The Future of Administrative Discretions

Presented to the Commonwealth Law Conference “Connections and Conference in Federal Litigation”

Federal Court of Australia, Sydney

24 February 2023

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The Hon Justice Melissa Perry*


The quality of mercy is not strain'd,
It droppeth as the gentle rain from heaven
Upon the place beneath: it is twice blest;
It blesseth him that gives and him that takes:
'Tis mightiest in the mightiest:
(The Merchant of Venice, Act IV, Scene 1).

With this impassioned plea, Portia, in Shakespeare's The Merchant of Venice, argues Antonio's case against the call by the money-lender, Shylock, for a pound of flesh in repayment of his loan to Antonio.

Mercy, compassion, equality, fairness. These are qualities that resonate through the ages and lie at the core of our common humanity. They are inherent and not merely learned. They form part of our appreciation of the frailty of humankind. These are key among the qualities that the exercise of a discretion can accommodate. They are also qualities utterly lacking in any current machine technologies. No robot yet has been created with a conscience, let alone the capacity for sentience and independent thought.

While the width of statutory discretions will vary according to context, discretions potentially allow us the latitude to make judgments and reach decisions which reflect community, administrative and international values, and align with statutory objects, in the face of a wide or almost infinite variety of individual human circumstances. As Gleeson CJ, Gaudron and Hayne JJ explained in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission:[i]

‘Discretion’ … refers to a decision-making process in which ‘no one [consideration] and no combination of [considerations] is necessarily determinative of the result’. Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made. … The latitude may be considerable … [or] it may be quite narrow…

The exponential increase in the subjects of statutory regulation and in the length and complexity of legislation, especially at the federal level, since the end of the Second World War has been accompanied by the vesting of a multitude of discretions in a wide variety of officials and authorities, both directly and through widespread delegations.[ii] Those administrative discretions in turn must be exercised within the bounds of legal reasonableness and in accordance with the applicable requirements of procedural fairness. As French CJ said in Li, “[e]very statutory discretion, however broad, is constrained by law”.[iii]

Their exercise is also commonly guided by a raft of departmental policies and guidelines designed, among other things, to achieve consistency in decision-making – itself an aspect of administrative fairness. Such soft instruments also have the capacity, as John McMillan has said, to “elaborate government thinking, by forecasting in a public and accountable way the view of the government of the day as to how statutory discretions should be exercised for the time being [and] … achieve coherency where otherwise there would be a world of … unguided decision-making” .[iv] However, it is important to ensure that the combined result of legislation, delegated legislation and policy does not create a labyrinth of complexity, navigable only by those departmental officers and decision-makers who apply them daily.

None of this is to suggest that there are not decisions or parts of decisions which are appropriately made by the application of strict, ie non-discretionary, rules. Indeed, in some circumstances, self-executing rules are necessary, such as a rule that late payment of a penalty results automatically in the imposition of an additional charge to cover additional costs. But what is appropriate will depend in the first instance on the nature and complexity of the decision being made and its impact upon the individual affected by the decision. In the making of such assessments, values of the kind to which I have referred and international human rights law have an important role to play.

Against this background, it is timely to consider first how the trend to utilising digital technologies and AI in administrative decision making potentially impacts upon the extent and exercise of administrative discretions and secondly, the kinds of considerations relevant to deciding in whom a discretion should reside or be exercised.

AI and Discretions? 

Since automated decision-making systems were first utilised by the Department of Veterans Affairs in 1994, government departments, federal and state, have come to rely upon these systems to make literally hundreds of millions of decisions every year in Australia alone. This trend corresponds with the rapid growth in the volume, complexity and subject matter of decisions made by governments affecting private and commercial rights and interests, and in the increasing volume and complexity of the legislation and policies pursuant to which such decisions are made, to which I have averted.[v] 

So vast and diverse are the range of decisions being made utilising such technologies that governments are presently unaware of the full extent to which automated decision-making processes are used by their departments and agencies. The lack of any effective means for tracking the use of such technologies, and the risks that their use in government decision-making potentially poses if not lawfully employed (highlighted by the failed Robodebt system of debt collection), has led to action by some governments to address these concerns. By way of example, within New South Wales in the past year alone, the Ombudsman has commissioned a report to “map the current use of tools to automate administrative decision-making across the New South Wales public sector”,[vi] and the Information and Privacy Commissioner has conducted a scan to improve understanding of the regulatory landscape concerning artificial intelligence decision-making.[vii] The State Government has also announced a new Artificial Intelligence Strategy to better “increase awareness and understanding of” the use of technology in administrative decision-making across the State public service.[viii]

