Appropriation Bill (No. 1) 2000-2001 (Bills Digest 169 1999-2000)

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Bills Digest No. 169 1999-2000
Appropriation Bill (No. 1) 2000-2001

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) 2000-2001

Date Introduced: 9 May 2000

House: House of Representatives

Portfolio: Finance and Administration

Commencement: On Royal Assent

Purpose

To authorise the Minister for Finance to issue $38.53 billion from the Consolidated Revenue Fund for the ordinary annual services of government during 2000-2001.

Background

A concise assessment of the 2000-2001 Budget can be found in the Parliamentary Library e-brief Budget 2000 at http://www.aph.gov.au/library/intguide/econ/budget.htm.

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) 2000-2001 (which deals with capital works, grants to the States and various other matters) and the Appropriation (Parliamentary Departments) Bill 2000-2001, 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. Historically, funding from the Appropriation Bills comprises approximately 25% of the expenditure of Commonwealth agencies, the remainder coming from special appropriations and income receipts.

The $38 530.846 million appropriated by this Bill compares to $36 024.4 million for the equivalent 1999-2000 Act.⁽¹⁾

The Budget is based on a number of assumptions and forecasts regarding future economic conditions and activity. The following table reproduces Governments forecasts for 1999-2000 and 2000-2001, together with its projections out to 2003-2004. The figures are the percentage change from the previous year.

Forecasts			Projections
	1999-2000	2000-2001	2001-2002	2002-2003	2003-2004
Real GDP	4.25	3.75	3.5	3.25	3.25
Employment	2.75	2.25	2.0	2.0	2.0
Wages	3.0	4.25	3.25	3.25	3.25
CPI	2.5	5.75	2.5	2.5	2.5

The following table reproduces the Governments forecasts for various fiscal aggregates for 1999-2000 and 2000-2001, together with its projections out to 2003-2004, where they have been included in the Budget.

Forecasts			Projections
	1999-2000	2000-2001	2001-2002	2002-2003	2003-2004
Revenue ($b)	164.7	153.3	158.6	168.3	180.5
Expenses ($b)	155.2	150.3	156.5	160.1	165.5
Fiscal balance ($b)	9.7	5.4	1.1	7.6	13.9
Net underlying cash balance ($b)	7.8	2.8	3.2	8.8	14.4

In relation to the significant decreases in the forecast level of revenue and expenses between 1999-2000 and 2000-2001 in the above table, Budget Paper No.1⁽²⁾ comments

Total revenue and expenses are expected to fall markedly as a percentage of GDP in 2000-01. These reductions reflect an effective break in both series with the introduction of The New Tax System, in particular the abolition of the wholesale sales tax and the abolition of financial assistance grants to the States. In addition, the delivery of personal income tax cuts will result in a large reduction in revenue. All revenue from the GST is appropriated to the States.

In relation to the fiscal balance, the Paper comments:⁽³⁾

In accrual terms, the fiscal balance is expected to be in surplus by $5.4 billion or 0.8 per cent of GDP in 2000-01, an improvement of $1.0 billion on the corresponding estimate at the time of the Mid-Year Economic and Fiscal Outlook 1999-2000 (MYEFO). This follows an estimated surplus of $9.7 billion in 1999-2000.

Regarding the net underlying cash balance ('the surplus') the Paper comments:⁽⁴⁾

In cash terms, an underlying surplus of $2.8 billion or 0.4 per cent of GDP is expected in 2000-01, an improvement of $2.3 billion on the corresponding estimate at the time of MYEFO.⁽⁵⁾ The outcome for 1999-2000 is estimated to be much stronger than forecast at the time of MYEFO, an improvement of $4.4 billion to an estimated outcome of $7.8 billion.

There has of course been some criticism about the integrity of the surplus. This has focused mainly on the inclusion as revenue of the anticipated proceeds of auctioning the spectrum licenses for 'third generation' mobile telecommunications and the decision not to count the $1.66 billion GST assistance to the States as an expense.⁽⁶⁾

Other forecasts of interest in the Budget include a fall in the current account deficit on the balance of payments from 5.5% of GDP (1999-2000) to 4.75% (2000-2001)⁽⁷⁾ and a fall in the unemployment rate from 7% (1999-2000 average) to 6.5% (2000-2001 average).⁽⁸⁾

Expenditure

Significant new⁽⁹⁾ expenditure measures include (figures are over four years unless otherwise stated):-

Additional Assistance for Rural and Regional Australia, totalling about $1.83 billion. The main items in this are:

