Bills Digest No. 154 2004–05
Appropriation Bill (No. 1) 2005-06
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Contact Officer & Copyright Details
Passage History
Appropriation Bill
(No. 1) 2005-06
Date Introduced: 10 May 2005
House: House
of Representatives
Portfolio: Department of Finance and Administration
Commencement: When
the Act receives the Royal Assent
To appropriate funds for the ordinary annual services of the Government.
Section 83 of the Constitution provides that no monies may be withdrawn
from the Consolidated Revenue Fund except ‘under an appropriation made
by law’. Laws authorising spending are either:
Special appropriations—which account of about 75 per cent of spending—are
spending authorised by Acts for particular purposes. Examples are age
pensions, disability support pensions and the Newstart Allowance paid
under the Social Security (Administration) Act 1999, and the Family
Tax Benefits A and B paid under A New Tax System (Family Assistance)
(Administration) Act 1999.
There are usually six annual Appropriation bills. Three—Appropriation
Bill (No. 1), Appropriation Bill (No. 2) and Appropriation (Parliamentary
Departments) Bill (No. 1)—are introduced with the Budget. Appropriation
Bill (No. 1) appropriates funds for the ordinary annual services of the
Government, while Appropriation Bill (No. 2) appropriates funds for other
annual services. Section 54 of the Constitution requires that there be
a separate law appropriating funds for the ordinary annual services of
the Government. That is why there are separate bills for ordinary annual
services and for other annual services. The distinction between ordinary
and other annual services was set out in a ‘Compact’ between the Senate
and the Government in 1965 (the Compact has been updated to take account
of the adoption of accrual budgeting). The Appropriation (Parliamentary
Departments) Bill (No. 1) appropriates funds for the Parliamentary departments.
There is a separate Bill for the Parliamentary departments because the
services they provide are not considered to be either ordinary or other
annual services.
In the spring sitting of Parliament, three other Appropriation bills
are introduced. They provide supplementary funding to agencies, and are
called additional estimates. The bills are Appropriation Bill (No. 3)
for ordinary annual services, Appropriation Bill (No. 4) for other annual
services, and Appropriation (Parliamentary Departments) Bill (No. 2) for
the Parliamentary departments.
Appropriation Bill (No. 1) and Appropriation Bill (No. 2) appropriate
funds to departmental outputs and administered expenses. Departmental
outputs are expenses that agencies control. They are essentially the cost
of running agencies. Examples of departmental expenses are salaries and
other day-to-day operating expenses. Administered expenses are those that
agencies administer on the Government’s behalf. The bulk of appropriations
in Appropriation Bill (No. 1) are for departmental expenses. While most
administered expenses are funded through special appropriations, some
are funded through Appropriation Bill (No. 1). The ‘regional partnerships’
program and the Bass Strait Passenger Vehicle Equalisation Scheme are
examples of administered expenses funded through Appropriation Bill (No.
1).
Departmental outputs and administered expenses contribute to outcomes.
They are the results or consequences for the community that the Government
wishes to achieve. For example, Appropriation Bill (No. 1) 2005–06 (the
Bill) appropriates funds for the Federal Magistrates Service under Outcome
1 which is:
To provide the Australian community with a simple and accessible
forum for the resolution of less complex disputes within the jurisdiction
of the Federal Magistrates Service.
The data in the Bills are aggregated. Additional information can be found
in Portfolio Budget Statements. However, by far the largest single portfolio
appropriation is for Defence-some $16.438 billion from a total of $47.371
billion. A summary of the Department of Defence’s 2005-06 Budget is contained
in Chapter 2 of its Portfolio Budget Statement.
Information for other portfolios can found in their respective Portfolio
Budget Statements at http://www.budget.gov.au/2005-06/pbs/html/index.htm.
Section 53 of the Constitution provides that the Senate may not amend
proposed laws appropriating revenue or moneys for the ordinary annual
services of the Government. The Senate may, however, return to the House
of Representatives any such proposed laws requesting, by message, the
omission or amendment of any items or provisions therein.
The amount available for agencies to spend on departmental and administered
items is specified in Schedule 1. The total specified in this Schedule
is $47.371 billion.
