Bills Digest no. 97 2008–09
Appropriation (Nation Building and Jobs) Bill (No. 2)
2008 09
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
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Date
introduced: 4 February
2009
House: Hose of Representatives
Portfolio: Finance and Deregulation
Commencement:
On Royal
Assent
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
To appropriate $1 727.2 million
for the non-ordinary ( other ) annual services of the government as
part of the Nation Building and Jobs Plan.
On 3 February 2009, the Rudd Government announced the National
Building and Jobs Plan (the Plan).[1] The context is the deteriorating Australian and
world economies. The Plan s purpose is to provide additional fiscal
stimulus to counter the contraction in the economy. The Plan is the
fourth fiscal stimulus package and follows the Economic Security
Strategy,[2] the
Nation Building Package,[3] and the Council of Australian Governments (COAG) funding
package.[4]
For a discussion of the desirability and the efficacy of
measures to revive the economy through fiscal stimulus, see the
Bills Digest for the Appropriation
(Nation Building and Jobs) Bill (No. 1) 2008-2009.
The Plan has ten elements:
- Building the Education Revolution
- 20 000 social and defence homes
- energy efficient homes
- small business and general business tax breaks
- black spots, boom gates and community infrastructure
- tax bonus payment for working Australians
- single-income family bonus payment
- farmer s hardship bonus payment
- back to school bonus payment, and
- training and learning bonus payment.
To implement the Plan, the government introduced six Bills:
- the Appropriation (Nation Building and Jobs) Bill (No. 1)
2008-2009
- Appropriation (Nation Building and Jobs) Bill (No. 2)
2008-2009
- Household Stimulus Package Bill 2009
- Tax Bonus for Working Australians Bill 2009
- Tax Bonus for Working Australians (Consequential Amendments)
Bill 2009, and
- Commonwealth Inscribed Stock Amendment Bill 2009.
This Bills Digest deals with the Appropriation (Nation Building
and Jobs) Bill (No. 2) 2008-2009 (the bill).
All six Bills were referred
to the Finance and Public Administration Committee for inquiry and
report by 10 February 2009. Details of the inquiry are at
http://www.aph.gov.au/Senate/committee/fapa_ctte/stimulus_package/index.htm.
The Plan s cost is estimated at almost $42 billion over four
years. Of this, almost $13 billion is in 2008 09, more than $17
billion in 2009 10, more than $1.5 billion in 2010 11, and more
than $1.5 billion in 2011 12.[5]
The Bill appropriates $1 727.2 million comprising:
- $987.2 million in 2008 09 for the Department of Education,
Employment and Workplace Relations under the Building the Education
Revolution program
- $260 million for the Department of Families, Housing, Community
Services and Indigenous Affairs for social housing, and
- $480 million to the Department of Infrastructure, Transport,
Regional Development and Local Government. The components are:
- $230 million of which $150 million is for repairs to national
highways, $50 million for boom gates for rail crossings, and an
additional $30 million for the Black Spot program, and
- an additional $250 million under the Regional and Local
Community Infrastructure Program: Strategic Projects program.
All of the above amounts will be paid to the states, territories
and local governments as specific purpose payments.
This Bill appropriates funding of $987.2 million in the 2008 09
financial year as part of the government s $14.7 billion Building
the Education Revolution (BER) initiative. Subsequent funding of
$8.5 billion for school infrastructure is proposed in 2009 10, and
a further $5.26 billion is proposed in 2010 11.[6] The $987.2 million will be
additional to the Commonwealth s expenditure on schools which was
estimated in the Mid-Year Economic and Fiscal Outlook (MYEFO) to be
$9.8 billion in 2008 09.[7]
Building the Education Revolution has three key programs:
- Primary Schools for the 21st Century
- provides $12.4 billion over three years for government and
non-government primary schools to build or upgrade major
infrastructure, such as multi-purpose halls and libraries
- facilities must be made available to the community for low or
no cost
- projects must be completed by 30 June 2011
- priorities will be given to schools applying to build new
facilities, but schools with a recently completed library or hall
are still entitled to apply and
- funding caps apply and will be determined by school size.
