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Bills Digest No. 154 2001-02
Appropriation Bill (No.1) 2002-2003
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
Endnotes
Contact Officer & Copyright Details
Passage History
Appropriation
Bill (No.1) 2002-2003
Date Introduced:
14 May 2002
House:
House of Representatives
Portfolio:
Finance and Administration
Commencement:
Royal Assent.
Purpose
To authorise the Minister for Finance
to issue $43 445 965 000 from the Consolidated Revenue
Fund for the ordinary annual services of government during 2002-03.
The basic appropriation in this Bill is $43 445 965 000.
This compares to $41 425 224 000 in 2001-02 and $38 530 846 000
in 2000-01. A concise assessment of the 2002-03 Budget can be found in
a forthcoming Parliamentary Library publication Implications: Budget
2002-03. An overview of the process and context of appropriation bills
can be found in another Library publication The Commonwealth Budget:
Process and Presentation.(1)
Under section 83 of the Constitution, no monies may be
drawn from Treasury except 'under an appropriation made by law'. Appropriation
Bill (No. 1) 2002-03, together with the Appropriation Bill (No.2) 2002-03
and the Appropriation (Parliamentary Departments) 2002-03, are introduced
in May each year for the annual appropriations of Government. Where 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.
Historically, annual appropriations comprise approximately 25 per cent
of agency expenses. The remaining 75 per cent comes from special or standing
appropriations and income receipts.
Appropriation Bill (No. 1) provides for the appropriation
of money from the Consolidated Revenue Fund for the ordinary annual services
of government. Appropriation Bill (No. 2) provides for the appropriation
of money for purposes other than the ordinary services of government (for
example, departmental capital, administered expenses for new agency outcomes,
and grants to the States and Territories). The division of items between
the Bills accords with the 1965 'compact' between the House of Representatives
and the Senate.(2)
Appropriation Bill (No. 1) sets out agency appropriations
by outcome and distinguishes between administered and departmental expenses.
Administered items are revenues, expenses, assets and liabilities
that the government controls, but which an agency manages on the government's
behalf. Examples include subsidies, grants and benefit payments; taxes,
fees, fines and excises; and public debt and related interest. Departmental
items are resources (assets, liabilities, revenues and expenses) that
agencies control directly and use to produce outputs on behalf of government.
Examples are computers and plant and equipment used in providing goods
and services; accruing liabilities for employee entitlements; revenues
from user charges and profits; and employee salaries. The data are highly
aggregated and additional information is contained in Portfolio Budget
Statements.
The difference between administered and departmental
items and the issue of control are particularly significant for the present
Bill. While expenditure in relation to departmental items is controlled
by agencies, expenditure in relation to administered items, such as subsidies,
grants and benefit payments, is extensively controlled by legislation.
For present purposes, three key administered items are the Pharmaceutical
Benefits Scheme, the Disability Support Pension and the Superannuation
Surcharge. Expenditure on these items will be significantly affected by
proposed amendments to the National Health Act 1953,(3)
Social Security Act 1991(4) and the Superannuation
(Guarantee) Administration Act 1992.(5)
The Opposition and Democrats have indicated that they
will block the proposed amendments in the Senate.(6)
Importantly, an attempt to block these amendments is
not an attempt to block supply. The changes to PBS and DSP appear
in legislation separate from the Appropriation Bills.(7) At
the same time, some commentators have argued that the threat to block
these amendments 'undermines democratic process nonetheless'(8)
and 'breaches the intent of the Constitution'.(9)
Significant new revenue and expenditure measures are
indicated below. Figures are expenses in 2002-03 first and expenses
over 5 years 2002-03 to 2005-06 second.
- Additional funding for the deployment to the 'War Against Terrorism':
'the additional funding for this deployment in 2001-02 and 2002-03 is
around $524 million'.(10)
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Measure
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2002-03
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5 years
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- Additional funding for the War Against Terrorism (a)
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$194.0m
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–
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- Together with expenditure in 2001-02 ($329.8m) this is $523.8 million
in 2001-02 and 2002-03.
