Bills Digest no. 137 2005–06
Appropriation Bill (No. 5) 2005–2006
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) 2005–06 appropriates funds for the ordinary annual services
of government
Date introduced: 9 May 2006
House: House of Representatives
Portfolio: Finance and Administration
Commencement: Day of Royal Assent
Appropriation Bill (No. 5) 2005–06 appropriates funds for the ordinary
annual services of government.
Appropriation Bill (No. 6) 2005–06 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Under section 83 of the Constitution, no monies may be withdrawn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, or
- six (usually) annual appropriation acts.
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) 2005–06 and Appropriation Bill (No. 6) 2005–06
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) 2005–06 appropriates additional money for ordinary annual
services while Appropriation Bill (No. 6) 2005–06 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 $1 336 450 000, while the total specified
in Schedule 2 of Appropriation Bill (No. 6) is $2 289 288
000.
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
and include:
- additional funding to the Department of Agriculture, Fisheries and
Forestry to enable a payment of $500 million to the Murray-Darling Basin
Commission in 2005-06
- an additional $310.4 million to fund a coordinated package of measures
to assist those adversely affected by Tropical Cyclone Larry, including:
- $97 million to the Department of Families, Community Services
and Indigenous Affairs to provide support in the form of ex-gratia
payments to individuals and families, a one-off diesel and petrol
subsidy program to assist businesses, including farmers, and a one-off
program of income support payments
- $86.9 million in wage subsidy payments to businesses and farmers
affected by the cyclone, and
- an additional $126.5 million in grants to affected businesses
to assist with restocking, replanting, re-establishment and clean-up
- grants totalling $265 million to a number of medical research facilities,
including $50 million each to the Walter and Eliza Hall Institute of
Medical Research and the John Curtin School of Medical Research at the
Australian National University and $165 million to a number of other
medical research facilities for a variety of development and expansion
projects, including $37 million to the Howard Florey Institute
- an additional $243 million to the Department of Transport and Regional
Services to enable a $270 million payment to be made to the Australian
Rail Track Corporation to assist with investment in Australia’s interstate
rail network, including the upgrading of the North-South corridor
- contributions totalling $87 million to universities, including $75
million to the Australian National University for general capital works,
subject to the university also contributing $50 million of its
own resources; $12 million will be provided to the University of Wollongong
to expand the Centre of Transnational Crime Prevention; and a one-off
contribution of $23 million to support the establishment of new medical
schools in Victoria
- an additional $19.5 million financial assistance to support primary
producers in regions that have been declared eligible for exceptional
circumstances assistance and those in regions that have been declared
eligible for interim income support.
- a $10 million contribution to the construction cost of a non-government,
community managed boarding college to deliver education and related
services to Indigenous high school students on the Tiwi Islands, and
- grants to sporting facilities, including $15 million towards the
establishment of the South Australian State Aquatic Centre, $15 million
to the Melbourne Cricket Ground to support the establishment of an Australian
sports museum; and $9.6 million toward upgrade of Toyota Park, home
of the Cronulla Sharks Rugby League Club, to enhance spectator safety
and security and improve disabled access.(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:
- 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 as required.
[…]
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. The major item is additional funding to the Department of Transport
and Regional Services to enable a total payment of $1.759 billion for
a range of highway projects of which $1.741 billion was allocated in the
2006–07 Budget. (4)
Clause 11: ‘Reduction of appropriations upon request’. This clause
is identical in wording to clause 9 in Appropriation Bill (No. 5) 2005–06
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)].
- This section is drawn from previous work by Richard
Webb, of the Economics, Commerce and Industrial Relations
Section, Parliamentary Library.
- Mr Gary Nairn,
MP Secretary to the Minister for Finance and Administration, ‘Second
reading speech: Appropriation Bill (No.5) 2005-2006’, House of Representatives,
Debates, 9 May 2006, p. 43.
- Agency Resourcing 2006-07, Budget Paper No. 4, p. 6.
- Budget Measures 2006-07, Budget Paper No. 2, p. 317.
Mary Anne Neilsen
Law and Bills Digest
Bills Digest Service
Information and Research Services
This paper has been prepared to support the work of the Australian Parliament
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.
IRS staff are available to discuss the paper's contents
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ISSN 1328-8091
© Commonwealth of Australia 2006
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Published by the Parliamentary Library, 2006.
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