Schools with up to 50 students, for example, can apply for up to
$250 000; schools with over 400 students can apply for up to $3
million in funding.[8]
- Science and Language Centres for 21st Century
Secondary Schools
- provides $1 billion over three years to build approximately 500
new science laboratories or language learning centres in government
and non-government secondary schools and
- funding will be through a one-off competitive grants process
and only made available to schools with a demonstrated need and the
capacity to complete construction by 30 June 2010.[9]
- National School Pride Program
- provides a total of $1.3 billion for all Australian schools to
undertake maintenance and minor building work and
- funding caps apply and will be determined by school size.
Schools with over 400 students will be able to apply for a maximum
of $200 000.[10]
The Government proposes to make funding for the BER available
from February 2009 through state and territory governments for
government schools and through Block Grant Authorities (BGAs) for
non-government schools. It will be a condition of funding, however,
that the state and territory governments and BGAs prioritise
projects so they can be completed on time. Schools receiving
funding under any of the three new programs will be required to
report on the progress of projects using an online reporting
portal.[11]
The National School Pride Program proposes funding of
$1.3 billion over three years. The program is similar to the
Investing in Our Schools Programme (IOSP) that operated
under the Coalition Government between 2005 and 2008 in that it
will fund maintenance and minor capital works with a cap of $200
000.[12] However,
unlike IOSP, the Government expects that all schools will receive
funding (with 60 per cent of schools receiving funding in 2009 and
40 per cent in 2009 10. Proposal assessments will be through the
states for government schools and funding caps are tied to school
size.[13] Proposal
assessments for non-government schools will be managed through BGAs
as they were under the IOSP.
The Primary Schools for the 21st Century
program is the largest component of the Building the Education
Revolution package. Funding will be $12.4 billion over three years
with the majority appropriated in the 2009 10 and 2010 11 financial
years. All primary schools, special schools and K 12 schools with a
primary component are expected to benefit from this
program.[14] They
will be eligible to apply for funding to build libraries,
multipurpose halls or to upgrade existing facilities. Under the
terms of the Council of Australian Governments National Partnership
Agreement on the Nation Building and Jobs Plan, funding for
government primary schools is conditional on the states agreeing to
make new and refurbished buildings in primary schools available for
community use at no or low cost. Presumably similar conditions will
be included in agreements with non-government schools
authorities.[15]
Of the $987.2 million appropriated by the Bill, $386.4 million
will be spent on the National School Pride
Program and $600.8 million on the Primary Schools for
the 21st Century program.[16]
Sector allocation estimates for 2008 09 are: government schools
$688.5 million, Catholic schools $192.6 million and independent
schools $106.2 million. State allocation estimates for 2008 09 are:
New South Wales $317.1 million, Victoria $235.0 million, Queensland
$183.9 million, Western Australia $107.9 million, South Australia
$85.1 million, Tasmania $27.2 million, Northern Territory $14.6
million and the Australian Capital Territory $16.3 million.[17]
The primary objective of the BER is to provide economic stimulus
through the rapid construction and refurbishment of school
infrastructure .[18] However, the substantial financial commitment of $14.7
billion to schools is consistent with the Labor Government s
emphasis on investing in education to build future national
prosperity. The Labor Party in opposition and in government have
named this commitment the Education Revolution .[19]
To date, the Government s budget measures for schools have been
directed at broadly based programs developed in partnership with
the states and territories. These new programs include the Digital
Education Revolution (computers in schools initiative), the
National Action Plan for Literacy and Numeracy (providing
additional support to students and schools with most need), Trade
Training Centres in Schools, increasing general recurrent grants
for government primary schools to the same level as government
secondary schools and new indexation arrangements for all
government schools which will increase their recurrent grant
funding.
The concentration of funding, $12.4 billion of the total $14.7
billion, to primary schools builds on the government s commitment
to increase general recurrent funding of government primary
schools. Recent reports have drawn attention to the
under-resourcing of government and non-government primary schools.
Two concluded that many primary schools, particularly those serving
disadvantaged communities, did not have sufficient resources to
meet the National
Goals for Schooling.[20] Similarly, an investigation into the state of
Australian primary schooling, based mainly on evidence provided by
staff from a random sample of 160 primary schools, concluded:
There is a link between the capacity of schools
to develop good programs and the quality and scale of their
facilities. It is much harder for a school to promote all of the
Key Learning Areas if it consists of little more than regular
classrooms, a set of offices for the principal and clerical staff
and a reception area. Primary schools tend to be too small to
acquire the funds (or, in the case of non-government schools, have
sufficient income to service debts) needed for capital works. Being
small also works against their political interests, as they are
more likely to be invisible to capital grants administrators.