The Bill contains a clause (clause 12) titled ‘Advance to the
Finance Minister’. This allows the Minister to pay sums for emergency
or unforseen purposes. As in earlier years, the maximum the Minister may
spend is $175 million [sub-clause 12(3)].
The Bill is largely identical to Appropriation
Act (No. 1) 2004–05. The following are noteworthy differences between
the Bill and this Act.
Clause 9 deals with ‘reduction of appropriations upon request’.
Note: departmental appropriations do not lapse at the end
of the financial year. They therefore remain legally valid until spent,
that is, the unspent balances of all departmental appropriations remain
available across all financial years. However, amounts appropriated for
departmental expenses can be subject to a reduction process. Under this
process, the Finance Minister may issue a determination—following a written
request from the relevant Minister—to reduce an agency’s departmental
expenses appropriation. Subsection 9(9) of Appropriation Act (No. 1)
2004-05 provides that:
A determination under this section is a disallowable instrument
for the purposes of section 46A of the Acts Interpretation Act
1901.
This provision does not appear in the Bill. Instead, subclauses 9(9)
and 9(10) provide that:
-
determinations are legislative instruments
-
section 42 of the Legislative Instruments Act 2003 applies
to determinations but Part 6 of that Act does not, and
-
written requests are not legislative instruments.
Note: section
42 of the Legislative Instruments Act 2003 enables legislative
instruments to be disallowed by either House of Parliament in the same
way as formerly existed under section 46A of the Acts Interpretation
Act 1901. Where it applies, Part 6
of the Legislative Instruments Act 2003 effectively places a 10-year
sunset clause on relevant instruments.
As in Appropriation Act (No. 1) 2004-05, clause 11
allows the Finance Minister to increase, by determination, spending on
departmental items. The maximum allowed is $20 million. However, clause
11 differs from the comparable sections in Appropriation Act (No. 1)
2004-05 in that it:
-
limits the Minister’s power to do so to the current year [subclause
11(1)]
-
whereas subsection 11(2) of Appropriation Act (No. 1) 2004-05
referred to ‘all departmental items’, subclause 11(2)
does not so specify
-
Note: subsection 11(2) of the Appropriation Act (No.1)
2004–05 explicitly stated:
-
The total of the amounts determined by the Finance Minister under
this section for all departmental items cannot be more
than $20 million. (Emphasis added).
-
By comparison, subclause 11(2) of the Bill does not contain the
phrase ‘for all departmental items’. Whilst this deletion does not
appear to allow the Minister to spend $20 million on each individual
departmental item, it would be preferable for this to be clarified
-
provides that determinations are legislative
instruments, but neither section 42 nor Part 6 of the Legislative
Instruments Act 2003 applies to determinations [subclause 11(3)],
and
-
prevents the Minister from making increases under previous years
Appropriation Acts [subclause 11(4)].
Note: the Bill does not include the equivalent of section 11(3)
of the Appropriation Act (No. 1) 2004-05, which provides that the
Finance Minister must give Parliament details of increases. Subclause
11(3) means that the Minister’s determination is not required to be tabled
in each House of Parliament, and is not subject to disallowance.
Clause 12 deals with the Advance to the Minister for Finance.
Similar to clause 11:
-
paragraph 12 (1)(a) limits the Minister’s power to make advances
to the current year
-
subclause 12(4) provides that determinations are legislative
instruments, but neither section 42 nor Part 6 of the Legislative
Instruments Act 2003 applies to determinations, and
-
subclause 12(5)] prevents the Minister from
making increases under previous years Appropriation Acts.
Note: the Bill does not include the equivalent of section 12(4)
of the Appropriation Act (No. 1) 2004-05, which provides that the
Finance Minister must give Parliament details of increases.
Clause 13 deals with Comcover receipts. Subclause 13(5)
introduces a provision that is not in Appropriation Act (No. 1) 2004-05.
Subclause 13(5) provides that neither a determination made by the Agency
Minister, nor a written direction made by the Finance Minister, in respect
of Comcover payments is a legislative instrument.
Richard Webb
23 May 2005
Bills Digest Service
Information and Research Services
This paper has been prepared to support the work of the Australian Parliament
using information available at the time of production. The views expressed
do not reflect an official position of the Information and Research Service,
nor do they constitute professional legal opinion.
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ISSN 1328-8091
© Commonwealth of Australia 2005
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