Publications

Budget Features 1999-2000

Portfolio Directions Overview and
Significant Budget Measures

Contents

Agriculture, Fisheries and Forestry

Portfolio Directions Overview

Els Wynen

The Department of Agriculture, Fisheries and Forestry Australia devised two outcomes for its activities. The first outcome is related to profitability and competitiveness of agricultural industries, and the creation of jobs, particularly in regional Australia. The second outcome relates to a sustainable resource base for all agricultural industries.

Achieving each outcome requires outputs in six different areas:

• policy
• program administration
• scientific advice
• export certification
• quarantine services
• economic research.

Success at achieving each outcome may be measured against several indicators. Indicators for the first outcome, profitability, competitiveness and job creation, span the gamut from marketing to farm business issues, rural adjustment, adoption of research, food safety and quality management, processing, and structural and competitive arrangements. Targets also range widely, from the number of markets developed to recognition of the Department's contribution to improving certain indicators.

Indicators of the second outcome, the provision or maintenance of a sustainable resource base, relate to:

• quarantine effectiveness
• fisheries and forest based industries
• water reform
• Natural Heritage Trust issues, and
• the agricultural sector and natural resource management.

Some targets are stated as the absence of growth in undesirable characteristics (such as in the establishment of pests and diseases), others as policy developments (fisheries and forest based industries) or time limits on policy adoption (water reform and Natural Heritage Trust). The last indicator, securing a sustainable resource base for the agricultural sector and resource management in general, is planned to be targeted through influencing decisions and activities through Ministerial Council, other forums and international meetings.

Many of the indicator targets for both outcomes are sufficiently vague to make it difficult to judge whether they have been attained.

All changes announced in the budget are allocated to the first outcome, productivity, competitiveness and job creation. In total, with expenditure of $19.7 million on announced measures and $7.0 million in savings through performance improving initiatives, a net amount of $12.7 million is budgeted to be spent on new measures in 1999-2000.

Table 1 shows the changes in appropriation to the different outputs. At $312.8 million AFFA's total cost of outputs is estimated to be 3 per cent lower than in the previous year. A higher percentage of this than in the previous year (53 per cent as compared with 49 per cent) is to come from government sources.

Table 1: Total AFFA resourcing ($'000)

Expenditure on some outputs, in particular policy and scientific advice, and also export certification, is to decline considerably in comparison with the previous year. Areas of largest gains are program administration and quarantine services. Changes in expenditure on some outputs are due largely to restructuring of the Department. For example, several branches of the Bureau of Rural Sciences (BRS) (listed under 'scientific advice') have been moved to the Australian Geological Survey Organisation in the Department of Industry, Science and Resources. Other branches have moved to other parts within AFFA, but outside the BRS, and are now listed under different outputs, such as policy and program administration.

In general, it is difficult to compare AFFA's total figures with last year's, as the department has undergone substantial restructuring. Minerals and energy issues have been removed from AFFA, and food has been included, hence the change of name from the Department of Primary Industries and Energy.

Most of the new measures (see Table 2) are allocated to policy and administration, with one measure also featuring export certification (Supermarket to Asia, $23.7 million over three years). For another measure all funding is allocated to quarantine strategies, in northern Australia ($12.1 million over three years). With the exception of the Great Artesian Basin ($31.8 million over five years), budgeted expenditure on all (six) other projects is similar to that in the previous year.

Table 2: Summary of Measures in the 1999-2000 Budget

The privatisation of the wool stockpile, as proposed in the Wool International Privatisation Bill 1999, is expected to change revenue, but the nature of the measure is such that it was considered that no reliable estimate could be provided.

Some industry groups were singled out for extra treatment. The pork industry was allocated extra money to help pig farmers leave the industry ($6 million, of which $1 million came from a previous program). In an earlier announcement the sugar industry was allocated $12.1 million over the next three years to fund increased research and development.

These last two measures, and some others, are industry-specific. However, many of the allocations in the portfolio of Agriculture, Fisheries and Forestry are process directed, with the targeting of strategies for, for example, marketing (STA), quarantine and forest agreements.

Agriculture, Fisheries and Forestry

Significant Budget Measures

Els Wynen

Outcome 1

Australian agricultural, food, fisheries and forestry industries are profitable and competitive and continue to create jobs, particularly in regional Australia.

Budget Measure Purpose

Supermarkets to Asia Strategy.

Key Issues Commentary

The Supermarket to Asia Council was set up in 1996, and was considered one of the Government's most important new initiatives.

In 1997-98, total food exports generated over $18 billion, of which nearly 60 per cent came from exports to Asia. In 1998, the year of economic downturn in Asia, Australian food exports to that destination were lower in the first three quarters than in the corresponding period in the previous year, but values in the last quarter exceeded those in the same quarter in 1997.

The allocation of funds to the Supermarket to Asia Council has been extended, with $23.7 million allocated over the next three years. The largest amount ($9.2 million over three years) is allocated to the new Food and Fibre Chains Program. Another major amount goes to the AQIS Technical Market Access Program, with lesser amounts earmarked over the next three years for the STA Council's Secretariat ($4.8 million) and a development program ($3.1 million).

The Food and Fibre Chains Program is expected to build supply chains for food and fibre exports. This program will provide matching funding to Australian companies for the purpose of developing efficient and competitive supply chains and develop sustainable trade relationships. Funding will depend on likely increase in export value and the extent to which results can be demonstrated to other food and fibre industry participants. Companies assisted will generally be required to provide matching contributions.

Agriculture, Fisheries and Forestry

Significant Budget Measures

Els Wynen

Outcome 1

Australian agricultural, food, fisheries and forestry industries are profitable and competitive and continue to create jobs, particularly in Regional Australia.

Budget Measure Purpose

Pork Industry Assistance Package.

Key Issues Commentary

In 1999-2000 $6 million is allocated to help farmers to leave the industry once they have decided to do so. Of this amount, $1 million was reallocated from an earlier announced research program.

The purpose of this allocation is markedly different from funding in earlier years. In 1997, $10 million was allocated to a development program, and in 1998 $1 million was earmarked for the development of producers' business skills. At the same time $8 million was set aside for rebates for investments in processing, mainly for the export market. The latest allocation is to help producers to exit from the industry.

Agriculture, Fisheries and Forestry

Significant Budget Measures

Els Wynen

Outcome 1

Australian agricultural, food, fisheries and forestry industries are profitable and competitive and continue to create jobs, particularly in Regional Australia.

Budget Measure Purpose

Sugar Industry Assistance package.

Key Issues Commentary

In July 1998 the government provided the sugar industry with $13.45 million over four years. The money was to be spent on research and development, as a response to the Sugar Taskforce which had reported upon the impact of the removal of import tariffs and export parity pricing for domestic sales, effectively decreasing the domestic price of sugar. At the same time as these institutional changes occurred, the sugar content of cane sugar had been decreasing, putting further pressure on sugar farmers' incomes.

Agriculture, Fisheries and Forestry

Significant Budget Measures

Bill McCormick

Outcome 1

Australian agricultural, food, fisheries and forestry industries are profitable and competitive and continue to create jobs, particularly in Regional Australia.

Financial Impact of Price of Outputs

Comment

Three fishing boats have been apprehended fishing illegally in Australian waters off Heard-McDonald Islands: the Salvora and the Aliza Glacial, apprehended in October 1997 and the Big Star, apprehended in February 1998. The Salvora and the Big Star were released on bonds of $1.57 million and $1 million respectively, which were forfeited when the skippers and fishing masters were found guilty and fined a total of $200 000 in October 1998. The skipper and fishing master of the Aliza Glacial failed to appear in court in July 1998, arrest warrants have been issued and the boat has been put on sale by the Federal Court.

The Heard Island fishery was opened up in 1997-98 and since the islands are south of the Sub-Antarctic convergence, it comes within the northern boundary for the Convention for the Conservation of Antarctic Marine Living Resources (CCAMLR). The islands and the surrounding 12 nautical mile territorial sea form the Heard Island Wilderness Reserve are listed as a World Heritage Area, where commercial fishing is prohibited. The Fishery more than 12 nautical miles from the Islands, which is part of CCAMLR area number 58.52 has a Total Allowable Catch (TAC) annually set at 3 800 tonnes for Patagonian Toothfish and 31 tonnes of Mackerel Icefish (Champsocephalus gunnari) following advice from the Scientific Committee of CCAMLR. The estimated value of such a catch is put at $20 million. Trawling is the only fishing method permitted, as Longlining was specifically banned because of its threat to the wandering albatross. While CCAMLR sets the TAC, details of the fishery such as issuance of permits and provisions of fishery data to CCAMLR is carried out by the Australian Fishers Management Authority (AFMA).

There has been significant illegal fishing carried out in the waters around Sub-Antarctic Islands between South Africa and Australia. It has been reported that 40 vessels were operating illegally off the French Islands of Kerguelen and Crozet, within 200 nautical miles of Heard-McDonald Islands. The HMAS Anzac apprehended and brought to Fremantle two illegal fishing vessels registered in Belize and Panama.

The Minister for the Environment and Heritage, Senator Hill has claimed that the value of Patagonian Toothfish taken illegally over the past two years was $500 million(1). He has urged action by CCAMLR on the issue of illegal fishing. Last year five proposals were put up for adoption by CCAMLR but did not receive support:

• a catch certification scheme to prevent illegal trade is a logical measure and is supported by conservation groups. However it needs to be developed
• mandatory Vessel Monitoring Systems within CCAMLR area (e.g. satellite monitoring) is an obvious step especially in the Southern Ocean where conventional monitoring is very difficult
• CCAMLR scientific observers to report other vessels sighted is also obvious to identify illegal fishing vessels and provide data to a central repository
• tighten access of illegal fishing vessels to CCAMLR parties' ports is aimed at both making it more difficult to provision ships and to reducie landing of illegal catch
• impose uniform standard of marking fishing vessels and their fishing gears to make identification of legal fishing vessels in the CCAMLR area easier so by default illegal fishing vessels are more easily identified

The Australian Government has taken the following actions to regulate the catch in its areas:

• restricting the Heard Island legal fishery to two vessels
• all licensed vessels carry a vessel monitoring system
• Australian observers must report all other vessels sighted
• AFMA officers verify all landing of Toothfish and verify these for CCAMLR, and
• vessels undermining CCAMLR conservation measures are refused entry to Australian ports.

The $3.9 million to increase patrols in the waters for illegal fisheries around Heard-McDonald Islands will be very useful. However prior to this initiative Australia's efforts to patrol these waters have been restricted, with no continuing funding to support vessels in these waters. $4.1 million was allocated to fund such patrols in 1997-98 with some of these funds being used for operations in the 1998-99.

1. Press Release 3 November 1998, Minister for the Environment and Heritage.

 Agriculture, Fisheries and Forestry

Significant Budget Measures

Rod Panter

Outcome 2

Australian agricultural, food, fisheries and forestry industry have a sustainable resource base.

Financial Impact on Price of Outputs

Comment

This Measure funds a program of monitoring, surveillance and public awareness in Northern Australia and the region with regard to incursions of pests such as fruit flies.

A further $4.0 million is planned for 2000-2001 and $4.1 million in 2001-2002.

Dozens of species of foreign insects have been found in Australia since 1970. Examples of damaging pests are the silverleaf whitefly (first detected in Queensland in 1994) and the western flower thrips (found in Perth in 1993). The Torres Strait region is a recognised pathway of insect pests from Papua New Guinea and South-East Asia. Also, infested aircraft and ships present a potentially easier route than insect flight.

Parliamentary Library Research Paper No. 29 (1995-1996) 'The Papaya Fruit Fly-A Failure of Quarantine' described in detail a failure in quarantine whereby Sydney, Newcastle, Brisbane and Cairns lacked continuous placement of insect traps to detect exotic fruit flies escaping quarantine measures in the early 1990s. Cairns did have State Government traps in place up to 1988 but these were removed when AQIS took over the direct management of the northern Australia surveys. A result of this discontinuity was an unexpected outbreak of exotic papaya flies near Cairns in 1995. Other potential fruit fly invaders from PNG/Asia include the melon fly and the oriental fruit fly.

Attorney-General's

Portfolio Directions Overview

Chris Field

The Budget will not have a major effect on this portfolio, the major changes being the introduction of a Federal magistracy, additional financing for counselling and dispute mediation and the introduction of a National Crime Information System.

In addition to providing a wide range of legal services to the Commonwealth and its Departments and Authorities, the portfolio is responsible for a number of independent and semi-independent bodies dealing with a range of responsibilities. These include native title, legal aid, protective services, human rights, censorship, aspects of criminal law and customs and border control. The work of the portfolio is often performed in co-operation with other portfolios and their agencies and other governments, particularly in the area of law enforcement and border management.

The portfolio aims to achieve two major outcomes.

Outcome 1

An equitable and accessible system of federal law and justice.

Outcome 2

Coordinated security, crime prevention and law enforcement arrangements.

To achieve these outcomes, the portfolio is divided into four groups, overseeing:

• legal policy and services to the government
• community affairs
• the justice system and
• maintenance of law, order and safety.

Much of the work of the portfolio is of an on-going nature which leaves little scope for major financing change unless there is a major change in policy or operations for the area. A broad overview of the portfolio reveals:

• the total resources for outcome 1 in 1999-2000 are budgeted to be $282.6 million compared to an estimated $306.9 million in 1998-99(1)
• total resources for outcome 2 in 1999-2000 are budgeted to be $111.2 million, compared to an estimated $175.4 million in 1998-99.(2)

Staff years for outcome 1 in 1999-2000 are estimated to be 693.7 (690 for 1998-99) and, for outcome 2, are estimated to be 877.6 in 1999-2000 compared to 859.1 in 1998-99.(3)

In addition to the measures specific to this portfolio, a number of measures announced in the Budget will have cross portfolio effect, with the Attorney-General's portfolio playing a role in the implementation of programs relating to the government's initiatives relating to the use of illegal drugs. The major portfolios responsible for such programs are Health and Aged Care and Education, Training and Youth Affairs and these measures are discussed in the review of those portfolios.

1. Portfolio Budget Statement 1999-2000, p. 49.
2. ibid., p. 71.
3. ibid.

Attorney-General's

Significant Budget Measures

Jennifer Norberry

Outcome 1

An equitable and accessible system of federal law and justice.

Budget Measure Purpose

To establish a Federal Magistrates Service to deal with less complex civil federal and family law matters.

Financial Impact on Price of Outputs

Enhancing the role of summary proceedings in family law has been under consideration for some time.(1) Options discussed have included increasing the federal jurisdiction exercised by the state and territory courts, establishing a separate federal magistracy and appointing magistrates directly to the Family Court. The context in which this discussion has occurred is the need to ensure quick and inexpensive access to the justice system on one hand and to ensure that the system is fair and high quality on the other. In relation to the Family Court of Australia, much of this debate has taken place in the context of increasing workloads and delays in hearing and determining matters.

In October 1998, the Attorney-General foreshadowed the possibility of creating a federal magistracy.(2) In December 1998, it was announced that Cabinet had approved the creation of a federal magistracy to undertake less complex federal civil and family law matters(3). The Attorney said:

Critics of a separate federal magistracy have included the Chief Justice of the Family Court.(5) and the Shadow Attorney-General. While the Chief Justice has supported the idea of magistrates working within the Family Court system he has opposed suggestions for a separate federal magistracy operating outside the specialist jurisdiction of family law. The Shadow Attorney-General has expressed concerns that a federal magistracy might not be adequately resourced and may be cumbersome and inefficient.(6)

On 11 May 1999, the Attorney issued a press release stating that the Government would provide additional resources of $27.9 million over four years to establish a Federal Magistrates Service as a federal court. The Attorney said that magistrates would be located in areas of the highest need and would promote the use of alternative dispute resolution.

On 12 May 1999, in reply to a Question on Notice the Attorney said that, like other federal courts, the federal magistracy will be responsible for managing its own affairs supported by a chief executive officer and other staff.(7)

It is intended that the magistracy will commence operation in 2000, following the passage of enabling legislation through the Parliament.(8)

1. See, for example, Family Law Council, Magistrates in Family Law. An Evaluation of the Exercise of Summary Jurisdiction to Improve Access to Family Law, July 1995; Joint Select Committee on Certain Family Law Issues, Report on Funding and Administration of the Family Court of Australia, November 1995; Attorney-General's Department, Options for a Federal Magistracy, Discussion Paper, February 1997.
2. Attorney-General the Hon. Daryl Williams AM QC MP, 'Minimising delays in family law litigation,' News Release, 20 October 1998.
3. Attorney-General The Hon Daryl Williams AM QC MP, 'Federal magistracy to be established', News Release, 8 December 1998.
4. ibid.
5. 'Family Court of Australia Chief Justice discusses the Attorney-General's proposal for a magistracy,' PM, 8 December 1998.
6. Shadow Attorney-General Robert McClelland MP, 'Lack of resources for federal magistracy,' News Release, 26 February 1999.
7. House of Representatives, Parliamentary Debates (Hansard), 12 May 1999, p. 4333.
8. Attorney-General's Portfolio, Portfolio Budget Statements 1999-2000, Budget Related Paper No. 12.

Attorney-General's

Significant Budget Measures

Chris Field

Outcome 2

Coordinated security, crime prevention and law enforcement arrangements.

Budget Measure Purpose

To establish a national system containing identifying information on convicted and suspected criminals and a National Child Sex Offender Database. The system will be known as CrimTrac.

Financial Impact on Price of Outputs

The proposal to introduce CrimTrac was announced as part of the Attorney-General and Justice statement prior to the 1998 election and will provide DNA record of convicted criminals and crime scenes, a new register of fingerprints, apprehended and domestic violence orders, firearms licences and stolen vehicles. The election statement also announced that a National Paedophile Database (NPD) would be established. Details of the information to be collected on the NPD were not revealed in the statement, although it was noted that access to the NPD would be strictly limited to police forces and would not include the names of people who only come to the attention of police as a result of allegations made in the context of family law disputes.

Negotiations began with the States and Territories after the 1998 election and CrimTrac will be established in co-operation with the States and Territories and has been endorsed by the Australasian Police Ministers' Council. The States and Territories have agreed to fund ongoing and capital costs for the scheme and a Commonwealth/State steering committee has been established to oversee its implementation.(1)

The budget allocates $50 million for the establishment of CrimTrac over three years, $20 million in each of 1999-2000 and 2000-2001 and $10 million in 2001-02. During this time it is proposed that a National DNA database and National Child Sex Offender database will be established, the National Automated Fingerprint Identification System replaced, and 'real time access to national operational policing data' also established. The performance measure for 1999-2000 is that that the major components of the national DNA database and the National Automated Fingerprinting Identification System will have been implemented during the year.(2) (The old and new names for the fingerprint systems seem bound to generate uncertainty and confusion-both are abbreviated to NAFIS and the only difference between the terms is that the new scheme will be a Fingerprinting rather than Fingerprint system.)

While the CrimTrac proposal has received wide government support, a number of questions about the extent of the proposal remain uncertain, particularly regarding the proposed NPD. The establishment of a NPD may not need legislation other than an appropriation with the consequence that the scope of the scheme may therefore not be subject to parliamentary scrutiny. Announcements so far do not present a clear indication of the operation of the proposed NPD scheme and aspects that potentially raise privacy concerns. For example:

• Who will be on the database? While the proposed NPD was introduced under that term, it is called the National Child Sex Offender Database in the Budget papers(3) which raises the question as to whether a person must have been convicted of a certain offence to be included on the database and, if so, of what offences must the person have been convicted? In relation to the first question, the election statement referred to above notes that such allegations made in respect of family law matters will not be included in the database, which implies that allegations in other areas will be included (e.g. an allegation by a child carer). If it is to be the case that allegations are sufficient to lead to the placing of a name on the database, who is to determine if the allegation is sufficiently based for the inclusion and are there to be guidelines to this effect?
• Will there be procedures for a person to ascertain if their name is on the register and, if they are on the register due to an allegation (assuming allegations are sufficient for inclusion) will they receive information regarding the allegation?
• If the person is included in the database due to a conviction and the law they were convicted under provides for records to cease to be retained after a certain period, will this be sufficient to ensure automatic removal from the database?
• How will access to the system be restricted? If restricted to police forces, will other restrictions be in place to ensure that such access is not abused?

1. Portfolio Budget Statement 1999-2000, p. 69.
2. ibid., p. 78.
3. See, for example, Budget paper No. 2, p. 45.

Attorney-General's

Significant Budget Measures

Kate Burton

Outcome 1

An equitable and accessible system of federal law and justice.

