Chapter 13 - Financial legislation

Scrutiny of expenditure proposals by standing committees

The Senate has a system which allows intensive scrutiny of government expenditure proposals, or estimates, before the appropriation bills reflecting those proposals are received by the Senate.

The basis of this system is the scrutiny of estimates, from 1970 to 1994 by estimates committees and from 1994 by the legislative and general purpose standing committees. Schedules of the proposed expenditure contained in the main annual and additional appropriation bills are tabled in the Senate when the bills are introduced into the House of Representatives, and are referred to the committees for examination.

These committees provide the principal opportunity for senators to scrutinise, not only the expenditure proposals of the government, but the operations and activities of government departments and agencies. In effect, they have become twice-yearly general inquisitions into government operations. As such, they are regarded by senators as among the most valuable of the Senate’s activities.

The committees, for each group of annual and additional appropriation bills, hold a main round of hearings at which all items of expenditure are open to examination, and in relation to the annual appropriation bills a supplementary round of hearings, after answers to questions taken on notice are received, which are confined to matters senators have notified for further questioning.

The committees report after their main hearings, and draw attention to any matters for further consideration by the Senate. They do not necessarily make any further reports after the supplementary hearings unless they have specific recommendation to make, for example, a recommendation that a matter be referred to a standing committee for further inquiry.

Strictly speaking, the committees have before them only the estimates of expenditure reflected in the annual appropriation bills, and, as has been noted, these account for less than 20 percent of government expenditure. In practice, however, the whole range of government expenditure is examined by the committees, particularly at the time of the main appropriation bills.

The introduction first of program budgeting and subsequently of output-based accrual accounting by government departments reinforced the practice. The requirements of estimates committees for more detailed explanations of expenditure proposals led to the development by departments of voluminous explanatory notes on the estimates and the tabling of those notes in the Senate. With program budgeting these notes were replaced by program performance statements, and then by output-based portfolio budget statements. These statements are tabled in the Senate and used by the committees as the basis of their scrutiny. (For a resolution of the Senate requiring further explanations of items in program performance statements, see 2/6/1992, J.2391-2.)

For directions to committees to hold further hearings on estimates, see 7/2/1995, J.2895-6, 2897; 4/11/1996, J.836; 10/4/2000, J.2582-3, 2585; 28/6/2000, J.2958; 28/11/2000, J.3594-5; 12/3/2002, J.154-6; 25/11/2003, J.2709-10; 16/6/2004, J.3473. (See Supplement)

It is considered that normally the appropriation bills should not be passed until the committees have concluded their hearings. The rationale for this is that the hearings may lead to senators wishing to move amendments or requests to the bills. The second reading debate on the bills may take place before the committees conclude their hearings. There is no fixed rule relating to this matter, and it has always been open to the Senate to pass the appropriation bills before the committees have concluded their deliberations. (For a postponement of the appropriation bills until the conclusion of estimates hearings, and debate on the matter, see SD, 20/6/1995, pp 1464-6.)

The Senate has on several occasions resolved, following reports of estimates committees, that there are no areas of expenditure of public funds by statutory authorities which are not open to scrutiny (9/12/1971, J.846; 23/10/1974, J.283; 18/9/1980, J.1563; 4/6/1984, J.902-3; 19/11/1986, J.1424).

The committees must hear evidence on the estimates in public session (SO 26(2)), and all documents received by the committees are published (see proceedings on report of Standing Orders Committee, 28/9/1972, J.1146, SD, p. 1331-2).

Normally only the main annual and additional appropriation bills are referred to the committees (precedent for referral of special appropriation bills: 1/12/1992, J.3169).

Further details on estimates hearings are in Chapter 16, Committees.

When proposed expenditure contained in an appropriation bill has been considered by a committee under these procedures, the bill is not considered in committee of the whole unless a senator has circulated in the Senate a proposed amendment or request for amendment to the bill. In that circumstance debate in committee is confined strictly to the purpose of the amendment (SO 115(4); for precedents see 29/3/1995, J.3185-6; 6/4/2000, J.2567; 13/4/2000, J.2637-9; 24/6/2004, J.3697-8).

The adoption of any recommendations of the committees may be proposed by way of an amendment to the motion for the passage of any other stage of a bill (18/11/1993, J.821; 31/10/1996, J.813).

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