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Chapter 13 - Financial legislation
Types of financial
legislation
Bills which
appropriate money or which deal with taxation appear in the following
categories:
Appropriation
bills
- annual
appropriation bills (usually called Appropriation Bill (No. 1), Appropriation
Bill (No. 2) and Appropriation (Parliamentary Departments) Bill), which
appropriate money for the services of the government and the Parliament for the
financial year
- additional
appropriation bills (usually called Appropriation Bill (No. 3),
Appropriation Bill (No. 4) and Appropriation (Parliamentary Departments) Bill (No. 2)),
which appropriate additional funds for the services of the government and the
Parliament for the financial year
- supply bills
(usually called Supply Bill (No. 1), Supply Bill (No. 2) and Supply
(Parliamentary Departments) Bill), which appropriate money for the services of
the government and the Parliament for the period from the beginning of the
financial year until the annual appropriation bills are passed, and which are
subsumed by the annual appropriation bills (following a change in the budget
cycle in 1994, these bills are not necessarily required)
- special
appropriation bills, appropriating money for special purposes, including bills
which make continuing and indefinite appropriations (these matters are further
analysed below).
The annual appropriation bills and the supply bills for the services of
the government always appear in pairs because the provisions which appropriate
money for the ordinary annual services of the government, and which may not be
amended by the Senate, must, under section 54 of
the Constitution, be separated from those provisions which appropriate money
for services of the government other than ordinary annual services. The funds
appropriated by the supply and appropriation bills are therefore divided
between two bills to separate the provisions which are amendable by the Senate
from those which are not amendable by the Senate. The ordinary annual
services appropriations are usually in Appropriation Bills Nos 1 and 3, and
other appropriations in Appropriation Bills Nos 2 and 4. (The distinction
between ordinary annual services and other services is a matter for
interpretation and was delineated by an agreement between the Senate and the
government in 1965, as further outlined below.)
In 1999 the Senate amended two appropriation bills for special purposes
to strike out provisions which allowed grants to be made to bodies and persons
without terms and conditions. The Senate took the view that the specification of
terms and conditions for grants is an essential element of audit control of
expenditure. (Appropriation (Supplementary Measures) Bills (Nos 1 and 2) 1999,
11/10/1999, J.1815).
Provisions in
bills which were described by the government as “switching off” and “switching
on” appropriations were the subject of a statement by the Chair of Committees
on 14 September 2005. They appeared to be a device to avoid
the injunction in section 53 of the Constitution on the initiation of
appropriations in the Senate, and did not appear to derogate from the processes
of the Senate (SD, 14/9/2005, p. 37).
Until 2005 it was thought that the
expenditure of money under appropriations was as a matter of law limited to the
purposes of the appropriations. In Combet v Commonwealth 2005 221 ALR 621
(21 October 2005), however, a majority of the High Court, called upon to
consider the legality of certain government advertising expenditure under the
post-1999 outcome-based budgeting system reflected in appropriation bills, in
effect held, as the minority justices observed, that the executive government
is free to expend money from appropriations on any purpose it deems
appropriate. This judgment, as the Chief Justice explicitly stated, placed the
task of controlling expenditure under appropriations exclusively in the
responsibility of the Parliament. (See also report by the Finance and Public
Administration Committee on Transparency and accountability of Commonwealth
public funding and expenditure, PP 47/2007; response by the Chairs’
Committee presented 21/6/2007, J.4028.)
Taxation bills
- bills
which do not impose taxation, but which deal with taxation
- customs tariff
bills, which impose customs duties
- excise tariff
bills, which impose excise duties
Bills which impose taxation must be separate from bills which otherwise
deal with taxation, and bills imposing taxation must deal with only one subject
of taxation, except for customs tariff and excise tariff bills. These
requirements, which are contained in section 55 of the
Constitution, are further analysed below.
Loan
bills
When the expenditure and revenue-raising
proposals of the government announced in the budget result in a deficit of
revenue, it is normal for the Parliament to pass a Loan Bill authorising the
government to borrow money to the extent of the deficit. Parliament thus has
the opportunity annually to determine whether the government should be
authorised to borrow. As these bills do not appropriate money or impose
taxation, they are amendable by the Senate.
In 1985 and 1986 Loans Bills were presented to the Senate in a form
which would have made permanent the statutory authority for the government to
borrow money, and the bill for 1987 would have extended the authority to borrow
into the supply period of the following financial year. In each case the Senate
amended the bill to restrict the authority to borrow to the current financial
year, thereby preserving the right of the Parliament to consider annually the
government’s authority to borrow. (See Supplement)
(See Supplement)
Advances
The annual appropriation bills include sums for advances to
government (called Advances to the Minister for
Finance) to provide for payments in advance of appropriations, the money for
which is recovered by later appropriations for the purpose, and for urgent and
unforeseen expenditure. Similar advances are provided in the parliamentary
appropriation bills for the President of the Senate and the Speaker
of the House of Representatives for parliamentary expenditure.
The
appropriation bills set out the conditions governing expenditure from the
advances, and provide for particulars of such expenditure to be laid before the
Houses. Following a report in 1979 of the Senate Standing Committee on Finance
and Government Operations (PP 217/1979), statements of issues from the
advances have also been presented since 1981. Such issues may or may not become
final charges on the advances reflected in the statements of expenditure.
Statements of
expenditure from the advances are referred to the standing committees for
estimates hearings. The Senate considers them in committee of the whole on a
motion that the statements be approved. This does not have the effect of
authorising the expenditure, which is authorised by the original appropriation.
Rejection of such a motion would signify dissatisfaction with a statement as an
accountability document.
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