Bills Digest No. 192  1998-99 Appropriation Bill (No. 1) 1999-2000


Numerical Index | Alphabetical Index

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 and Copyright Details

Passage History

Appropriation Bill (No. 1) 1999-2000

Date Introduced: 11 May 1999

House: House of Representatives

Portfolio: Treasury

Commencement: Royal Assent

 

Purpose

To authorise the Minister for Finance to issue $36 024.4 million from the Consolidated Revenue Fund for the ordinary annual services of government during 1999-2000.

For information on the major changes to the expenditure and activities of the various portfolios and agencies announced in the Budget, refer to the Library publication 'Budget Features, 1999-2000.'

 

Background

The second reading speech for this Bill is the vehicle used to announce the annual Budget. This Bill, together with the Appropriation Bill (No. 2) 1999-2000 (which deals with capital works, grants to the States and other matters not covered in Appropriation Bill (No. 1) 1999-2000) and the Appropriation (Parliamentary Departments) Bill 1999-2000, are introduced in May each year. If additional funds are needed later in the year it is common for further Appropriation Bills to be introduced and these are known as the additional estimates. Funding from the Appropriation Bills comprises approximately 25% of the expenditure of Commonwealth agencies, the remainder coming from special appropriations and income receipts.(1)

For the first time, this year's Budget has been prepared using the accrual accounting method which provides a greater emphasis on agency outcomes and a more accurate indication of the life time cost of a program and this has resulted in some minor changes in the structure of the Appropriation Bills compared to previous years:

  • the 1965 Compact between the Senate and House (which was entered into to regulate the content of the Appropriation Bills to prevent problems with section 53 of the Constitution which provides that the Senate may not amend Bills appropriating money for the ordinary annual services of government) to:
  • include the full cost of outputs to Departments in Appropriation Bill (No. 1)
  • include equity injections and loans and administrative expenses for new programs in Appropriation Bill (No. 2), and
  • provide that the Appropriation Bills will not lapse at the end of the financial year as expenses are of an ongoing nature.(2)

Budget

The Budget is based on a number of assumptions and forecasts regarding future economic conditions and activity. The following are some of the forecasts for 1999-2000, with estimates for 1998-99 in brackets(3):

Total final demand%                    3         (41/4)

GDP%                                        3        (41/4)

Total business investment%          0             (2)

CPI%                                          2         (11/4)

Unemployment rate                 71/2         (73/4)

Current Account deficit

(% of GDP)                            51/4         (51/2)

Revenue                    $162.8b

Surplus                    $5.4b (on an accrual basis)

In addition to the economic parameters the Budget also makes a number of assumptions regarding the revenue and expenditure, which are particularly relevant when considering the possible future impact of the government's A New Tax System package (ANTS) which envisages significant changes in the tax revenue mix through the introduction of a goods and services tax (GST) and personal income tax cuts. The revenue estimates contained in the forward estimates are based on the implementation of government policy as announced, which is estimated to see total revenue fall as a percentage of GDP from 26.3% in 1999-2000 to 22.9% in 2001-2.(4)

However, the agreement between the government and Australian Democrats reached on 28 May 1999 for the passage of the ANTS legislation through the Senate will have significant implications for the Budget forecasts and outcomes. At the time of writing, the proposed changes to revenue through such measures as the exemption for non-processed food, changes in the proposed alteration to the diesel fuel rebate, changes in the personal income tax rates, possible alterations to Federal/State funding arrangements and additional expenditure on environmental items are not precisely known, but they will have an impact on the figures presented in the Budget for 2000-2001 and later years. While the revenue and expenditure figures for 1999-2000 are likely to be unaffected by the proposed changes, there may be other impacts for the forecasts as expenditure patterns and expectations change in anticipation of the implementation of the ANTS package.

 

Main Provisions

The amount available for agency's expenditure on Departmental and administered items is specified in the Schedule to the Bill. The total amount specified in the Schedule is $36 024 million (clause 5).

Where an amount is specified in the Schedule for an administered item, the Minister for Finance may issue the lesser of the amount specified in the item and the amount determined by the Minister as expenses incurred by the entity in relation to the item in the 1999-2000 year (clause 7). In relation to Departmental items, the Minister must issue the amount specified:

  • where an Act specifies that an entity must be paid amounts appropriated for the purposes of the entity and this Bill specifies an amount, or
  • for certain payments of remuneration and allowances (clause 6).

The Minister for Finance may increase the amount in a Departmental item/s by determination to a total maximum of $20 million (clause 9), while clause 10 provides that where there are unforeseen circumstances and the need is urgent, the Minister for Finance may increase expenditure by a total of $175 million. Parliament must be notified of increased spending under clauses 9 and 10.

Clause 13 will formally appropriate the funds for the Bill.

 

Concluding Comments

While the move to accrual accounting has benefits in comparisons with private enterprise which generally uses the accrual accounting method and provides a more transparent view of the total cost of an activity, the changes have made year to year comparisons more difficult in some areas. While both expense and accrual figures are available for comparison with last year, the Portfolio Budget Papers are now in a different format to previous years which can make program and sub-program (as they were previously referred to) analysis difficult as the activity may now be in an outcome or agency expense that is not easily comparable to the old figures.

 

Endnotes

  1. 1999-2000 Budget Paper No. 4, 1.

  2. Ibid., 1-2.

  3. 1999-2000 Budget Paper No. 1, 2-5, 1-4, 6-15.

  4. Ibid., 6-14.

 

Contact Officer and Copyright Details

Chris Field
31 May 1999
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 1999

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1999.

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