Sadly, capital works have been done on the cheap. Old and
sub-standard structures place a huge pressure on primary schools.
This has become increasingly challenging as safety requirements
have become more rigorous. Limited funds must be diverted to urgent
works, such as replacing asbestos materials or removing trees that
have died as a result of the drought. Many of these requirements
are very expensive.[21]
Understandably, therefore, the Australian Primary Principals
Association has welcomed the BER package and is calling for the
Bill to be passed.[22]
Before the BER package was announced, the Government s
commitment to school capital works was similar to the previous
government $1.7 billion over four years.[23] Estimates for 2008 09 were $526.9
million or 5.5 per cent of the Commonwealth s total school
funding.[24] The
Mid Year Economic and Fiscal Outlook (MYEFO) showed a decrease in
the estimate for school capital works to $341.44 million to take
into account changed parameters in the costing of capital
works.[25] The
additional funding of $987.2 million appropriated in the Bill
therefore represents a significant increase in the Commonwealth s
funding to school infrastructure.
The $14.7 billion over three years in the BER package, albeit a
one-off measure, represents a major shift in the Commonwealth s
role and has generated discussion on the possibility of cost
shifting from the states to the Commonwealth. The Government has
argued that this will be prevented by making the funding
conditional on the states maintaining their current and planned
level of investment for capital infrastructure in schools over the
next four years, spending it concurrently with BER funding on
school infrastructure, and providing the Australian Government with
evidence of capital expenditure for the past four years and
estimates for the next four years .[26]
As a part of the $42 billion economic stimulus package, up to $6
billion is to be provided under the Commonwealth Social Housing
Initiative to fund the construction of around 20 000 public
and community housing dwellings. It is envisaged that the new
houses should be largely completed by December 2010.[27] The Commonwealth
Social Housing Initiative will also allocate around $400 million to
the states and territories over two years for the repair of around
2 500 public housing dwellings that are currently
uninhabitable.[28]
Until recently, the main vehicle through which the Australian
Government, along with the state and territory governments, has
provided funding for public housing was the Commonwealth-State
Housing Agreement (CSHA). This joint agreement helped to provide
public and community housing to individuals and families in need
since the late 1940s. The last CSHA commenced in 2003 and was
effective until 30 June 2008.
In recent years it has been Australian Government policy to
place a greater emphasis on Commonwealth Rent Assistance (CRA) a
payment to support eligible renters in the private rental market
than on the CSHA. As a result, Australian Government outlays on the
CSHA declined in nominal and real terms since 1991 92, while CRA
funding was increased. For example, in 1994 95, government
expenditure for the CSHA was four per cent higher than for CRA.
Between 1994 95 and 2003 04, an increase of nine per cent in CRA
expenditure combined with a 31 per cent decrease for CSHA resulted
in CRA expenditure surpassing CSHA expenditure.[30] In 2006 07, the Howard
Government provided $2.2 billion in CRA funding, as opposed to
$970.6 million in CSHA funding.
In terms of public housing, this shift in funding emphasis has
meant that public housing stock has decreased as state and
territory public housing authorities have been squeezed for funds.
Through the CSHA, in 1996 97 the stock of public housing was around
375 000 dwellings, which was then about five per cent of
Australia s total housing stock. In subsequent years, however,
there was little or no growth in public housing stock and, as at 30
June 2008, the total number of public rental dwellings managed by
state and territory housing authorities had fallen to 337
866.[31]
A reduction in the amount of public housing stock has resulted
in a reduced capacity on the part of governments to provide
affordable housing to those most in need. Waiting lists for public
housing are increasing. As at 30 June 2008, 177 652 households were
on waiting lists for public rental housing. Of these households, 14
638 were classified as being in greatest need . This number
represented eight per cent of all households on waiting
lists.[32]
Increasingly, the public housing that is available is being used
for emergency housing needs to assist those estimated 100 000
Australians who are homeless on any given night and those
individuals and households that are at risk of becoming homeless.
