Bills Digest 163 1996-97 Appropriation Bill (No. 2) 1997-98


Numerical Index | Alphabetical Index

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

Appropriation Bill (No. 2) 1997-98

Date Introduced: 13 May 1997
House: House of Representatives
Portfolio: Finance
Commencement: Royal Assent

Purpose

To appropriate $5 866 977 000 for expenditure on capital works and services, payments to the States and Territories, and for other services during the 1996-97 financial year. The Bill appropriates $ 1 000 000 000 for the Federation Fund Trust Account.

Background

The Information Research Services publication Budget Review 1997-98 contains a detailed analysis of the Budget and its impact on particular departments and programs. It should be read in conjunction with this Digest.

(a) Introduction

Annual authorisations for expenditure are contained in the Appropriation Act (No. 1), which authorises expenditure for the ordinary services of government, and the Appropriation Act (No. 2), which deals with expenditure on capital works and services, payments to the States and other purposes not authorised by special legislation. The Parliamentary Departments are covered by the Appropriation (Parliamentary Departments) Act.

(b) Glossary of Terms

Appropriation - is the setting apart, assigning or applying to a particular use or to a particular person a sum of money. In the budget context an appropriation usually refers to an authorisation by Parliament to draw on funds from the Consolidated Revenue Fund (CRF).

Budget Outlays - refer to the net cost to the taxpayer of providing government services. Appropriations/payments out of the CRF are adjusted to take account (for example) of many government receipts. Hence a hypothetical government program 'XYZ' may have a total appropriation of $600 million but this may only represent budget outlays of $500 million if the 'XYZ' receives income of $100 million from other (non budget) sources.

Running costs - are the full current and minor capital costs incurred by a department or agency in providing government services for which the department or agency is responsible. For many departments, staff salaries will represent the largest proportion of such costs. Borrowings - Borrowings allow agencies to bring forward some future years appropriation to be spent in an earlier year. This is intended to provide agencies with the flexibility to respond to changing spending priorities; and a mechanism to meet unforeseen costs. Borrowings are arranged either through annual appropriation or additional estimates Bills, such as is the case with this Bill, with a consequent reduction in a future appropriation, or through the Provision for Running Costs Borrowing (PRCB) where the borrowing does not coincide with an appropriation Bill.

Agencies are allowed to borrow up to 10% of the total running costs budget from any one year. Running Costs Borrowings (PRCB) - The PRCB is a reserve that agencies can draw on to borrow running costs funds from future appropriation where it is not viable to wait until the passage of the next Appropriation Bill. Agencies can borrow from the PRCB if: there is a legitimate reason to borrow running costs; the agency has a running costs appropriation; the borrowings are repaid in full from some future appropriation; and sufficient funds are available.

(c) Outline of Bill

Schedule 2 of the Bills deals with the proposed allocation of funds appropriated by the Bill, a total of $5 886 977 000.

The major part of funds to be appropriated go to the Department of Health and Family Services, a total of $1 539 755 000. This principally consists of $1 403 132 000 for payments to the States and Territories.

Comment: Payments to the States and Territories (Division 891 at pp. 33-35 of the Bill) comprise a number of items, the main ones being health advancements ($113 787 000), health care access ($283 609 000), assistance for people with disabilities ($316 084 000), home and community care ($476 329 0000) and housing and crisis accommodation ($128 173 000). Major Budget measures within Division 891 (figures obtained by subtracting 1997-98 appropriation from 1996-97 estimated expenditure): +$2 728 000 in payments for special health programs (e.g. blood transfusion services, imported blood and blood related products, and artificial limbs scheme); -$8 305 000 in grants for provision of health services; -$4 816 000 for medicare agreements - other health services; +3 048 for University Departments of Rural Health; +$1 586 000 for the national youth suicide prevention strategy; +6 309 000 for assistance for people with disabilities; -$2 893 000 for supported accommodation assistance under the Supported Accommodation Assistance Act 1994; - $518 000 for referral services for women escaping domestic violence in rural and remote areas; +$1 430 000 for the supported accommodation assistance program - national case management and data strategies; +$5 010 000 in alternative funding arrangements for rural obstetric services; and -$52 580 000 for the Commonwealth dental program for health card holders. Major Budget measures within Division 892 - Other Services (p. 35 of the Bill) include (figures obtained by subtracting 1997-98 appropriation from 1996-97 estimated expenditure): -$6 057 000 for hearing services - payments for contestable services through a voucher system; +$5 050 000 for acute health care - microeconomic reform initiatives; +$5 252 000 for improving access of Aboriginal people to primary care; and +$6 878 000 for aged care accreditation and quality assurance.