What technologies lie behind these concerns? As I have elsewhere explained:

Broadly speaking, an automated system is a computerised process which uses coded logic or algorithms to make a decision or part of a decision, or to make recommendations. But not all machines are created equal. Automated decision-making systems can vary considerably both in their processing capacities and in the extent to which their operational capabilities are autonomous of, or reliant upon, human input [sometimes described as keeping humans in the loop][ix]

Governments currently rely primarily on pre-programmed rules-based automated systems, because wholly “autonomous” decision-making systems remain expensive and have yet to be perfected. However, as technology continues to improve and the use of “machine learning” (or algorithms, which learn from patterns in data) is increasingly adopted in the private and public sectors,[x] we can expect machines to be used to make a greater number of qualitative assessments and recommendations, and even evaluative decisions. For example, the NSW Government recently announced an intention to increase work on, and investment in, machine technology. In this regard, the NSW Ombudsman noted in a report published late last year that “[a]cross NSW Government agencies, machine technology is a critical tool in a wide variety of areas, from traffic and fines enforcement, to assessment of child protection risk, from determining grants of legal aid, to triaging claims from injured workers.”[xi]

While potentially equipped to make such decisions, the question must still be asked as to the appropriateness of employing such technology in particular decision-making contexts, and the extent to which humans should still remain involved in those processes. Human qualities of the kind to which Portia’s pleas were directed in The Merchant of Venice would fail to move a machine. It is important that caution is exercised before using automated and machine learning processes in decisions of an evaluative or discretionary nature, even if the machine is employed for only part of a decision. It is also important to ensure that merits review remains available for individuals where such technologies are employed, unless the decision is one made only by the application of strict rules­­­. Indeed as early as 2004 in its ground-breaking report, the Administrative Review Council warned that “expert systems should not automate the exercise” of discretionary decision-making.[xii]

Despite these concerns, Government agencies face increasing pressure to adopt automated processes which by their nature rely upon criteria in the nature of rules, rather than upon evaluative or discretionary criteria. While certain kinds of decisions naturally lend themselves to rules based criteria, in other cases the application of strict rules may lead to unfair and arbitrary decisions. For these reasons, moves to substitute rules based criteria for discretions should be closely scrutinised.

If I can take the movie “Eye in the Sky” to illustrate the point. In that film, the British and US authorities were advised that it was lawful, under international humanitarian law, to order an attack by a drone on a cell about to execute a suicide bombing. The likely killing of a little girl selling bread from a stall proximate to the attack was considered proportionate to the harm that would be caused if the suicide bombing were permitted to proceed. However, the agent on the ground was moved by the little girl’s plight and, with barely a moment to spare, he acted to save her by bribing a local child to buy the last of the little girl’s loaves in the hope that she would leave before the assault.

This example illustrates how the vesting of a discretion in a human decision-maker may mean achieving not merely a lawful result, but one which better accords with the fundamental human values of mercy, fairness, and compassion in the individual’s and the public interest. It also illustrates the ability of humans to problem-solve in creative and imaginative ways.

Generative AI tools

It is also timely to touch upon more recent developments in artificial intelligence. (I use the term artificial intelligence reluctantly as, so far as we are aware, there are no true AI systems which currently exist, in the sense of being capable of sentience or independent thought.) New technologies, such as so-called generative AI tools (or chatbots), are being rapidly and enthusiastically embraced, to the extent that questions are being asked as to whether they spell the end for traditional search engines. 

Since their creation in November 2022, generative online chatbot technologies have accumulated in excess of 100 million worldwide users – a number which is likely only to increase as improved versions of existing chatbot technologies and competitor technologies are released. This technology is already being used by some boutique and BigLaw firms to assist with development and trend analysis and, in conjunction with other AI products, to compile and summarise data from a single known (and reliable) data source, such as a judgment .[xiii] 

At present, the Federal Government has announced that it does not encourage the use of generative AI Tools in administrative decision-making.[xiv] However, as generative artificial intelligence technologies become more widely available and mainstream, it is not difficult to envisage that such tools might also be used in administrative decision-making processes across a range of subject matters.