In effect, public housing is becoming welfare housing.
At the same time, rents in the private market are increasing
apace. Rents increased by an average of 12 per cent during 2006 07
and a major report has predicted rent rises of 50 per cent in major
cities over the next four years.[33] Because there has been an upward shift in the
distribution of private rental stock towards higher-rent
properties, higher-income households have displaced lower-income
households from more affordable housing in the private rental
market.[34] While
these lower-income households may receive Commonwealth Rent
Assistance, this assistance is capped and, once the maximum rate
(which is indexed twice each year to reflect changes in the
consumer price index) is reached, any rent increases are borne by
CRA recipients. It should also be noted that CRA is paid at a
universal rate across the country. This renders it a blunt
instrument , and one that cannot take into account variations in
rental prices across jurisdictions.
As a part of the 2008 09 Budget, the Government signalled that
it would be reforming the framework for federal financial
arrangements. This involved a rationalisation of existing
Commonwealth housing and homelessness assistance programs under the
new National Affordable Housing Agreement, which was introduced
from 1 January 2009. This Agreement is to provide funding of $6.2
billion over five years from 2008-09.
Under the National Affordable Housing Agreement, the states and
territories are to pursue reforms in three areas of National
Partnership, one of which is social housing. Under the social
housing national partnership, $400 million is to be provided over
the next two financial years for capital investment for social
housing and homelessness, with approximately 1 600 to 2 100
additional dwellings to be built by 2009-10. While this investment
will, along with the National Rental Affordability Scheme and A
Place to Call Home strategy, improve housing affordability in
Australia to a degree, it will not add substantially to the public
housing supply.[35]
And without a significant increase in Australia s public housing
sector, some commentators argue that the nation will fail to meet
future demand for secure, low-cost housing.[36]
Greens Senator Scott Ludlam recently proposed that the
Government invest an initial $2 billion in public and
not-for-profit housing to enable the construction of more than
6 000 homes for low-income families. Ludlum went on to argue
that the Government needs to pump sufficient funds into public
housing, to bring down waiting lists and provide relief to these
families .[37]
Comment on the Commonwealth Social Housing Initiative has been
almost universally positive, with community groups, the housing
industry and state governments all expressing their support for the
package.
While community groups have noted that there is still more work
to be done in improving housing affordability in Australia, and
thereby assisting the most disadvantaged in the community, they
hailed the package as a significant contribution towards the
realisation of these goals.
Michael Perusco, Chief Executive of the Sacred Heart Mission,
has commended the government for its actions in assisting the
disadvantaged through the public housing stimulus package. He has
argued that the package has returned public housing to its rightful
places as a key part of social policy, sending the powerful message
to policymakers, advocates and the community that public housing
must be a priority .[38]
Executive director of Catholic Social Services, Frank Quinlan,
stated that he was delighted with the package, and urged state
governments to get behind it quickly .[39]
Julian Disney, chairman of the National Affordable Housing
Summit, has noted that the initiative represents the biggest
expenditure on public housing for at least a quarter of a century ,
and a quantum leap in commitment to resources badly needed and much
overdue for many years .[40]
NSW Master Builders Association s executive director Brian
Seidler welcomed the package, and is reported as having stated that
anything that gives the building industry a kick along is good
news.[41] Managing
director of the Housing Industry Association, Ron Silberberg is
supportive of the package on the grounds that it will provide a
much needed boost for construction work, with the 20 000 new
dwellings creating as many as 35 000 new jobs in the building and
related industries.[42]
The states, too, have welcomed the package.[43] West Australian Treasurer Troy
Buswell has noted that it complements a $316 million Western
Australian stimulus package to build 1 000 new homes for low-income
families and government workers.[44] NSW Housing Minister David Borger and Victorian
State Housing Minister Richard Wynne have both expressed their
strong support for the package, indicating that the investment
would help create around 9 000 and 5 000 homes,
respectively.[45]
Various concerns have been raised in relation to the
Commonwealth Social Housing Initiative. For one thing, initially it
was not clear precisely on what basis funding for the initiative
was to be distributed to the states. This led NSW Housing Minister
David Borger to observe that if the funding is distributed to the
states on a per capita basis then NSW would be entitled to receive
approximately one third of the $6.4 billion .[46] Victorian Council of Social
Service policy spokesman David Imber is reported as having stated
that Victoria should benefit from at least a quarter of the
spending, but gave no indication as to how this figure was arrived
at.[47] The West
Australian Government is reported as viewing the package as good
news for Western Australia, so long as the money is shared between
the states on a per-capita basis.
