Bills Digest no. 109 2008–09
Appropriation Bill (No. 6) 2008 09
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
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introduced: 26 February
House: House of Representatives
Portfolio: Finance and Deregulation
relevant links to the Bill, Explanatory Memorandum and
second reading speech can be accessed via BillsNet, which is at
When Bills have been passed they can be found at ComLaw, which is
To appropriate $1 830.889 million
for the non-ordinary ( other ) annual services of the government in
support of the Nation Building and Jobs Plan.
On 3 February 2009, the Rudd Government announced the National
Building and Jobs Plan (the Plan). The context was the deterioration in the
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, the Nation Building Package, and the Council of Australian
Governments (COAG) funding package.
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withdrawn from the Consolidated Revenue Fund except under an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
- special appropriations, or
- one of (usually) six annual appropriation acts.
Special appropriations which account for about 80 per cent of
spending are spending authorised by acts for particular purposes.
Examples are age pensions, carer payments, and the seniors
concession allowance paid under the Social Security
(Administration) Act 1999, and Family Tax Benefits A and B
paid under A New Tax System (Family Assistance)
(Administration) Act 1999. The remaining twenty per cent of
spending is funded by annual appropriations.
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 was
updated to take account of the adoption of accrual budgeting).
Appropriation Bill (No. 1) is introduced with the Budget and
appropriates funds for the ordinary annual services of the
Government . Appropriation Bill (No. 2) which is also introduced
with the Budget appropriates funds for other annual services. A
third Appropriation Bill Appropriation (Parliamentary Departments)
Bill No. 1 funds the parliamentary departments.
Other annual services include:
- grants of financial assistance to the states, territories, and
- new administered expenses (see below)
- non‑operating costs, and
- payments to CAC Act bodies (see below).
Non‑operating costs comprise:
- equity injections, which are provided to agencies to allow
them, for example, to invest in non-financial assets such as
buildings and railway lines
- loans are provided to agencies when an investment is expected
to yield a return, for example, increased productivity
- previous years outputs appropriations replenish money spent on
departmental expenses (see below) in a previous year
- administered assets and liabilities appropriations fund
additions to administered assets and the discharge of administered
Funding requirements usually change after the Budget is brought
down. The government may agree to additional funding if the amounts
in the three Budget Appropriation Acts are inadequate and so has to
seek parliamentary approval for additional spending. The process
whereby additional funds are provided is called additional
estimates and usually begins around
November of the Budget year. The approved additional estimates are
incorporated into Appropriation Bills No. 3 and No. 4 and
Appropriation (Parliamentary Departments) Bill No. 2. These Bills
are the counterparts of Appropriation Bills No. 1 and No. 2 and
Appropriation (Parliamentary Departments) Bill No. 1
When the Budget is brought down, the government releases
Portfolio Budget Statements. They contain, amongst other things,
explanations of the funding sought through the three Appropriation
Bills. The Portfolio Budget Statements are relevant documents for
the purposes of section 15AB of the Acts Interpretation Act
means that the Portfolio Budget Statements can be used to help
interpret an Act. Portfolio Additional Estimates Statements are the
counterparts of Portfolio Budget Statements and contain
explanations of the funding sought through the additional estimates
The Senate s powers in relation to ordinary
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.
Departmental expenses (outputs) are costs incurred in running
agencies, for example, salaries, depreciation and other day-to-day
operating expenses. Administered expenses (items) are the costs of
providing the programs that agencies administer. While most
administered expenses are funded through special appropriations,
some are funded through the Appropriation Bills. The Bass Strait
Passenger Vehicle Equalisation Scheme is an example of an
administered expense funded as an ordinary annual service.
Departmental outputs and administered expenses contribute to
outcomes. Outcomes are the results or consequences for the
community that the government wishes to achieve. An example, in the
Attorney-General s portfolio, is:
An equitable and accessible system of federal
It is sometimes the case that an appropriation for a
departmental expense exceeds what is needed. However, departmental
items do not automatically lapse if they are not spent. In these
circumstances, a reduction process to extinguish the unspent amount
is available. Under this process, on request in writing from a
minister, the Finance Minister may issue a determination to reduce
the agency s departmental expenses appropriation. In short, the
excess of the amount allocated over the amount expended can be
Appropriations for administered expenses are also subject to an
annual process to extinguish amounts that are not required. The
amount identified as spending on administered expenses in agencies
financial statements as published in their annual reports is the
basis for this process. In short, the amount of the reduction is
the difference between the amount appropriated and the amount spent
as shown in the agency s financial statements.
The Bill appropriates $1 830.889 million. The Bill is the fifth
to appropriate money for other annual services for financial year
2008 09. The other items of legislation to do so are:
The Nation Building and Jobs Plan is the main fiscal stimulus
package the government has introduced. The Appropriation
(Nation Building and Jobs) Act (No. 2) 2008-09 appropriated
some funds for the Nation Building and Jobs Plan. In his second
reading speech for Appropriation Bill (No. 5) 2008 09, the Minister
for Competition Policy and Consumer Affairs, and Assistant
Treasurer, the Hon. Chris Bowen (the Minister), stated that
additional funding is needed to underpin the Nation Building and
Jobs Plan. Whereas Appropriation Bill (No. 5) 2008 09 provides
additional funding for ordinary annual services, Appropriation Bill
(No. 6) 2008-09 (the Bill) appropriates funds for other annual
services in support of the Nation Building and Jobs Plan. As the
Minister noted in the second reading speech for the Bill:
Appropriation Bill (No. 6) 2008-2009 provides
additional funding for payments of a capital nature, such as for
the purchase of administered assets and for payments to the states,
territories and local government authorities.
There are three components to the appropriations.
