BILLS DIGEST NO. 112, 2014–15              9 June 2015

Appropriation (Parliamentary Departments) Bill (No. 1) 2015-2016

Liz Wakerly
Economics Section 

Date introduced: 12 May 2015

House:  House of Representatives

Portfolio: Finance

Commencement:  On Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website.

The Bills Digest at a glance

Sections 81 and 83 of the Australian Constitution provide that there must be an appropriation, made by law, for the purposes of the Commonwealth, before money may be drawn from the Consolidated Revenue Fund (CRF).[1]

The Appropriation (Parliamentary Departments) Bill (No. 1) 2015–2016 (the Bill) seeks to appropriate $233.4 million from the CRF for the four parliamentary departments:

•       Department of the Senate—$21.5 million

•       Department of the House of Representatives—$22.1 million

•       Department of Parliamentary Services—$182.4 million and

•       Parliamentary Budget Office—$7.4 million.

Structure of the Bill

This Bill is divided into a number of parts:

•       Part 1 of the Bill defines terms, provides that the Portfolio Budget Statements are aids to the interpretation of the Bill under the Acts Interpretation Act 1901 and provides that notional transactions between non-corporate entities of the Commonwealth are to be treated as being real transactions[2]

•       Part 2 proposes appropriations to make payments of the amounts in Schedule 1 for departmental, administered, administered assets and liabilities and other departmental items

•       Part 3 specifies the way in which the amounts in Schedule 1 may be adjusted through an Advance to the responsible Presiding Officer and

•       Part 4 deals with miscellaneous items.

An explanation of the operation of each part is outlined at page two of the Explanatory Memorandum to the Bill.[3]

Background

An appropriation is the legal release of monies from the CRF.[4] The annual Appropriation Acts are the authoritative sources for details of annual appropriations provided to departments. The Acts take precedence over budget papers, Portfolio Budget Statements and other associated materials.

Following a recommendation from the Parliament’s Appropriations and Staffing Report of the Senate Select Committee, appropriations for parliamentary departments are removed from the Bill for the ordinary annual services of the Government and included in a separate Parliamentary Appropriations Bill.[5]

There are certain unique constitutional and presentational requirements that a Bill proposing to appropriate monies must satisfy. Further information is contained in, for example, Bills Digest No. 110, Appropriation Bill (No. 5) 2014–2015 [and] Appropriation Bill (No. 6) 2014–2015.[6]

Statement of Compatibility with Human Rights

The Government states that the ‘Appropriation Bill is not seen as engaging, or otherwise affecting, the rights or freedoms relevant to the Human Rights (Parliamentary Scrutiny) Act 2011’.[7]

At the time of writing, the Bill had not been considered by the Parliamentary Joint Committee on Human Rights.[8]

Financial implications

The Bill seeks to appropriate $233,415,000 from the CRF.[9] Table 1 compares actual available appropriations for 2014–15 with proposed appropriations for 2015–16.

Table 1: Comparison of proposed 2015–16 appropriations with actual available appropriations for 2014–15

2014–15 ($’000)

2015–16 ($’000)

Department of the Senate

20,627

21,503

Department of the House of Representatives

21,146

22,134

Department of Parliamentary Services

271,370

182,368

Parliamentary Budget Office

7,013

7,410

Total: parliamentary departments

320,156

233,415

Source: Appropriation (Parliamentary Departments) Bill (No. 1) 2015–2016, Schedule 1.

Under the Appropriation (Parliamentary Departments) Act (No. 2) 2014–2015, $113,837,000 was appropriated from the CRF for the Department of Parliamentary Services to improve security in Parliament House.[10]

Advance to the responsible Presiding Officer

The Advance to the responsible Presiding Officer (APO) enables the Presiding Officer to provide additional appropriations when the Presiding Officer is satisfied that there is an urgent need for expenditure and the existing appropriation is inadequate either because the expenditure was omitted or understated or due to unforeseen circumstances.[11]

The maximum amount under these advances is $300,000 for the Department of the Senate, the Department of the House of Representatives and the Parliamentary Budget Office; and $1 million for the Department of Parliamentary Services. These amounts are the same as those contained in the Appropriation (Parliamentary Departments) Act (No. 1) 2013–2014 and the Appropriation (Parliamentary Departments) Act (No. 1) 2012–2013 (excluding the Parliamentary Budget Office which commenced operations in 2012–13).[12] No APOs were provided to the parliamentary departments in either 2013–14 or 2012–13.[13]

Agency resourcing

From the Department of the Senate Portfolio Budget Statement (PBS):

The appropriation for the department in the 2015–16 Budget is $21.5m, compared with $20.6m in 2014–15.