According to the recently-released Council of Australian
Governments National Partnership Agreement on the Nation Building
and Jobs Plan, funding is to be allocated to the states generally
on a per capita basis, subject to jurisdictions submitting suitable
proposals that meet the requirements of the initiative .[48]
The success or otherwise of the package should the Bill be
passed is very much dependent upon the cooperation of the states,
and on their capacity to deliver on the package. Some commentators
have argued that the states have a poor record in delivering on
infrastructure development commitments, and are ill-equipped to
promptly execute such commitments.[49] However, it should be noted that the
appointment of national coordinators at Commonwealth and state
levels to maximise the timely and effective delivery of the package
should go some way towards addressing such concerns. The fact that
the Australian Government drew on data from the states including
data on the number of housing projects that were already in their
development pipelines in developing the package, further enhances
the likelihood of its success.[50] That said, it is to be expected that some states
will be in a better position to commence construction projects than
others.
Much will depend on the capacity of the building and
construction industry to cater to the substantial boost in building
activity entailed by the economic stimulus package as a whole.
Another issue has to do with maintenance of the
newly-constructed public housing stock. If the new housing is to be
adequately maintained so as to not fall into disrepair, then this
will demand that sufficient funding be allocated under the National
Affordable Housing Agreement in the future. The National
Partnership Agreement on the Nation Building and Jobs Plan includes
a provision for improved maintenance benchmarks for social housing,
but in the absence of sufficient funding for these benchmarks to be
met, there is a risk that the quality of the new public housing
stock may decrease.
It is generally agreed that supply-side responses to the current
housing affordability crisis are essential, the reason being that
focusing primarily on providing Commonwealth Rent Assistance to
supplement private rental merely stimulates demand and increases
housing rental costs. It has done nothing to increase the supply of
affordable, public housing.
Should the Appropriation (Nation Building and Jobs) Bill (No. 2)
2008-2009 be passed, and the Commonwealth Social Housing Initiative
implemented, this would help to reduce public housing waiting lists
and assist in reducing the number of homeless Australians.
Appropriation (Nation Building and Jobs) Bill (No. 2) 2008-2009
appropriates $230 million for land transport. Of this, $150 million
is for repairs to national highways, $50 million is for boom gates
for rail crossings, and an additional $30 million is for the Black
Spot program.
The government will provide $150 million in 2008 09 to repair
regional links on national highways. According to the government,
in addition to preventing the deterioration of national highways,
this will create jobs in regional areas including those where jobs
are being lost due to the contraction in the mining sector.[51]
The Commonwealth provides $300 million annually to the states
for maintenance of national highways. Funding is allocated among
the states using a formula. The formula combines each jurisdiction
s proportion of the national total of lane length, total vehicle
distance travelled, and total heavy vehicle distance travelled to
determine the amount of funding each jurisdiction will
receive.[52] The
states determine how the funds will be spent.
The government proposes to provide $150 million over two years
$50 million in 2008 09 and $100 million in 2009 10 to improve road
and rail safety by funding the construction of boom gates at rail
crossings. According to the government, there are around 9400 rail
crossings the great majority of which do not have active
protection. Projects will be prioritised using the Level
Crossing Assessment Model, a safety risk assessment tool used
across Australia.[53] The allocation of funds for this purpose is presumably
in response to several highly-publicised crashes at rail crossings
which have entailed a considerable cost in lives and damage.
The government will provide additional funding of $90 million
over two years $30 million in 2008 09 and $60 million in 2009 10
for the road safety Black
Spot Program. The program aims to reduce the social and
economic costs of road accidents through the identification and
cost effective treatment of dangerous locations on Australian
roads. This measure is in addition to the $60 million increase in
funding in 2008-09 for this program announced as part of the
Government's Nation Building Package on 12 December
2008.[54]
There have been several benefit-cost assessments of the Black
Spot program. The studies indicate that the program has had very
high benefit-cost ratios. For example, the Bureau of Transport
Economics, found:
Overall, the Black Spot Program appears to have
been highly effective in reducing the number of casualty crashes.