The largest for the Department of Infrastructure, Transport,
Regional Development and Local Government is an equity injection of
$1 188.9 million into the Australian Rail Track
Corporation (pages 19 and 20 of the Bill refer). The Australian
Rail Track Corporation is a wholly-owned Commonwealth company, and
is the main vehicle through which the Commonwealth funds investment
in rail. Investment in the Hunter Valley coal lines is a major
component of the proposed investment.
The second component also for the Department of Infrastructure,
Transport, Regional Development and Local Government is the
bringing forward of $711 million for spending on roads. Of this,
the Bill provides for $391.989 million in 2008 09 (pages 19 and 20
of the Bill refer). The $391.989 million will be paid to the
states, territories and local government.
The third component is $250 million for the Department of the
Environment, Water, Heritage and the Arts (pages 17 and 18 of the
Bill refer). According to the second reading speech, the government
proposes to bring forward expenditure totalling $500 million over
four years, beginning in 2008 09, to expedite the return of water
to the Murray Darling Basin. The $500 million is in response to the
agreement with Senator Xenophon to bring forward expenditure to buy
water to return to the Basin.
For the most part, the Bill s provisions are identical to those
in Appropriation Act (No. 2) 2008 09 and Appropriation
(Nation Building and Jobs) Act (No. 2) 2008-09.
Clause 3 contains definitions. The following
are some of the definitions in clause 3.
CAC Act body: this is a Commonwealth authority or company within
the meaning of the Commonwealth Authorities and Companies Act
CAC Act body payment item: this is the amount set out in
Schedule 2 in relation to a CAC Act body.
Chief Executive is defined as having the same meaning as in the
Financial Management and Accountability Act 1997.
Item means any of the following:
- a State, ACT, NT and local government item;
- an administered item;
- an administered assets and liabilities item;
- an other departmental item;
- a CAC Act body payment item.
Other departmental item means an amount set out in
Schedule 2 in relation to an Agency:
- opposite the heading Equity Injections ; or
- opposite the heading Loans ; or
- opposite the heading Previous Years Outputs .
Clause 3 contains several definitions of
Portfolio Statements. They all refer to the Statements introduced
as relevant documents in support of various Acts.
Additional Estimates Statements means the Portfolio Additional
Estimates Statements that were tabled in the Senate or the House of
Representatives in relation to the Bill for the Appropriation
Act (No. 3) 2008‑2009 and the Bill for the
Appropriation Act (No. 4) 2008‑2009.
Budget Statements means the Portfolio Budget Statements that
were tabled in the Senate or the House of Representatives in
relation to the Bill for the Appropriation Act (No. 1)
2008‑2009 and the Bill for the Appropriation Act
(No. 2) 2008‑2009.
Supplementary Additional Estimates Statements means the
Portfolio Supplementary Additional Estimates Statements that were
tabled in the Senate or the House of Representatives in relation to
the Bill for the Appropriation (Nation Building and Jobs) Act
(No. 1) 2008‑2009 and the Bill for the
Appropriation (Nation Building and Jobs) Act (No. 2)
Supplementary Additional Estimates Statements No. 2 means
the Portfolio Supplementary Additional Estimates Statements that
were tabled in the Senate or the House of Representatives in
relation to the Bill for this Act and the Bill for the
Appropriation Act (No. 5) 2008‑2009.
Supplementary Estimates Statements means the Portfolio
Supplementary Estimates Statements that were tabled in the Senate
or the House of Representatives in relation to the Bill for the
Appropriation (Economic Security Strategy) Act (No. 1)
2008‑2009 and the Bill for the Appropriation
(Economic Security Strategy) Act (No. 2)
Clause 6 provides that the total of the items
in Schedule 2 is $1 830 889 000.
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, Portfolio Supplementary Additional Estimates Statements
or Portfolio Supplementary Additional Estimates Statements
No. 2 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)(j). Subclause
9(2) specifies that if the Portfolio Budget Statements,
Portfolio Supplementary Estimates Statements, Portfolio Additional
Estimates Statements, Portfolio Supplementary Additional Estimates
Statements or Portfolio Supplementary Additional Estimates
Statements No. 2 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
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.
Three clauses in Part 3 deal with reductions to
- clause 12 deals with reductions of (a)
payments to the states, territories and local governments and (b)
- clause 13 deals with reductions of (a)
administered assets and liabilities and (b) other departmental
- 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.
Section 44(2) of the Legislative Instruments Act 2003
lists legislative instruments that are not subject to
The list includes Item 38 Instruments made under Annual
Appropriation Acts . Subclause 12(3) of the Bill
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 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
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,
in the case of CAC Act bodies, a similar request must come from the
Secretary of the Department if the Finance minister is responsible
for the body (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
Special accounts are essentially ledgers in which all
expenditure and revenue related to a particular purpose are
recorded. This simplifies identification of all financial
activities related to that purpose. 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
Clause 16 deals with the conditions attached to
grants of financial assistance to the states, territories and local
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
According to the Explanatory Memorandum, clause
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
∙ conditions under which payments to the
States, the ACT and NT and local councils may be made: paragraph
∙the amounts and timing of those
payments: paragraph 16(2)(b).
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.
Clause 17 Appropriation of the Consolidated Revenue
Fund provides that the Consolidated Revenue Fund is
appropriated for the purposes of this Act, including the operation
of this Act as affected by the Financial Management and
Accountability Act 1997.
Schedule 1 lists the agency in this case
the Department of Infrastructure, Transport, Regional Development
and Local Government which is responsible for making payments to
the states, territories, and local governments, the outcomes for
which payments are made, and the Minister 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.
As noted, Appropriation Bill (No. 5) 2008-09 also appropriate
funds in support of the Nation Building and Jobs Plan [see the
Digest for Appropriation Bill (No. 5) 2008-09].
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277
6 March 2009
Bills Digest Service
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