Bills Digest no. 108 2008–09
Appropriation Bill (No. 5) 2008-09
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
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date introduced: 26 February 2009
House: House of Representatives
Portfolio: Finance and Deregulation
Commencement: On Royal Assent
Links: The relevant links to the Bill, Explanatory Memorandum
and second reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills have been passed they can
be found at ComLaw, which is at http://www.comlaw.gov.au/.
To
appropriate about $384 million for the ordinary annual services of government.
On 3 February 2009, the Rudd Government announced the
National Building and Jobs Plan (the Plan).[1] The context was the deteriorating Australian and world economies. The Plan’s
purpose is to provide additional fiscal stimulus to counter the contraction in
the economy. Appropriation Bill (No. 5) 2008-09 (the Bill) appropriates
additional funding in support of the Plan. The Plan is the fourth fiscal
stimulus package and follows the Economic Security Strategy,[2] the Nation Building Package,[3] and the Council of Australian Governments (COAG) funding package.[4]
Section 83 of the Constitution provides that 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be withdrawn from the Consolidated Revenue Fund except ‘under an appropriation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
- one of (usually) six annual appropriation acts.
Special appropriations—which account for about 80 per cent of
spending—are spending authorised by acts for particular purposes. Examples are
age pensions, carer payments, and the seniors concession allowance paid under
the Social Security (Administration) Act 1999, and Family Tax Benefits A
and B paid under A New Tax System (Family Assistance) (Administration) Act
1999. The remaining twenty per cent of spending is funded by annual
appropriations.
Section 54 of the Constitution 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. 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). Appropriation
Bill (No. 1) is introduced with the Budget and appropriates funds for the
‘ordinary annual services of the Government’. Appropriation Bill (No. 2)—which
is also introduced with the Budget—appropriates funds for other annual
services. A third Appropriation Bill—Appropriation
(Parliamentary Departments) Bill No. 1—funds the parliamentary
departments.
Additional estimates
Funding requirements usually
change after the Budget is brought down. The government may agree to additional
funding if the amounts in the three Budget Appropriation Acts are inadequate
and so has to seek parliamentary approval for additional spending. The process
whereby additional funds are provided is called ‘additional estimates’ and usually begins around November of the Budget
year. The approved additional estimates are incorporated into Appropriation
Bills No. 3 and No. 4 and Appropriation (Parliamentary Departments) Bill No. 2.
These Bills are the counterparts of Appropriation Bills No. 1 and No. 2 and
Appropriation (Parliamentary Departments) Bill No. 1 respectively.
When the Budget is brought down,
the government releases Portfolio Budget Statements. They contain, amongst
other things, explanations of the funding sought through the three
Appropriation Bills. The Portfolio Budget Statements are ‘relevant documents’
for the purposes of section 15AB of the Acts Interpretation Act 1901.[5] This means that the Portfolio Budget Statements can be used to help interpret
an Act. Portfolio Additional Estimates Statements are the counterparts of Portfolio Budget Statements and contain
explanations of the funding sought through the additional estimates Appropriation
Bills.[6]
The Senate’s powers in relation to ordinary annual
services
Section 53 of the Constitution
provides that the Senate may not amend proposed laws appropriating revenue or
moneys for the ordinary annual services of the government. The Senate may,
however, return to the House of Representatives any such proposed laws
requesting, by message, the omission or amendment of any items or provisions
therein.
Departmental expenses (outputs) are costs incurred in running
agencies, for example, salaries, depreciation and other day-to-day operating
expenses. Administered expenses (items) are the costs of providing the programs
that agencies administer. While most administered expenses are funded through
special appropriations, some are funded through the Appropriation Bills. The
Bass Strait Passenger Vehicle Equalisation Scheme is an example of an
administered expense funded as an ordinary annual service.
Departmental outputs and administered expenses contribute to
outcomes. Outcomes are the results or consequences for the community that the
government wishes to achieve. An example, in the Attorney-General’s portfolio,
is:
An equitable and accessible system of federal civil justice.[7]
Reduction
processes
Departmental expenses and administered expenses Budget
allocations can be reduced. It is sometimes the case that an appropriation for
a departmental expense exceeds what is needed. However, departmental
items do not automatically lapse if they are not spent. In these circumstances,
a ‘reduction process’ to extinguish the unspent amount is available. Under this
process, on request in writing from a minister, the Finance Minister may issue
a determination to reduce the agency’s departmental expenses appropriation. In
short, the excess of the amount allocated over the amount expended can be
extinguished.
Appropriations for administered expenses are also subject
to an annual process to extinguish amounts that are not required. The amount
identified as spending on administered expenses in agencies’ financial
statements—as published in their annual reports—is the basis for this process. In
short, the amount of the reduction is the difference between the amount
appropriated and the amount spent as shown in the agency’s financial
statements.
In effect, the unused amounts
are returned to consolidated revenue.
