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withdrawn from the Consolidated Revenue Fund except under an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
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production. The views expressed do not reflect an official position
of the Information and Research Service, nor do they constitute
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ISSN 1328-8091
© Commonwealth of Australia 2005
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Published by the Parliamentary Library, 2005.
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