The change in the appropriation comprises an increase of $1.7 million (ongoing funding of $0.2m to meet increased fringe benefits tax liabilities and one-off program funding from the Contingency Reserve of $1.5m for secretariat support for committees) offset by a decrease of $0.64m (cessation of dedicated funding for the Parliamentary Joint Select Committee on the Constitutional Recognition of Aboriginal and Torres Strait Islander Peoples).[14]

The Department of the House of Representatives PBS reports that:

The Department has received supplementary departmental funding totalling $2.328m across five years, commencing 2014–15 of which $1.5m reflects additional requirements in the Department’s support for committees. This increase in funding is very welcome, although there will still be pressure on resources and, at this stage, the forward years 2017–18 and 2018–19 will see a return to a decline of appropriation in real terms. For the budget and forward year one, continued expenditure restraint will be required to enable the Department to deliver effective services which can reasonably be expected of us and remain within budget.

From 1 April 2015, as a result of the implementation of paid parking within the Parliamentary triangle, the Department is liable for the payment of Fringe Benefit Tax for employees who access the private car parks at Parliament House. The balance of the additional funding through the budget ($0.828m) will meet the liability from 1 July 2015.

As foreshadowed in previous statements, the middle period of the Parliamentary cycle is characterised by high levels of activity across all areas of the Department resulting in increased supplier and employee expenses. As a result, the Department has estimated it will make a small loss of $0.138m before depreciation ($0.822m after depreciation) for 2014–15. The Department has sufficient cash reserves to fund the loss without any immediate impact on its sustainability in the short term.

The estimates for the budget year and three forward years show a break even position. At this stage it is difficult to predict with certainty what the outcome for these years will be other than that the Department’s budget will continue to be under pressure, although the additional funding referred to above in the budget year and forward year one will assist in supporting our existing levels of service. The Department will continue to seek efficiencies and these will contribute to strengthening the Department’s financial position.[15]

In the Department of Parliamentary Services PBS, departmental funding has reportedly increased by $0.7 million in 2015–16 and approximately $0.5 million per year across the forward estimates:

This increase is due to the additional $1.1 million in operating funding allocated in the 2015–16 budget with a similar amount allocated each year across the Forward Estimates. The additional funding is partially offset by a reduction in funding due to changes in price parameters.

The additional revenue from Government has been allocated to both supplier and employee expenses and DPS is forecasting a balanced income statement result in 2015–16 and across the Forward Estimates (excluding depreciation and amortisation, for which the department is not appropriated).

The departmental depreciation and amortisation estimate has been increased by $3.3 million per annum in line with actual achievement.

The administered suppliers estimate for 2015–16 has increased by $3.3 million and approximately $4.0 million per annum across the Forward Estimates for operating costs associated with the capital works programme.

…

An additional $19.7 million was allocated to the administered capital budget as part of the 2015–16 budget.

DPS was allocated an additional $1.3 million in 2015–16 and $0.7 million in 2016–17 for the departmental capital budget.[16]

In some cases, non-corporate Commonwealth entities (NCEs) can receive money from various sources that may be retained and spent by the NCE. Examples of such receipts are money received as payment for services provided by the NCE and money received as repayment of an earlier amount paid by the Commonwealth. The authority to retain and spend such amounts is provided in section 74 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and section 27 of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule).[17]

As a general principle, the PGPA Rule allows an entity to retain sufficient amounts to cover activities for which it has not received other appropriations by Parliament. As at May 2015, the Department of Parliamentary Services proposed a total of $8,259,000 in section 74 retained revenue receipts for 2015–16.[18]

Additional funding (of $3,450,000 ) will be provided by the Government to the Department of Parliamentary Services over four years 2015–16 to 2018–19 to support capital works addressing ‘critical failures and long term under investment identified in the Building Condition Assessment Report for Parliament House’.[19]

The Parliamentary Budget Office received a special appropriation at the time of its establishment in July 2012. The special appropriation is recognised as revenue in the year the funds are spent. According to the Parliamentary Budget Office PBS:

[t]he PBO is budgeting for a surplus of $0.4 million for 2015–16 as a result of recognising the use of funds from the PBO’s special appropriation as revenue to complete projects which will be capitalised rather than expensed.

From 2016–17 onwards the PBO is budgeting for a break-even operating result, after non-appropriation expenses such as depreciation are removed.[20]

Key issues and provisions

Many of the key provisions of Appropriation Acts are similar from year to year.

Part 1 – Preliminary

Clauses 1, 2, and 3 are formal or technical clauses, such as when the Bill commences and the definitions used.

Clause 4 declares that the PBSs are relevant documents under paragraph 15AB(2)(g) of the Acts Interpretation Act 1901 that may be used to interpret provisions of the Bill (or the proposed Act).[21] The purpose of the PBSs is to provide information on the proposed allocation of resources to the outcomes of the parliamentary departments.

Clause 5 ensures that payments between NCEs result in a debit from the appropriation for the paying NCE (to ensure consistency with section 76 of the PGPA Act).

Part 2 – Appropriation items

Clause 6 sets out the total appropriations in Schedule 1 of the Bill. The amounts in Schedule 1 of the Bill may be further adjusted in accordance with sections 74 and 75 of the PGPA Act:

•       departmental items may be increased to take into account certain other amounts received by a parliamentary department if those receipts are prescribed by the PGPA Rule in accordance with section 74 of the PGPA Act

•       appropriations may be adjusted by amounts recoverable by an NCE from the Australian Taxation Office for Goods and Services Tax (GST) (the amounts in Schedule 1 exclude recoverable GST) and

•       items may be adjusted to take into account the transfer of functions between NCEs.