- Measures to upgrade domestic security:(11) '[i]n
this Budget we are allocating an additional $1.3 billion over five years
to upgrade security within Australia'.(12)
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Measure
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2002-03
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5 years
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- Improved aviation security: airport security will be
increased and the APS(13) will implement the Air
Security Officer Programme (the 'Air Marshall' measure announced
during the 2001 Election).
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$40.2m
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$169.5m
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- Identification of security threats: ASIO,(14)
AFP(15) and the NCA(16) will have increased
technical investigative capacity ($15.2m/$46.9m); AFP will have
increased protective security capacity ($27.1m/$110.1) and increased
overseas cooperation, including 16 new overseas officers ($3.8m/$43m);
ASIO, ASIS,(17) ONA(18) and Defence (eg
DSD)(19) will have increased counter-terrorist capabilities
($15.7m/$88.2m))
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$110.9m
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$519.4m
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- Increased response capacity: Health and Ageing will
run a stockpile of biological weapons vaccines and antidotes
($10.7m/$11.3m). ADF(20) will have an Incident Response
Regiment ($18.0m/$85.0m) and a 2nd counter-terrorist
Tactical Assault Group ($32.6m/$132.6m).
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$113.7m
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$333.3m
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Total (b)
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$219.6m
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$1177.9m
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- Together with net additional expenditure in 2001-02 ($130.4m),
this is $1.3 billion over 5 years.
- Additional funding for border security:(21) '[l]ast
budget we proposed spending $1.6 billion over five years on border security.
The measures we have taken since, together with the measures I am announcing
… will increase that expenditure to $2.8 billion'.
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Measure
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2002-03
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5 years
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- Increased funding for coastal surveillance: ADF will
continue coastal surveillance of the north coast of Australia
to deter asylum seekers. (c)
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$22.3m
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–
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- Funding for Nauru: AAID(22) will pay for
the MOU with Nauru ($7.0m) and DFAT will pay for the Australian
presence ($2.1m).
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$9.1m
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–
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- Construction of an IRPC(23) on Christmas Island:
DIMIA and DoTRS will arrange for the construction of a refugee
detention centre on Christmas Island by Jan. 2003 ($21.1m/$50.5m)
(d)
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$21.1m
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$50.5m
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- Offshore processing (external territories): this is
the processing of refugees in external territories such as Christmas
Island.
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$81.9m
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$455.1m
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- Offshore processing (third countries): this is the
processing of refugees under the Pacific Solution in countries
such as Nauru.
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$129.3m
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$430.8m
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- Savings from offshore processing (third countries)
(e)
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-$85.8m
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-$350.0m
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- Regional Cooperation Agreement: this includes measures
to improve regional capacity to detect and intercept illegal
people movement and Australia's contribution to the UNHCR(24)
and IOM.(25)
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- Other Measures: Including reintegration assistance
for Afghans ($2.3m/$5.1m) and doubling of ACS(26)
National Maritime unit surveillance and response capacity ($14.8m/$77.4m)
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Total (f)
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$238.4m
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$825.4m
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- This is additional to the $18.7m provided for coastal surveillance
in 2001-02.
- Construction of the Christmas Island IRPC involves capital expenditure
of $116.4 in 2002-03.
- The savings result from an expectation that there will be no more
unauthorised boat arrivals for onshore processing, compared to an expected
5,500 per annum in the 2001-02 Budget.
- Together with expenditure in 2001-02 ($322m), capital and savings
($114.9m/$83.4m), and net additional expenditure to MYEFO ($4.0m/$5.6m),
this is an additional $1.2 billion over 5 years.
- Making the Pharmaceutical Benefits Scheme Sustainable: 'the
government is taking some small steps to help put the [PBS] on a more
sustainable basis so it can deliver access to medicines at affordable
prices over the longer term'.(27)
>
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Measure
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2002-03
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5 years
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- Realigning patient co-payments: co-payments will increase
by $1 to $4.60 per script for concession card holders and by
$6.20 to $28.60 for others. For card holders who pay for 52
prescriptions per annum, further prescriptions are free. For
others who pay $874.90 per annum, further prescriptions will
be $4.60.