Budget Measure Purpose

The Government will provide funding of $15 million to be shared equally for the national advertising campaign for and against the republic referendum proposal. In addition, funding of $672 000 will be provided for the provision by the Referendum Taskforce of expert legal and administrative support in relation to the conduct of the campaigns and the referendum process.

Financial Impact On Price Of Outputs

Communications, Information Technology and the Arts

Portfolio Directions Overview

Matthew James

The administrative changes of October 1998 transferred separate IT components into the portfolio. The Office for Government On-line has responsibility for whole-of-government electronic access and the Commonwealth Y2K amelioration effort. The National Office for the Information Economy handles electronic commerce policy. The sale of the National Transmission Network generated revenue of $399 million but also a loss of $356 million due to asset write-down and employee entitlements.

The main focus of the Budget in this portfolio is that of the Australian Broadcasting Authority (ABA). The ABA has received additional resources to facilitate the transition to digital television broadcasting and the regulation of on-line services. The ABA will oversee the development of industry codes of practice for content. Monies are now directly allocated to the Australian Broadcasting Corporation (ABC) and the Special Broadcasting Service (SBS) to purchase their own national transmission services.

In communications services, the Department has promoted last year's On-line Australia Day and next year's On-line Australia Year. It has committed to a call centre demonstration project. There is also an information program for the transfer of AMPS mobile telephone services to GSM digital and CDMA networks. A review of the longer-term cost-effectiveness of telecommunications interception will also occur. In commitments, there is $50 million for untimed local call access (Telstra social bonus) and $25 million extra to the Regional Telecommunications Infrastructure Fund.

Various arts funds receive continued support along with cultural programs. The National Science and Technology Centre and the Australian National Maritime Museum each have building and exhibition refurbishment support, as does Old Parliament House. The year will see consideration of a major performing arts review. Capital injection for the new Museum of Australia does not occur until next year. The Sydney Symphony Orchestra receives some extra funding in time for the Olympics.

The National Gallery of Australia has a one off contribution of $137 million as a capital use charge of 12 per cent against its $1 billion of assets in terms of works of art. Designed to reflect a return on assets, the charge is funded through appropriations and treated as a dividend to the Commonwealth. Similarly, the National Library of Australia has extra expenses of $176 million for its capital use charge, raising the unit cost of collection items from $40 to $311 each. The Library's infrastructure, plants and assets are valued at $1.3 billion and are subject to a new depreciation regime.

However, in broad terms, there appears to be no significant measures or major changes in relative funding allocated to outcome groups within the portfolio. There are minimal cross-portfolio impacts or any great changes to staffing numbers. The portfolio's budget is not consequent on the expected sale of Telstra shares, although the Department does provide advice to the Office of Asset Sales and Information Technology Outsourcing. Year 2000 compliance expenses cease this financial year. The portfolio receives about half of its revenue from taxes, fees, fines and charges.

Defence

Portfolio Directions Overview

Derek Woolner

Defence Department-$18 042 million:

• $16 541 million for Defence outcomes
• $1278 million equity injection, and
• $224 million capital receipts

In its accrual budget presentation, the Australian Defence Force and Department of Defence component of the Defence Portfolio has a single outcome:

The prevention or defeat of armed force against Australia or its interests.

This outcome is divided into four 'key deliverables', which are not themselves relevant to the financial aspects of the budget. The costing of the elements of the Defence outcome is given in each of 22 outputs which cover the range of defence activity (see Portfolio Budget Statement, p. 6).

Defence in 1999-2000 is funded at the same level in real terms (that is, after adjustment for inflation and currency exchange rate variation) as the expected Outcome for the 1998-1999 Budget. This is the third year that defence spending has been held constant in real terms after a series of minor reductions in successive budgets led to the value of defence spending being reduced by some 2.5 per cent over the first six years of the 1990s. However, because of sustained economic growth, spending on defence continues to decline as a proportion of GDP and, at an estimated 1.8 per cent(1) for 1999-2000, is the lowest proportionate level since the 1930s or, perhaps, the lowest ever.(2)

The accrual-based funding of $18 042 million for 1999-2000 appears significantly greater than the cash-based Estimated Outlay of $10 945 million in the 1998-1999 Budget. As with other portfolio areas, the accrual budgeting process inflates the apparent funding available to Defence by incorporating procedures to represent the costs of capital investment. This adds $4463 million to the Budget estimates, in the form of a capital and risk charge. This is repayable to Finance at the end of the financial year on the basis of 12 per cent of the value of Defence capital assets.

Translation of 'Defence Function Outlays' from the cash basis of 1998-99 to 'Appropriations for Departmental outputs' on the accrual basis of 1999-2000, is not easily apparent. The Defence Portfolio Budget Statement provides a table (p. 20) demonstrating this exercise. However, readers should be aware that, under the accrual format, Defence is responsible for 'Administered Expenses', mainly military superannuation which was removed from the Defence Budget in 1992-93. This adds another $1952.9 million to Departmental Appropriations for 1999-2000 that were not a component of Defence Function Output in 1998-99.

The allocation for expenditure on new capital equipment in 1999-2000 is $2750.2 million but only $60.1 million of this is outlaid to start new projects.(3) The pressures building on the Defence capital budget can be seen in the retirement in 1999 of the DDG HMAS Perth. The three DDGs (guided missile destroyers) will leave service with no direct replacement for their capability being available.

A feature of the Defence Budget that remains under accrual budgeting is that it continues to be a global budget. That is, changes to the levels of activity within the various outputs of the Defence organisation, or the provision of new funding for initiatives, are not determined by government during the budget process. Instead, Defence is given a budget adjusted on an overall basis (this year, on the basis of zero real growth in 1999-2000 compared with the outcome for 1998-1999) and left to allocate the funds itself, in accordance with the Minister's priorities.

For this reason, the Defence entry in Budget Paper No. 2 Budget Measures 1999-2000 (p. 61) contains no figures of expenditure. The initiatives listed in that section (the creation of an Office of the Revolution in Military Affairs, with $10 million for research into related issues and spending $23 million on chemical, biological and radiological defence), are not funded by any new appropriation but rather from the reorganisation of existing levels of Defence funds.

The principle tool of this reorganisation is the Defence Reform Program (DRP). The central policy objective of the DRP is to reduce Defence personnel numbers to provide funding for increased purchases of new capital equipment, military stores and other support items and to allow a proportion of military personnel to be transferred to the combat elements of the ADF.

The 1999-2000 Budget continues this process by evaluating the outputs of a further 6953 positions against commercially supplied alternatives.(4) The outcome is expected to be a reduction in the uniformed Permanent Force from an estimated 52 997 personnel to 50 000(5). At 30 June 1998, the personnel of the ADF had stood at 55 174.(6) Civilian numbers are expected to be reduced from 16 819 to 16 560 during the course of the financial year.

Similarly, funds are moved within the Defence Budget to reflect changes in the rates of activity between outputs or changes in the manner of their provision. Table 1 attempts to give an approximation of the changes in operating activity within each of the 22 defence outputs by excluding capital related items from the output price data given in Section Three of the PBS. The set of data for 'Employees' should roughly relate to the book keeping entry for salaries and allowances and that for 'Other Expenses' to the entry for military stores, fuel, other consumables and support used in the production of the output.

The indications from Table 1 are that spending within these output areas are responding to policy objectives, if somewhat modestly. Overall, expenditure on personnel declines by $254.1 million whilst expenditure on supporting items increases by $96.7 million. In general, however, funding for non-capital components of the defence outputs declines by $157.4 million.

The most significant reduction in personnel costs ($107.7 million) occurs in Air Strike/Reconnaissance, probably due to the market testing of some 565 maintenance positions at RAAF Amberley.(7) The reduction of $41.8 million for Land Task Forces should be treated as preliminary, as the PBS does not calculate the effects of the decision to place a second brigade at 28 days readiness and the Army is being allowed to carry some 200 extra personnel in 1999-2000.(8) The increase in spending on 'Other Expenses' for Land Task Forces of $68.2 million is, on the other hand, consistent with policy direction to achieve a higher rate of effort from Army units.

1. 'Defence Portfolio', Portfolio Budget Statements 1999-2000, [hereafter, PBS], p.18.
2. Comparing this measurement over time is a tricky exercise because significant changes to the nature of Commonwealth budgeting and to the Defence Budget make direct comparisons difficult.
3. PBS, Table 1.14, p. 24
4. PBS, Table 1.2, p. 12.
5. PBS, Table 1.13, p. 23.
6. Defence Annual Report 1997-98, p. 163.
7. PBS, Table 1.2, p. 12.
8. PBS, Table 1.13, p. 23.

Defence

Significant Budget Measures

Derek Woolner

Outcome 1

The prevention or defeat of armed force against Australia or its interests.

Financial Impact on Price of Outputs

Comment

Broadly, this output can be related to the RAN's fleet of frigates and destroyers, and their necessary supporting elements. The major issue regarding the provision of this output is the imminent loss of capability. The oldest but most capable of the RAN's surface combatants, the DDG Class, is to begin retiring from Service during 1999. These vessels provide wide area anti-aircraft defence for the fleet, with the capacity to track and engage multiple targets. Neither of the RAN's two remaining types, the FFG-7 nor ANZAC class, possess this capability. The DDGs also have the command space and communications to control a naval task force group, a role for which neither of the other types is well equipped.

The capabilities of the FFG-7 and ANZAC classes are to be upgraded under significant modernisation programs which will provide, to some degree, the level of capability of the DDGs. Nevertheless, they will remain handicapped by limitations of their design. The FFG-7s lack a medium calibre gun (the DDG has two) and the ANZACs currently have no capacity for area air defence missiles. When this capability is added late in the next decade, its capacity will remain limited by the necessity to store the missiles in the short-range missile magazine.

The retirement of the DDGs underlines a change in planning for the numerical strength of the RAN's surface combatants. The 'Dibb Report', on ADF force structure requirements, recommended a force of 16 to 17 surface combatants to meet the RAN's mission requirements, modelled around eight to nine capable destroyers and eight of the type that are now being built as the ANZAC class(1). The 1994 Defence White Paper continued this objective, noting that planning was commencing for replacing the capability of the DDGs once they began to retire in about 2000. However, throughout this period the strength of the surface combatant fleet fluctuated around 12 vessels and is currently down to 10, as the RAN awaits the completion of the ANZAC class construction program that will bring numbers up to 14. The change in the planning objective was confirmed in Australia's Strategic Policy, the Government's 1997 strategic planning document, which considered 14 an adequate number to meet requirements.

1. Paul Dibb, Review of Australia's defence capabilities, March 1986, p. 130.

Defence

Significant Budget Measures

Derek Woolner

Outcome 1

The prevention or defeat of armed force against Australia or its interests.

Financial Impact on Price of Outputs

Comment

The RAN's patrol boat capability is intended to provide maritime patrol and response operations in low threat situations. It is, however, more generally seen in the public eye for its non-defence roles of search and rescue, the apprehension of foreign fishing vessels and the arrest of drug runners. Of the total of 4349 available boat days provided by this capability almost half, 1800 are allocated to civilian law enforcement tasks.

The immediate issue for this output is the limited existing life of the Fremantle Class patrol boats. These were due to retire around the turn of the century to be replaced by a much larger, corvette sized vessel which was being proposed as a joint development project with Malaysia. In the event, the Malays chose to proceed with a German design and consequently the proposed RAN version was abandoned. In Australia's Strategic Policy of December 1997, the Government confirmed that it no longer intended to provide coastal surveillance capability with this type of vessel (p. 62). It would, instead, extend the life of the Fremantle Class and make a decision in two to three year's time on a similar type of boat to replace them.

However, it is now apparent that the environment for coastal surveillance is changing considerably. The declaration of the UN Convention on the Law of the Sea has greatly extended the areas of Australia's maritime jurisdiction. These now include waters, such as the sub-Antarctic around Heard and Macquarie Islands, where the patrol boats cannot operate and where the use of destroyers is dangerous. In addition new challenges to coastal law enforcement, such as organised illegal immigration appear to be emerging.

In this environment it is significant that the second of the initiatives for output four involves the study of alternative options and (preferred) commercial arrangements for the provision of the coastal surveillance and patrol capability. Already, in this year's Budget, the Department of Agriculture, Fisheries and Forestry has announced a budget measure, costing around $4 million over each of the next four years, to patrol the sub-Antarctic waters of the Australian Fishing Zone using chartered commercial vessels.(1)

Consequently it would not be surprising to see the RAN significantly reduce its patrol boat fleet when it begins to replace the Fremantle's, due to begin retiring in 2008-09.

1. Budget Measures 1999-2000, p. 40.

Defence-Veterans' Affairs

Portfolio Directions Overview

Peter Yeend

Introduction

Total appropriations for the Veterans' Affairs portfolio are $7.2 billion for the 1999-2000 year and the forward estimates are $7.8 billion in 2000-2001, $7.7 billion in 2001-2002 and $7.9 billion in 2002-2003. These estimates are for total portfolio outlays and therefore include administered expenses, i.e. cost of benefits and pension paid to individuals, and also portfolio operating expenses, i.e. running costs (staffing, computers etc.), to deliver programs and services.

The expected decline in administered expenses and operating expenses in the out years relates to the expected decline in the population of veterans and their dependants. Contrasting with these trends, the estimates for the provision of services, other than administered expenses, e.g. housing, health services, shows a steady increase in estimated outlays. This is likely to be due to the increased need for ancillary servicing of an ageing veterans' population.

The 1999-2000 Budget does not propose any significant initiatives in the Veterans' Affairs portfolio. While there are about 21 separate initiatives almost all are small in nature in terms of their cost and the numbers of persons affected.

Portfolio outcomes

The Veterans' portfolio now has four outcomes most of which align closely to the former programs and program objectives in the portfolio:

• Outcome 1-appropriate compensation and income support for veterans, veterans' widows and their dependants.
• Outcome 2-health care services for veterans, veterans' widows and their dependants
• Outcome 3-commemoration of war and peace keeping service
• Outcome 4-identification of veterans' needs and informed and appropriate access to services.

Outcome 1 was previously contained within Program 1-compensation and income support for veterans, veterans' widows and their dependants. Likewise, Outcome 2 mirrors the former Program 2-health care and services, and Outcome 3 the former Program 3-war graves. Outcome four appears new in terms of its having no discrete alignment with a former Program. It is unclear why it has been specified separately, as the objectives appear to be implicit in the other Outcomes, especially in Outcomes 1 and 2.

Defence-Veterans' Affairs

Significant Budget Measures

Peter Yeend

Outcome 1

Appropriate income compensation and income support for veterans, veterans' widows and their dependants.

Financial Impact on Price of Outputs

Budget Measure

Alignment of eligibility for invalidity service pension to the disability compensation assessments

Introduction

The most significant measure in the Veterans' Affairs portfolio for the 1999-2000 Budget is the proposal to align the assessment of permanent incapacity between the invalidity service pension with the disability compensation assessments. This is proposed to commence from January 2000.

Currently, under the invalidity service pension qualification requirements, the permanent incapacity requirements are met where the person has:

• a permanent incapacity for work of at least 85 per cent or is permanently blind in both eyes.

This is the same as the old invalid pension permanent incapacity for work requirements.

The proposal is to replace this requirement with the measurement of permanent incapacity that currently applies for the Special rate pension, also known as Totally and Permanently Incapacitated Pension (T&PI). This requirement is:

• unable to work more than 8 hours per week because of his or her accepted disabilities.

Comment

This is somewhat a stricter incapacity for work requirement and fewer applicants will be able to meet this tougher measure.

Apart from the desire to align the incapacity for work measures between the two payments, no other explanation or rationale is provided.

The Budget papers do not provide any detail on the estimated numbers of claimants who will be affected by this stricter criteria, but the cost savings are projected to be $5.3 million in 2000-2001, $12.9 million in 2001-2002 and $16.0 million in 2002-2003.

Defence Housing Authority

Portfolio Directions Overview

Derek Woolner

The Defence Housing Authority (DHA) is a statutory authority, not funded from the Commonwealth budget and deriving most of its income from accommodation rentals. It was established under the Defence Housing Authority Act 1987 to provide housing to Members of the Australian Defence Force (ADF) with families. The single outcome for the DHA is:

Part of Defence outcomes. To provide Defence personnel and their families with good quality housing.(1)

The Portfolio Budget Statement (PBS) provides one formal output:

• Provision of Defence housing, (with the following performance targets):

The DHA is the dominant supplier of accommodation for Service families, housing 85 per cent of all Service families.

The salient feature of the DHA is that it is a massive owner of Commonwealth assets and currently owns almost $2 billion worth of land, property and equipment.

Although the DHA envisages this dropping to almost $1.9 billion in 1999-2000, the DHA long-term projection is that assets will grow in value to more than $2.1 billion by 2002-2003.(2) These assets are dominated by houses, of which the DHA plans to provide net increase of 507 in 1999-2000, bringing total stock up to 21 996 by the end of the year.(3)

The DHA commenced operations on 1 January 1988 to address the issue of poor accommodation for Service families, which was recognised as having contributed to reduced Service morale for over two decades.

Postings for Service personnel on an average of less than every three years, often to remote or under-developed locations, posed frequent difficulties in housing their families adequately. The accommodation that was generally provided through the Services had been constructed, often in the 1950s, by the State governments under the Commonwealth State Housing Agreement (Servicemen). As owners but not users, the States had little incentive to upgrade, or even, to maintain the quality of housing. Without equity, the Commonwealth had no leverage to vary the locations of housing stock to reflect changing requirements.

An investigation by the Army in 1987 found that the poor standard of family housing was a reason contributing to 42 per cent of officer resignations.(4) The effects of the housing issue on Service morale also figured strongly in the 1988 report of the Joint Committee on Foreign Affairs, Defence and Trade, Personnel Wastage in the Australian Defence Force - Report and Recommendations. A task force investigating Service housing during 1985 found that, of the Defence stock of 23 500 houses:

• 6000 were below standard and should be replaced
• 6000 required substantial improvement to reach acceptable levels
• many houses were no longer sited to suit the operational needs of the Services or the social needs of Service families.(5)

By 1996 the DHA had made good progress in overcoming the poor quality of Defence housing. Between 1988 and 1996 the numbers of:

• good quality houses had increased from 7211 to 14 818, and
• sub-standard houses had decreased from 16 383 to 600.(6)

The DHA has also been innovative, leasing houses where sufficient private stock was available and selling, then leasing-back, its own property, to generate capital for construction of new houses. In 1988 there were no leased houses and only 445 leased out, by 1996 there were :

• 5215 leased houses, and
• 1517 houses leased back.

This activity appears to have achieved its aim to improve Service morale. By 1995, the DHA was gaining satisfactory ratings from 84 per cent of tenants concerning the standard of DHA new housing. Almost 70 per cent of tenants were satisfied with the standard of maintenance. Figures for those dissatisfied were six per cent in the former case and 16.2 per cent in the latter(7). DHA expects the satisfaction of tenants to remain at or above the 84 per cent level.(8)

The future of the DHA was considered by the Government in 1997, following a review of Government Business Enterprises. It was announced in June 1998, that the DHA would remain in government ownership and be restructured on a more commercial basis. The (then) Minister for Defence Industry, Science and Personnel, the Hon. Mrs Bronwyn Bishop said this was:

In general accord with these sentiments, the DHA has been restructuring its portfolio over the last three or four years to reduce its house numbers in south-eastern Australia, where the ADF is reducing its numbers and where the commercial market is better stocked. The resultant finance is being used to build accommodation in northern Australia where significant elements of the ADF are being relocated. In addition the DHA has been restructuring its portfolio, increasing the proportion of stock it sells and leases back from the private sector.

This has enabled the DHA to reduce significantly its debt and it plans to be totally debt free by the end of 1999-2000.(10)

1. Budget Related Paper No.1.4c, 'Defence Housing Authority', Portfolio Budget Statements 1999-2000, p. 12.
2. ibid., Table 3.2, p. 15.
3. ibid., p. 10
4. David Anderson, 'The Challenge of Military Service: Defence Personnel Conditions in a Changing Social Context', Background Paper No. 6 1997-98, Department of the Parliamentary Library, 10 November 1997, p. 89.
5. ibid., p. 90.
6. ibid., Table 3, p. 91.
7. ibid., p. 92.
8. Budget Related Paper No.1.4c, 'Defence Housing Authority', Portfolio Budget Statements 1999-2000, p. 10.
9. Ian Davis, 'Defence housing to stay under Canberra rule', Australian Financial Review, 11 June 1998.
10. Budget Related Paper No.1.4c, 'Defence Housing Authority', Portfolio Budget Statements 1999-2000, p. 10.