The second highest amount allocated, $1 115 458 000, is for the Department of Social Security. This principally consists of $1 093 630 000 for payments to the States and Territories.

Comment: Payments to the States and Territories (Division 949 at p. 43 of the Bill) comprises a number of items, the main ones being compensation for extension of fringe benefits to pensioners and older long-term allowees and beneficiaries ($116 452 000), social housing subsidy program ($2 130 000), and Commonwealth State housing agreement ($975 048 000).

The third highest amount allocated, $1 002 889, is for the Department of Prime Minister and Cabinet. This principally consists of $1 001 000 000 under Division 939 (at p. 42 of the Bill) for Other Services.

Comment: Other Services (Division 939) comprises two items, the principal being Centenary of Federation. An amount of 1 000 000 000 will be appropriated for this item for payment to the Federation Fund Trust Account. The purpose of the Federation Fund (FF) is to finance a number of major projects of national significance, in order to both mark the Centenary of Federation and contribute to the building of required infrastructure for the coming century. The FF will be established as a separate Trust Account within the Commonwealth Public Account with total funds of the amount appropriated by this Bill. The projects are to be well advanced but not necessarily completed by the Centenary of Federation in 2001, and will be selected on the basis that they will generate jobs in the construction phase and make a significant ongoing contribution to Australia and the Australian economy. For example, it has already been decided to draw upon the FF from 1998-99 onwards to finance the cost of constructing the National Museum of Australia and the associated building for the Australian Institute of Aboriginal and Torres Strait Islander Studies. An amount of $1 000 000 is also appropriated under Division 939 for assistance to improve the integration of young offenders into education, training, employmentand community life.

A total of $175 000 000 is allocated for the Advance to the Minister for Finance (p. 29 of the Bill).

Comment: The Advance to the Minister for Finance is a form of contingency fund which is kept topped-up via provisions in the Appropriation Bills and the Supply Bills. The Advance is only used to provide funding for any unforeseen and urgent expenditures. These may arise if there are unforeseen shortfalls in funding for programs for which an appropriation already exists, or may relate to totally new programs. Monies may also be provided out of the Advance to cover payments which must be made pending the Minister for Finance's authorisation for the issue of Warrant authority. (A Warrant is a document provided by the Minister for Finance to the Secretary of a Department authorising the drawing of monies from the Commonwealth Public Account. The Warrant in effect ensures or attests that the making of any payment is covered by a lawful appropriation.)

Main Provisions

The effect of clause 3 is to authorise the Minister for Finance to issue from the Consolidated Revenue Fund a total of $5 866 977 000 for the year ending 30 June 1998 (Schedule 2 gives a portfolio and program breakup of the proposed expenditure).

Clause 4 deals with payments to the States and Territories. Schedule 2 deals with payments to the States and Territories by each Department. Payments detailed in Schedule 2 must be made on terms and conditions determined by the specified Minister.

Part 2 of the Bill foreshadows certain technical amendments to the proposed Appropriation Act (No. 2) 1997-98 contingent on the passage of the Government's proposed public sector financial management reforms. The necessary legislation which, amongst other things, will replace the Audit Act 1901.

Contact Officer and Copyright Details

Ian Ireland
26 June 1997
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 14 July 1997


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