Chapter 13 - Financial legislation

Types of financial legislation

Bills which appropriate money or which deal with taxation appear in the following categories:

Appropriation bills

  • annual appropriation bills (usually called Appropriation Bill (No. 1), Appropriation Bill (No. 2) and Appropriation (Parliamentary Departments) Bill), which appropriate money for the services of the government and the Parliament for the financial year
  • additional appropriation bills (usually called Appropriation Bill (No. 3), Appropriation Bill (No. 4) and Appropriation (Parliamentary Departments) Bill (No. 2)), which appropriate additional funds for the services of the government and the Parliament for the financial year
  • supply bills (usually called Supply Bill (No. 1), Supply Bill (No. 2) and Supply (Parliamentary Departments) Bill), which appropriate money for the services of the government and the Parliament for the period from the beginning of the financial year until the annual appropriation bills are passed, and which are subsumed by the annual appropriation bills (following a change in the budget cycle in 1994, these bills are not necessarily required)
  • special appropriation bills, appropriating money for special purposes, including bills which make continuing and indefinite appropriations (these matters are further analysed below).

The annual appropriation bills and the supply bills for the services of the government always appear in pairs because the provisions which appropriate money for the ordinary annual services of the government, and which may not be amended by the Senate, must, under section 54 of the Constitution, be separated from those provisions which appropriate money for services of the government other than ordinary annual services. The funds appropriated by the supply and appropriation bills are therefore divided between two bills to separate the provisions which are amendable by the Senate from those which are not amendable by the Senate. The ordinary annual services appropriations are usually in Appropriation Bills Nos 1 and 3, and other appropriations in Appropriation Bills Nos 2 and 4. (The distinction between ordinary annual services and other services is a matter for interpretation and was delineated by an agreement between the Senate and the government in 1965, as further outlined below.)

In 1999 the Senate amended two appropriation bills for special purposes to strike out provisions which allowed grants to be made to bodies and persons without terms and conditions. The Senate took the view that the specification of terms and conditions for grants is an essential element of audit control of expenditure. (Appropriation (Supplementary Measures) Bills (Nos 1 and 2) 1999, 11/10/1999, J.1815).

Provisions in bills which were described by the government as “switching off” and “switching on” appropriations were the subject of a statement by the Chair of Committees on 14 September 2005. They appeared to be a device to avoid the injunction in section 53 of the Constitution on the initiation of appropriations in the Senate, and did not appear to derogate from the processes of the Senate (SD, 14/9/2005, p. 37).

Until 2005 it was thought that the expenditure of money under appropriations was as a matter of law limited to the purposes of the appropriations. In Combet v Commonwealth 2005 221 ALR 621 (21 October 2005), however, a majority of the High Court, called upon to consider the legality of certain government advertising expenditure under the post-1999 outcome-based budgeting system reflected in appropriation bills, in effect held, as the minority justices observed, that the executive government is free to expend money from appropriations on any purpose it deems appropriate. This judgment, as the Chief Justice explicitly stated, placed the task of controlling expenditure under appropriations exclusively in the responsibility of the Parliament. (See also report by the Finance and Public Administration Committee on Transparency and accountability of Commonwealth public funding and expenditure, PP 47/2007; response by the Chairs’ Committee presented 21/6/2007, J.4028.) (See Supplement)

Taxation bills

  • bills imposing taxation
  • bills which do not impose taxation, but which deal with taxation
  • customs tariff bills, which impose customs duties
  • excise tariff bills, which impose excise duties
  • other taxation measures.

Bills which impose taxation must be separate from bills which otherwise deal with taxation, and bills imposing taxation must deal with only one subject of taxation, except for customs tariff and excise tariff bills. These requirements, which are contained in section 55 of the Constitution, are further analysed below.

Loan bills

When the expenditure and revenue-raising proposals of the government announced in the budget result in a deficit of revenue, it is normal for the Parliament to pass a Loan Bill authorising the government to borrow money to the extent of the deficit. Parliament thus has the opportunity annually to determine whether the government should be authorised to borrow. As these bills do not appropriate money or impose taxation, they are amendable by the Senate.

In 1985 and 1986 Loans Bills were presented to the Senate in a form which would have made permanent the statutory authority for the government to borrow money, and the bill for 1987 would have extended the authority to borrow into the supply period of the following financial year. In each case the Senate amended the bill to restrict the authority to borrow to the current financial year, thereby preserving the right of the Parliament to consider annually the government’s authority to borrow.

(See Supplement)


The annual appropriation bills include sums for advances to government (called Advances to the Minister for Finance) to provide for payments in advance of appropriations, the money for which is recovered by later appropriations for the purpose, and for urgent and unforeseen expenditure. Similar advances are provided in the parliamentary appropriation bills for the President of the Senate and the Speaker of the House of Representatives for parliamentary expenditure.

The appropriation bills set out the conditions governing expenditure from the advances, and provide for particulars of such expenditure to be laid before the Houses. Following a report in 1979 of the Senate Standing Committee on Finance and Government Operations (PP 217/1979), statements of issues from the advances have also been presented since 1981. Such issues may or may not become final charges on the advances reflected in the statements of expenditure.

Statements of expenditure from the advances are referred to the standing committees for estimates hearings. The Senate considers them in committee of the whole on a motion that the statements be approved. This does not have the effect of authorising the expenditure, which is authorised by the original appropriation. Rejection of such a motion would signify dissatisfaction with a statement as an accountability document.

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