Education, Training and Youth Affairs

Portfolio Directions Overview

Kim Jackson

In line with the new outcome/output framework introduced in this Budget, the Department has presented its programs as directed towards three broad outcomes related to:

• school systems
• post-secondary education and training
• research training and activity, together with international education programs.

Each outcome is said to be the result of the activity of three or four 'output groups' that are functional groupings of the Department's programs.

There would seem to be considerable scope for improvement in the presentation of information in the Department's Portfolio Budget Statement. While the Budget measures are described in detail, the aggregation of data into such broad outcomes prevents any meaningful analysis at the functional program level. Difficulty in tracing program data referred to in Ministerial press releases illustrates this point. For example the Minister has stated that expenditure supporting Vocational Education and Training will be in the order of $1.6 billion. While a significant proportion of this expenditure, including new measures, is documented, the Budget papers do not facilitate the tracking of all the programs which contribute to this total, thus making comparisons with previous years difficult.

The chosen structure of the new presentation can also be questioned. Output Group 2.1 (infrastructure funding for post-secondary education) incorporates both the higher education system and vocational education and training (VET) activities. Programs for these sectors have quite disparate administrative, legislative, reporting and delivery arrangements and could only be properly evaluated as separate entities. In contrast, one single function (university research) is split between two outcomes (2.1 and 3.2).

Another difficulty for the portfolio concerns the nature of its performance indicators, as the Department acknowledges in its user guide to the Portfolio Budget Statements. Output Groups 1.1 and 2.1 comprise the Commonwealth's contribution to the infrastructure of the school, VET and higher education sectors. This represents 81.6 per cent of the portfolios' resources. Many of the performance indicators for items 1.1 and 2.1 deal with the output of an entire sector and thus are also reflections of decisions made by other stakeholders. The Commonwealth's capacity to influence each sector varies with its funding role: it provides 29 per cent of government funding for schools, 25 per cent of the operating revenues for the publicly funded VET system, and 57 per cent of university operating revenue. The accrual based outcome/output framework requires meaningful performance information to be effective and this will always be a difficulty when most of the Department's expenditure is necessarily expressed as broad educational outcomes in a federal context.

The move from cash to accrual budgeting has had a big impact on the stated cost of the Department's programs. Total expenses decreased by 7.1 per cent, but this was solely due to the 16.6 per cent decrease in post-secondary infrastructure funding. This was presumably due to the accrual treatment of expenditure under the Higher Education Contribution Scheme (HECS). Under accrual accounting, taxation liabilities are recognised at the time of assessment. Thus Commonwealth payments to universities on behalf of students are now offset against the students' future repayments though the tax system, giving a much more accurate picture of the Commonwealth's true expenditure on higher education. It is surprising that this billion dollar variation in the cash and accrual figures for post-secondary infrastructure funding should go uncommented upon in the Portfolio Budget Statement, particularly as it totally transfigures the broad outcomes for the Department. Excluding this item, accrual budgeting shows a 2.8 per cent increase in administered expenses and a 14.8 increase in departmental outputs.

The following table compares the resources available for the portfolio's outcomes for 1998-99 (in both cash and accrual formats) and 1999-2000, together with the 1999-2000 Budget Measures.

Note: The Budget Measure 'Redevelop AUSTUDY etc' has been split equally between Output Groups 1.2 and 2.1. The total for all Budget Measures includes the reduction of $10 million for DETYA's price agreement.

The table indicates that most of the major funding changes between 1998-99 and 1999-2000 are the result of previous budget decisions. Measures contained in the 1999-2000 Budget contribute only $2.7 million of the $317.4 million increase in infrastructure funding for school systems. The full impact of the Government new funding system for non-government schools will not be felt until later years ($56.6 million in 2000-01, $110.4 million in 2001-02 and $168.5 million in 2002-03). Similarly, only $7.9 million of the $186.5 million decrease in infrastructure funding for post-secondary education can be attributed to 1999-2000 Budget Measures, namely the cessation of the Higher Education Equity Merit Scholarship Scheme ($3.9 million) and reductions to the Higher Education Innovation Program ($4.0 million).

With regard to other Budget Measures that impact upon the portfolio's resources over the coming financial year:

• the $48.3 million for Output Group 1.2 comprises funds for literacy and numeracy programs and increased allowances under the Isolated Children Scheme (see also Indigenous Affairs Portfolio Overview)
• the $49.2 million for Output Group 1.3 is for an extension of the Asian Languages and Studies in Australian Schools Program ($30 million) and for the Quality Teacher Program ($15 million)
• the $7.8 million for Output Group 2.2 is for increased support for rural and regional New Apprenticeship incentives
• the $41.8 million for Output Group 3.1 consists of $ 36.8 million to restore research infrastructure funding to former levels and $ 5.0 million for science lectureships
• the $10.0 million for Output Group 3.3 comprises endowments for the Sir Robert Menzies Centre for Australian Studies and the Centre for Australian and New Zealand Studies ($5.0 million each).

Education, Training and Youth Affairs

Significant Budget Measures

Marilyn Harrington

Outcome 1

School systems provide their students with high quality foundation skills and learning outcomes.

Financial Impact on Price of Outputs

Background and Comment

The key education measure of the 1999-2000 Budget is the restructuring of the Commonwealth's recurrent funding for non-government schools.

Essentially the restructuring is a shift from a formula based on comparing the income a school generates on its own behalf with a standard level of resources to one that measures the relative need of a school community.

In 1997 the Commonwealth Government conducted a review of the Education Resources Index (ERI). The subsequent consultation report(1) considered that the ERI mechanism was flawed, that it failed to address relative need in an equitable way and, through its complexity, lacked transparency, predicability and flexibility. The report concluded:

The ERI in effect discouraged non-government schools from generating their own funds by assessing a school's funding rate according to the level of funds raised.

The report went on to suggest the investigation of alternative methods of funding, including a model based on the socio-economic status (SES) of a non-government school community. Subsequently a simulation exercise to test the validity and feasibility of an SES approach was conducted in 1998.

The new SES funding approach will assess need according to a measure of the SES of a school community and is intended to reflect the capacity of a school community to support its school. The process will involve collecting and linking students' home addresses with their Australian Bureau of Statistics Census Collection Districts, which typically comprise about 250 households. An SES index will then be applied to calculate an average SES score for each school community, (the lower the SES score of a school community the lower will be its capacity to support its school). The dimensions in the SES index to be used will include occupation, education, and income, with the latter including a measure of the income of families with children as well as a broad household income measure.

While the aim of the restructuring of the Commonwealth's recurrent funding of non-government schools is to implement a more equitable and adequately resourced system for those non-government school communities in need, because of the assurance that no school will be financially disadvantaged by the move to the new funding system, there will be a net increase in funding to all non-government schools. The minimum entitlement is to be set at the current secondary non-government school rate of 13.7 per cent of the Average Government School Recurrent Costs (AGSRC) index. This represents a 1.7 per cent increase in funding for the most privileged non-government primary school students. At the other end of the scale, the new maximum payment rate for the poorest of non-government schools will be set at 70 per cent of the AGSRC which is 14 per cent higher than the current ERI maximum funding rate. These increases are to be phased in over the next quadrennium of Commonwealth funding for schools, i.e. 2001 to 2004.

The assurance that no school will be financially disadvantaged by the move to the new funding system means that schools that would have had their funding reduced under the new system, given their SES ranking, will have their year 2000 per capita entitlements maintained in real terms at least until the end of the next quadrennium of schools funding, (i.e. 2004). In effect it would then appear that while a new funding model has been created there are no plans to implement it for these schools until at least 2005.

This decision that no non-government school will have its funding cut in the next quadrennium may result in anomalous situations, given that all new non-government schools will be assessed according to the SES system. It is conceivable that a new non-government school will receive less funding than a pre-existing non-government school with the same SES ranking.

In the context of this budget there has been speculation about the funding recategorisation of Catholic systemic schools.(3) This re-categorisation was the result of a review process commenced prior to the last election. Under the ERI system, the review process entails an application to an independent body, the Non-Government Schools Funding Review Committee. For a non-government independent school or school system to be reviewed it needs to satisfy the Committee that it has a need for a higher level of funding because of a significant change in circumstances since it was last categorised. The need for a higher level of funding is usually demonstrated by the ERI indicating a higher level of funding than the school or system receives. The Committee receives submissions from both the school and the Department of Education, Training and Youth Affairs before making a recommendation to the Minister who is responsible for the final decision.

In 1997 the Catholic education systems in all States and Territories, (the ACT later withdrew its application), except Western Australia which was already funded at the Category 11 rate, applied for their funding status to be re-categorised from Category 10 to Category 11.(4) The final recommendation was still with the Minister when the last election was called. The Coalition's subsequent election promise was therefore in effect an endorsement of the review outcome. Further, the decision to backdate the additional payment to 1 January 1998 is in accordance with the Commonwealth's administrative guidelines for schools. These guidelines state that for non-government schools which are re-categorised '... the date of effect will be from 1 January in the year following the year in which the review application is lodged ...'.(5) Figures supplied by the Department indicate that the re-categorisation currently equates to approximately $85 million in additional Commonwealth recurrent funding for non-government schools. It should also be noted that the Australian Labor Party made a similar promise of additional funding for Catholic schools in its 1998 education election policy, promising an additional $255 million for the reclassification of Catholic schools.(6)

There have been suggestions that the Catholic systemic schools have been given an unfair advantage over other non-government schools. This perception is in part related to the timing of the announcement of the re-categorisation of these schools to a higher level of funding under the ERI, and the announcement of the new SES funding model with its 'no losers' approach. The challenge for the Catholic and other systems will be in how they re-focus the distribution of their block grants within the new needs based funding model.

This Budget measure has further stimulated the questioning of the Commonwealth Government's commitment to the government school system. Throughout the life of this Government, critics of the Commonwealth's recurrent funding for government schools have argued that there has been an erosion of its funding of government schools vis-à-vis its funding for non-government schools. In the context of general criticism of the Commonwealth's funding for government schools it should be noted, however, that the States have the major financial responsibility for government school education. Commonwealth specific purpose grants represent about 12 per cent of total spending on government schools with the balance being met by State governments either from General Purpose Grants or from their own revenue sources. The Commonwealth provides a greater proportion of funding for non-government schools, with specific purpose grants representing about 38 per cent of total support.

The Government's abolition of the New Schools Policy and the introduction of the Enrolment Benchmark Adjustment (EBA) have been particularly targeted for criticism by education unions, parent groups, and others concerned about the level of Commonwealth general recurrent funding for government schools.(7) The New Schools Policy, introduced by the previous Labor Government, had imposed restrictions on the establishment and funding of new non-government schools. In 1997, the first year after the abolition of the New Schools Policy, 111 new non-government schools were approved for recurrent funding. In 1998 this figure had resumed similar proportions to those under the previous regime, with 35 new schools approved.(8) The other policy, the EBA, is an adjustment to Commonwealth recurrent grants for government schools in response to shifts in the proportion of non-government to government school student enrolments from a 1996 benchmark. In 1997 the total EBA liability was $11.9 million, rising to $21.0 million in 1998. In an answer to a Question on Notice in Senate estimates last year, the Department advised that it had revised its estimates of the EBA liability for 1996-97 to 2000-01 downwards from $197.6 million to $127.8 million.

Both these policies have had implications for Commonwealth recurrent funding for government schools. It could be argued that the increase in the number of new schools since the abolition of the New Schools Policy has had implications for the proportions of government school to non-government school enrolments. Hence the implications for Commonwealth recurrent funding for government schools through the application of the EBA. The EBA is considered regressive by its critics because of its cumulative nature and because it penalises government schools in spite of increased enrolments.

In his Budget media release, the Minister stated that 'over the next four year funding period (quadrennium) Commonwealth spending on government schools will increase by almost $1 billion over the previous four year funding period'(9). This amount refers to the compounded total increase in funding for government schools in the next quadrennium (i.e. 2001 to 2004) over the previous quadrennium, (i.e. 1996 to 2000). The spending increase includes supplementation for movements in the AGSRC, additional funding for new and existing targeted programs, and increases in per capita funding for shifts in enrolments.

However, critics have used various figures to support their argument that the Commonwealth's funding of non-government schools is increasing at the expense of its funding for government schools. Using one crude measure, an analysis of the estimated total specific purpose payments to the states for schools through to the out-years of the forward estimates(10) does suggest that the percentage share of Commonwealth expenditure on government schools has declined. The total payments in the table which follows include per capita grants, targeted programs, capital grants and recurrent grants under the Aboriginal Education Strategic Initiatives Programme (AESIP). Capital grants under AESIP, (representing a total of $9.7 million for the 1998-99 financial year only), have been excluded because of the absence of a government/non-government school breakdown.

Estimated Specific Purpose Payments to the States

1998-99 to 2002-03 ($ million)

The implications of the new system of funding non-government schools for government schools are an imponderable at this stage. The restructuring has been heralded by the Government as encouraging freedom of choice in education even for the needy. Non-government schools are being encouraged to extend their services to lower income communities through the enticement of a financial benefit.(11) It has been predicted that non-government schools will lower their fees as a result of the increase in funding and the removal of restrictions that had existed under the old ERI system.

It is probably reasonable to assume that these changes will see a further drift in enrolments from the government to the non-government school sector. While the effect on the EBA liability is one question to consider, another interesting observation will be the composition of the shift. The question to be asked is whether the changes will achieve the desired effect of attracting enrolments from the lower SES groups or whether the enrolments will be enticed from that sector of the government school community currently at the margin of being able to afford non-government school education. If so, the effect of the changes may be a further weakening of the government school sector by enticing away from the sector those families who currently have the greatest capacity to contribute to government school communities, both in a financial and a qualitative sense. If this happens the result could be a residualisation of the government school sector, marginalising it and leaving it with those students with the greatest educational need and consequently incurring the greatest per capita expense.

1. Dept of Employment, Education, Training, and Youth Affairs, Schools funding: consultation report, Canberra, 1997.
2. ibid., p. 50.
3. Systemic Catholic Schools are those which are administered by the Catholic Education Offices in each State and Territory. Non-systemic Catholic Schools are independent schools run by various religions congregations.
4. Under the current system of Commonwealth general recurrent funding for non-government schools, schools, based upon their ERI rating, are assigned to one of twelve funding categories. Category 1 schools receive the least amount of funding and Category 12 the most.
5. Department of Education, Training and Youth Affairs, Commonwealth programmes for schools quadrennial administrative guidelines 1997-2000, Canberra, 1999, p. 52.
6. Australian Labor Party, A better plan for education, 1998, p. 9.
7. For example, the Australian Education Union in its pre-budget submission, Time for a fair go for public education, reiterates its call for the EBA to be abolished, claiming it is discriminatory and that government schools must not be expected to 'educate more and more students with less and less Federal Government assistance'. See also J. Elson-Green, 'A public disgrace', Australian Educator, Election issue, Spring 1998, pp. 4-5.
8. Australia, Senate Employment, Workplace Relations, Small Business and Education Legislation Committee, Examination of additional estimates 1998-99: additional information received, 10-11 February 1999, p. 71.
9. Dr D. Kemp, '$870 million more for education', Media release, 11 May 1999.
10. Federal financial relations 1999-2000, Budget paper no. 3, p. 52.
11. Dr David Kemp, Choice and equity: funding arrangements for non-government schools 2001-2004, 11 May 1999, p. 2.

Education, Training and Youth Affairs

Significant Budget Measures

Kim Jackson

Outcome 2

Post school education and training providers assist individuals achieve relevant skills and learning outcomes for work and life.

Financial Impact on Price of Outputs

The HEEMSS was announced in the 1996-97 Higher Education Budget Statement to take effect from 1997. The scheme was to 'further encourage the participation of equity groups'. One thousand new students each year were to be exempted from the HECS charge, building up to a pool of 4000 students by the year 2000. Up to the present time 3000 scholarships have been allocated to universities.

Scholarships are allocated to each university on the basis of the number of Australian undergraduates at each institution. The scholarships are awarded by universities in accordance with guidelines published by DETYA. The guidelines specify that recipients should be commencing students and should belong to one of the equity groups listed in the table below. The table gives a breakdown of students receiving scholarships in 1998. Some students fit into more than one category of disadvantage, so it is not possible to sum the figures. The gender breakdown of 1998 recipients was 34 per cent male, 66 per cent female.

HEEMSS Recipients by Category of Disadvantage, 1998

The criteria for selection were very broad, with institutions only being required to award the scholarships on the basis of merit, with merit being determined by each institution having regard to the academic potential and level of disadvantage of applicants. In the second year of the scheme the Commonwealth also introduced the requirement that universities should award the scholarships to people who had suffered educational and financial disadvantage.

DETYA has conducted an informal survey of university equity officers and states that the main points to arise are as follows:

• 85 per cent of respondents claimed that the scheme was ineffective in attracting people into higher education who might otherwise not undertake university study because young people did not value an exemption from HECS and because the universities did not advertise the scheme properly
• there was no agreement on whether the scholarships improved retention
• HECS exemptions are more attractive to mature age students and single parents, rather than school leavers
• the scheme is administratively expensive for the universities.

The scheme could also be criticised for lack of consistency. Higher education students who seek Commonwealth assistance through the Youth Allowance must undergo a personal and parental income and assets test and, in some cases, a family actual means test. The maximum allowance for an adult student living away from home under the Youth Allowance is $6952 p.a. (not including rent assistance). In contrast, HEEMSS recipients can receive benefits of up to $5682 p.a. (the maximum HECS rate) with minimal or no means-testing.

The Government has stated that existing scholarships will not be affected by this measure and that savings will be $6.8 million in 1999-2000, $9 million in 2000-01, $10.8 million in 2001-02 and $12.3 million in 2002-03.

Employment, Workplace Relations and Small Business

Portfolio Directions Overview

Steve O'Neill

Outcome 1

Improved performance of the labour market (predominantly relating to labour assistance measures such as the Job Network and Work for the Dole).

Outcome 2

Flexible and fair workplace relations at the enterprise level.

Outcome 3

An improved operating environment for small business.

Effect on relative funding given to each of the Outcome groups

The impression from reviewing the Portfolio Budget Statement is that resources have been minimally increased for Administered Expenses (i.e. those expenses which used to be Program Costs, usually represented by dollars or services actually received by clients). This increase has been funded in part from savings from the previous year. However, resources have been contracted for administration purposes (i.e. the old Departmental Running Costs).

Administered Expenses therefore represent the $ benefit received by clients. DEWRSB, however uses two concepts to express the old Running Costs component of expenditure. One is Total Price, which is the total charge for the cost of administration. However Total Price is marginally higher than Departmental Output Appropriation, as revenue earned through cost recovery activities make up the difference between the two.

The Portfolio Budget Statement shows on page 16 that Total Appropriations for DEWRSB will be $2.3 billion, of which some $180 million is made up of capital injections. Thus, the appropriations for the three outcomes amount to $2.1 billion.

This appropriation can be derived in the table below by adding the Administered Expenses and Dept Output Appropriation for each Outcome. Also in the table 'Total Price' is left in brackets so as to be ignored when deriving the $2.1 billion appropriation

Any significant changes in the Portfolio's structure and output responsibilities since the last Budget

The total appropriations for 1998-99 of under $600 million included certain transport expenditures (eg Tasmanian freight equalisation and waterfront redundancy fund). These responsibilities now again reside in the Transport Portfolio. With the transfer of the Employment Services Market from the former Department of Employment Education, Training and Youth Affairs, the DEWRSB appropriations have increased to $2.3 billion.

Budget measures impacting on outputs which are of a cross-portfolio nature

• Expansion of Mutual Obligations
• Extension of Work for the Dole
• Return to Work Program
• Redirection of Funds from Job Network
• Indigenous Employment Policy
• Secret Ballots
• Plain English Legislation
• Review of Affirmative Action (EEO for Women) Act 1986

Impact on portfolio Average Staffing Levels

Employment, Workplace Relations and Small Business

Significant Budget Measures

Steve O'Neill

Financial Impact On Price Of Outputs

Measure 1: Expansion of Mutual Obligations

From 1 July 1999, MO arrangements will be extended and strengthened by widening the coverage of Work for the Dole (WfD) to 25 to 34 year olds who have been unemployed for 12 months. WfD places will be expanded from 25 000 in 1998-99 to 32 500 in 1999-2000, to 50 000 place in 2000-2001.

The measures are cited as improving the employability of job seekers by giving them work experience and building positive habits.

Measure 2: Expansion of Work for the Dole to Yr 12 school leavers

The criteria for eligibility is to be job searching and on full payment for 3 months. This will involve 6000 places per year. Priorities in the existing program have been re-ordered so that the measure does not involve additional costs.

The aim and effect on outcomes is to enhance labour market efficiency by matching projects with areas of high youth unemployment.