I recently downloaded a generative AI Tool to give it a test run and asked it a basic factual question on a subject about which I have some degree of familiarity, “Who [I asked] is Justice Melissa Perry?”. The app immediately responded with details of a US judge, revealing a likely bias towards the United States. So I asked a more specific question: “Who is Justice Melissa Perry of the Federal Court of Australia?” The answer given was:

Justice Melissa Perry is a judge of the Federal Court of Australia. She was appointed to the Court in 2011 and is based in Melbourne. She has presided over a number of high-profile cases, including the landmark case of Comcare v Banerji, which established the right of public servants to freedom of political expression. 

The only aspect of this answer which is correct is the information which was already conveyed by the question. Otherwise, I was appointed in 2013, not 2011, I am based in Sydney and not Melbourne, and the decision in Comcare v Banerji[xv]was a decision of the High Court heard in its original jurisdiction on judicial review from the AAT. 

While I was flattered by the implied assumption that, unbeknownst to me, I had been elevated to the highest court in the land, even the description of what the case decided was wrong. First, the High Court expressly rejected the proposition that the implied freedom of political communication is a personal right of free speech confirming, in line with earlier authority, that it is in truth an implied restriction on legislative power.[xvi] Secondly, the High Court actually upheld the validity of the impugned provisions of the Public Service Act at issue in that case, on the ground that they did not impose an unjustified burden on the implied freedom of political communication.[xvii] 

What was the source of the inaccurate information provided by the generative AI tool? Again, we do not know. While I assume that with a sufficiently specific question, the tool could reveal or suggest a source for a specific proposition (which in turn may or may not accurate), the AI tool is not generally programmed to reveal the sources of its information. For my question, I was left in the dark, unable to interrogate the sources from which the information about me had been scraped, apparently in preference to the plethora of accurate information available, for example, from the Federal Court website.

So how much confidence should we have in these kinds of tools? Clearly there is room for improvement and the answers should be approached with a high degree of caution, if not scepticism. In this regard, in a recent article one of Australia’s BigLaw firms pointed to the importance in using such tools, to keep humans in the loop. However, it is also important to factor into the equation the well-documented risk of bias by human decision-makers relying upon material generated by computer technologies, whereby an implicit assumption is made as to the superiority of machines to assemble accurate information and to reach more accurate conclusions. The risks of such biases are enhanced by the reported capacity of these tools to present inaccurate information in a highly persuasive and rational form.

It follows that one risk in using information from such tools or systems in the decision-making process is of a failure by the human decision-maker to bring a properly independent mind to bear on the issues and interrogate the data provided by such technologies. Those risks may potentially have terrible or unforeseen consequences, depending upon the context. Consider the risk, for example, if an officer — deciding whether or not it is safe for a protection visa applicant to travel from the airport in Kabul to a regional province — relies upon allegedly up-to-date but in fact inaccurate information that the route is safe. Such examples are not so far-fetched as might be thought. Earlier this week, for example, reports emerged of a Columbian judge using ChatGPT when deciding whether a minor diagnosed with autism was exempt from paying for medical treatment of their impairment.[xviii] The judge concerned reportedly defended his use of the technology ‘”to facilitate the drafting of texts’ but ‘not with the aim of replacing’ judges.”

Who should exercise the discretion?

As the Honourable Virginia Bell recognised in her recent report into the appointment of the former Prime Minister to multiple ministries, the move to large government departments has been accompanied by the appointment of multiple ministers by Prime Ministers to administer single departments, with their respective responsibilities usually assigned by the Prime Minister to a senior minister.[xix] The senior minister in turn may assign particular responsibilities to junior and assistant ministers, including parliamentary secretaries.[xx] However, as the High Court in Re Patterson made clear, in such instances each Minister remains accountable to the Parliament in accordance with our constitutional system of responsible government.[xxi]

How then might the concepts of accountability work where, as is commonly the case, the decision-maker is rarely in fact the Minister, but in the overwhelming number of cases or perhaps invariably, the Minister’s delegate – a Departmental or agency officer? On the one hand, as John McMillan has argued, despite being nominated in the statute as the decision-maker, in many instances it may be undesirable in terms of public confidence in government if the Minister were personally to exercise the statutory power. As he explains, this may give rise to a perception that political biases or other irrelevant factors may have intruded into the decision-making process.[xxii] On the other hand, as McMillan also contends, there is much to be said for the Minister having the formal status of a decision-maker “because that links the whole process to the arena of public and political accountability”.[xxiii] In line with this, he also suggests that “[t]he statutory nomination of a Minister, Secretary or agency head as the decision-maker should presumptively be an indication only of who has political and managerial responsibility for the function.” Of course, as he also explains, there are decisions where that presumption should not apply.[xxiv]