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-$298.6m
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$1,207.9m
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- Reductions in pharmacy fraud: the HIC(28)
will have greater capacity to identify and target pharmacies
engaged in PBS fraud
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-$25.1m
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$201.3m
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- Increased information for doctors: the pharmaceutical
industry will ensure that information on PBS rules are given
to doctors
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-$27.6m
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$147.2m
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- Facilitating the use of generic medicines: the government
intends to entrench the default use of generic medicines in
return for guaranteed low prices from manufacturers of those
medicines
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-$19m
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-$110.9m
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- Reinforcing the commitment to evidence based medicine:
various measures will be taken to limit unnecessary new listings
on the PBS, to reduce over-prescription, to ensure greater compliance
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-$12.1m
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-$280.6m
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- Restrictions on 'doctor shopping': the HIC will have
greater surveillance capacity over clinically inappropriate
proscriptions
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-$2.0m
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-$16.4m
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Total
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-$400.6m
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-$1,964.3m
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A Better Superannuation System: '[t]he government
announced last year in its superannuation policy statement … a range
of measures designed to enhance the overall attractiveness, accessibility
and security of superannuation'.(29)
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Measure
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2002-03
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5 years
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- Superannuation co-contribution for low income earners:
from 1 July 2002, the Government will replace an existing rebate
with a matching contribution up to $1,000 per annum for low
income earners up to $20,000, tapering by 8c per dollar up to
$32,000.
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$0.0m
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$300.0m
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- Superannuation Guarantee contributions: ATO will be
funded to implement changes to the Superannuation Guarantee
regime.
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$10.9m
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$31.9m
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- Superannuation Guarantee contributions: from 1 July
2003 employers will be required to make quarterly contributions.
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$0.0m
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$46.0m
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- Temporary residents: from 1 July 2002 temporary residents
will be able to access their superannuation on permanent departure.
This is subject to withholding of tax concessions on benefits.
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-$70.0m
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-$325.0m
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- Superannuation surcharge: from 1 July 2003 surcharge
rates for super and termination payments will fall by 1/10
over 3 years.
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$0.0m
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$370.0m
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Measure
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2002-03
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5 years
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- ASIC Output Pricing Review:(30) following
a pricing review ASIC will have additional funding to maintain
its enforcement capacity and to administer the Financial
Services Reform Act 2001.
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$19.4m
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$89.8m
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- ATO Output Pricing Review:(31) following
a pricing review, ATO will have additional resources for base
tax administration functions. This is associated with revenue
($33.0m/$1,500m).(32)
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$358.9m
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$1,563.2m
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- Baby bonus:(33) from 1 July 2002, tax relief
will be available to families of between $500–2,500 per annum
for 5 years where a parent or partner gives up or reduces their
employment.
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$85.0m
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$1,235.0m
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- Advance to Mitsubishi Motors Corporation:(34)
a promise of assistance has been made to Mitsubishi for the
establishment of a global research and development centre in
Adelaide in 2004-05.
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–
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$35.0m
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- Intergovernmental Agreement–additional GST administration
costs:(35) ATO will have additional funding to
manage 'greater than anticipated GST workloads' and to enhance
field services to small businesses. (g)
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$204.0
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$832.4m
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- Extension of First Home Owner's Scheme:(36)
the original grant ($7,000) was supplemented by an additional
grant ($7,000) in 2001 which is reduced ($3,000) and ceases
on 30 June 2002
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$30.0m
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$35.0m
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- Extension of Gold Card: post WWII veterans over 70
years will be entitled to pharmaceuticals at a concessional
rate and to an effectively unlimited health concession card
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$16.4m
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$93.0m
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- Recognising and improving the work capacity of people with
a disability: an additional 73,000 places will be provided
for disability employment assistance, but the Family and Community
Services Legislation Amendment (Disability Reform) Bill 2002
will restrict access and encourage greater participation in
DSP
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$7.2m
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-$336.5m
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- A Guaranteed Amount (GMA) is paid by the States for these costs,
subject to a balancing payment by the Commonwealth to offset any shortfall
between the GMA and GST receipts for the State.
The amount available for agencies' expenditure on departmental
and administered items is specified in the Schedule. The total
of the items specified is $43 445 965 000 (clause
6).