Financial
implications
The Bill appropriates $384.179 million, and is the fifth to
appropriate money for ordinary annual services for financial year 2008–09. The
other items of legislation to do so are:
The Nation Building and Jobs Plan is the main fiscal
stimulus package the government has introduced to counter the current downturn in
the economy. The Appropriation (Nation Building and Jobs) Act (No. 1)
2008-09 appropriated some funds for the Nation Building and Jobs Plan. In
his second reading speech for the Bill, the Minister for Competition Policy and
Consumer Affairs, and Assistant Treasurer, the Hon. Chris Bowen (the Minister),
stated that additional funding would be needed to underpin the Nation Building and Jobs Plan. The Bill provides
some of this additional funding. [Appropriation Bill (No. 6)
2008-09 also contains additional funding in support of the Nation Building and Jobs Plan. See
also the Bills
Digest for Appropriation Bill (No. 6) 2008-09].
The Bill
appropriates $285.619 million for the Department of Education, Employment and
Workplace Relations ($15.541million is for departmental expenses and $270.078
million for administered expenses. Of the $285.619 million, $223.3 million is to
be expended as follows:
- $43.7
million is for the expected increase in commencements and completion claims
under the Australian apprenticeships system
- •
$38.8
million is to assist apprentices and trainees to return to the workforce and continue
training. Employers and training organisations will be encouraged to retain
apprentices and trainees through an additional payment on completion of
training
- $34 million will
be provided to keep open, until 31 March 2009, 241 ABC Learning centres, which
the receiver has assessed to be unviable under the ABC Learning business model
- $36.8 million
will be provided to ensure that any Australian worker made redundant will
receive assistance to help them re-enter the workforce, and
- $70
million is to meet an expected increase in expenditure against the General
Employee Entitlements and Redundancy Scheme.
The
Department of Infrastructure, Transport, Regional Development and Local
Government will receive an additional $20.066 million in 2008–09 ($3.666
million for departmental expenses and $16.4 million for administered expenses).
According to the Minister, the Department will be provided with an additional
$16.4 million in 2008–09 and $195 million in total over two years to implement
the East Kimberley Development Package. The package is designed to support
economic development in the region through investment in social and common use
infrastructure. Payment is conditional on joint assessments, with the Western
Australian government, of potential infrastructure investments.
The Bill
provides $28.486 million to the Department of Families, Housing, Community
Services and Indigenous Affairs ($17.395 million for departmental expenses and
$11.091 million for administered expenses). According to the Minister, the
funding will allow the doubling of the Emergency Relief Program until 30 June
2011.[9] The additional $11.091 million will
enable community organisations concerned to respond to the expected increase in
demand for emergency relief resulting from the recent deterioration in economic
conditions.
The Bill
provides $14.856 million to the Department of Foreign Affairs and Trade to offset
the effect of exchange rate fluctuations on its ability to make payments to
international organisations on the Australian Government’s behalf.
The above
figures are taken from the Minister’s second reading speech.
Most of the provisions in the Bill are identical to those in
the other four items of legislation noted above.
Clause 3 contains definitions. There are five
definitions of ‘Portfolio Statements’. They all refer to the Statements
introduced as ‘relevant documents’ in support of various Acts:
- Portfolio Additional Estimates Statements
- Portfolio Budget Statements
- Portfolio Supplementary Additional Estimates Statements
- Portfolio Supplementary Additional Estimates Statements No. 2,
and
- Portfolio Supplementary Estimates Statements.
Portfolio
Additional Estimates Statements means the Portfolio Additional Estimates
Statements that were tabled in the Senate or the House of Representatives in
relation to the Bill for the Appropriation Act (No. 3) 2008–2009 and the Bill for the Appropriation Act (No. 4) 2008–2009.
Portfolio
Budget Statements means the Portfolio Budget Statements that were tabled in
the Senate or the House of Representatives in relation to the Bill for the Appropriation
Act (No. 1) 2008–2009 and the Bill for the Appropriation Act
(No. 2) 2008–2009.
Portfolio
Supplementary Additional Estimates Statements means the Portfolio
Supplementary Additional Estimates Statements that were tabled in the Senate or
the House of Representatives in relation to the Bill for the Appropriation
(Nation Building and Jobs) Act (No. 1) 2008–2009 and the Bill for the Appropriation
(Nation Building and Jobs) Act (No. 2) 2008–2009.
Portfolio
Supplementary Additional Estimates Statements No. 2 means the Portfolio
Supplementary Additional Estimates Statements that were tabled in the Senate or
the House of Representatives in relation to the Bill for this Act and the Bill
for the Appropriation Act (No. 6) 2008–2009.
The reference to Portfolio
Supplementary Estimates Statements is to the Statements released in support
of the Appropriation (Economics Security Strategy) Act No. 1 2008–09 and
the Appropriation (Economics Security Strategy) Act (No. 2) 2008–09.
Clause 4 provides that the Portfolio Budget
Statements, Portfolio Supplementary Estimates Statements, Portfolio Additional
Estimates Statements, Portfolio Supplementary Additional Estimates Statements
and Portfolio Supplementary Additional Estimates Statements No. 2 are relevant
documents for the purposes of section 15AB of the Acts Interpretation Act
1901.[10]
Clause 6 Summary of appropriations states the
total of the items specified in Schedule 1 is $384 179 000. Schedule
1 lists all the agencies that are to be funded, the amount of funding, and the
breakdown of funding between departmental and administered expenses.