Total appropriations include amounts for departmental items (clause 7), administered items (clause 8), administered assets and liabilities items (clause 9) and other departmental items (clause 10).

Part 3 – Advance to the responsible Presiding Officer

Clause 11 enables the responsible Presiding Officer to provide additional appropriations for items when satisfied there is an urgent need for that expenditure and the existing appropriation is inadequate. The total amounts that can be determined under the APO provision are provided in subclauses 11(3) to 11(6). Subclause 11(7) provides that a determination under clause 11 is a legislative instrument which is not subject to disallowance or sunsetting.

Part 4 – Miscellaneous

Clause 12 provides for crediting amounts to special accounts. A special account may be established under the PGPA Act by an Act (section 80) or a determination of the Finance Minister (section 78) that is disallowable by Parliament (section 79). The determination or Act that establishes the special account will specify the purposes of the special account.

Clause 13 appropriates funds from the CRF as necessary for the purposes of the Bill. There is an appropriation in law when the Act commences. The amounts appropriated by the Bill may be affected by the PGPA Act (sections 74 to 75 – see clause 6) after the Bill receives Royal Assent.

Clause 14 specifies that the Bill, once enacted, is repealed at the start of 1 July 2018.

Schedule 1 – Services for which money is appropriated

Schedule 1 to the Bill provides details of the appropriations for each parliamentary department (see Table 1 of this Digest).

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

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[1].              Constitution, sections 81 and 83, accessed 29 May 2015.

[2].              Acts Interpretation Act 1901 (Cth), accessed 4 June 2015.

[3].              Explanatory Memorandum, Appropriation (Parliamentary Departments) Bill (No. 1) 2015-2016, p. 2, accessed 4 June 2015.

[4].              Department of Finance, ‘Summary of annual appropriations’, Department of Finance website, accessed 22 May 2015.

[5].              Senate Standing Committee on Appropriations and Staffing, Parliament’s appropriations and staffing: report of the Senate Select Committee, Parliamentary paper no. 151/1981, The Senate, Canberra, 1981, accessed 29 May 2015.

[6].              T Dale, D Weight and D Mather, Appropriation Bill (No. 5) 2014–2015 [and] Appropriation Bill (No. 6) 2014–2015, Bills digest, 110, 2014–15, Parliamentary Library, Canberra, 2015, accessed 29 May 2015.

[7].              Explanatory Memorandum, Appropriation (Parliamentary Departments) Bill (No. 1) 2015–2016, op. cit., p. 4.

[8].              Parliament of Australia, ‘Parliamentary Joint Committee on Human Rights: committee reports‘, Australian Parliament website, accessed 1 June 2015.

[9].              Appropriation (Parliamentary Departments) Bill (No. 1) 2015–2016, clause 6.

[10].              Appropriation (Parliamentary Departments) Act (No. 2) 2014–2015, clause 6, accessed 1 June 2015.

[11].              As defined in clause 3 of the Bill, the responsible Presiding Officer is the President of the Senate for the Department of the Senate, the Speaker for the House of Representatives, and the President and the Speaker together for both the Department of Parliamentary Services and the Parliamentary Budget Office.

[12].              Appropriation (Parliamentary Departments) Act (No. 1) 2013–2014, section 13, Appropriation (Parliamentary Departments) Act (No. 1) 2012–2013, section 13, both accessed 2 June 2015.

[13].              Australian Government, Report on advances provided under the Annual Appropriation Acts 2012–13, Department of Finance, accessed 2 June 2015. No advances were provided in 2013–14; as a result a report on advances provided under the Annual Appropriation Acts 2013–14 was not produced: Department of Finance, ‘Advance to the Finance Minister’, Department of Finance website, accessed 5 June 2015.

[14].              Australian Government, Portfolio budget statements 2015–16: budget related paper no. 1.17B, May 2015, p. 3, accessed 2 June 2015.

[15].              Australian Government, Portfolio budget statements 2015–16: budget related paper no. 1.17A, May 2015, pp. 8–9, accessed 2 June 2015.

[16].              Australian Government, Portfolio budget statements 2015–16: budget related paper no. 1.17C, May 2015, pp. 19–20, accessed 2 June 2015.

[17].              Public Governance, Performance and Accountability Act 2013 (Cth); Public Governance, Performance and Accountability Rule 2014 (Cth), both accessed 2 June 2015.

[18].              Portfolio budget statements 2015–16: budget related paper no. 1.17C, op. cit., p. 10, accessed 2 June 2015.

[19].              Australian Government, Budget measures: budget paper no. 2: 2015–16, p. 199, accessed 2 June 2015.

[20]               Australian Government, Portfolio budget statements 2015–16: budget related paper no. 1.17D, p. 16, accessed 2 June 2015.

[21].              Acts Interpretation Act 1901 (Cth), section 15AB, accessed 2 June 2015.