In relation to departmental items, the Minister for Finance
must issue:
- a sufficient amount, where a departmental item for an agency
includes provision for payment of remuneration and allowances to a statutory
office holder; and
- the amount specified in the Schedule, where an entity
has a direct statutory entitlement to its own appropriation; or
- any lesser amounts to that specified in the Schedule,
where an entity does not have a direct statutory entitlement to its
own appropriation (clause 7).
In
relation to administered items, where an amount is specified in the Schedule,
the Minister for Finance may issue a lesser amount, as he or she determines,
having regard to the relevant expenses incurred by the entity in the 2001-02
financial year (clause 8).
The Minister for Finance may increase the amounts specified
in departmental items up to a maximum of $20 million over all departmental
items (clause 10). However, where there are unforeseen circumstances
and the need is urgent, the Minister for Finance may increase expenditure
by a total of $175 million (clause 11). Parliament must be notified
of increased spending under clauses 10 and 11.
Clause 14 formally appropriates funds for the
Bill from the Consolidated Revenue Fund.
Endnotes
- Richard Webb, The Commonwealth Budget: Process and Presentation, Research
Paper No.10 2002-03, 19 March 2002.
- Webb, op. cit., p. 16.
- As noted in the commentary on expenditure, the Government has proposed
an increase in co-payments for prescriptions covered by the Pharmaceutical
Benefits Scheme. The level of co-payments is described in section 87
of the National Health Act 1953. As section 87 specifies a precise co-payment
dollar amount, which is neither adjustable by regulation or ministerial
order, it appears that an amendment to section 87 would be needed to
increase the level of co-payment.
- Family and Community Services Legislation Amendment (Disability Reform)
Bill 2002.
- Taxation Laws Amendment (Superannuation) Bill (No. 2) 2002.
- Simon Crean MP, 'Better
Budget Choices', Media Release, 16 May 2002; Senator Natasha Stott-Despoja,
'Fair
go for the future not deprive and divide', Media Release, 16 May
2002.
- Sid Marris, 'Costello fights for his Budget', The Australian, 16 May
2002; Megan Saunders, 'Vanstone asks PM to help working disabled', The
Australian, 17 May 2002.
- Editorial, 'The Senate should let the budget pass', The Age, 17 May
2002.
- Crispin Hull, 'We must end Senate's absurd power to block money Bills',
The Canberra Times, 18 May 2002.
- The Hon. Peter Costello MP, Appropriation Bill (No.1) 2002-03, Second
Reading Speech, House of Representatives, Debates, 14 May 2002, p. 2012.
- Source: Budget Measures 2002-03, Budget Paper No. 2, pp. 57–70.
- The Hon. Peter Costello MP, Appropriation Bill (No.1) 2002-03, Second
Reading Speech, House of Representatives, Debates, 14 May 2002, p. 2012.
- Australian Protective Service.
- Australian Security Intelligence Organisation.
- Australian Federal Police.
- National Crime Authority.
- Australian Secret Intelligence Service.
- Office of National Assessments.
- Defence Signals Directorate.
- Australian Defence Forces.
- Source: Budget Measures 2002-03, Budget Paper No. 2, pp. 132–143.
- Australian Agency for International Development.
- Immigration Reception and Processing Centre.
- United Nations High Commissioner for Refugees.
- International Organisation for Migration.
- Australian Customs Service.
- The Hon. Peter Costello MP, Appropriation Bill (No.1) 2002-03, Second
Reading Speech, House of Representatives, Debates, 14 May 2002, p. 2013.
- Health Insurance Commission.
- Peter Slipper MP, Taxation Laws Amendment (Superannuation) Bill (No.2)
2002, Second Reading Speech, House of Representatives, Debates, 16 May
2002, p. 2233.
- Source: Budget Measures 2002-03, Budget Paper No. 2, p. 159.
- Source: Budget Measures 2002-03, Budget Paper No. 2, p. 162.
- Source: Budget Measures 2002-03, Budget Paper No. 2, p. 17.
- Source: Budget Measures 2002-03, Budget Paper No. 2, p. 163.
- Source: Budget Measures 2002-03, Budget Paper No. 2, p. 144.
- Source: Budget Measures 2002-03, Budget Paper No. 2, p. 165.
- Source: Budget Measures 2002-03, Budget Paper No. 2, p. 167.
Nathan Hancock
27 May 2002
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 2002
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