Measure 3: Return to Work Program

The program will commence in October 1999. It is voluntary. It is intended to assist those who have been out of the workforce for two or more years and whose primary role has been as primary care giver. In this sense, it is similar to the former (and current) Jobs Education and Training scheme except that conditionality of access dependent on benefit receipt is not required.

Measure 4: Redirection of Funds

Job Network funds of $25 million. in 1999-2000 have been transferred to the Indigenous Employment Program. From 2000-2001, $37 million will be transferred to WfD in each year. The impact on outputs it is claimed will placements under Job Network to increase to 797 000 for each of the next three years. NEIS placements should remain at the current levels of 6800 and the number of people to be assisted under Community Support Program can double.

Minor Measure 1: Secret Ballots

This minor measure is an entirely novel development in this year's Budget. Secret ballots are intended to 'enhance democratic decision-making' involved in the taking of Protected Industrial Action. They should 'improve the arrangements for bargaining and strengthen the accountability and responsiveness of unions to their members and minimise unnecessary protected industrial action'. Protected industrial action will not be able to commence until 'eligible employees' have expressed their views through a secret ballot. Legislation to enact this measure is forthcoming.

Understandably, the measure does not explain who an 'eligible employee' is. An eligible employee is normally assumed to be eligible to be a member of a particular union by virtue of the industry or occupation s/he works in. Indeed the current s.135 of the Workplace Relations Act talks about the Australian Industrial Relations Commission ordering secret ballots 'to find out the attitudes of members' (not non-members) and of organisations (normally unions). Recourse to ballots in the event of industrial action are not made frequently: six applications out of 29 378 matters lodged with the AIRC according to its 1997-98 Annual Report (p. 27).

But an eligible employee could mean one who is eligible to be covered by an agreement for which the protected industrial action is being organised. The proposal seems to involve the suggestion of a union conducting a ballot for non-members as well as members since non members may be eligible to be covered by any subsequent agreement. It is not clear whether a union will be required to conduct an election for workplaces where it has no members. Non-unionists are eligible to take protected industrial action when negotiating certified agreements and Australian Workplace Agreements.

The proposal seems to be a variant of the 1996 arrangements whereby all employees of a workplace to be covered by an enterprise agreement must vote on the final agreement before its certification. Presumably the electoral roll will have to be provided by the employer, in good faith and all honesty, to the Australian Electoral Commission, where non-unionists are involved. Presumably also, the AEC will conduct the ballot in the same manner it conducts ballots for agreements, which is procedural, and thus not necessarily an overnight exercise.

The potential problem with requirements for workplace ballots can be seen in the overly protracted negotiations to secure salary increases for the staff of federal Members of Parliament which are now well behind the rest of Australian Public Service agencies, many of which are now commencing 'second round' negotiations. The only class of federal agreement which does not require a workplace ballot is an Australian Workplace Agreement, despite the fact that these can be collective and offer identical terms to all employees.

Minor Measure 2: Plain English legislation

This measure envisages a scoping study to be undertaken to assess the likelihood of developing a plain English version of the Workplace Relations Act 1996.

Minor Measure 3: Affirmative Action Agency-operation of legislation

This measure intends to introduce an incentive basis for compliance, a reduction in paperwork and stronger workplace links. The proposals include changing the names of the Agency, the name of the Director and the Act, the establishment of an advisory board, the design of new streamlined report form and the preparation and dissemination of educative material.

Employment, Workplace Relations and Small Business

Significant Budget Measures

Dale Daniels

Outcome 1

Improved performance of the labour market.

Financial Impact On Price Of Outputs

Budget Measure: Extension of The Work For The Dole Program

The Work for the Dole Scheme (WfD) started in December 1997 when the first of the 10 000 planned participants in 70 community-based pilot projects commenced WfD activities. In January 1998 a plan to provide 100 000 WfD places spread evenly over the years 1998-99 to 2001-02 was announced. Two rounds of WfD projects were announced in July 1998 and December 1998 and 25 000 places were planned for 1998-99.

The pilot projects involved unemployed people aged 18 to 24 years who had been out of work for 6 months or more. They worked for up to 30 hours per fortnight for up to six months, received an additional $20 per fortnight to help with extra costs and were mainly drawn from regional areas of high youth unemployment. The subsequent rounds included places for older unemployed people (about 20 per cent) and were more broadly distributed across Australia.

Since July 1998 80 per cent of participants have been drawn from unemployed people between 18 and 24 years of age, receiving the full rate of payment, and not involved in voluntary work, part-time work, education, training or literacy courses.

Government expenditure planned for WfD has so far been $21.6 million in 1997-98 for the pilot projects and $61.8 million in 1998-99 for the permanent scheme.(1)

Expansion of the Scheme 1999 to 2001

In his Budget speech the Treasurer announced:

In 1999-2000 32 500 places will be provided and in 2000-01 and subsequent years 50 000 places will be provided. Places have already been earmarked for year 12 leavers in the current round of projects. 6000 places per year will be required for that group and the remainder of the additional places for 25 to 34 years olds.

Cost of the Expansion

Extending WfD to year 12 leavers will cost $24.7 million in 1999-2000 and approximately $100 million over the four years 1999-2000 to 2003-2004. Extending it to 25 to 34 year olds will cost $111 million over those four years.(3) From 2000-2001 $37 million per year will be redirected to WfD from that earmarked for the Job Network to help meet these costs.

Mutual Obligation

WfD is part of a broader set of activities, which can be undertaken to satisfy mutual obligation requirements. From July 1999 there will be 14 options including WfD available. They range from voluntary or part-time work through various forms of education and training to participation in the Green Corps or the Community Development Employment Programme (CDEP).

Evaluation of WfD

An evaluation of WfD has been conducted but is not yet publicly available. Some material drawn from the evaluation has been published in the media and used in media releases.(4) While there has been some adverse comment from critics(5) about the employment outcomes for participants of WfD, the evaluation appears to make favourable comparisons between WfD and some of the labour market programs wound up in the Government's first term.

1. The Hon. Dr David Kemp MP, Work for the Dole Initiative, Media Release, 13 May 1997. New Work for the Dole Projects Media Release, 14 April 1998.
2. The Hon. Peter Costello MP, Budget Speech 1999-2000, Australia, House of Representatives, Hansard, 11 May 1999 p. 8.
3. The Hon. Peter Reith MP, Strengthening and Extending Mutual Obligation, Media Release 11 May 1999.
4. Tom Allard, 'Work-for-dole Shapes As Success', Sydney Morning Herald, 17 February 1999, p. 2. The Hon. Peter Reith MP, Strengthening and Extending Mutual Obligation, Media Release, 11 May 1999.
5. For example 'Acoss criticises Work for the Dole', Impact, February 1999, p. 5.

Environment and Heritage

Portfolio Directions Overview

Bill McCormick

The Environment and Heritage portfolio has three outcomes.

Outcome 1

Protecting and conserving the environment.

Outcome 2

Delivering meteorological and related services.

Outcome 3

Advancing Australia's interests in Antarctica.

The total estimated expenses of the portfolio are $896.1 million of which $360.9 million is administered by the Department of Environment and Heritage, which includes the Bureau of Meteorology and the Antarctic Division as well as Environment Australia. The overall figure included $146.9 million of what is termed 'Small Agency Proxy Expenses' and includes the Australian Greenhouse Office, the Australian Heritage Commission, the National Parks and Wildlife and the Great Barrier Reef Marine Park Authority (GBRMPA). If the Bureau of Meteorology and the Antarctic Division are excluded the estimated expenses for Environment and Heritage Departmental and Administered is $632.2 million.

There were a number of Budget measures which arose from the 1998 election commitments:

• the Living Cities Program ($30 million over three years)
• the Oceans Policy Implementation ($50 million over three years, of which $20 million is subject to the sale of the second 16 per cent tranche of Telstra)
• funds for additional surveillance and enforcement measures in the Great Barrier Reef ($3.4 million over three years)
• the establishment of a new Cultural Heritage Projects Program ($6.6 million over three years), and
• provide $15.8 million to police our sub-Antarctic waters.

In addition to these election commitments, the new Budget measures included:

• an additional $5.8 million to complete all outstanding Regional Forest Agreements (RFAs) by December 1999 to be split between the Department of Environment and Heritage and the Department of Agriculture, Fisheries and Forestry (AFFA)
• repair flood damage to main access and other roads to Norfolk Island National Park ($3.5 million), and
• funding to GBRMPA to cover increased costs of the Independent Monitor for the Port Hinchinbrook project.

Funding was also provided to permit the continuation of several environment programs at existing levels for the next three to four years:

• Environment Protection Program ($4.3 million)
• Biodiversity Convention and Strategy Program ($2.2million)
• Greenhouse Science Initiatives ($3.4 million over three years), and
• Australian Biological Resources Study ($1.1million).

There were two other election commitments relating to the Budget:

• an additional $250 million will be provided to the Natural Heritage Trust from the sale of the second, 16 per cent, tranche of Telstra during the next three years, and
• $96 million from the Federation Fund was to be used to establish a Federation Sydney Harbour Trust to manage, protect and rehabilitate Sydney Harbour Foreshore Defence Sites once Defence vacates them. However, in the Budget Papers there is only a commitment of $93.2 million over four years for all funding through the Centenary of Federation Fund for major and minor cultural heritage projects including the Sydney Harbour Federation Trust.

There was a change to Portfolio responsibilities after the 1998 election whereby cultural heritage was returned from the then Communications and the Arts Portfolio.

The Environment and Heritage component of the Natural Heritage Trust (NHT) funding for 1999-2000 is $159.7 million. The AFFA component for 1999-2000 is $161.2 million.

It should be noted that there have been changes in the proposed expenditures from the Natural Heritage Trust over and above the additional $250 million from the second sale of Telstra. The proposed funding for 1999-2000 projects as outlined in the 1998-99 Commonwealth's Environment Expenditure Document has been modified in this Budget with:

• a significant reduction in total expenditure of $38.3 million for 1999-2000, and
• a further reduction of $9.3 million for 2000-2001.

As a result:

• Funding for Bushcare will be $11.6 million less in 1999-2000 than what was estimated in the 1998-99 Environment Statement, and
• NHT funding for the National Landcare Program in 1999-2000 will be $16.3 million less than predicted.

What has happened is that the money to these and other NHT programs has been delayed by one or more years and added to the extra $250 million from the Telstra sale to extend NHT funding into 2001-2002 financial year. Funding for that year will now total $314.7 million. In the debate of the Natural Heritage Trust of Australia Act 1997, the Senate prevented the Government from stretching existing NHT funds into 2001-2002 because there would be less funding for the previous years than promised by the Government.

The Portfolio Budget Statements for the Environment and Heritage Portfolio do not provide adequate information for adequate comparison of the 1999-2000 financial year Administered Expenses with those of 1998-99. There is a breakdown in spending for 1998-99 of the $387.4 million but it is not possible to identify the full breakdown of the $360.3 million to be spent in 1999-2000. In addition specific programs referred to as part of new Budget Measures such as the Living Cities Program, have no detail of funding for 1999-2000 only the total for the three or four years for which they run.

Environment and Heritage

Significant Budget Measures

Bill McCormick

Outcome 1

The environment, especially those aspects that are matters of national environmental significance, is protected and conserved

Financial Impact on Price of Outputs

Comment

This program provides $30.7million over three years and is aimed at urban environmental problems. It was part of the 1998 Coalition Election commitment. $10.2 million is designated for 1999-2000 and the program is comprised of five main elements: Waste Management; Chemwatch, Air Toxics; Compressed Natural Gas Refuelling Infrastructure; and Urban Waterways and reducing Coastal pollution.

$2.1 million has been allocated over three years for the waste management element, a resources recovery centre program. These recovery centres are needed to facilitate the development of more diverse and sustainable markets for recycled materials. $0.7 million will be provided in 1999-2000 for this new program.

Chemwatch, a new program for the national collection, storage and destruction of unwanted rural chemicals and a national database of agricultural and veterinary chemicals usage, will be established with funding of $14.4 million over three years. Funding for 1999-2000 will be $1.3 million. Commonwealth funding for the collection, storage and destruction of these chemicals, which is expected to begin in early 2000, is to be shared with the States and the Northern Territory on a dollar for dollar basis. Details for the database are to be developed for consideration by two relevant Ministerial Councils, Australian and New Zealand Environment and Conservation Council (ANZECC) and Agriculture and Resource Management Council of Australia and New Zealand (ARMCANZ). It is unclear when such a database will be up and running.

$3.8 million will be spent over the next five years on establishing a 'viable' compressed natural gas transport-refuelling infrastructure through a network of publicly accessible compress natural gas (CNG) refuelling stations in Sydney and Melbourne. It was originally intended to be targeted at light commercial vehicles. There may be implications of the proposed reduction in diesel excise for vehicles over 3.5 tonnes in having a 'viable' network of refuelling stations.

In response to the independent inquiry into Urban Air Pollution, the Government has introduced an Air Toxics program, and allocated $5 million over three years ($1.5 million in 1999-2000) to develop a national strategy to monitor, establish the levels of community exposure and manage emissions of air toxics. Air toxics were defined in the 1996 State of the Environment Report as 'pollutants present at very low concentrations, known to cause or suspected of causing long term health effects in humans'.

The largest component of the Living Cities Program in monetary terms is that relating to Urban Waterways and reducing Coastal Pollution through the National Stormwater Initiative. $25 million over three years will be provided to improve the health of urban waterways through such programs as Waterwatch. In 1999-2000, $0.6 million will be provided to Urban River Health and $4.7 million will be provided to Health Urban Waterwatch. These are the only two programs specifically itemised in the Portfolio Budget Statements for 1999-2000. The National Stormwater Initiative, which will address issues relating both to stormwater management and sewage overflows, will be allocated $11 million. The details of the program and funding allocations are still being considered by the Minister for Environment.

Environment and Heritage

Significant Budget Measures

Bill McCormick

Outcome 1

The environment, especially those aspects that are matters of national environmental significance, is protected and conserved

Financial Impact of Price of Outputs

Comment

While the new measures initiative for the implementation of the Oceans Policy was costed at $30 million for three years ($10 million for 1999-2000) an additional $20 million of this funding is contingent on the sale of the second tranche of Telstra. $4.1 million is included in the Natural Heritage Trust (NHT) budget for 1999-2000.

Key initial actions are:

• developing Regional Marine Plans beginning with the south eastern region of Australia's Esclusive Economic Zone (EEZ)
• improving understanding of the marine environment through baseline studies, sustainability indicators and monitoring and improved assessment of impacts of commercial and recreational activities
• support for the declaration and management of new marine reserves in Commonwealth waters
• support for the development of a national ballast water management system
• trials to treat acid sulphate soils
• a national moorings program for sensitive marine areas
• measures to increase the effectiveness of surveillance and enforcement of illegal fishing
• the phased withdrawal of the use of tributyltin anti-fouling paints.

There is no breakdown of specific funding for these initiatives available in the Budget Papers.

So far a National Oceans Ministerial Board has been established comprising Commonwealth Ministers responsible for the environment (Chair), industry, fisheries, resources, science, tourism and shipping, to oversee the regional marine planning process. Whether State or Territory Ministerial-level representation fits in the planning process is unclear. A National Oceans Office will be established in the Department of Environment by the end of the 1998-99 financial year. A National Oceans Advisory Group of non-government interests will provide advice to the Ministerial Board on the implementation of the oceans policy.

Environment and Heritage

Significant Budget Measures

Bill McCormick

Outcome 1

The environment, especially those aspects that are matters of national environmental significance, is protected and conserved.

Financial Impact of Price of Outputs

Comment

Cultural heritage was returned to Environment Australia (AHC) as a result of new administrative arrangements introduced after the October 1998 election. This new program, the Cultural Heritage Projects Program (CHPP) is an election commitment to support the restoration and conservation of the built and indigenous environment. As well as including $6.8 million funding over three years, CHPP incorporates $0.8 million from the National Estates' Grants Program and $1.1 million annually from the Incentives for Heritage Program. However it should be noted that the CHPP will only restore part of the funding that was available under the National Estates Grants Program in 1995-96 of $5.0 million before funding was cut to less than $1.0 million in 1996-97. The increased funding is only earmarked for the next three years, so that in 2002-2003 CHPP funding will fall to $1.9 million per annum.

The Incentives for Heritage Program was previously a tax deduction which was converted into a grants program as part of the Cultural Heritage Projects Program. This conversion has some advantages in that it allows building owners and managers who do not have a taxable income to benefit from the grants.

Family and Community Services

Portfolio Directions Overview

Peter Yeend

Background

This is the first Budget for the Family and Community Services (F&CS) portfolio, which replaced the Social Security portfolio and combined responsibilities transferred from other portfolios as a result of the portfolio reshuffle after the October 1998 election.

While the F&CS portfolio structure does not exactly mirror that of the Department of Social Security, all the responsibilities of Social Security are within F&CS, together with the following policy, program and autonomous agency responsibilities, transferred from other portfolios:

• the Australian Institute of Family Studies-previously under the then Health and Family Services Department (H&FS)
• the Commonwealth Rehabilitation Service-previously under H&FS
• child care assistance provided for under the Child Care Act 1972 and the Child Care Payments Act 1997 and the Child Care Rebate Act 1993-previously under H&FS
• the Child Support Agency-previously under the Australian Taxation Office
• the provision of employment and other services for people with disabilities, including expenditure under the Supported Accommodation Assistance Acts and the Disability Services Act 1986-previously under H&FS
• selected responsibilities for family law and family policy under the Marriage Act 1961 and the Family Law Act 1975-previously under the Attorney General's portfolio.

As with the Social Security portfolio in the past (since the mid-1980s), the F&CS portfolio is a feature in the Commonwealth Budget, because most of the programs within the portfolio are large in terms of numbers of people affected and dollars expended. In almost all situations, portfolio and program initiatives are initiated in the Budget context.

Overview

While there is a large number of individual items in the F&CS portfolio in the 1999-2000 Budget, no individual item is significant. In terms of major changes or initiatives, this Budget is one of the least consequential for policy and program initiatives for many years.

The main reason for this is that the government's major program changes in the social security area are contained within the proposed Tax Reform Package. The changes and features presented in the Tax Reform Package are:

• a one-off increase of 4 per cent in the rate of income support payments paid to social security and veterans' affairs pensioners and allowees
• a 2.5 per cent increase in the income test free areas for pensions and allowance income support payments
• a decrease in the taper rate for the pensions income test from 50 per cent down to 40 per cent.

The tax reform package also entails a total restructure of the income support and supplement payments paid in respect of families with children. The restructure involves a rationalisation of some twelve separate payment and tax assistance arrangements down to three main packages of assistance. See Bills Digest No. 175, 1998-99, A New Tax System (Family Assistance) Bill 1999.

Re-allocation of the programs within the portfolio-three main portfolio outcomes

There are now three main outcomes for the F&CS portfolio:

• Outcome 1-Stronger Families
• Outcome 2-Stronger Communities
• Outcome 3-Economic and Social Participation

Outcome 1-Stronger Families, largely encompasses the programs that were previously itemised in Programme 4 of the Social Security Portfolio, i.e. Income Security for Families with Children. The additional program coverage now within Outcome 1 is the youth allowance program and income assistance for students, which were previously contained within Programme 3 in the Social Security portfolio, i.e. Income Security for the Unemployed and Students.

Outcome 2-Stronger Communities, largely encompasses the programs that were previously itemised in Programme 5 of the Social Security Portfolio, i.e. Housing, and also those programs that were previously itemised in Program 6 - Disability Services in the Health and Family Services portfolio.

Outcome 3-Economic and Social Participation, largely encompasses the programs that were previously itemised in Social Security Portfolio:

• Programme 1-Income Security for the Retired
• Programme 2-1ncome Security for People with a Disability and for Carers
• Programme 3-Income Security for the Unemployed, and
• Programme 4 in the Health and Family Services portfolio, being Family and Children's Services.

Forward estimates of administered expenses

In the accrual accounting context, administered expenses refers to what was formerly described as program outlays, being that amount of money passed on to individuals as a payment of pension, benefit or an allowance etc.

The forward estimates for program outlays in the Social Security portfolio, presented in the 1998-99 Budget papers, showed estimated total program outlays of $47.9 billion in the 2001-2002 year. The 1999-2000 Budget Papers present forward estimates for administered expenses for the F&CS portfolio of $53.9 billion, for the 2001-2002 year. The larger amount arises from the additional program and policy responsibilities assumed by the F&CS portfolio post the October 1998 election.

The forward estimate of $53.9 billion in administered expenses alone for the F&CS portfolio in 2001-2002 is 36 per cent of the total estimated government expenditure of $148.4 billion, which is made up of both departmental and agency expenses (previously referred to as running costs) as well as administered expenses.