Arguably we are seeing a trend towards a greater number of instances where Ministers are personally choosing to exercise powers affecting individual rights and interests. In this regard, it is important to stress that a decision personally made by a Minister is almost invariably excluded from merits review. As such, there are important consequences from the perspective of an individual whose rights and interests are affected by a decision if that decision is made personally by a Minister. The Law Council has also highlighted that decision-making powers not subject to merits review may engage Australia’s international human rights obligations, agreeing with the Parliamentary Joint Committee on Human Rights in this respect.[xxv] Furthermore, there are an increasing number of cases in which the legality of a decision made personally by a Minister is challenged on the basis that the Minister could not have given lawful consideration to the issues given among other things the volume of material before the Minister and the limited time devoted to consideration of the issues by the Minister.[xxvi]

In its report, What decisions should be subject to merits review, the Administrative Review Council set out those circumstances which may justify taking the rare step of excluding merits review including decisions involving consideration of issues “of the highest consequence to the Government”. Examples given by the ARC include those concerning national security, Australia’s relations with other countries, and Australia’s economy where the decision has a sufficiently high political content. This suggests that such decisions might ordinarily be of a sufficiently significant or controversial nature as to fall within the category of decision requiring consideration at Cabinet level, as recognised in the Bell Report.[xxvii] The seriousness of this step was further highlighted by the ARC’s recommendation that exclusion of decisions from merits review should be limited to decisions personally made by a Minister, and only be effected by, and take effect upon, the tabling in the Parliament of a certificate excluding the decision from merits review accompanied by an explanation.[xxviii] 


To conclude, the creation of a statutory power to make decisions always gives rise to two fundamental­­ questions: in whom should the statutory power formally be vested; and who, or what, should exercise the power? An answer to these questions in each case requires a consideration of fundamental human rights, the values underpinning Australian administrative law, principles of responsible government, and the specific statutory context. In this regard, the use of machines unquestionably has the capacity to promote consistency, accuracy, cost-effectiveness and timeliness in the making of government decisions. However, while the term “artificial intelligence” is often used to describe many of these technologies and they are most certainly artificial, ­­­ they are not in fact intelligent. Machines operate according to the rules under which they have been programmed including, in the case of machine learning, by applying the rules in question to “learn”, even though the outcome may not be predictable. ­­It follows that the deployment of machines in particular administrative decision-making contexts needs to be approached with care. This is especially so where, for example, the proposal is to amend a law so as substitute pre-existing discretions in favour of strict rules. Ultimately, achieving just, consistent and transparent decisions in the exercise of statutory discretions benefits both the institutions of government through building public confidence in them, and the individual who is subjected to the exercise of statutory powers. It is, harkening back to Portia’s plea, “twice blest; It blesseth him that gives and him that takes”.

* Justice of the Federal Court of Australia; LLB (Hons, Adel), LLM, PhD (Cantab), FAAL. This presentation was delivered at the Commonwealth Law Conference held by the Law Council of Australia on 24 February 2023. It draws upon presentations and published articles by, or co-authored with, Justice Perry, including in particular: a paper presented by Justice Perry and co-authored with Alexander Smith at the Inaugural International Public Law Conference, University of Cambridge, Centre for Public Law, 15-17 September 2014; Justice Melissa Perry, ‘iDecide - Administrative Decision-Making in the Digital World’ (2017) 91(1) Australian Law Journal 29; and Perry, M A, “iDecide: Digital Pathways to decision” in The Automated State: Implications, Challenges and Opportunities for Public Law (2021; The Federation Press) (Perry, Digital Pathways). The author also expresses her thanks to Emeritus Professor Robin Creyke AO for her generous assistance with research. 

[i] (2000) 201 CLR 194 at 294-205.

[ii] DJ Galligan, Discretionary Powers: A Legal Study of Official Discretion (Clarendon Press, Oxford, 1986) has observed: “… a notable characteristic of the modern legal system is the prevalence of discretionary powers vested in a wide variety of officials and authorities. A glance through the statute book shows how wide-ranging are the activities off the state in matters of social welfare, public order, land use and resources planning, economic affairs, and licensing. It is not just that the state has increased its regulation of these matters, but also that the method of doing so involves heavy reliance on delegating powers to officials to be exercised at their discretion” (at [72]). 