A regional health package to increase doctor numbers and improve services-$562 million. The majority of these funds are appropriated to the Health and Aged Care portfolio, with a small amount to the Education, Training and Youth Affairs portfolio.⁽¹⁰⁾

the Fuel Sales Grants Scheme⁽¹¹⁾ to reduce the pump price of petrol and diesel-$501 million. This is appropriated to the Treasury (Australian Tax Office) portfolio and includes $9.5 million in 2000-2001 for administration.⁽¹²⁾

the Agriculture - Advancing Australia at $309 million. This is appropriated to the Agriculture, Fisheries and Forestry portfolio and continues a package announced by the Government in September 1997.⁽¹³⁾

An increase in youth allowance limits for farms and businesses-$132 million. This is appropriated to the Family and Community Services portfolio.⁽¹⁴⁾

the Stronger Families and Communities Strategy, for which the Budget provides additional funding of $240 million about half of which will be spent in regional Australia. Again, this is appropriated to the Family and Community Services portfolio.⁽¹⁵⁾

Extra funding for Fringe Benefits Tax (FBT) transitional grants for public and not-for-profit hospitals to ease the transition to FBT changes worth $240 million. This is appropriated to the Health and Aged Care portfolio.⁽¹⁶⁾

Additional funding for the Employee Entitlements Support Scheme⁽¹⁷⁾ to help compensate people who lose entitlements when employers go broke. An appropriation of $135 million over three years has been made to the Employment, Workplace Relations and Small Business portfolio.⁽¹⁸⁾

Residential Aged Care Funding Equalisation and Assistance Package to fund a uniform national payment for nursing home care - $148 million over six years. This is mainly appropriated to the Health and Aged Care portfolio.⁽¹⁹⁾

Continued Australian Police presence in the United Nations Transitional Administration in East Timor at a cost of $104 million. This is appropriated to the Attorney General's portfolio.⁽²⁰⁾

Establishment of an ongoing East Timor Aid Program worth $100 million. This is appropriated to the Foreign Affairs and Trade portfolio.⁽²¹⁾

A 'Product Stewardship' program for recycling and re-use of waste oil worth $97 million, appropriated to the Environment and Heritage portfolio. This is funded by a 5 cent a litre levy on lubricating oils and similar products over four years.⁽²²⁾ This levy is counted as an additional revenue measure for the Australian Tax Office.⁽²³⁾

Diversionary programes for juveniles in the Northern Territory at $20 million. This is appropriated to the Attorney General's portfolio.⁽²⁴⁾

Main Provisions

The amount available for agencies expenditure on Departmental and administered items is specified in the Schedule to the Bill. The total amount specified $38 530.846 million (clause 6).

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 having regard to the expenses incurred by the entity in relation to the item in the 1999-2000 year (clause 8). 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 7).

The Minister for Finance may increase the amount in a Departmental item/s by determination to a total maximum of $20 million (clause 10), while clause 11 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 10 and 11.

Clause 14 will formally appropriate the funds for the Bill.

Endnotes

That is, Appropriation Act (No.1) 1999-2000. Appropriation Act (No.3) 1999-2000, which dealt with 1999-2000 additional estimates, appropriated a further $1 847 million.

Budget Strategy and Outlook 2000-20001: Budget Paper No.1 at p 1-5. Copies of the budget papers can be viewed or downloaded at http://www.budget.gov.au/sitemap.htm.

ibid 1-3.

ibid.

The Mid-Year Economic and Fiscal Outlook 1999-2000

See for example Tony Harris 'Sales and fudges soak up deficit' Australian Financial Review 16 May 2000.

Budget Paper No.1, op cit. p 2-4.

ibid p 2-5.

That is, post the Mid-Year Economic and Fiscal Outlook 1999-2000

See Budget Paper No.2 at 118-123 for a detailed breakdown. An electronic copy can be viewed or downloaded at http://www.budget.gov.au/papers/bp2/index.htm

Further commentary on the Scheme can be found in the relevant Bills Digest at http://www.aph.gov.au/library/pubs/bd/1999-2000/2000BD158.htm

See Budget Paper No.2 at 159-160.

See Budget Paper No.2 at 46-47.

See Budget Paper No.2 at 86.

See Budget Paper No.2 at 91-95.

See Budget Paper No.2 at 109-110.

See also the Parliamentary Library e-brief 'Corporate Insolvencies and Workers' Entitlements'. This paper has been prepared for Senator and Members and their staff but not for members of the public.

See Budget Paper No.2 at 74.

See Budget Paper No.2 at 123.

See Budget Paper No.2 at 55.

See Budget Paper No.2 at 102.

See Budget Paper No.2 at 77. Note that the seems to be a discrepancy between page 77 because the explanation section on that page implies the levy only lasts one year when in fact it appears from the relevant table on page 26 of the Budget Paper that it lasts for four years.

See Budget Paper No.2 at 26.

See Budget Paper No.2 at 50-51.

Contact Officer and Copyright Details

Angus Martyn
29 May 2000
Bills Digest Service
Information and Research Services

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Published by the Department of the Parliamentary Library, 2000.