Bills Digest No. 156 2004–05
Appropriation Bill (No. 5) 2004-2005
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 & Copyright Details
Passage History
Appropriation Bill (No. 5) 2004-2005
Appropriation Bill (No. 6) 2004-2005
Date Introduced: 10 May 2005
House: House of Representatives
Portfolio: Finance and Administration
Commencement: Day of Royal Assent
Appropriation Bill (No. 5) 2004–05 appropriates funds
for the ordinary annual services of government.
Appropriation Bill (No. 6) 2004–05 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Under section 83 of the Constitution, no monies may be withdrawn from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) 2004–05 and Appropriation Bill (No. 6) 2004–05
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) 2004–05 appropriates additional money for ordinary annual
services while Appropriation Bill (No. 6) 2004–05 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 $291 568 000, while the total specified
in schedule 2 of Appropriation Bill (No. 6) is $22 709 000. The
largest item in Appropriation Bill (No. 5) is $160 million for transitional
grants to compensate eligible entities for lost access to a fringe benefits
tax exemption. The largest item in Appropriation Bill (No. 6) is $17.3
million for the Australian Defence Force deployment to Iraq.
Basic appropriations are provided for in Part 2 of the Bill. Clauses
7 and 8 provide for appropriations for departmental items and administered
items respectively. Specific amounts are outlined in schedule 1.
After the $160 million for transitional grants referred to above, the
balance of monies appropriated by this Bill (around $131.6 million) includes:
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$35.1 million to the New South Wales Legal Aid Commission:
-
$28.2 million for Australian Defence Force deployments to Iraq, including
enhancements to armoured vehicles and protective equipment to help
safeguard deployees;
-
$23 million to provide for increases in Australia’s financial contributions
to United Nations peacekeeping operations;
-
$10 million for a one-off grant to the Australia and New Zealand
School of Government;
-
$7 million and $5.7 million for depreciation expenses arising from
revaluations of the collections of the National Library of Australia
and the National Gallery of Australia respectively;
-
$5.1 million for contributions to sport and recreational organisations
and facilities, including the upgrade of Kogarah Oval in Sydney;
-
$5 million towards the cost of fitting out the Brain and Mind Research
Institute research centres and laboratories;
-
$5 million for research by the Centre for Medical Bionics and Hearing
Services;
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$464,000 for expenses associated with the recent Werriwa by-election;
and
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$429,000 for ex-gratia payments in relation to the recent bushfires
on the Eyre Peninsula in South Australia.(2)
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:
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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.
This has been explained more fully thus:
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 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.
Basic appropriations are provided for in Part 2 of the Bill. Clauses
7 and 8 provide for appropriations for departmental items and administered
items respectively. Specific amounts are outlined in schedule 2.
As well as the $17.3 million for the Australian Defence Force deployment
to Iraq referred to above, the Bill also appropriates $4 million to reimburse
the States for the cost of providing medical teams under the AUSASSIST
arrangements during the tsunami relief effort.(4)
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)].
Endnotes
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This clause is drawn from previous work by Richard Webb, of the Economics,
Commerce and Industrial Relations Clause, Parliamentary Library.
-
Dr. Sharman Stone, Secretary to the Minister for Finance and Administration,
‘Second reading speech: Appropriation Bill (No.5) 2004-2005’, House
of Representatives, Debates, 10 May 2005, p. 42.
-
Agency Resourcing 2004-05, Budget Paper No. 4, p. 5.
-
Dr. Sharman Stone, Secretary to the Minister for Finance and Administration,
‘Second reading speech: Appropriation Bill (No.6) 2004-2005’, House
of Representatives, Debates, 10 May 2005, p. 42–3.
Jerome Davidson
20 May 2005
Bills Digest Service
Information and Research Services
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using information available at the time of production. The views expressed
do not reflect an official position of the Information and Research Service,
nor do they constitute professional legal opinion.
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ISSN 1328-8091
© Commonwealth of Australia 2005
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Published by the Parliamentary Library, 2005.
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