sovereign.