F&CS Budget themes

If there is any detectable theme or trend in the Budget, then it would be the separate data matching items:

• data matching with the Registrars-General Birth records
• data matching with the Prescribed Payments Scheme and Reportable Payments System using tax file numbers
• data matching with the Australian Stock Exchange.

While these data matching items collectively represent a continuation of applying increased rigour and scrutiny to ensure payment integrity, individually they are just extensions of current arrangements.

Budget initiatives for people with disabilities

Overall, the measures aimed at services for people with disabilities and their carers in this Budget are likely to be seen as small gains given long-term concerns expressed by disability peak organisations about the lack of any real increases under the Commonwealth-State Disability Agreement (CSDA) to meet an estimated unmet need for 13 500 people with disabilities (totalling some $294 million).(1) The funding of trial arrangements for disability employment services and increased funding for the Continence Aids Assistance Scheme are modest measures.

The States and the Commonwealth last met on the CSDA on 9 April 1999. Following that meeting, the Minister for F&CS, the Hon. Jocelyn Newman, advised disability organisations that she would be responding to their concerns on unmet need after the matter has been further discussed at the executive level of government. In the meantime, while the $20 million extension of respite support for carers of young people with disabilities has been welcomed, concern is already being expressed by disability organisations that the level of funding is too little to meet demand.(2)

1. Australia's Welfare 1997, Australian Institute of Health and Welfare, 1997, p. 343.
2. Advocacy groups including ACROD (Australia's Council on Disability) and Disability Action expressed concern about the Budget funding levels in post-Budget News Releases. Each quoted in The Canberra Times, 13 May 1999 and The Age, 13 May 1999, respectively.

Family and Community Services

Significant Budget Measures

Peter Yeend

Outcome 1

Stronger families.

Budget Measure

Tax Reform Family Assistance Package-extension of eligibility for Family Tax Benefit Part A (FTB(A)) to jobseekers/students not otherwise qualified for Youth Allowance (YA)

Financial Impact on Price of Outputs

Introduction and Background

The Budget announced several enhancements to the proposed Tax Reform Family Assistance Package. As a part of these enhancements, it is proposed to extend eligibility for FTB(A) to cover eligible young jobseekers and students up to the age of 21, who are not otherwise eligible for youth allowance (YA).

Separate from the Budget proposals and initiatives, the government's Tax Reform Package proposed a total restructure of the income support and supplement payments, paid in respect of families with children. See Bills Digest No. 175, 1998-99, A New Tax System (Family Assistance) Bill 1999.

The restructure involves a rationalisation of some twelve separate payment and tax assistance arrangements down to three main packages of assistance. The proposed restructure as presented in the Tax Reform Package features:

• Family Tax Benefit Part A (FTB(A))-replacing Family Allowance, Family Tax Payment (Part A) and Family Tax Assistance (Part A)
• Family Tax Benefit Part B (FTB(B))-replacing Basic Parenting Payment, Guardian Allowance, Family Tax Payment (Part B) and Family Tax Assistance (Part B), the children rate of the Dependant Spouse Rebate and the Sole Parent Rebate.

The third new payment under the Tax Reform Package is the Child Care Benefit, an amalgamation of the Child Care Fee Relief and the Child Care Cash Rebate.

The YA was introduced from 1 July 1998, as a major rationalisation of the income support arrangements for young jobseekers and students. YA involved an amalgamation of five different payments carrying thirteen different payment regimes.

Before the introduction of the YA, the government estimated that the numbers of YA recipients would be 416 000 students and 144 000 jobseekers-a total of 560 000.

The most recent YA population data available was supplied at Senate Estimates on 9 February 1999, showing that as of 6 November 1998, there were 291 827 students and 84 848 jobseekers on YA, a total of 376 675. This is about 67 per cent of the estimated number of potential recipients.

Comment

There are a number of reasons why the YA population is somewhat less than the jobseeker and student population on income support prior to the introduction of YA.

• Expansion of age of independence and parental means testing

Where a jobseeker or student does not meet the independent criteria, the level of their parent(s) income and means can affect the rate of YA payable. Under YA, for unemployed jobseekers the age of independence was raised from 18 to 21, exposing a greater number of jobseekers to the parental means testing arrangements. As with AUSTUDY, for dependent students, parental income and means test applies up to the age 24.

• Changes to the measurement of income from the Income Tax Assessment Act (ITAA) to the Social Security Act (SSA)

The introduction of YA saw the use of the tighter income testing rules. For YA, income testing for both the young person and for the parent(s) use the rules as prescribed under the SSA. These rules about income measurement and allowable deductions are tighter than income assessments based on the ITAA, which was used under the AUSTUDY scheme. This testing applies to the personal income test for dependent and independent jobseekers/students, and also to the parental income test for dependent jobseekers/students.

• The Family Actual Means Test (FAMT)

Previously, an actual means test was only used for the AUSTUDY scheme. Now, under YA the FAMT applies to all dependent students aged up to 24 and dependent jobseekers aged up to age 19.

• Withdrawal of income support for some unemployed 16-17 year olds

Prior to 1 July 1998, youth training allowance (YTA) was payable to 16-17 year old unemployed jobseekers. However, under YA income support was withdrawn for some 16-17 year olds from 1 January 1999. From 1 January 1999, a 16-17 year old can only access YA if they meet one of the following criteria:

• are in full-time education
• have their year 12 certificate
• have 18 months full-time work in the previous 24 months, or
• meet the YTA independent criteria, which means, is not and cannot be expected to obtain or seek support from parents/guardians, for reasons like domestic violence, parents unable to exercise care, etc.

As at the introduction of YA in July 1998, there were about 30 000 former Youth Training Allowance (YTA) recipients transferred across to YA. Of these, the number who will be able to qualify for YA in 1999 is unknown. Very few (i.e. less than 2000) will probably be able to meet the year 12 certificate or the full-time work in the previous 24 months requirements. Of the 30 000, about half (15 000) were being paid the higher independent YTA rate, having met the independent criteria. This leaves about 12 000 to 15 000 who will really only be able to qualify by returning to full-time education. Of this group it is unknown how many can, are able, or are willing to return to full-time education to qualify for YA.

The proposal is to extend eligibility to FTB(A) to jobseekers/students not otherwise eligible to YA. The maximum level of FTB(A) assistance proposed is $18.75 per week or $37.50 per fortnight (pf). This is somewhat less than the maximum YA rate currently payable to a dependent jobseeker/student aged 18 or more, of $176.00 pf.

The FTB(A) structure as proposed is:

• The maximum standard rate of FTB-Part A will be $2920.00 per annum (FTB child under 13 yrs), $3697.45 per annum (FTB child 13 yrs to 15 yrs) and $956.30 per annum (FTB child 16 yrs to 18 yrs) (excluding additional allowances) and will have an income test threshold of $28 200 per annum. This means where income exceeds $28 200, the maximum rate of FTB(A) is thereafter reduced by 30 cents in the dollar, by the amount of income in excess of $28 200.
• The maximum base rate of FTB-Part A will be $956.30 per annum and will have an income test threshold limit of $73 000 plus $3000 per child (after the first).
• Both the standard rate and base rate of payment will have an income test taper rate of 30 per cent.

No information is provided in the Budget papers on the number of jobseekers/students who may benefit from this extension of access to FTB(A). The numbers will depend on the income levels and number of children in those families with a dependent jobseeker/student not otherwise currently eligible for YA.

No figures regarding costs are provided in the Budget Papers for this proposal separate to the costings provided to the whole of the enhancements proposed for the Tax Reform Family Assistance package.

Finance and Administration

Portfolio Directions Overview

Richard Webb

The Finance and Administration portfolio comprises the Department of Finance and Administration (DOFA), the Australian Electoral Commission (AEC), the Office of Asset Sales and Information Technology Outsourcing (OASITO), the Commonwealth Grants Commission (CGC), and the Commonwealth Superannuation Administration (ComSuper). While the 'finance' activities of the portfolio are relatively self-contained within the Department, the portfolio's 'administrative' functions are relatively discrete. But even the Department's activities vary considerably, ranging from assisting in formulating the budget to providing services to Ministers and Parliament, and some of these activities could be seen as more administrative than related to finance.

The diversity of the Department's activities is reflected in three broad outcomes: sustainable government finances; improved and more efficient government operations; and efficiently functioning Parliament. The generality of these outcomes raises questions as to how useful they are in assessing not only the Department's performance but also its performance relative to those of other portfolios whose outcomes could also logically include improved and more efficient government operations. DOFA has five output 'groups': the budget group, which contributes to the sustainable government finances outcome; the public sector financial management group; the property and contract management group; and the government information group, which jointly contribute to the improved and more efficient government operations outcome; and the Ministerial and Parliamentary services group which contributes to the efficiently functioning Parliament outcome.

DOFA's expenses-for both departmental and administered items-are estimated to fall in 1999-2000, the former by $171.3 million and the latter by $322 million. (DOFA is probably one of the few departments to incur reductions in both). However, much of the reductions result from on-going rather than new activities. Unfortunately, much of the information needed to explain the reasons behind the changes-particularly the reduction in administered expenses-is not evident in the Portfolio Budget Statements.

Relative to DOFA, the budgets of the AEC, OASITO, the CGC and ComSuper are small. That said, the AEC's departmental expenses are estimated to rise by $13 million or 8.6 per cent partly because of increased expenses associated with an electoral role review. Expenses of OASITO are estimated to rise almost two and a half times to $256.4 million mainly because of increased costs of asset sales including the second tranche of Telstra and Australian Defence Industries. (OASITO's practice of including notes to its budgeted financial statements is one that some other agencies and departments could do well to follow). Appropriations for the CGC are estimated to rise by about $3 million partly because of its proposed additional function of calculating the needs of indigenous communities. Perhaps as a result, employee expenses are estimated to rise by 57 per cent. (The CGC's balance sheet shows that it has negative net worth, a reminder of the need for caution in interpreting accrual financial statements of government entities).

Finance and Administration

Significant Budget Measures

Richard Webb

Comment

There are apparently relatively few new items in DOFA's budget, with the great majority being the continuation of existing activities, e.g. the commercialisation of the property folio whereby departments and agencies are required to pay commercial rents for properties 'owned' by DOFA. Two noteworthy items in DOFA's budget are set out below.

The funding for the National Illicit Drug Strategy is to permit an evaluation of the current phase of the Strategy to determine how well it is meeting its objectives. An amount of $600 000 has been set aside to connect Parliamentarians' electorate offices to the Internet.

However, as with other Departments, there are some changes which are not clearly explained. For example, under outcome one, administered expenses fall from $360.2 million in 1998-99 to only $8000 in 1999-2000. The explanation for the change in the portfolio budget statements is both cryptic and arcane. In other cases, no explanation for changes is given or evident. For example, under outcome one, the price of departmental outputs for output 1.1.1 (Whole-of-Government financial reports) falls from $7 million in 1998-99 to $1.7 million in 1999-2000 but no reason is given. The revised format of the budget papers and portfolio budget statements also has resulted in a considerable loss of information. For example, under outcome two, whereas administered expenses are broken down into their component parts for 1998-99, the Portfolio Budget Statements give only a single figure for 1999-2000.

Finance and Administration

Significant Budget Measures

Richard Webb and Kate Burton

Australian Electoral Commission (AEC)

Outcome 1

Australians have an electoral roll which ensures their voter entitlement and provides the basis for the planning of electoral events, and electoral redistributions.

Special Appropriation Purpose

The ongoing implementation of Continuous Roll Update (CRU) methodologies and recommendations of the Joint Standing Committee on Electoral Matters for upgrading witnessing arrangements and proof of identity checks for new electoral enrolments. The AEC expects an improvement in the accuracy and quality of the roll which will facilitate the highest possible number of people eligible to vote are on the electoral roll.

Outcome 2

Stakeholders/customers have access to and advice on impartial and independent electoral services and participate in electoral events.

Budget Measure Purpose

This measure will enable the AEC to conduct a Referendum on issues relating to Australia becoming a Republic. The measure will also enable the AEC to prepare and process separate ballot papers for each question at the Referendum, if there is more than one question to be put.

Financial Impact On Price Of Outputs

Finance and Administration

Significant Budget Measures

Richard Webb

Office of Asset Sales and Information Technology Outsourcing (OASITO)

The Budget provides $7.5 million for the costs of selling up to a further 16.6 per cent of Telstra. The funding for the costs of staff responsible for asset sales is a notional amount, actual spending being conditional on actual staff requirements. If necessary, additional funding will be sought through additional estimates. Following the Government's decision to extend the information technology outsourcing program, the Budget provides $14.3 to meet the cost of the program.

Commonwealth Grants Commission (CGC)

The Government has introduced the Commonwealth Grants Commission Amendment Bill 1999 to enable the CGC to develop measures of relative disadvantage, that could be used to target resources for the indigenous community more effectively to the areas of greatest need. The Budget sets aside $3.2 million for this purpose.

Foreign Affairs and Trade

Portfolio Directions Overview

Michael Ong and Bruce Donald

Department of Foreign Affairs and Trade (DFAT): $721.9 million

This appropriation includes an estimated departmental carryover of $8.1 million from 1998-99 to 1999-2000. Of this amount, $36.6 million, over four years, is for the following new measures:

• Opening of an Australian Consulate in Dili, $16.9 million. This will allow the Government to monitor developments more effectively and support Australia's role in assisting a peaceful transition process in East Timor
• Opening of an Australian Policy Liaison Office in Lisbon (Portugal), $3.34 million. The aim is to help build and maintain a substantial dialogue with Portugal as the East Timor transition unfolds
• Opening of an AusAID office in the Australian Consulate General in Dili, $2.7 million.

Equity measure for the above totalled $3.8 million.

• Opening of an Australian Embassy in Zagreb (Croatia), $6.7 million. The Embassy will strengthen diplomatic representation in Central Europe and work to advance Australia's bilateral and regional interests including trade and investment as well as provide consular, passport and visa services to the estimated 3000 Australian citizens in Croatia
• The Embassy will include Austrade Marketing Staff, $0.8 million. This staff will identify opportunities for expanded bilateral trade and investments.

Equity measure for the Embassy is $0.2 million.

Trade

Of the initiatives undertaken in the foreign affairs and trade portfolio this year a number relate to trade. Some of this is reacting to current events, while some of it is forward looking, e.g. initiatives related to the World Trade Organization (WTO). On the other hand there is no specific trade outcome for the Department.

Outcomes

Because of these difficulties, presumably, the Department's three outcomes make no attempt to disentangle trade issues from those related to foreign affairs or development. There are four separate outcomes identified for the Australian Trade Commission, three of which can be said to relate to export issues. During the year the Export Finance and Insurance Corporation was incorporated within the portfolio, but no outcomes related to the organisation are detailed in the Portfolio Budget Statement.(1)

Initiatives

Department: According to press releases from the Minister for Trade's Budget media release, there will be a significant reorganisation within DFAT:

Given that the average staffing level for DFAT is expected to fall by 46 (from 3585 to 3539), the expansion of these trade related sections must come at the expense-in terms of inputs, at least-of more foreign affairs related objectives. But because the Budget material lists unchanged (and overarching) outcomes and outputs this re-allocation is obscured. Both functions are largely subsumed by two similar outputs, which have broadly-defined 'milestones', and no objective performance information (mainly 'satisfaction of ministers'). In comparison, the seemingly minor expenditure of $7 million over two years on a new financial and human resources management information system is separately specified.

Austrade: The only initiative listed for Austrade is the opening of an office in Zagreb, which will lead to recurrent expenditures of only $0.2 million per annum. While recent openings in Bucharest and South America can be argued to help achieve the objective of diversifying Australian exports to new markets (which is not listed as an Austrade outcome), it seems implausible, given existing economic links between Croatia and surrounding nations, that this office will be highly important.

EFIC: The only measurement of EFIC's achievements listed in the portfolio statement is the management of payments received for exports supported on the National Interest Account. Little attention within the portfolio seems to have been paid to EFIC's wider role. Only 8 per cent of EFIC's 1997-98 short term insurance to Asian markets was under the National Interest facilities established for South Korea and Indonesia. EFIC is budgeted to receive less revenue for 'national interest premiums', (down from $83.6 million to $5.2 million from 1998-99 to 1999-2000), and to return to paying a dividend during 1999-00. Because the Commonwealth guarantees the due payment by EFIC of its liabilities, EFIC adds A$7.7 billion (measured at March 1999) to the Commonwealth's contingent liabilities. Less than half of this arises from national interest provisions.

1. Instead $16.6 million allocated for DFAT's Outcome one, is identified as going toward EFIC's administered expenses, down from $19.4 million in 1998-99.

Foreign Affairs and Trade-Aid Budget

Portfolio Directions Overview

Ravi Tomar

1999-2000 Budget: $1502 million

In 1999-2000, Australia's aid budget is forecast to be $1502 million, an increase of $22 million on the estimated outlays for 1998-99 of $1480 million. However, at constant 1998-99 prices, there is a real decline of 0.2 per cent over last year's outlays. Cumulatively, there has been a real reduction of 9.7 per cent in expenditure since 1995-96. On the other hand, during the period 1990-95, the aid budget grew by an average of 3 per cent in real terms per year.

The ratio of the volume of Official Development Assistance to the Gross National Product (the ODA/GNP ratio) will fall to an all time low of 0.25 per cent compared to 0.32 per cent in 1995-96, 0.28 per cent in 1996-97, 0.27 per cent in 1997-98 and 0.26 per cent in 1998-99. While this is marginally higher than the latest available (1997) average ODA/GNP ratio of OECD countries, Australia now ranks 17th among the 22 donor nations. Also, unlike last year, the Government's Australia's Overseas Aid Program 1999-2000 statement makes no mention of its support for the UN target of 0.7 per cent ODA/GNP ratio.

The 1999-2000 aid budget continues to give effect to the objective and direction set for the aid program in Better Aid for a Better Future, the Government's response to the Report of the Committee of Review (1997) of the Australian overseas aid program, One Clear Objective: poverty reduction through sustainable development. The objective is to advance Australia's national interest by assisting developing countries to reduce poverty and achieve sustainable development. This also includes a focus on the Asia Pacific region and on five priority sectors of governance: health; education; agriculture; and rural development, and infrastructure.

Some of the major features of the aid budget for 1999-2000 have been in response to the continuing financial crisis in Southeast Asia. These include:

• Doubling the Asia Crisis Fund to $12 million. The aim of the Fund is to provide technical assistance to affected countries in the form of economic and financial sector reform as well as employment generation.
• Increasing country program allocation to Indonesia by $6 million, taking total aid flows to $121 million. In 1998-99 Australia commenced a $70 million program of capacity building in economic and financial management, including reform of state owned enterprises and public sector capacity building. Australia is also providing a $10 million package of assistance (up to $15 million if needed) for the preparation and conduct of the Indonesian elections on 7 June 1999. Australia is also the largest bilateral aid donor to East Timor, providing $7 million in 1998-99 as part of the overall aid program to Indonesia. Australia has also pledged $20 million to assist the UN consultation process in Timor, regarding possible future autonomy or independence, planned for August 1999. However, due to the timing of this pledge, the financial implications have not been included in the budget statement.

Other salient features of this year's aid budget include:

• A continued move towards program aid and a subsequent decline in budget support to PNG. Of a total aid package of $328.9 million, $264.9 million has been allocated towards programmed activities while $35.5 million goes towards budget support. This is the final year in which Australia will provide budget support to PNG. In future years the entire aid allocation will be provided through specific projects and programs
• An additional $2 million allocated to the emergency program for mine clearance activities in countries such as Cambodia, Mozambique and Angola
• An additional $670 000 to support the global target of eradicating polio and iodine disorders by 2000. The funds have been earmarked for the World Health Organization's immunisation program and for the International Council of Iodine Deficiencies Disorders program. This takes Australia's support for these programs to $1.4 million
• A new three year $3 million microfinance initiative to provide capacity building and training for specialised microfinance organisations in the Asia Pacific region
• A 30 per cent increase for the Human Rights Fund. This is used to fund community-based human rights activities. Recent activities include raising awareness of human rights issues among government officials and community leaders in Uganda; and supporting human rights monitoring and legal aid centres in Indonesia, including East Timor
• An increase in funding for the AusAID-Non Government Organisations Cooperation program (ANCP), which provides funding for programs identified by NGOs. Allocation for ANCP will increase by $1.5 million or 7 per cent to $24.3 million
• An additional $900 000 to assist the Palestinian Territories.