It is estimated that the Program prevented around 32 fatal crashes
and 1 539 serious crashes between 1996 97 and 1998 99. The Program
is therefore estimated to have saved at least 32 lives and
prevented a large number of injuries over these three years.
Further benefits will continue to accrue over the life of the black
spot treatments that were applied.[55]
The overall benefit-cost ratio was 16.2. This means that the
value of the benefits was 16.2 times the cost.
The government will provide an additional $500 million over two
years $250 million in each of 2008 09 and 2009 10 to support
strategic projects being undertaken by local governments including
the construction of community infrastructure such as town halls,
community centres and sport and recreation facilities. According to
the government, this measure will allow a greater number of
projects to be funded from the current applications for the Local
Community Infrastructure Program. This measure is in addition to
the $300 million in 2008 09 for the Regional
and Local Community Infrastructure Program announced at the
Inaugural meeting Australian Council of Local Governments on the 18
November 2008.[56]
For the most part, the Bill s provisions are identical to those
in Appropriation Bill (No. 2) 2008-09. The main difference is that
the Bill omits provisions in Appropriation Bill (No. 2) 2008-09
dealing with the Advance to the Finance Minister.
Clause 3 contains definitions. Most definitions
are identical to those in Appropriation Act (No. 2)
2008-09. The following are some of the definitions in
clause 3:
Clause 6 provides that the total of the items
in Schedule 2 is $1 727 200 000.
Clause 7 deals with payments to the states,
territories and local governments. Subclause 7(2)
specifies that if the Portfolio Budget Statements, Portfolio
Supplementary Estimates Statements, Portfolio Additional Estimates
Statements or Portfolio Supplementary Additional Estimates
Statements indicate that certain activities are intended to be for
a particular outcome, then expenditure on those activities is taken
to be as contributing to the outcome.
Clause 8 deals with administered items .
Subclause 8(1) provides that the amount identified
for an administered item in an outcome can be used to contribute to
that outcome. The wording of subclause 8(2) is
identical to that in subclause 7(2).
Clause 9 deals with administered assets and
liabilities. Subclause 9(1) provides that the
amount identified for an agency s administered assets and
liabilities may be applied to achieving any of the agency s
outcomes, which are specified in paragraphs
9(1)(a) to 9(1)(h). Subclause
9(2) specifies that if the Portfolio Budget Statements,
Portfolio Supplementary Estimates Statements, Portfolio Additional
Estimates Statements or Portfolio Supplementary Additional
Estimates Statements indicate that certain activities were intended
to be for a particular outcome, then expenditure on those
activities is taken to be as contributing to the outcome.
Clause 10 Other departmental
items provides that the amount specified in an other
departmental item for an Agency may be applied for the departmental
expenditure of the Agency.
Clause 11 deals with CAC Act body payments.
Subclause 11(1) provides that an amount,
appropriated for a CAC Act body payment item, may be paid to the
body for that body s purposes. Subclause 11(2)
provides that if an Act provides that a CAC Act body must be paid
amounts that are appropriated by the Parliament for the purposes of
the body, and Schedule 2 contains a CAC Act body
payment item for that body, then the body must be paid the full
amount specified in the item. According to the Explanatory
Memorandum:
The purpose of subclause 11(2) is to clarify
that subclause 11(1) is not intended to qualify any obligations in
other legislation regulating a CAC Act body, where that legislation
requires the Commonwealth to pay the full amount appropriated for
the purpose of the body.[57]
Three clauses in Part 3 deal with reductions to
appropriations:
- clause 12 deals with reductions of (a)
payments to the states, territories and local governments and (b)
administered items
- clause 13 deals with reductions of (a)
administered assets and liabilities and (b) other departmental
items, and
- clause 14 deals with reductions to CAC Act
bodies payment items.
