Bills Digest No. 157 2004–05
Appropriation Bill
(No. 6) 2004-2005
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
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Appropriation Bill
(No. 5) 2004-2005
Appropriation Bill
(No. 6) 2004-2005
Date Introduced: 10 May 2005
House: House of
Representatives
Portfolio: Finance and Administration
Commencement: Day of Royal Assent
Appropriation Bill (No. 5) 2004
05 appropriates funds for the ordinary annual services of
government.
Appropriation Bill (No. 6) 2004 05 appropriates funds for the
other annual services of government.
Under section 83 of the Constitution, no monies may be withdrawn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 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.
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. 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 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).
The 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.
As noted, there are usually six annual appropriation bills of
which three are introduced when the Budget is brought down.
However, funding requirements often change after the Budget is
brought down. Governments make new policy commitments which have to
be funded. Agencies reassess their requirements and, if necessary,
submit requests for additional funding. The Government may agree to
additional funding if the amounts in the first three Appropriation
Acts are inadequate. The process whereby additional funds are
provided is called additional estimates and begins around November.
The approved additional estimates are normally incorporated into
three appropriation bills, which are introduced in the spring
sitting of Parliament. 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.
Appropriation Bill (No. 5) 2004 05 and Appropriation Bill (No.
6) 2004 05 are unusual in that they are supplementary to the usual
additional estimates bills. However, they are not unusual in that
they are, to all intents and purposes, the same as the usual
additional estimates bills. Appropriation Bill (No. 5) 2004 05
appropriates additional money for ordinary annual services while
Appropriation Bill (No. 6) 2004 05 appropriates money for other
annual services.
The data in the Bills are aggregated. Additional information can
be found in Portfolio Supplementary Additional Estimates
Statements.
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. 5) is
$291 568 000, while the total specified in schedule
2 of Appropriation Bill (No. 6) is $22 709 000. The
largest item in Appropriation Bill (No. 5) is $160 million for
transitional grants to compensate eligible entities for lost access
to a fringe benefits tax exemption. The largest item in
Appropriation Bill (No. 6) is $17.3 million for the Australian
Defence Force deployment to Iraq.
Basic appropriations are provided for in Part 2
of the Bill. Clauses 7 and 8 provide for
appropriations for departmental items and administered items
respectively. Specific amounts are outlined in schedule
1. After the $160 million for transitional grants referred
to above, the balance of monies appropriated by this Bill (around
$131.6 million) includes:
-
$35.1 million to the New South Wales Legal Aid Commission:
-
$28.2 million for Australian Defence Force deployments to Iraq,
including enhancements to armoured vehicles and protective
equipment to help safeguard deployees;
-
$23 million to provide for increases in Australia s financial
contributions to United Nations peacekeeping operations;
-
$10 million for a one-off grant to the Australia and New Zealand
School of Government;
-
$7 million and $5.7 million for depreciation expenses arising
from revaluations of the collections of the National Library of
Australia and the National Gallery of Australia respectively;
-
$5.1 million for contributions to sport and recreational
organisations and facilities, including the upgrade of Kogarah Oval
in Sydney;
-
$5 million towards the cost of fitting out the Brain and Mind
Research Institute research centres and laboratories;
-
$5 million for research by the Centre for Medical Bionics and
Hearing Services;
-
$464,000 for expenses associated with the recent Werriwa
by-election; and
-
$429,000 for ex-gratia payments in relation to the recent
bushfires on the Eyre Peninsula in South
Australia.(2)
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
-
annual administered appropriations are determined by the Finance
Minister. If the amount determined is less than the original
appropriation, the difference lapses.
This has been explained more fully thus:
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 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.(3)
Clause 9 gives effect to the intention to lapse unspent
departmental expenses.
Basic appropriations are provided for in Part 2
of the Bill. Clauses 7 and 8 provide for
appropriations for departmental items and administered items
respectively. Specific amounts are outlined in schedule
2. As well as the $17.3 million for the Australian Defence
Force deployment to Iraq referred to above, the Bill also
appropriates $4 million to reimburse the States for the cost of
providing medical teams under the AUSASSIST arrangements during the
tsunami relief effort.(4)
Clause 11: reduction of appropriations upon
request . This clause is identical in wording to clause 9 in
Appropriation Bill (No. 5) 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
-
This clause is drawn from previous work by Richard Webb, of the
Economics, Commerce and Industrial Relations Clause, Parliamentary
Library.
-
Dr. Sharman Stone, Secretary to the Minister for Finance and
Administration, Second reading speech: Appropriation Bill (No.5)
2004-2005 , House of Representatives, Debates, 10 May
2005, p. 42.
-
Agency Resourcing 2004-05, Budget Paper No. 4, p. 5.
-
Dr. Sharman Stone, Secretary to the Minister for Finance and
Administration, Second reading speech: Appropriation Bill (No.6)
2004-2005 , House of Representatives, Debates, 10 May
2005, p. 42 3.
Jerome Davidson
20 May 2005
Bills Digest Service
Information and Research Services
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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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