Foreign Affairs and Trade

Significant Budget Measures

Frank Frost

Outcome 1

Opening of an Australian Consulate-General in East Timor and an Australian Policy Liaison Office in Lisbon

Financial Impact on Price of Outputs

Comment

The process of change in Indonesia since the end of the Soeharto Government in May 1998 has opened up new possibilities for a review of the status of East Timor. The opening of the Consulate-General in Dili and the Liaison Office in Lisbon will support the Government's capacity to monitor developments in relation to East Timor and to facilitate the provision of assistance to the transition process.

Under the terms of agreements signed in New York on 5 May 1999 between Indonesia, Portugal (the former colonial power) and the United Nations, a ballot is to be held in East Timor on 8 August 1999 to determine the future status of the territory. A proposal for autonomy within Indonesia will be put to the East Timor electors. If the proposal is rejected, authority in the territory will revert to the United Nations and East Timor is then expected to move towards full independence.

Australia is taking a close interest in the developments in East Timor. During talks between Prime Minister Howard, President Habibie and senior ministers from both countries in Bali on 27 April, Australia announced that it would provide $20 million to help fund the costs of the planned ballot. It was also announced that Indonesia had agreed to the opening of an Australian Consulate-General in Dili.

The Consulate General in Dili will improve the Australian Government's capacity to monitor developments and to assist the transition process. The likely future involvement of Australia in an international confidence building and administrative role during a transitional period in East Timor will clearly benefit from the presence of the Consulate-General.

AusAID will establish an office in the Consulate-General. Australia's aid to East Timor amounted to about $7 million in 1998-99. The Government has made it clear that Australia will provide substantial assistance to an autonomous or independent East Timor. The AusAID office will help gather information on which to base planning for aid provisions.

Portugal, as the former colonial power and as a signatory to the 5 May agreements, will play an important role in the development of external policies towards East Timor. The Policy Liaison Office will assist the Australian Government to monitor developments in Portuguese policies and approaches towards East Timor.

The opening of the Consulate-General in Dili and of the Policy Liaison Office in Lisbon are a part of a commitment of $26.8 million over a four year period to support a transition process in East Timor. As the transition process proceeds, the Australian financial contribution to East Timor may be expected to increase.

Health and Aged Care

Portfolio Directions Overview

Paul Mackey and Jacqueline Ohlin

The health and aged care (HAC) portfolio accounts for a significant proportion of the expenses of the Commonwealth Government. It includes funding for the universal publicly-funded health program, Medicare, as well as funding for aged care facilities, Aboriginal and Torres Strait Islander health services and medical research. Funding for hearing services for eligible clients and specific programs directed towards improving health services in rural and regional Australia also form part of the portfolio.

Total expenses for the Health and Aged Care portfolio are estimated to increase from $22 865.1 million in 1998-99 to $23 935.3 million in 1999-2000, an increase of approximately 4.5 per cent. The table below provides a breakdown of the total estimated expenses of each of the portfolio's 10 outcomes for 1998-99 and 1999-2000. The table also provides an estimate of the total impact of Budget measures under each outcome in 1999-2000.

Source: Portfolio Budget Statements, 1999-2000, Health and Aged Care Portfolio

In the change to accrual accounting and outcome/output reporting arrangements, it has not been possible, for the most part, to compare and contrast specific financial changes for portfolio outcomes with sub-programs from previous Budgets. Consequently, caution should be exercised in interpreting what may appear to be significant changes in funding between 1998-99 and 1999-2000. Possible factors include the change to accrual reporting which has resulted in liabilities for multi-year agreements appearing to increase funding in 1998-99 (as is the case in outcome five, Rural Health Care).

It should also be noted that there are no Forward Estimates for outcomes or for total expenditure under this portfolio provided in the Portfolio Budget Statement. Although Budget Paper No.1 does provide forward estimates for the portfolio, the manner of presentation requires some degree of care in interpreting the figures.

Health

The Budget proposes significant increases in funding for several health programs. Funding for health and medical research is expected to increase by some $247 million over the four years from 1999-2000, with further increases of $157 million and $181 million projected for 2003-04 and 2004-05 respectively. This will result in the Commonwealth Government's funding for health and medical research through the National Health and Medical Research Council (NH&MRC) more than doubling by 2004-05 from its allocation of $165 million in 1998-99. This increased funding follows the release of the final report of the Health and Medical Research Strategic Review. The Review, chaired by Mr Peter Wills, was established by the Government in March 1998 to investigate and report on Australia's health and medical research sector. The Review issued an interim report in December 1998 and the final report was released on 12 May 1999. One of its recommendations was a doubling in the budget of the NH&MRC over five years.

Increased funding of $168 million over four years is proposed for the National Illicit Drugs Strategy within the Health and Aged Care Portfolio. Primary care receives increased funding in excess of $240 million over four years, including a range of initiatives aimed at older Australians. Health measures directed at people living in rural and remote areas receive some $134 million over the four years from 1999-2000. These measures include the introduction of Rural Australia Medical Undergraduate Scholarships which receive funding of $4 million over the four years from 1999-2000. The Budget papers envisage that up to 100 of these 'bonded scholarships' could be funded each year.

Funding of $12.4 million over four years is to be provided for Hepatitis C education and prevention. Hepatitis C is a significant public health problem in Australia, with an estimated 200 000 people infected with the virus and a further 8000 to 11 000 new cases each year. Another significant health problem in Australia, suicide, is to be addressed by an enhanced suicide prevention strategy which is expected to receive $39 million over four years.

Increased funding of $209.5 million over four years is to be provided to meet the demand for hearing services vouchers and to ensure that the Community Service Obligations of Australian Hearing Services are met. The Budget also introduces, from 1 July 1999, a 'nominal' charge of $30.00 per annum for the replacement of lost or damaged hearing aids. In addition, the maintenance charge which has remained at $25.00 per annum since its introduction in 1991, is to be indexed and will increase to $30.00 per annum from 1 July 1999. Both measures will affect all eligible clients with the exception of children under the age of 21. All changes to Australian Hearing Services' client charges are disallowable instruments.

Significant savings are expected in pathology services ($110 million over four years) and pharmaceuticals ($187 million over four years). It should be noted that both of these savings estimates are net savings to the Portfolio after payments to practitioners. Both measures are unusual to the extent that any savings in expenditure are to be shared between the Government and practitioners. The measures will offer financial incentives to produce changes in practitioner behaviour. Both measures recognise the central role of GPs as 'gatekeepers' within the Australian health system.

Aboriginal and Torres Strait Islander health services received an increased allocation of funding in the Budget with $78.8 million to be spent over four years to improve access to health services for indigenous Australians. Further details on this initiative and other health-related measures for indigenous people are discussed in this publication's overview of the Aboriginal and Torres Strait Islander Portfolio.

The Budget also announced a significant change in policy towards private health insurance with the introduction, from 1 July 1999, of lifetime community rating. The media package from the Health and Aged Care Portfolio released with the Budget papers contains a backgrounder which provides details of both the recent changes to the private health insurance arrangements and the proposals for lifetime health cover.

Aged Care

Overall, the range of Budget measures in relation to aged care provide a modest enhancement of services for older Australians and their carers. Some of these services are targeted to rural/regional areas, in particular:

• 100 extra aged care beds in Regional Health Service Centres, and
• specific areas of residential care funding (including capital assistance) and aged care planning.

The targeting of additional services to rural/regional areas will go some way toward redressing a perceived long-standing imbalance of health and community services for older people in rural Australia. In the areas of residential care, this has been made possible by recent amendments to principles within the Aged Care Act 1997, allowing reallocation of aged care places between regions based on need. This should lead to greater flexibility in the allocation of aged care places. Of interest is the process by which winners and losers between regions will be adjudicated, given that these are often seen as resources hard-won by respective regions. The Department has made a commitment to involve Regional Planning Advisory Groups in this process, but there will be a need for overall policy monitoring to ensure equity.

The targeting of residential care funds by the Commonwealth Government has been earmarked as an area of substantial savings in excess of $20 million per year over the 4 years to 2002-03. The application of the Resident Classification Scale (a self-assessment by providers of a care recipient's needs) is credited with these proposed savings. However, industry groups such as Aged Care Australia indicate that, in 1998, the expectation from the Review of the Resident Classification Scale was that recurrent funding via the RCS would be higher, not lower. There is concern that this apparent attempt by the Department to constrain growth through the validation system could result in more conservative assessments of care recipients' needs by the sector, and lead to a downgrading in service provision to individuals.

The funding of enhanced respite care services for carers of people with dementia and other cognitive and behavioural problems ($82.2 million over 4 years) is likely to be welcomed by carers and service providers. Finally, the establishment of single contact points for the 58 Home and Community Care regions across Australia is aimed at providing simplified access for individuals to health and community services. The success of such a measure will rely substantially on the preparedness of fully-committed service providers within regions to address new administrative arrangements. The measure might also flag an opportunity for policy discussion about how to match up disparate regional boundaries for services delivered under different jurisdictional arrangements.

The development of a strategic national framework, to be completed by January 2000, is proposed as a means of addressing policy areas affected by population ageing. Consultation with key stakeholders is a part of the process of developing the framework.

Portfolio Reviews

It is the nature of the Health and Aged Care Portfolio that a wide variety of strategies and agreements are in existence at any one time. One result of the change in this Budget to outcome/output reporting is that the portfolio has reported, under each outcome, on the status of evaluations and reviews which are either currently under way or planned for 1999-2000. In order to assist Senators and Members to gain an insight into the breadth and nature of the evaluations and reviews, brief details on each have been consolidated below in a single alphabetical listing. Further details on any of the strategies and agreements can be obtained either from the Portfolio Budget Statements or by contacting the officers named at the beginning of this overview.

Aboriginal and Torres Strait Islander health services: an evaluation is to be conducted of the performance of the Department of Health and Aged care in Aboriginal and Torres Strait Islander health. The evaluation is to be completed by June 2000.

After Hours Primary Medical Care Trials: a national evaluation of the trials is to be conducted by an external organisation and is due for completion by February 2001.

Aged Care: a review commenced in July 1998 of the structural reforms of the aged care system introduced by the Aged Care Act 1997. The review will be completed in July 2000.

BreastScreen Australia: evaluation plan finalised by 1999, with the evaluation expected to be completed by 2003.

Commonwealth/State Review of Pharmacy Arrangements under the Competition Principles: review expected to be completed by December 1999.

Coordinated Care Trials: the independent evaluation of the trials continues during 1999-2000.

Diagnostic Imaging Reform Package: an evaluation will be conducted during the life of the agreement, until 2001-02.

Health and Other Services (Compensation) Act 1995: the effectiveness of the Act and the efficiency of administration is under review.

Health Program Grants: a review is scheduled to be completed by December 1999.

Immunisation Strategy: evaluation of the measles campaign expected to be completed in 1999; Australian Childhood Immunisation Register to be evaluated in 1999.

John Flynn Scholarship Scheme: an evaluation of the scheme is expected to be completed by February 2000.

National Communicable Diseases Surveillance Strategy: a monitoring and evaluation plan is to be developed by June 2000, with implementation by the end of 2000.

National Drugs Strategy: an evaluation of licit and illicit drug strategies is expected to be completed by 2003.

National Health Priority Areas: a broad independent review of the National Health Priority Areas is planned for 1999-2000, which will build upon the first phase of the review undertaken during 1998-99. A report is expected for Health Ministers by June 2000.

National Indigenous Australians' Sexual Health Strategy: an evaluation is to be initiated from 1999 onwards.

National Injury Prevention Strategic Framework: evaluation planned for 2002.

National Public Health Partnership: monitored annually, with a first stage evaluation expected to be completed in 2001.

Pathology Agreement: an evaluation will be conducted during the life of the agreement, until 2001-02.

Private Health Insurance Ombudsman: a review of the functions of the Ombudsman is expected to be completed by mid-1999.

Private Health Insurance regulation: a review of industry regulation is expected to be completed by June 2000.

Private Sector Trials of Alternatives to Hospital Care: a review of the trials is expected to be completed by late 1999.

Relative Value Study of the Medicare Benefits Schedule: three major components expected to be completed progressively during 1999.

Review of Community Pharmacy Agreement: the agreement is to be reviewed following the outcome of the Commonwealth/State Review of pharmacy. The review is scheduled to be completed by June 2000.

Review of Hospital tables and second tier default benefits: a review is expected to be completed by mid-1999.

Rural Undergraduate Steering Committee Program: a full evaluation of the program is expected to commence prior to June 2000.

Rural Workforce Agencies: an evaluation is being conducted concurrently with the development and delivery of the program and is to be completed by July 2001.

Health and Aged Care

Significant Budget Measures

Paul Mackey

Outcomes 1, 2, 4, 7

The 1999-2000 Budget announced several important measures in the area of primary care. Primary care is a fundamental element of Australia's health system and, as such, is addressed under several outcomes of the Health and Aged Care Portfolio. It is addressed, for example, under Access to Medicare (outcome two), Aboriginal and Torres Strait Islander Health (outcome seven), Quality Health Care (outcome four) and Population Health and Safety (outcome one).

The high level of expenditure by the Commonwealth Government on health programs often attracts the attention of commentators, particularly economic commentators, who tend to focus on what they perceive as inefficiencies and/or misdirected funding of the health system. Spending by governments on health, as with other areas of social policy, is often portrayed as a minus for the economy, while the important role played by at least some elements of this funding in ensuring that people remain productive members of the community is often overlooked.

While the public/private and Commonwealth/State dilemmas which bedevil the funding and delivery of health services do provide scope for efficiency, critics of public health spending tend to underplay its fundamental importance to the Australian economy. It can be argued that health funding which is directed to the prevention of disease, funding which is directed to primary care, funding for high technology diagnostic equipment, high technology surgery and new generation drugs is not always money which is wasted. Significant savings accrue to the community, for example, through better disease prevention and management and patients returning to employment more quickly than in the past following surgery, or being better able to manage their condition while remaining in employment.

An important factor in limiting the impact of health problems, and their cost to individuals and the community, is early diagnosis and prompt treatment. A central element in this area is primary care and, in particular, general practice. Primary care has been defined as 'the level of the health system that offers the means of achieving optimal equity, effectiveness and efficiency of health services'.(1) This Budget pays particular attention to primary care and general practice with the introduction of several initiatives which, in total, are expected to exceed $240 million over the four years from 1999-2000. These initiatives are spread across several of the portfolio's outcomes.

Most health expenditure is spent on a minority of the population. For example, it has been estimated that around 50 per cent of total health expenditure is spent on about 10 per cent of the population. Many of these people have chronic conditions or illnesses and, not surprisingly, many of the people requiring care are also in older age groups. Budget measures directed towards older people form a key element of the primary care initiatives.

For example, a new voluntary annual health assessment program for people aged 75 years and over is to receive $44.3 million over four years. Although people in this age group can be expected to have some contact with the health system, it is unclear how many would have an annual assessment which could, for example, examine their general state of health, survey the range of medication and treatment regimes they are undergoing as well as gaining an insight into their general life situation. This measure, together with others in the primary care area such as a $6.6 million program which aims to prevent falls in older people, are directed at preventing ill health. Falls are a significant contributor to the hospitalisation and disability suffered by older people. Any reduction in morbidity will be welcome both for the individuals concerned and in reduced costs to the health system.

Another important area addressed by the primary care initiatives is that of rural health. People living in rural and remote areas of Australia face a wide range of health-related disadvantage when compared to people in capital cities. For example:

• total death rates for males and females living in capital cities are 20 per cent lower than those for people living in remote centres
• hospitalisation rates for falls in people aged 65 years or older show higher rates in rural and remote zones of Australia
• the supply of general practitioners (GPs) and retail pharmacists is much lower in rural and remote areas than in metropolitan areas, and
• Medicare data indicates that people living in rural and remote areas use fewer services than those in metropolitan areas.(2)

Initiatives introduced in the Budget to address the disadvantage faced by people living in non-metropolitan Australia include $43.1 million over four years for retention payments to keep GPs in rural areas. A further $8.2 million over four years will provide funding for fly-in-fly-out female GPs to meet the health needs of rural women.

Aboriginal and Torres Strait Islander people are another group of Australians whose needs have been largely unmet by Australia's health system. Although the available data is limited, it does indicate that there are 'large differences between the health of Indigenous and other Australian populations across a range of health status measures'.(3) The Budget proposes to spend $78.8 million over four years to improve access by Aboriginal and Torres Strait Islander people to primary health care services including clinical care, illness prevention and early intervention activities.

Significant savings are also expected in the primary care area, principally through an initiative aimed at changing the prescribing habits of GPs, the Quality Incentives for General Practice Programme. Although the savings from this measure accrue against the expenses of the Pharmaceutical Benefits Scheme (PBS), discussion on it is included with the primary care measures because the target of the initiative is the prescribing habits of GPs.

An upward trend in expenditure under the PBS over many years has prompted successive governments to introduce a range of measures aimed at limiting the level of increase in expenditure. User payments for non-concessional patients are already quite high at a maximum of $20.30 per prescription. Concessional category patients (those people covered by a health concession card) are protected from the high cost of many pharmaceuticals, paying a maximum of $3.20 per prescription. Both categories of patients may pay slightly more for some brand name pharmaceuticals. Approximately eighty per cent of the $2.78 billion outlaid by the Commonwealth Government on the PBS in 1997-98 was spent on concessional category patients.(4) Accordingly, the scope for further major policy change in user charges is limited, leaving policy makers to assess measures which address the provider side of the equation.

Recognising the central and crucial role of GPs as 'gatekeepers' to the services of Australia's health system, Governments have targeted the prescribing habits of GPs with initiatives in several Budgets. For example, the 1997-98 Budget announced the establishment of the National Prescriber Service (NPS). The role of the NPS is to provide doctors with feedback on their prescribing habits, as well as supplying them with information about medicines and advice on making good prescribing decisions. It will also identify and develop effective approaches to quality prescribing.

In the 1999-2000 Budget, the Quality Incentives for General Practice Programme introduces financial incentives for GPs to change their prescribing habits. In what is essentially a redistribution of expenditure from the PBS to GPs, this measure involves GPs and the Commonwealth Government sharing, on a 50/50 basis, savings from changes in the prescribing habits of GPs. Three high cost and high growth drug groups are to be the target of the initiative: antibiotics; peptic ulcer drugs; and cardiovascular drugs. The Budget papers note that the full details of how the programme will operate remain to be developed 'in full consultation with the medical profession'.(5) Early reaction from the medical profession has been less than encouraging for the Commonwealth Government, however, with the Australian Medical Associations (AMA) complaining that:

The Budget papers state that the expected savings from this measure are $187.4 million over four years. It should be noted, however, that these are net savings to the Portfolio after payments to GPs. The Budget papers fail to identify that payments to GPs under the measure are expected to total $78.3 million over three years, with the first payments commencing in 2000-01 (payments to GPs will be made on the basis of the changes in their prescribing in the previous financial year). The total reduction in expenditure by the Commonwealth Government under the PBS on the pharmaceutical drugs in the three groups targeted under this initiative is therefore expected to be $266.6 million over four years. Pharmaceutical companies which manufacture and supply drugs in the categories targeted by this initiative can also expect to lose money through reduced quantities of the drugs sold via the PBS.

Overall, the Budget provides a mix of spending and savings initiatives in the area of primary care. The spending initiatives have been welcomed, particularly those targeting older people and people living in rural and remote areas of Australia. For example, the Council on the Ageing (COTA) has reacted positively to the range of health initiatives, stating that 'other welcome initiatives in the Budget include the innovations in primary health care for older Australians'.(7) The National Rural Health Alliance congratulated the Government on meeting its election commitments on rural health and commented that:

The savings initiative represents a more radical policy change and therefore judgement on its appropriateness and effectiveness will need to be informed by experience. However, some limited data is available from the experience of other countries in offering financial incentives to GPs in order to change their prescribing habits. For example, one study of such a scheme in the United Kingdom found no clear evidence on a regional basis that GPs had underprescribed in order to save money. However, the study was unable to rule out the possibility of this having occurred in individual practices.(9) Clearly, changes in the prescribing behaviour of GPs as well as the expectations of patients offer potential benefits from both the public health and cost control perspectives. However, effective monitoring of GP behaviour and the health outcomes of their patients will be necessary to ensure that this measure results in genuine quality improvements for the health system and its patients.