Clause 8 deals with ‘administered items’. Subclause
8(1) confirms that if an amount is specified in an administered item to be for
an outcome, then money can be expended to achieve that outcome. Subclause
8(2) provides that where the Portfolio Budget Statements, Portfolio
Supplementary Estimates Statements, Portfolio Additional Estimates Statements,
Portfolio Supplementary Additional Estimates Statements or Portfolio
Supplementary Additional Estimates Statements No. 2 indicate that an
activity is for an outcome, the amount in the administered item is taken to contribute
towards the achievement of that outcome.
Clause 9 deals with ‘CAC Act body payment items’. A
CAC Act body is a Commonwealth authority or company within the meaning of the Commonwealth
Authorities and Companies Act 1997 (the CAC Act).[11] The amounts to be paid to CAC Act bodies are shown in Schedule 1 as
‘Payments to CAC Act bodies’. For example, in the Defence Portfolio, Schedule
1 shows an administered expense for the Australian War Memorial of $38.597
million. Subclause 9(1) provides that the amount specified in a CAC Act
body payment item may be paid to the body and used for the body’s purposes. Subclause
9(2) provides that if an Act provides that a CAC Act body must
be paid amounts that are appropriated by the Parliament for the body’s purposes
[paragraph 9(2)(a)] and Schedule 1 contains a CAC Act body
payment item for that body [paragraph 9(2)(b)], then the body must be
paid the full amount specified in the item. The Explanatory Memorandum explains:
The purpose of subclause 9(2) is to clarify that
subclause 9(1) is not intended to qualify any obligations in other
legislation regulating a CAC Act body, where that legislation requires the
Commonwealth to pay the full amount appropriated for the purposes of the body.[12]
As noted, a process exists whereby appropriations for
departmental expenses that are not needed can be abolished. Clause
10—Reducing departmental items contains this process. Subclause 10(1) specifies who can request reductions in departmental expenses. Paragraph
10(1)(a) empowers the Minister for an agency to ask the Finance Minister to
reduce a departmental item for that agency, while paragraph 10(1)(b) enables the Chief Executive of an agency, for which the Finance Minister is
responsible, to ask the Finance Minister to reduce a departmental item for that
agency. Subclause 10(2) specifies that the Finance Minister may make a
determination reducing a departmental item by the amount in the request. Subclause
10(3) provides that the determination will have no effect to the
extent that it would reduce the departmental item below nil.
Clause 11—Reducing administered items contains the
process for extinguishing appropriations for administered items that are not
needed. Subclause 11(1) provides that if the amount shown in the
financial statements of an agency’s annual report shows that the expensed
amount of an administered item is less than the amount appropriated for that
item, then the amount of the reduction is the difference between the appropriated
amount and the amount in the annual report. Subclause 11(2) enables the
Finance Minister to determine that an amount, published in the financial
statements of an agency, is taken to be the amount specified in his or her
determination, while paragraph 11(2)(b) ensures that the amount
published in the annual report can be corrected. Subclause 11(3) provides that the Finance Minister’s determination, made under subclause
11(2), is a legislative instrument, that section 42 (relating to disallowance)
of the Legislative Instruments Act 2003 applies to the determination,
but that Part 6 (relating to sunsetting provisions) of the Legislative
Instruments Act 2003 does not apply to the determination.[13] In short, this means that the Finance Minister’s determinations are
disallowable by Parliament, but once made, will not expire.
Clause 12 contains the process for reducing CAC
Act body payments. This is almost identical to that for departmental items (clause
10). One difference is that whereas paragraph 10(1)(b) enables the
Chief Executive of an agency, for which the Finance Minister is responsible, to
ask the Finance Minister to reduce a departmental item for that agency, in the case of CAC Act bodies, a similar request must come
from the Secretary of the Department if the Finance minister is responsible for
the body [paragraph 12(1)(b)]. The reason for this difference is that
payments to CAC Act bodies are channelled through the relevant portfolio
departments. Subclause 12(2) empowers the Finance Minister to make a
determination reducing a CAC Act body payment by the amount requested. Subclause
12(5) provides that proposed subsection 9(2) does not limit the
reduction of a CAC Act body payment under this section.
Special
accounts are essentially ledgers in which all expenditure and revenue related
to a particular purpose are recorded. This simplifies identification of
all financial activities related to that purpose. Clause 13 Crediting
amounts to Special Accounts provides that if any of the purposes
of a Special Account is a purpose that is covered by an item, then amounts may
be debited (expended) against the appropriation for that item and credited to
that Special Account.
Clause 14 provides that
the Consolidated Revenue Fund is appropriated for the purposes of this Act,
including the operation of this Act as affected by the Financial Management
and Accountability Act 1997.
Concluding
comments
Addition funding of $1 830.9 million in support of the Nation Building and Jobs Plan is contained Appropriation Bill (No. 6) 2008-09.
Members, Senators and
Parliamentary staff can obtain further information from the Parliamentary
Library on (02) 6277 2464
Richard Webb
6 March 2009
Bills Digest Service
Parliamentary Library
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