Bills Digest No. 143 2003-04
Appropriation Bill (No. 6) 2003–04
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.
6) 2003–04
Date Introduced:
11 May 2004
House:
House of Representatives
Portfolio:
Treasury
Commencement:
When they receive the Royal Assent
Appropriation Bill (No. 5) 2003–04
appropriates funds for the ordinary annual services of government.
Appropriation Bill (No. 6) 2003–04 appropriates funds
for the other annual services of government.
Under section 83 of the Constitution, no monies may be
withdrawn from the Consolidated Revenue Fund except ‘under an appropriation
made by law’. Laws authorising spending are either:
Special appropriations—which account of about 75 per
cent of spending—are acts that provide money for particular purposes.
For example, age pensions, disability support pensions and the Newstart
Allowance are paid under the Social Security (Administration) Act 1999,
while the Family Tax Benefits A and B are paid under A New Tax System
(Family Assistance) (Administration) Act 1999.
There are usually six annual appropriation bills. Three—Appropriation
Bill (No. 1), Appropriation Bill (No. 2) and Appropriation (Parliamentary
Departments) Bill (No. 1)—are introduced with the Budget. Appropriation
Bill (No. 1) appropriates funds for the ordinary annual services of the
government while Appropriation Bill (No. 2) appropriates funds for other
annual services. Appropriation (Parliamentary Departments) Bill (No. 1)
appropriates funds for the Parliamentary departments.
Section 53 of the Constitution provides that the Senate
may not amend laws appropriating money for the ordinary annual services,
while Section 54 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.
There is a separate Bill for the Parliamentary departments because the
services they provide are not considered to be either ordinary or 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).
The Bills appropriate funds to departmental outputs and
administered expenses. Departmental outputs are expenses that agencies
control. Examples are salaries and other day-to-day operating expenses.
Administered expenses are those that agencies administer on the Government’s
behalf. The examples of special appropriations above are administered
expenses.
Departmental outputs and administered expenses contribute
to outcomes. They are the results or consequences for the community that
the Government wishes to achieve.
As noted, there are usually six annual appropriation
bills of which three are introduced when the Budget is brought down. However,
funding requirements often change after the Budget is brought down. Governments
make new policy commitments which have to be funded. Agencies reassess
their requirements and, if necessary, submit requests for additional funding.
The Government may agree to additional funding if the amounts in the first
three Appropriation Acts are inadequate. The process whereby additional
funds are provided is called additional
estimates and begins around November. The approved additional estimates
are normally incorporated into three appropriation bills, which are introduced
in the spring sitting of Parliament. They are Appropriation Bill (No.
3) for ordinary annual services, Appropriation Bill (No. 4) for other
annual services, and Appropriation (Parliamentary Departments) Bill (No.
2) for the Parliamentary departments.
Appropriation Bill (No. 5) 2003–04 and Appropriation
Bill (No. 6) 2003–04 are unusual in that they are supplementary
to the usual additional estimates bills. However, they are not unusual
in that they are, to all intents and purposes, the same as the usual additional
estimates bills. Appropriation Bill (No. 5) 2003–04 appropriates additional
money for ordinary annual services while Appropriation Bill (No. 6) 2003–04
appropriates money for other annual services.
The data in the Bills are aggregated. Additional information
can be found in Portfolio Supplementary Additional Estimates Statements.
The amount available for agencies’ spending on departmental
and administered items is specified in Schedules. The total specified
in Schedule 1 of Appropriation Bill (No. 5) is $604 million, while
the total specified in Schedule 2 of Appropriation Bill (No. 6)
is $183 million. The largest item in Appropriation Bill (No. 5) is $450
million for the Australian Rail Track Corporation, which will reportedly
use the funds to upgrade the section of the interstate (standard gauge)
rail network that runs between Brisbane and Sydney.(1) The
largest item in Appropriation Bill (No. 6) is $129 million for the Health
and Ageing portfolio.
Appropriation Bill (No. 5) 2003–04 is largely identical
to Appropriation Act (No. 3) 2003–04. Differences include:
-
the definition of ‘agency’
now includes the High Court (Clause 3)
-
the definition of ‘entity’
now includes the Australian National Training Authority (Clause
3)
-
in several cases, for example,
Clause 4) references to Portfolio Budget Statements and Portfolio
Additional Estimates Statements have the added reference to Portfolio
Supplementary Additional Estimates Statements
-
Clause 9 deals with ‘reduction of appropriations
upon request’. In this context, it is important to distinguish between
the processes for departmental appropriations and annual administered
appropriations. In short:
-
departmental appropriations do not lapse at the
end of the financial year. They therefore remain legally valid
until spent. The unspent balances of all departmental appropriations
remain available across all financial years unless the Finance
Minister withdraws drawing rights
-
annual administered appropriations are determined by the Finance
Minister. If the amount determined is less than the original appropriation,
the difference lapses.
The Introduction to Budget Paper No. 4 explains this
more fully:
The annual appropriations acts are not expressed in terms
of a particular financial year and so do not automatically lapse. Amounts
appropriated for departmental expenses and for non-operating costs(2)
can be subject to a lapsing process first introduced in the additional
estimates appropriations bills for 2003-2004. Under this process, on request
in writing from a responsible minister for an agency, the Finance Minister
may issue a determination to reduce the agency’s departmental expense
or non-operating costs appropriation. Requests for amounts to be lapsed
may arise, for example, because the appropriation is no longer required.
Until the Finance Minister issues a determination under this process,
moneys appropriated for departmental expenses and non-operating costs
may be issued from the CRF in the budget or later years.
Appropriations for administered expenses are subject to a
determination by the Finance Minister on the amounts to be issued. The
effect of that determination is to prevent any part of the appropriation
that has not been expensed in the year from being issued from the CRF.
By convention the Finance Minister issues determinations in relation to
administered expenses appropriations following the completion of each
financial year.(3)
Clause 9 gives effect to the intention to lapse unspent
departmental expenses.
- Clause 10 deals with ‘net appropriations’. Subclause
4 deals with items that are taken to be administered ‘marked net appropriations’,
and adds paragraph 4(e) which provides that the administered item for
outcome 2 of the Department of Transport and Regional Services is also
to be marked as a net appropriation. However, the Bill does not define
net appropriations. Subclause 10(2) contains a reference to section
31 of the Financial Management and Accountability Act 1997, which
deals with net appropriations, but even that Act does not define net
appropriations.
Appropriation Bill (No. 6) 2003–04 is largely identical
to Appropriation Act (No. 4) 2003–04. The changes are:
-
the definition of ‘agency’
now includes the High Court (Clause 3)
-
the definition of ‘entity’
now includes the Australian National Training Authority (Clause
3)
-
Clause 11: ‘reduction of appropriations upon
request’. This clause is identical in wording to Clause 9 in Appropriation
Bill (No. 5) 2004–05 except that whereas Clause 9 refers to reducing
‘a departmental item’ [sub-clauses 9(1) and 9(2)], Clause 11 refers
to reducing ‘an administered assets and liabilities item or an other
departmental item’ [sub-clauses 11(1) and 11(2)].
-
Tansy Harcourt, ‘Auslink’s $550m boost for rail’, Australian Financial
Review, 20 May 2004, p. 1.
-
Non-operating costs include things such as equity injections and
loans.
-
Agency Resourcing 2004-05, Budget Paper No. 4, p. 5.
Richard Webb
24 May 20004
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 2004
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