1. B. Starfield, 'Is strong primary health care good for health outcomes?', in The Future of primary care: papers from a symposium, quoted in General Practice Strategy Review Group, General Practice: changing the future through partnerships, Canberra, Department of Health and Family Services, 1998. p. 18.
2. K. Strong, et al., Health in Rural and Remote Australia: the first report of the Australian Institute of Health and Welfare on Rural Health, Canberra, Australian Institute of Health and Welfare, 1998, pp. vii-viii.
3. Australian Institute of Health and Welfare, Australia's Health 1998: the sixth biennial health report of the Australian Institute of Health and Welfare, Canberra, AIHW, 1998, p. 28.
4. Department of Health and Family Services, PBS: Expenditure and Prescriptions Twelve Months to 30 June 1998, DHFS, 1998.
5. Portfolio Budget Statements 1999-2000, Health and Aged Care Portfolio, p. 78.
6. Australian Medical Association, 'AMA Preliminary Budget Reaction: mostly good, some bad, and some ugly', Media Release, 11 May 1999.
7. Council on the Ageing, 'Older Australians welcome lifetime healthcover plan', Media Release, 11 May 1999.
8. National Rural Health Alliance, 'Government delivers on rural general practice', Budget Media Release, 11 May 1999.
9. H. McGavock, 'Strategies to improve the cost effectiveness of general practitioner prescribing', PharmacoEconomics, 1997, vol. 12, no. 3, p. 309.

Immigration and Multicultural Affairs

Portfolio Directions Overview

Adrienne Millbank

Note: Budget Measures are net of revenue measures for the same outcome areas.

Recent interest in the Immigration portfolio has focussed on the setting of the 1999-2000 program intake levels, a consultative and decision-making process that takes place about the same time as, but outside of, the Budget process. Apart from the Kosovo refugee initiative, and the establishment of an immigration presence in the proposed Australian Consulate-General in East Timor, portfolio Budget initiatives are further developments or refinements of established policies and strategies.

The Kosovo refugees

The Government decided on 1 May 1999 to activate plans to provide temporary safe haven in Australia for 4000 displaced Kosovars. Temporary (3-month renewable) visas are being provided under the Migration Legislation (Temporary Safe Haven Visas) Bill 1999, which was passed by the Senate on 30 April 1999 and the House of Representatives during the 1999 Budget sittings.

There was insufficient time following the Government's decision to reflect resource implications in the Budget estimates. However, the cost of an initial 3 months' stay of the 4000 Kosovars has been estimated by DIMA at $70 million.(1)

The establishment of an immigration presence at the proposed Australian Consulate-General in East Timor

The Government has decided to open an Australian Consulate-General in Dili, East Timor. Demand for immigration services is expected to arise at the Consulate, given that the sizeable East Timor community in Australia (estimated at 15 000) would expect that they or their relatives could use immigration services in Dili rather than travelling to Jakarta.

Funding has therefore been provided for an Immigration and Multicultural Affairs 'presence' in the proposed Consulate.

Extension of the Living in Harmony campaign

In accordance with a 1998 election commitment (and arising originally from a 1996 election promise), an additional $5 million has been allocated in 1999-2000 to the Commonwealth's community relations Living in Harmony initiative, taking the total sum for the campaign to $10 million over two years.

The campaign comprises three linked strategies: a community grants program (the centrepiece); a 'partnerships' program; and a public information strategy. Community grants totalling $2.5 million, and partnership projects were announced by the Minister in March 1999(2). An extra 50 grants, also totalling around $2.5 million, and focussing on 'grass-roots' activities, are to be announced in the 'near future'.(3)

Asylum-seeker assistance

The Asylum-Seeker Assistance (ASA) scheme provides financial assistance and limited health care to protection-visa applicants in need. Since the August 1996 Budget, ASA has been limited to those at the primary decision-making (departmental) stage. Besides reigning in escalating costs, an objective of limiting access to the ASA was to discourage pursuit of claims for refugee status through higher levels of review and appeal.

The scheme has been extended in this Budget to provide help to 'a limited number' of people 'in dire need' during review of their failed protection visa applications. The Department has estimated that approximately 30-35 cases per month will be assisted under the limited increase in the coverage of the scheme.

The Migration Review Tribunal (MRT)

The new merits review tribunal, which replaces two tiers of review currently performed by the departmental Migration Internal Review Office (MIRO) and the independent Immigration Review Tribunal (IRO), will come into being 1 June 1999. The total appropriation for the new Tribunal in 1999-2000 is $10.7 million.

The MRT will be prescribed under the Financial Management and Accountability Act 1997, and will administer the MRT review application fee of $1400. This fee is set slightly higher than the combined $500 MIRO and $850 IRT fees, but below estimated cost recovery.

Increase in visitor visa charges

The application charge for non-Electronic Travel Authority (ETA) short-term visitor visas will increase from $50 to $60. This is described as offsetting 'inter-alia' higher costs of visa processing in non-ETA (i.e. high overstay risk) countries, following the extension (from 1 July 1999) of the ETA to Hong Kong and Taiwan. This measure is expected to increase administered revenue by over $6.9 million in 1999-2000.

On-shore long stay visitor visa application charges will increase from $145 to $170, to offset compliance costs.

The Department does not anticipate that these increases will result in any drop in application numbers.

1. Australia, Senate, Legal and Constitutional Legislation Committee, Estimates, Senator J. McKiernan, Questioner, Mr McMahon, Department of Immigration and Multicultural Affairs, Responder, 4 May 1999.
2. The Hon. Philip Ruddock MP, Minister for Immigration and Multicultural Affairs, '"LIH" community grants and new partnership projects announced', Press Release, MPS 48/99, 17 March 1999.
3. The Hon. Philip Ruddock MP, Minister for Immigration and Multicultural Affairs, 'Government fulfils promise to double "Living in harmony" funds, Press Release, MPS 79/99 12 May 1999.

Industry, Science and Resources

Portfolio Directions Overview

Michael Emmery

The Department of Industry, Science and Resources (DISR) has a total appropriation for 1999-2000 of $1094 million. The allocation of the DISR appropriation is the subject of this note. The expenses of the agencies which come under the Industry, Science and Resources Ministry, namely CSIRO, ANSTO, Australian Sports Commission, Australian Tourist Commission and a number of minor agencies are outlined in Table 13 of Budget Paper No 1.

Of the total DISR appropriation, just over one-half ($551 million) is allocated to improving the performance of Australia's manufacturing, resources and services sectors (Outcome 1). The remainder ($496 million) will be used to enhance the benefits of Australia's science and innovation systems (Outcome 2).

Decline in DISR Budget

The main component of the DISR budget is Administered Expenses, that is the cost of programs to assist industry and science which are administered by DISR on behalf of the Government. Estimated expenses for these administered programs in 1999-2000 is $802 million, which is a reduction of $163 million, or 17 per cent on 1998-99 expenses. The forward estimates indicate that the cost of these programs is expected to fluctuate but to remain below the 1999-2000 expenses in each of the next three years.

The other component is the Departmental Expenses which is also referred to as the Price of Departmental Outputs. The provision for this item in 1999-2000 is $299 million, a reduction of $34 million or 10 per cent from the previous year.

The 1999 Budget Papers provide little information on the reasons for the decline in the DISR budget in 1999-2000. It is noted that payments of bounties will fall significantly from the end of 1998-99, savings will result from the replacement of the Pharmaceutical Factor F scheme by the Pharmaceutical Industry Investment Programme; and departmental expenses will be reduced due to internal efficiencies. On the other hand, the Prime Minister's Investing for Growth statement in December 1997 outlined additional funding for Innovation Programmes in 1999-2000 of $143 million to cover increased outlays on R&D Start, venture capital and technology diffusion.

New Industry Assistance Measures

The 1999 Budget provides funding for four significant new assistance to industry measures:

• extension of Shipbuilding Production Bounty
• introduce Shipbuilding Innovation Scheme
• establish Printing Industry Competitiveness Scheme, and
• establish National Strategy for Biotechnology.

The first three measures honour commitments made by the Government in its Making Industry Stronger statement. The Government has extended the Shipbuilding Production Bounty from 1 July 1999 to 31 December 2000, with the bounty payable at a reduced rate of three per cent and a run down period over three years to 2003. The cost over this period is estimated at $28.3 million. The main beneficiaries will be builders of high speed ferries and luxury yachts in Western Australia and Tasmania. This is a reversal of an earlier decision to abolish the shipbuilding bounty on 30 June 1999.

The Shipbuilding Innovation Scheme will subsidise innovation expenditure by registered shipbuilders. It will apply to eligible R&D activities. The estimated cost of the Scheme is $9.1 million in 1999-2000 and rising to $11.2 million in 2002-03. It will be funded by the re-allocation of funds from R&D START Funding to the Shipbuilding Innovation Scheme and hence involve no additional funding from the Budget.

The Printing Industry Competitiveness Scheme will allow book printers to claim four per cent of the purchase price of all paper inputs used in the production of eligible books. The Scheme is to operate until 30 June 2003 and the total cost over this period is estimated at $20.6 million. The previous book printing bounty expired on 31 December 1997.

The National Strategy for Biotechnology will be jointly funded by the Department of Health and Aged Care and DISR. The DISR contribution is estimated at $6.0 million in 1999-2000 and $4.0 million in 2000-01. This will finance the establishment of Biotechnology Australia in the Department and support a new Council of Ministers on Biotechnology.

Two further measures of assistance to industry were announced in the Mid-Year Economic and Fiscal Outlook 1998-99. The Government has provided an incentive package of $40 million over five years from 1999-2000 to Visy Industries to establish an unbleached mini kraft pulp and paper mill at Tumut. This is the first project to be financed under the major project incentive program announced by the Prime Minister in his Investing for Growth statement and evaluated by the new Office of the Strategic Investment Coordinator. Of the $40 million incentive package for Visy, $25 million will come from existing programs and the remainder will be provided in five annual $3.0 million allocations from the Budget commencing in 1999-2000.

The second measure in this category is assistance to Textile, Clothing, Footwear and Leather industries. In July 1998, the Government announced the Strategic Investment Programme for these industries. This is a five-year, $700 million programme commencing in July 2000. It has no financial implications for 1999-2000 but will involve estimated outlays of $10.2 million in 2000-01 and $144.7 million in 2001-02.

The above new assistance to industry and science measures announced in the 1999 Budget and the 1998-99 Economic and Fiscal Outlook will involve additional outlays in 1999-2000 of $38.3 million. This is equal to 4.8 per cent of the cost of the programs administered by DISR. The net reduction in the cost of existing programs far exceeded the cost of new measures and this allowed for the 17 per cent reduction in the DIST administered programs budget in 1999-2000.

Industry reaction

Industry response to the Budget has been positive. The Australian Chamber of Commerce and Industry said:

This is the budget business was looking for.

Accrual budgeting format

While the new accrual format has obvious advantages, its introduction has been associated with a great loss of detail on individual programs. In relation to budgetary assistance to industry, previous Budget Papers showed outlays and tax concessions by function and this made it possible to track total budgetary assistance over time to specific industries such as motor vehicles and textiles, clothing and footwear and also to specific innovation programs such as R&D and venture capital. It is hoped that this detail will be restored in future Budget Papers to facilitate the monitoring and analysis of both new and existing industry policy programs.

Industry, Science and Resources

Significant Budget Measures

Mike Roarty

Outcome 1

A stronger, sustainable and internationally competitive Australian industry, comprising the manufacturing, resources and service sectors.

Financial Impact of Outputs

Comment

The Government will provide resources for infrastructure development in northwest Tasmania, to implement a study currently underway within the Regional Minerals Program with the planned funding of $1.0 million in 1999-2000 and $4.0 million in
2000-01.

Implementation of the measure will take place over the next two years once the priority projects have been identified by the Western Tasmania Study. The Study is due for completion in September this year. The study will in part provide recommendations for the development of suitable infrastructure to assist with the stimulation of economic development of the region with potential mineral developments. It is hoped that such a measure will compensate for the economic loss associated with the closure of the Burnie pulp and paper mill and the decline of other industries in the area.

The Regional Minerals Program administered by the Policy Group within Industry Science and Resources is focussed on a number of regions, namely, northwest Tasmania, the Gawler Craton in South Australia, the Geraldton and Pilbara regions in Western Australia and central western New South Wales. The northwest Tasmania region measure is by far the largest in the Regional Minerals Program.

Industry, Science and Resources

Significant Budget Measures

Mike Roarty

Outcome 2

Enhanced economic and social benefits through a strengthened national system of science and innovation.

Financial Impact of Outputs

Comment

Efficiencies and savings of $21 million have been identified in the Department of Industry, Science and Resources. These will used in part to pay for the Australian Geological Survey Organisation's (AGSO) offshore petroleum program beginning in 1999-2000, and continuing through to 2002-2003 at the rate of $5.3 million per year (see Non recovery of Australian Geological Survey Organisation's offshore petroleum program). The offshore petroleum program was identified as a priority program within AGSO's work commitments. This contribution will in part fund the total $11 million a year the Government will now not generate to fund the offshore petroleum program.

Financial Impact of Outputs

Comment

The Government in its last Budget had allocated $33.3 million over four years to identify prospective new oil zones in frontier areas, particularly the southern continental margins of the Great Australian Bight. This previous budget commitment will now be funded under new arrangements. Restructuring and savings in other areas ($5.3 million from the Department of Industry Science and Resources, $3.0 million within AGSO and presumably $3.0 from the Department of Agriculture, Forestry and Fisheries) will offset the previous funding commitment.

Since the last Budget and the election of the new Howard Government, the former Department of Primary Industries and Energy has been abolished and parts of the former Department have been transferred to the new Department's of Industry Science and Resources and Agriculture, Forestry and Fisheries.

Recent restructuring and downsizing of AGSO

There are a number of areas within the Department of Industry, Science and Resources that provide policy advice together with technical and market information on the coal, minerals, energy and petroleum industries.

With just two departmental outcomes, the process of assessment in terms of outputs of the individual groups within the Department dealing with the resource industries becomes difficult if not impossible. A case in point is AGSO, an outrider organisation within the Department.

AGSO is Australia's national geological research organisation. AGSO's stated role is to improve the quality, extent and accessibility of publicly available geoscientific knowledge. This knowledge is aimed to enhance a more productive, competitive and diversified Australian mineral and petroleum exploration industries, management of Australia's ocean resources consistent with sustainable development principles, and development of strategies to mitigate the effects of natural geological hazards.

The reasons for a major restructuring and staff reduction proposal for the AGSO organisation as announced by its Executive Director on 12 May 1999 were not apparent in the 1999-2000 Budget documentation. The AGSO document outlined the necessity to reduce staffing levels by 72 permanent positions and 17 contract positions in response to funding reductions for AGSO over the next three years.

The appropriation figures for AGSO provided by the Organisation, but not apparent in the Industry, Science and Resources, Portfolio Budget Statements (PBS) appear in Table 1.

Table 1: AGSO's Budget ($ million)

Source: AGSO

Immediately apparent from Table 1 is the large reduction in operational and property and plant and equipment funds from 1998-999 to 1999-2000. Operational funding has declined by $7.3 million from 1998-89 to 1999-2000, necessitating the staff reduction proposal document. One of the central thrusts of a switch to accrual accounting was in large measure, increased transparency. This claim cannot be borne out in the AGSO case.

Industry, Science and Resources

Significant Budget Measures

Rod Panter

Outcome 1

A stronger, sustainable and internationally competitive Australian industry, comprising the manufacturing, resources and service sector

Financial Impact on Price of Outputs

Comment

A new body, to be known as Biotechnology Australia, will be set up with planned funding of $6.0 million in 1999-2000 and $4.0 million in 2000-2001. Its functions will include the development of a national strategy for biotechnology, setting up a public awareness program and supporting a five-member Council of Ministers on Biotechnology. A new statutory Gene Technology Office in the Health and Aged Care portfolio is provided with $3.8 million in both 1999-2000 and 2000-2001. It will presumably replace the current Genetic Manipulation Advisory Committee which controls genetic engineering research on a non-statutory basis. Total funds for the Strategy amount to $17.6 million spread over the next two years.

While the Measure offers little direct assistance to researchers and companies, the development of strategy plus a firmer basis for regulation and the formation of a ministerial group is welcome. If biotechnology is planned to become a major industrial sector for Australia next century, much more government support will be required in future Budgets. As well as research grants, such support should focus on coordinating industry where necessary, provision of infrastructure, and helping the sector downstream from research, that is, with development, testing and marketing of its products.

Prime Minister and Cabinet

Portfolio Directions Overview

Scott Bennett

Overall portfolio direction

The portfolio supports the Prime Minister and aims to achieve a coordinated approach to the development and implementation of government policies.

The Department of Prime Minister and Cabinet 's Budget Outcome 1 is 'Sound and well coordinated government policies, programmes and decision making processes.'

It has four accrual budgeting outputs:

• Economic policy advice and coordination
• Social policy advice
• International policy advice and coordination.
• Support services for government operations.

Points to note:

• There have been no significant changes in Outcomes priorities
• There have been no significant changes in the portfolios' structure and output responsibilities since the last Budget.

Agencies

There are four agencies operating within the Department of Prime Minister and Cabinet:

• The Office of the Official Secretary to the Governor-General
• The Office of National Assessments
• The Public Service and Merit Protection Commission
• The Office of the Commonwealth Ombudsman.

The Office of the Official Secretary to the Governor-General

The role of this agency is to assist the Governor-General in performing the constitutional, statutory, ceremonial and public duties associated with the appointment, and to maintain the heritage value of the official properties.

The Office of the Official Secretary to the Governor-General's Budget Outcome 1 is 'The Governor-General is enabled to perform the constitutional, statutory, ceremonial and public duties associated with the appointment'.

It has three accrual budgeting outputs to its work:

• Administrative and hospitality support to the Governor-General
• Maintenance of the official properties
• Administration of the Australian Honours and Awards system.

There were no Budget measures from the 1999-2000 Budget, including forward years, which have resource implications for the Office of the Official Secretary to the Governor-General.

The Office of National Assessments

The Office of National Assessments has two Budget Outcomes:

Budget Outcome 1: 'Enhanced government awareness of international political and leadership developments, international strategic developments, including military capabilities, and international economic developments'.

Budget Outcome 2: 'Enhanced intelligence support for defence planning and deployments, in peacetime and in conflict, to maximise prospects for military success and to minimise loss of Australian lives'.

It has three accrual budgeting outputs to its each of Outcomes 1 and 2:

• Product
• Briefing
• Coordination.

There were no Budget measures from the 1999-2000 Budget, including forward years, which have resource implications for the Office of National Assessments.

The Public Service and Merit Protection Commission

There were no Budget measures from the 1999-2000 Budget, including forward years, which have resource implications for the Public Service and Merit Protection Commission.

The Public Service and Merit Protection Commission's Budget Outcome is 'Encourage the development of the Australian Public Service'.

It has five accrual budgeting outputs to its work:

• Providing advice to government to inform policy on the APS and communicate its reform agenda, and to agency heads and managers on strategic people management
• Facilitating and supporting implementation of government policy on APS values, code of conduct, ethics and workplace diversity; and effective leadership in APS, quality people management and organisational performance
• Facilitating and providing service-wide development and training
• Administering and facilitating understanding of relevant legislation
• Evaluating, and providing information on the performance of the APS and the nature and composition of the APS.

There were no Budget measures from the 1999-2000 Budget, including forward years, which have resource implications for the Public Service and Merit Protection Commission.

Cross agency overview

The Public Service and Merit Protection Commission is not involved in any cross agency arrangements. However, the APS reform agenda is undertaken in conjunction with the Departments of Employment, Workplace Relations and Small Business; Finance and Administration; and Prime Minister and Cabinet.

The Public Service and Merit Protection Commission has a major involvement with the Department of Finance and Administration in relation to redeployment services for staff from the former Department of Administrative Services.

The Office of the Commonwealth Ombudsman

The Commonwealth Ombudsman's role is to investigate complaints from people who believe they have been adversely affected by the defective administration of Commonwealth departments and agencies. It also acts as Defence Force Ombudsman and ACT Ombudsman. It also works to promote improved administration.

The Office of the Commonwealth Ombudsman's Budget Outcome 1 is 'To achieve equitable outcomes for complaints from the public and foster improved and fair administration by Commonwealth agencies'.

It has two accrual budgeting outputs to its work:

• Provision of a complaint management service for government
• Provision of advice to government to improve public administration.

There are no Budget measures from the 1999-2000 Budget including forward years, which have resource implications for the Office of the Commonwealth Ombudsman.

Prime Minister and Cabinet appropriation-1999-2000

1. The difference between the total price in 1998-99 and the revenue from Government and other sources relates to a carryover of $500 000 from 1998-99 to 1999-2000.

Prime Minister and Cabinet

Significant Budget Measures

Scott Bennett

Additional funding for partnerships against domestic violence

The new funding will build on the outcomes of Partnerships Against Domestic Violence and will focus on better prevention strategies in key areas such as community education, children affected by domestic violence, perpetrators of domestic violence and family violence in Indigenous communities.

