Bryan Pape, a states-rights advocate, barrister and University of New England academic, said the case had "nothing to do with the merits or demerits" of the Government's attempt to stimulate economic activity.

He wanted the court to rule on whether the bonus was the latest in a 20-year string of Commonwealth spending programs that "branched out into lots of new fields of activity," previously the domain of the states.

Mr Pape, who represented himself, produced a list of tax rebates and surcharges introduced in the 1960s to address an economic slowdown and subsequent boom, which he said were a valid use of the Commonwealth's taxation power.

"There are many things the taxation laws do to stimulate the economy," he said.

But the bonus was a gift, not a tax measure, and the Commonwealth did not have a general power to spend money on gifts, he said.

The constitution limited its spending to the 39 powers listed in section 51 of the constitution, such as external affairs and interstate trade, he said.

If that were not right, "there's really not much work for the constitution to do".

The chief justice, Robert French, suggested that if the bonus did not fall under one of the 39 powers in section 51, it might be a valid use of executive authority.

"And that gets us to the question: Does the executive power extend to giving money to people?" he asked.

Mr Pape replied that it did not. He argued that the Commonwealth's power to appropriate money from consolidated revenue under sections 81 and 83 of the constitution did not mean it could spend it for whatever purpose it chose.

Justice Bill Gummow asked Mr Pape how much power those sections gave the executive.

"Whether it [the executive] has power to spend it, having got it into the bank, I imagine one looks somewhere else in the constitution," Justice Gummow said.