Subclause 12(1) stipulates that the amount by
which payments to the states, territories and local governments and
for administered items can be reduced is the difference between
what has been appropriated and what has been spent, the latter
being the amount shown in agencies financial statements. However,
paragraph 12(2)(a) gives the
Finance Minister power to determine that subclause
12(1) does not apply or that subclause
12(1) applies as if the amount in the annual report were
the amount that the Finance Minister determines
paragraph 12(2)(b). The
Explanatory Memorandum states:
The power in paragraph 12(2)(b) is to ensure
that the amount published for the item can be corrected if, for
example, the amount is erroneous or requires updating after an
agency s annual report is published.[58]
Subclause 12(3) provides that a determination
made under subclause 12(2) is a legislative
instrument, that section 42 (relating to disallowance) of the
Legislative Instruments Act 2003[59] applies to the determination,
but that Part 6 (relating to sunsetting provisions) of the
Legislative Instruments Act 2003 does not apply to the
determination. In short, this means that the Finance Minister s
determinations are disallowable by Parliament, but once made, will
not expire.
Subclause 13(1) enables the minister
responsible for an agency, or where the Finance Minister is
responsible for the agency the chief executive of the agency, to
seek a reduction in administered assets and liabilities, and other
departmental items, while subclause 13(2) empowers
the Finance Minister to make a determination that accords with the
request. However, the determination cannot reduce the appropriation
below zero (subclause 13(3)). Requests are not
legislative instruments (subclause 13(5)). While
the Finance Minister s determinations are legislative instruments
and are disallowable, the determinations like those in
subclause 12(3) are not subject to the sunsetting
provisions of the Legislative Instruments Act 2003
(subclause 13(6)).
The wording in clause 14 which deals with
reductions to CAC Act bodies payment items is almost the same as
for clause 13. However, whereas a request can come
from the Chief Executive of an agency for which the Finance
Minister is responsible in the case of clause 13,
a similar request must come from the Secretary of the Department in
the case of CAC Act bodies (paragraph 14(1)(b)). Subclause
14(5) confirms that a reduction can be made for a CAC Act
body even though it has been allocated funds under
subclause 11(2).
Clause 15 Crediting amounts to Special
Accounts provides that if a purpose of a special account
is a purpose that an item covers irrespective of whether that item
expressly refers to the special account then amounts may be debited
against the appropriation for that item and credited to the special
account.
Clause 16 deals with the conditions attached to
grants of financial assistance to the states, territories and local
governments.
Section 96 of the Constitution provides in part:
the Parliament may grant financial assistance
to any State on such terms and conditions as the Parliament thinks
fit.
According to the Explanatory Memorandum, clause
16:
deals with Parliament s power under section 96
of the Australian Constitution to provide
financial assistance to the States. Clause 16 delegates the power
to the responsible Ministers listed in Schedule 1 of the Bill,
by providing the Ministers named in Schedule 1 with the power to
determine:
- conditions under which payments to the States, the ACT and NT
and local councils may be made: paragraph 16(2)(a); and
- the amounts and timing of those payments: paragraph
16(2)(b).[60]
Subclause 16(1) provides that it applies
to payments to the states, territories and local government for the
outcomes listed in column 2 of Schedule 1.
Paragraph 16(2)(a) provides that
payments must accord with the conditions attached to the payments
as established by the process set out in subclause
16(3) and also with any determination as to the amounts
and timing of payments paragraph 16(2)(b).
Subclause 16(3) provides that the way terms and
conditions are established is for the relevant Minister to make a
determination in writing before or after the Act commences.
Subclause 16(4) provides that determinations
mentioned in paragraph 16(2)(a) and
determinations made under paragraph 16(2)(b)
are not legislative instruments. The Explanatory Memorandum
explains that the reason is:
because the determinations are not altering the
appropriations approved by Parliament. Determinations under
subclause 16(2) will simply determine how appropriations for
State, ACT, NT and local government items will be paid. The
determinations are issued when required. However, payments can be
made without either determination.[61]
Schedule 1 lists the agencies responsible
for making payments to the states, territories, and local
governments, the outcomes for which payments are made, and the
names of the Ministers responsible for determining conditions and
for determining payments.
Schedule 2 lists the services for which money
is appropriated. The appropriations are broken down by agency, and
by the form that the payments take. In this case, all payments are
to the States, ACT, NT and local government.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277
2464.
Richard Webb
10 February 2009
Bills Digest Service
Parliamentary Library
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