There are four agencies operating within the Department of Prime Minister and Cabinet:

• The Office of the Official Secretary to the Governor-General
• The Office of National Assessments
• The Public Service and Merit Protection Commission
• The Office of the Commonwealth Ombudsman.

The Office of the Official Secretary to the Governor-General

The role of this agency is to assist the Governor-General in performing the constitutional, statutory, ceremonial and public duties associated with the appointment, and to maintain the heritage value of the official properties.

The Office of the Official Secretary to the Governor-General's Budget Outcome 1 is 'The Governor-General is enabled to perform the constitutional, statutory, ceremonial and public duties associated with the appointment'.

It has three accrual budgeting outputs to its work:

• Administrative and hospitality support to the Governor-General
• Maintenance of the official properties
• Administration of the Australian Honours and Awards system.

There were no Budget measures from the 1999-2000 Budget, including forward years, which have resource implications for the Office of the Official Secretary to the Governor-General.

Appropriation-1999-2000

The Office of National Assessments

The Office of National Assessments has two Budget Outcomes:

Budget Outcome 1: 'Enhanced government awareness of international political and leadership developments, international strategic developments, including military capabilities, and international economic developments'.

Budget Outcome 2: 'Enhanced intelligence support for defence planning and deployments, in peacetime and in conflict, to maximise prospects for military success and to minimise loss of Australian lives'.

It has three accrual budgeting outputs to its each of Outcomes 1 and 2:

• Product
• Briefing
• Coordination.

There were no Budget measures from the 1999-2000 Budget, including forward years, which have resource implications for the Office of National Assessments.

Appropriation-1999-2000

Additional capacity for analysis of international developments

The new funding will provide additional funding to the Office of National Assessments to maintain and enhance its analytical capabilities in support of policy formulation in a fluid international environment.

The Public Service and Merit Protection Commission

There were no Budget measures from the 1999-2000 Budget, including forward years, which have resource implications for the Public Service and Merit Protection Commission.

The Public Service and Merit Protection Commission's Budget Outcome is 'Encourage the development of the Australian Public Service'.

It has five accrual budgeting outputs to its work:

• Providing advice to government to inform policy on the APS and communicate its reform agenda, and to agency heads and managers on strategic people management
• Facilitating and supporting implementation of government policy on APS values, code of conduct, ethics and workplace diversity; and effective leadership in APS, quality people management and organisational performance
• Facilitating and providing service-wide development and training
• Administering and facilitating understanding of relevant legislation
• Evaluating, and providing information on the performance of the APS and the nature and composition of the APS.

There were no Budget measures from the 1999-2000 Budget, including forward years, which have resource implications for the Public Service and Merit Protection Commission.

Appropriation-1999-2000

The difference between the total price in 1998-99 and the revenue from Government and other sources relates to a carryover of $500 000 from 1998-99 to 1999-2000.

Cross agency overview

The Public Service and Merit Protection Commission is not involved in any cross agency arrangements. However, the APS reform agenda is undertaken in conjunction with the Departments of Employment, Workplace Relations and Small Business; Finance and Administration; and Prime Minister and Cabinet.

The Public Service and Merit Protection Commission has a major involvement with the Department of Finance and Administration in relation to redeployment services for staff from the former Department of Administrative Services.

The Office of the Commonwealth Ombudsman

The Commonwealth Ombudsman's role is to investigate complaints from people who believe they have been adversely affected by the defective administration of Commonwealth departments and agencies. It also acts as Defence Force Ombudsman and ACT Ombudsman. It also works to promote improved administration.

The Office of the Commonwealth Ombudsman's Budget Outcome 1 is 'To achieve equitable outcomes for complaints from the public and foster improved and fair administration by Commonwealth agencies'.

It has two accrual budgeting outputs to its work:

• Provision of a complaint management service for government
• Provision of advice to government to improve public administration.

There are no Budget measures from the 1999-2000 Budget including forward years, which have resource implications for the Office of the Commonwealth Ombudsman.

Appropriation-1999-2000

PM&C-Aboriginal and Torres Strait Islander Commission

Portfolio Directions Overview

Coral Dow

The Aboriginal and Torres Strait Islander Affairs portfolio accounts for only 56 per cent (down 3 per cent on 1998-1999 figures) of total Indigenous specific programme spending. In this Budget increases in Indigenous specific programme expenses will primarily be shared across a range of mainstream portfolios. Overall Indigenous specific programme expenses are expected to increase from $1.98 billion in 1998-99 to $2.23 billion in 1999-2000. The Government continues to target health, housing, education and employment through measures within the mainstream portfolios that will 'assist Indigenous Australians to move beyond welfare dependency' and fulfil its 1998 election commitment in Beyond Welfare.

Aboriginal and Torres Strait Islander Affairs Portfolio

The Aboriginal and Torres Strait Islander Affairs portfolio comprises the following agencies responsible for implementing discrete aspects of policies in Aboriginal and Torres Strait Islander Affairs: The Aboriginal and Torres Strait Islander Commission (ATSIC); Australian Institute of Aboriginal and Torres Strait Islander Studies (AIATSIS); Aboriginal and Torres Strait Islander Commercial Development Corporation (ATSICDC); Indigenous Land Corporation (ILC); Aboriginal Hostels Limited (AHL) and Torres Strait Regional Authority (TSRA)

The four year funding guarantee for the Aboriginal and Torres Strait Islander Affairs portfolio which commenced in 1997-98 remains in place. Expenses are expected to increase minimally from $1.10 billion in 1998-99 to $1.24 billion in 1999-2000.(1)

Funding for the Aboriginal and Torres Strait Islander Commission (ATSIC) is the most significant component of the portfolio. ATSIC claims that its capability to respond to the four priority areas is restricted by the budget cuts imposed in 1996.(2) ATSIC's estimated expenses for 1999-2000 are $1064 million of which the Community Development Employment Projects (CDEP) Scheme is the largest programme. The 1999-2000 Budget continues the 1996 cap on additional funding for CDEP places, excepting 'natural growth' places, estimated to be fifty new places per month. Changes announced in the 1998 Budget which will allow CDEP participants access to benefits such as rent assistance and health cards will begin during 1999-2000.

Other Indigenous specific programme expenses

Health and Aged Care portfolio

The long term strategy of the Office for Aboriginal and Torres Strait Islander Health, within the Department of Health and Aged Care, is to improve access to primary health care services. The budget measure 'improving access to health services for Aboriginal and Torres Strait Islanders' will provide $78.8 million over four years to establish a framework for coordinated expansion of primary health care services. There will also be an increase of $3.6 million for residential aged care. Funding will be increased in areas of identified needs but will be conditional on States and Territories meeting funding and accountability obligations.

In 1998-99 the Government introduced special arrangements under the Pharmaceutical Benefits Scheme (PBS) to enable Aboriginal Health Centres in remote areas to obtain better access to PBS medicines. In 1999-2000 an additional $6.8 million will be allocated under this initiative.

In November 1996 the Government announced an initiative in which the Army would assist ATSIC and the Department of Health and Family Services in providing health related infrastructure such as fresh water, sewerage and housing to remote communities. The Army/ATSIC Community Assistance Programme (AACAP) will be extended by $20.6 million over four years to the Aged and Health Care budget measure 'improved living conditions in remote communities.' ATSIC will fund the $20.6 million from its Community Housing and Infrastructure Programme, whilst the Army will provide personnel, equipment and training to communities.

Education, Training and Youth Affairs portfolio.

Commonwealth indigenous education programmes are administered by the Department of Education, Training and Youth Affairs. Two programmes, the Indigenous Education Strategic Initiatives Programme (IESIP) and the Indigenous Education Direct Assistance (IEDA) Programme, aim to improve literacy, numeracy, enrolments and retention of indigenous students. In 1997 the focus of the IESIP programme changed from funding educational initiatives to achieving educational outcomes. In 1999-2000 funding for IESIP will increase by $12 million to $130 million.

IEDA has three elements which complement IESIP: the Aboriginal Tutorial Assistance Scheme, the Aboriginal Student Support and Parent Awareness Programme and the Vocational and Educational Guidance for Aboriginals Scheme. Funding for IEDA in 1999-2000 will increase by $2.3 to $62.3 million.

Two new strategies to address the specific need of indigenous education have been announced-the National Indigenous English Literacy and Numeracy Strategy and the National Indigenous Students' School Attendance Strategy. These strategies will assist schools to identify appropriate methods and models to improve literacy, numeracy and school attendance. However funding for these strategies in the years 2000-2004 will come from existing IESIP funds.

Employment, Workplace Relations and Small Business Portfolio

From 1 July 1999 a new Indigenous Employment Programme (IEP) will be established. Additional funding of $25 million will be available in 1999-2000 from the Employment, Workplace Relations and Small Business Portfolio. The Government aims to address the high unemployment rate for indigenous people through increased opportunities in the private sector and further support for indigenous small business opportunities.

Targeting resources.

A budget measure within the Finance portfolio will fund the Commonwealth Grants Commission to develop measures of relative disadvantage to target more effectively areas of greatest need. $5.7 million over two years will fund the Commission's report on the relative needs of Indigenous Australians for each ATSIC region, and by State and Territory. This report will be used as a basis for implementing new arrangements that improve the allocation of funding to indigenous communities. This will be a new area of reporting for the Commission and cannot commence unless the Commonwealth Grants Commission Amendment Bill 1999 is passed. It is possible that the report will be used to 'depoliticise' future funding allocations in the Aboriginal and Torres Strait Islander Affairs portfolio.

1. The increase is largely explained by:

a) The introduction of a Capital User Charge which is to be applied from 1 July 1999, and represents the cost of the Commonwealth's investment in assets required to produce outputs. This will increase expenses in ATSIC's Home Loans program by $30.1m in 1999-2000.

b) Expenditure by the Indigenous Land Corporation which will draw on its investments and funds from the Indigenous Land Fund to transfer land to Indigenous communities.

2. ATSIC Media Release, 11 May 1998.

Transport and Regional Services

Portfolio Directions Overview

Richard Webb

The portfolio comprises the Department of Transport and Regional Services and three agencies-the Australian Maritime Safety Authority (AMSA), the Civil Aviation Safety Authority (CASA), and the National Capital Authority (NCA). All four bodies now have separate appropriations. Previously, appropriations for AMSA, CASA and the NCA were paid to the Department for spending as administered expenses. This reclassification accounts for the bulk of the reduction of about $130 million in administered expenses in 1999-2000 compared to 1998-99.

It is not possible to categorise separately transport and regional services because many expenses overlap both functions. An example is the budget measure-the upgrade of the Rockhampton regional airport runway.

Portfolio financial aggregates

In general, the Budget contains few new initiatives. Rather, the Budget focuses on the continued funding of existing programs, notably those related to the provision of roads and the upgrading of the interstate rail track. There are, however, some notable variations to funding of existing programs e.g. the Tasmanian Freight Equalisation Scheme.

The main aggregates for the portfolio are set out in Tables 1 and 2.

Table 1: Total appropriations for the Department in 1999-2000 ($ million)

The total appropriation for the price of departmental outputs ($181 922 million) is expected to rise by about 7.5 per cent in 1999-2000 compared with 1998-99. This rise is the difference between a 6 per cent rise in the price of outputs $(193 196 million) and a fall of 15 per cent in revenue from the sale of goods and services ($11 204 million). The single biggest factor behind the rise in the price of outputs is an almost 6 per cent rise in the price of providing policy advice and Ministerial services from $75 million in 1998-99 to $79.4 million.

Table 2: Total expenses ($ million)

* Administered Federation Fund projects funded from the Reserved Money Fund

Outcomes and outputs

All four bodies contribute to the one and only outcome-linking Australia through transport and regional services. This vague and rather meaningless outcome reflects the disparate nature of the Department's functions. The Department divides its activities into five output groups-policy advice and ministerial services; regulatory, investigative and safety services; services to communities; services for industry and government; and revenue administration. The Department also delivers a variety of programs on behalf of the Commonwealth ('administered expenses'). These are broken into two groups-services to communities and services to industry.

Transport and Regional Services

Significant Budget Measures

Richard Webb

The main changes to administered expenses are as follows.

Comment

The Airservices Australia (Location-Specific pricing) subsidy is to ease the introduction of location-specific pricing for tower services at regional and general aviation airports.

The local government incentive program seeks to improve efficiency in the provision of services by encouraging better practices by local governments.

Spending on flood mitigation is aimed at reducing losses in regional areas incurred as a result of damage to infrastructure.

The Tasmanian Freight Equalisation Scheme seeks to reduce the cost disadvantage that Tasmania faces relative to the mainland in transporting non-bulk goods. The Budget increases spending by $20.4 million in 1999-2000.

Spending on National Highways and Roads of National Importance aims both to improve roads and boost employment in regional areas. Spending is to rise by $195 million over four years, with $19 million in 1999-2000.

Federation fund projects are grants to improve transport productivity through spending on rail, bridge, and rail projects, which are funded from the Reserved Money Fund.

Transport and Regional Services

Significant Budget Measures

Matthew James

Outcome 1

Linking Australia through transport and regional services.

Significant Budget Measures

Equity loan injection of $8 million and annual increase in revenue of $8.6 million.

Financial Impact on Price of Outputs

Impact on Outputs

Comment

A major restructure of the Civil Aviation Safety Authority (CASA) coincides with a special appropriation from increased aviation fuel customs duty and excise. An increase in the rate of excise and customs duty on aviation fuel, indexed to the CPI, will occur annually to address a shortfall of industry contributions. This tax will also fund the Airservices Australia (Location-Specific Pricing) Subsidy for tower services.

The major organisational restructure aims to establish clearer lines of accountability, transparency of responsibility and the introduction of new skills and capabilities. The funding is to come from savings due from improved productivity and reduced offices, with seven new area offices to replace the previous multiple office structure. These changes reflect continuing turbulence within the air safety regulation sector. CASA will repay the equity loan over four years with quarterly instalments of $0.5 million.

Treasury

Portfolio Directions Overview

David Richardson

In addition to the Treasury itself, this portfolio includes the following agencies.

• Australian Bureau of Statistics (ABS)
• Australian Taxation Office (ATO)
• Productivity Commission
• Australian Competition and Consumer Commission (ACCC)
• National Competition Council (NCC)
• Australian Prudential Regulation Authority (APRA)
• Australian Securities and Investments Commission (ASIC)
• Companies and Securities Advisory Committee.

Treasury expresses its objectives in terms of the overall outcome-Strong, sustainable economic growth and the improved wellbeing of Australians-and three subsidiary outcome groups:

Outcome 1: Sound macroeconomic environment

Outcome 2: Effective government spending and taxation arrangements, and

Outcome 3: Well functioning markets.

Treasury itself has a modest budget. The price of Treasury outputs is $100.3 million for 1999-00, with revenues of $35.0 million, $34.2 million of which is seigniorage from the Royal Australian Mint. These figures are swamped by the Administered Expenses that go through the Treasury Portfolio, $26 985.5 million in 1999-2000. This amount includes the purchase of retired and other financial instruments at around $9 billion as well as grants to the States and Territories.

In many ways Treasury highlights the problems of trying to define planned outcomes and report against them in a policy department. When Treasury describes how Outcomes 1, 2 and 3 are each to be evaluated it begins with the following words:

The Productivity Commission is frank when it says:

Within Treasury the main measures contained in the budget are

• Establishment of the Australian Office of Financial Management, basically an enhanced capability to manage the Commonwealth's debt portfolio. This is further explained in the article Government Surpluses and Debt.
• Increased grants to the States and Territories coming out of the April 1999 Premiers' Conference to enhance the previously announced tax package. This will be worth $182.7 million in 2000-01.
• Promotion of Australia as a Centre for Global Financial Services with a budget of $7 million over the next two years.

The other agencies in the Treasury portfolio have minor new measures with the exception of the ATO. Those have either already been announced in the Government's A New Tax System or are covered in the article by Simon Lang, Taxation Measures.

Treasury

Significant Budget Measures

Bernard Pulle

Enhancement of the Corporations and Securities Panel

The Corporations and Securities Panel (the Panel) provides a mechanism for peer review of takeover activity, with the object of being more efficient and less formal than a court. The Corporate Law Economic Reform Program Bill 1998 (the Bill) includes measures so that the Panel, rather than the courts or the Administrative Appeals Tribunal (AAT), becomes the primary forum for resolving takeover matters. The courts will continue to determine any damages claims after the bid period and any criminal prosecutions. The Explanatory Memorandum to the Bill indicates Government's intention to review the reforms in relation to the Panel after two years.(1)

The additional resources allocated are $1.8 million per year for the next four years to fund the Panel's enhanced role and to provide a full-time independent secretariat to assist the Panel. The ongoing costs of the Panel are to be recovered in the same manner as the costs of the Australian Securities and Investments Commission (ASIC) by imposing appropriate fees and charges based on the expenditure of the Panel in the previous year.

The Bill was referred to the Parliamentary Joint Committee on Corporations and Securities (the Committee) by the Senate and the report of the Committee was released earlier this month. The majority report strongly supports the objective of making the Panel the primary forum for resolving takeover matters and cites the case of the UK Panel on Takeovers and Mergers as a good example how a Panel can quickly and effectively deal with such matters.(2)

The Australian Labor Party Members' Report expressed the view that it would be better for the Bill to allow relevant affected individuals in a takeover dispute to take action in the courts should the Panel support such action.(3)

The report by Senator Andrew Murray on behalf of the Australian Democrats recommended that the Bill be amended to allow for application for enforcement of an order of the Panel to be made by any person to whom the order relates or by each party to the proceedings or by ASIC.(4)

1. Explanatory Memorandum to the Corporate Law Economic Reform Program Bill 1998, paragraph 2.41.
2. Report on the Corporate Law Economic Reform Program Bill 1998 by the Parliamentary Joint Committee on Corporations and Securities (May 1999), paragraph 3.52, p. 19.
3. ibid., p. 61.
4. ibid., paragraph 2.17, p. 71.

The Parliamentary Departments

Significant Budget Measures

Scott Bennett

Overall portfolio directions

The administration of the Parliament of the Commonwealth of Australia is conducted by five parliamentary departments.

Points to note:

• There have been no significant changes in Outcomes priorities
• There have been so significant changes in the portfolios' structure and output responsibilities since the last Budget.

The Department of the Senate's Budget Outcome is 'The effective functioning of the Senate as a House of the Commonwealth Parliament'. To meet this outcome, it provides advisory and administrative services to the Senate, its committees and Senators in their legislative work.

It has four accrual budgeting outputs to its work:

• Senate support
• Committee support
• Senator's services
• Public education and awareness.

The Department of the House of Representative's Budget Outcome is to ensure that 'The House of Representatives fulfils its role as a representative and legislative body'. To meet this outcome, it undertakes similar work for the House of Representatives, House committees and Members of the House of Representatives in their legislative work.

It has six accrual budgeting outputs to its work:

• Operating chamber and Main Committee
• Members' services
• Parliamentary relations
• Committee support
• Security
• Public education and awareness.

The Department of the Parliamentary Library's Budget Outcome is 'To contribute to a more informed Parliament and, through it, to the Australian community'. It provides library, reference and research services to Senators, Members, the parliamentary departments and to selected other clients.

It has two accrual budgeting outputs to its work:

• Provision of commissioned information services and policy advice to Senators, Members, parliamentary committees and parliamentary departments
• Provision of self-help information services for the same clients.

The Department of the Parliamentary Reporting Staff's Budget Outcome is 'The Commonwealth Parliament to have international standard broadcasting, transcription and technology services and the Australian community to be able to see, hear and read the work of the Parliament'. It provides transcripts of parliamentary proceedings. It also provides information systems support to Senators, Members and the Parliamentary departments, and audio and video monitoring of parliamentary proceedings.

It has two accrual budgeting outputs to its work:

• Broadcast and transcription services
• Support and technology services.

The Joint House Department's Budget Outcome is 'An effectively functioning legislative building for the Parliament of Australia which preserves its value as a heritage complex and raises public awareness of the Australian Federal Parliamentary system and the Parliament House Building. It is responsible for Parliament House management and maintenance, as well as catering functions associated with Parliament House.

It has three accrual budgeting outputs to its work

• Total asset management services
• Building occupant services
• Information, interpretation, access and marketing services.

There were no Budget measures from the 1999-2000 Budget, including forward years, which have resource implications for the Parliamentary Departments.

Parliamentary Departments appropriation-1999-2000

Comments to: web.library@aph.gov.au
Last reviewed 13 August 2001 by the Parliamentary Library Web Manager
© Commonwealth of Australia
Parliament of Australia Web Site Privacy Statement
Images courtesy of AUSPIC