[iii]Minister for Immigration and Citizenship v Li (2013) 249 CLR 332, 348 29] (French CJ).

[iv] McMillan, J, “The role of judicial review in Australian Administrative Law”, 30 AIAL Forum 51 (McMillan) at 55.

[v] Perry, M A, “iDecide: Digital Pathways to decision” in The Automated State: Implications, Challenges and Opportunities for Public Law [full citation] at 1. 

[vi] NSW Ombudsman, ‘Mapping Automated Decision-Making Tools in Administrative Decision-Making’ (Report, 6 October 2022) 3.

[vii] Information Privacy Commissioner, “Scan of the Artificial Intelligence Regulatory Landscape – Information Access and Privacy’ (Report, 1 October 2022).

[viii] New South Wales Government, “NSW Government Artificial Intelligence (AI) Strategy” (Report, 31 March 2021).

[ix] Perry, M A, “iDecide: Digital Pathways to decision” in The Automated State: Implications, Challenges and Opportunities for Public Law (2021; The Federation Press) 2.

[x] Dominique Hogan-Doran, ‘Computer Says “No”: Automation, Algorithms and Artificial Intelligence in Government Decision-Making’ (2017) 13(3) Judicial Review 345, 367-368.

[xi] NSW Ombudsman, ‘The New Machinery of Government’ (Report, 29 November 2021) at [18] (citations omitted).

[xii] Administrative Review Council, ‘Automated Assistance in Administrative Decision Making’ (Report to the Attorney-General, November 2004) vii.

[xiii] See e.g. “Clayton Utz accelerates ESG work with ChatGPT”, LawyersWeekly, 21 February 2023.

[xiv] Brandon How, “DTA cautions public service ChatGPT use without policy” (online, Innovation Australia, 14 February 2023) < DTA cautions public service ChatGPT use without policy (>.

[xv] (2019) 267 CLR 373; [2019] HCA 23.

[xvi] Ibid at 395 [20] (Kiefel CJ, Bell, Keane and Nettle JJ).

[xvii] Ibid at 406-407 [46] (Kiefel CJ, Bell, Keane and Nettle JJ), at 425 [101]-[106], (Gageler J), at 440 [162] (Gordon J), at 459 [212] (Edelman J).

[xviii] The Guardian, 21 February 2023.

[xix] Report of the Inquiry into the Appointment of the Former Prime Minister to Administer Multiple Departments, the Hon Virgina Bell AC, 25 November 2022 (Bell Report) at [251]-[253].

[xx] Bell Report at [251]-[253].

[xxi]Re Patterson; ex parte Taylor [2001] HCA 51; (2001) 207 CLR 391 at [17] (Gleeson CJ), [210]-[211] (Gummow and Hayne JJ) (approving Zoeller v Attorney-General (Cth) (1987) 16 FCR 153 at 164-165 (Beaumont J). 

[xxii] McMillan at 56.

[xxiii] McMillan at 56-57.

[xxiv] McMillan at 57.

[xxv] Law Council of Australia, Legal and Constitutional Affairs References Committee, Performance and integrity of Australia’s administrative review system (7 Dec 2021) at [132] et seq.

[xxvi]Phosphate Resources Ltd v Minister for the Environment, Heritage and the Arts (No 2) (2008) 251 ALR 80 at [170] (Buchanan J); Koowarta v Queensland (2014) 316 ALR 724 at [191] (Greenwood J); Seafish Tasmania Pelagic Pty Ltd v Minister for Sustainability, Environment, Water, Population and Communities (No 2) (2014) 225 FCR 97 at 124 (Logan J); Secretary, Department of Sustainability and Environment (Vic) v Minister for Sustainability, Environment, Water, Population and Communities (Cth) (2013) 209 FCR 215 at 239 (Kenny J). For further discussion, see Mark Aronson, Matthew Groves and Greg Weeks, Judicial Review of Administrative Action and Government Liability (2017, Lawbook Company, 6th edition) [5.110].

[xxvii] Bell Report at [264] (referring to the PM&C Cabinet Handbook (14th Ed, 2020) at [72]). 

[xxviii] Administrative Review Council, What decisions should be subject to merits review (1999) at [4.29].

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