Appropriation Bill (No. 2) 2004-05


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Bills Digest No. 141  2003-04

Appropriation Bill (No. 2) 2004 05

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
Endnotes
Contact Officer & Copyright Details


Passage History

Appropriation Bill (No. 2) 2004 05

Date Introduced: 11 May 2004

House: House of Representatives

Portfolio: Treasury

Commencement: When they receive the Royal Assent

Purposes

Appropriation Bill (No. 1) 2004 05 appropriates funds for the ordinary annual services of government.

Appropriation Bill (No. 2) 2004 05 appropriates funds for the other annual services of government.

Background

Under section 83 of the Constitution, no monies may be withdrawn from the Consolidated Revenue Fund except under an appropriation made by law . Laws authorising spending are either:

  • special appropriations, or

  • six (usually) annual appropriation acts.

Special appropriations which account of about 75 per cent of spending are acts that provide money for particular purposes. For example, age pensions, disability support pensions and the Newstart Allowance are paid under the Social Security (Administration) Act 1999, while the Family Tax Benefits A and B are 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. 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.

The other three appropriation bills are introduced in the spring sitting of Parliament and are usually called additional estimates. They 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.

Section 53 of the Constitution provides that the Senate may not amend laws appropriating money for the ordinary annual services while Section 54 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 was updated to take account of the adoption of accrual budgeting).

Both Bills appropriate funds to departmental outputs and administered expenses. Departmental outputs are expenses that agencies control. Examples are salaries and other day-to-day operating expenses. Administered expenses are those that agencies administer on the Government s behalf. The examples of special appropriations above are administered expenses.

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) 2004 05 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.

ALP/Australian Democrat/Greens policy position/commitments

The Labor Party, the Australian Democrats and the Greens have indicated that they will oppose some of the Government s proposals contained in the Budget. An attempt to block these proposals is not an attempt to block supply . Any changes that the Opposition parties want to make to the Government proposals would entail amendment to either Appropriation Bill (No.2) or will be special appropriations legislation.

Main Provisions

The amount available for agencies spending on departmental and administered items is specified in Schedules. The total specified in Schedule 1 of Appropriation Bill (No. 1) 2004 05 is $45.060 billion, while the total specified in Schedule 2 of Appropriation Bill (No. 2) 2004 05 is $5.187 billion.

Both Bills contain a clause Advance to the Finance Minister . These clauses allow the Minister to pay sums for emergency or unforseen purposes. The maximum is $175 million for Appropriation Bill (No. 1) 2004 05 and $215 million for Appropriation Bill (No. 2) 2004 05 [sub-clauses 12(3) and 13(3) respectively]. The Minister has to account to Parliament for the sums spent from the Advances.

Appropriation Bill (No. 1) 2004 05

Appropriation Bill (No. 1) 2004 05 is largely identical to Appropriation Bill (No. 1) 2003 04. The changes are:

  • the definition of agency now includes the High Court (Clause 3)

  • the definition of entity now includes the Australian National Training Authority (Clause 3)

  •   Clause 9 deals with reduction of appropriations upon request . In this context, it is important to distinguish between the processes for departmental appropriations and annual administered appropriations. In short:
    • departmental appropriations do not lapse at the end of the financial year. They therefore remain legally valid until spent. The unspent balances of all departmental appropriations remain available across all financial years unless the Finance Minister withdraws drawing rights, and
    • annual administered appropriations are determined by the Finance Minister. If the amount determined is less than the original appropriation, the difference lapses.

The Introduction to Budget Paper No. 4 explains this more fully:

The annual appropriations acts are not expressed in terms of a particular financial year and so do not automatically lapse. Amounts appropriated for departmental expenses and for non-operating costs(1) can be subject to a lapsing process first introduced in the additional estimates appropriations bills for 2003-2004. Under this process, on request in writing from a responsible minister for an agency, the Finance Minister may issue a determination to reduce the agency s departmental expense or non-operating costs appropriation. Requests for amounts to be lapsed may arise, for example, because the appropriation is no longer required. Until the Finance Minister issues a determination under this process, moneys appropriated for departmental expenses and non-operating costs may be issued from the CRF in the budget or later years.

Appropriations for administered expenses are subject to a determination by the Finance Minister on the amounts to be issued. The effect of that determination is to prevent any part of the appropriation that has not been expensed in the year from being issued from the CRF. By convention the Finance Minister issues determinations in relation to administered expenses appropriations following the completion of each financial year.(2)

Clause 9 gives effect to the intention to lapse unspent departmental expenses.

  • Clause 10 deals with net appropriations . Subclause 4 deals with items that are taken to be administered marked net appropriations , and adds paragraph 4(e) which provides that the administered item for outcome 2 of the Department of Transport and Regional Services is also to be marked as a net appropriation.

Appropriation Bill (No. 2) 2004 05

Appropriation Bill (No. 2) 2004 05 is largely identical to Appropriation Bill (No. 2) 2003 04. The changes are:

  • the definition of agency now includes the High Court (Clause 3)

  • the definition of entity now includes the Australian National Training Authority (Clause 3)

  • Clause 11: reduction of appropriations upon request . This clause is identical in wording to Clause 9 in the Appropriation Bill (No. 1) 2004 05 except that whereas Clause 9 refers to reducing a departmental item [sub-clauses 9(1) and 9(2)], Clause 11 refers to reducing an administered assets and liabilities item or an other departmental item [sub-clauses 11(1) and 11(2)].

Endnotes

  1. Non-operating costs include things such as equity injections and loans.

  2. Agency Resourcing 2004-05, Budget Paper No. 4, p. 5.

 

Contact Officer and Copyright Details

Richard Webb
24 May 2004
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

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 2004

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Published by the Parliamentary Library, 2004.

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