Bills Digest No. 12  1999-2000

Numerical Index | Alphabetical Index

Appropriation Bill (No.3) 1999-2000

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.


Passage History
Main Provisions
Contact Officer and Copyright Details

Passage History

Appropriation Bill (No.3) 1999-2000

Date Introduced: 8 December 1999

House: House of Representatives

Portfolio: Finance and Administration

Commencement: On Royal Assent.


To authorise the Minister for Finance to issue $1.847 billion from the Consolidated Revenue Fund (CRF) in addition to funds appropriated by the Appropriation Act (No.1) 1999-2000.


Annual authorisations for expenditure are contained in:

  • Appropriation Act (No.1), which authorises expenditure for the ordinary annual services of government
  • Appropriation Act (No.2), which authorises expenditure on capital works and services, payments to the States and other purposes not authorised by special legislation, and
  • Appropriation (Parliamentary Departments) Act which authorises expenditure for the five parliamentary departments.

However, if the initial appropriation is insufficient for the financial year additional appropriations may be sought. These additional appropriations, known as additional estimates, are extra spending requirements - for example, for cost overruns in existing programs or for new programs - not foreseen when the Budget was presented.

The 1999-2000 additional estimates differ from previous additional estimates in two main ways. First, the estimates documentation is presented in an outcomes and outputs framework. Previous estimates were based on a program approach. Second, the estimates use an accrual budgeting framework. Previous budgets used a cash framework.

Accrual budgeting allows for the incorporation of all assets, liabilities, expenses and revenues, including cash receipts and expenditures. Under accrual budgeting, agencies are funded for the full cost of their functions, including non-cash costs such as employee entitlements such as long service leave or depreciation. Thus the amount an agency is appropriated under accrual budgeting in any one year may exceed its cash costs. Any unspent amount is accumulated for use in future years when required - for example accumulated depreciation to replace buildings and equipment.

It is suggested that this Bills Digest be read in conjunction with the Parliamentary Information and Research Services publication, Budget Review 1999-2000.(1)

Glossary of Budgetary and Accounting Terms(2)

Accrual accounting A system of accounting that recognises costs, revenues, lending and borrowing when they occur. Accrual accounting differs from cash accounting - the traditional basis used by the Commonwealth - which records transactions only when a payment or receipt is made. Thus the timing of the recording of transactions can differ under accrual accounting and cash accounting. Accrual accounting also includes non-cash costs-such as depreciation-and costs which, while incurred, have not yet been paid (e.g. accruing superannuation entitlements). Accrual accounting thus seeks to measure the full cost of providing goods and services in a given period. The 1999-2000 Budget is the first to be presented in an accrual framework.

Accrual budgeting A comprehensive budget incorporating assets, liabilities, expenses and revenues, including cash receipts and expenditures. Under accrual budgeting, agencies are funded for the full cost of their functions, including non-cash costs (e.g. depreciation). Thus the amount an agency is appropriated under accrual budgeting in any one year may exceed its cash costs (although the amount appropriated covers its full costs). Any unspent amount is accumulated for use in future years when required (e.g. accumulated depreciation to replace buildings and equipment).

Additional estimates Extra spending requirements (e.g. for cost overruns in existing programs or for new programs) not foreseen when the Budget was presented. Additional estimates are contained in Appropriation Bills Nos. 3 and 4 and the Appropriation (Parliamentary Departments) Bill No. 2.

Administered expenses Items that agencies administer on behalf of the Commonwealth (e.g. social security payments to eligible recipients). Administered expenses include grants, subsidies and benefits.

Advance to the Minister for Finance Contingency funds, appropriated in Appropriation Acts Nos. 1 and 2, to cover urgent expenditure not foreseen when the relevant Bill was drawn up (e.g. natural disasters) or for which funding provision was inadequate. The advance may also be used to implement changes in priorities, by enabling 'transfers' from the purpose for which they were originally appropriated to another purpose, pending specific appropriation.

Amortisation Refers to the writing off of the value of an asset over its lifetime. The term is usually applied to the writing off of 'intangible' assets such as goodwill or expenditure on software. The term is sometimes used as a synonym for depreciation. (See also depreciation).

Appropriation Refers to the authorisation by Parliament of expenditure of public moneys from the Consolidated Revenue Fund (CRF) for a particular purpose. Annual appropriations under Appropriation Bills Nos. 1 and 2 account for about only 25 per cent of total appropriations (the balance is accounted for by Special Appropriations). A major difference between the 1998-99 and 1999-2000 Budgets is that under the accrual accounting framework used in the 1999-2000 Budget, moneys appropriated for accrued expenses will remain in the CRF until they are required to be spent in future years. In the past, moneys appropriated but not spent lapsed at 30 June.

Appropriation Bill (No. 1) A Bill to appropriate moneys from the Consolidated Revenue Fund for the ordinary annual services of government i.e. recurrent services (e.g. running costs) and recurrent expenditures on already established programs.

Appropriation Bill (No. 2) A Bill to appropriate moneys from the Consolidated Revenue Fund for purposes other than the ordinary annual services of government e.g. payments to the States (i.e. those not covered by special appropriations), and spending on new programs.

Appropriation Bills (No. 3 and No. 4) When funds required exceed the approved appropriations contained in Appropriation Acts 1 or 2 because of spending overruns, the government may seek additional appropriations in Appropriation Bills Nos. 3 and 4. The government may also seek appropriations for new spending in these Bills (see 'additional estimates').

Appropriation (Parliamentary Departments) Bills (No. 1 and No. 2) Bills to appropriate moneys from the Consolidated Revenue Fund for the Parliamentary Departments. Bill No. 2 covers additional appropriations (see 'additional estimates').

Change in net assets In an accrual system, the net change in accumulated assets and liabilities. This measure equals the operating balance plus asset revaluations. Thus a positive operating balance-akin to the profit in a business-will increase net assets. Changes in net assets should be interpreted cautiously. On the one hand, increased asset values may indicate the ability to retire debt through asset sales. On the other hand, capital gains may also reflect higher costs of replacing assets in the future and the corresponding need for higher revenue.

Commonwealth Financial Transactions A monthly statement, in economic type/functional format, of revenue and outlays, the deficit or surplus, and the ways in which the deficit has been financed or the surplus invested. It compares transactions to date with budgeted revenue and outlays and the previous year's figures. Sometimes referred to as the Niemeyer Statement.

Commonwealth Public Account (CPA) The main bank account of the Commonwealth, maintained at the Reserve Bank, through which the day-to-day operations of the budget sector are conducted. It holds the moneys of the Consolidated Revenue Fund. Bodies (e.g. CSIRO) that receive budget funding but maintain their own bank accounts, operate outside the CPA. However, the distinction will become less clear as more agencies operate their own bank accounts.

Consolidated Revenue Fund (CRF) The Fund established by section 81 of the Constitution, which requires that all monies received by the Commonwealth must be paid into this Fund, and so is the main working fund. Section 83 of the Constitution requires an appropriation of moneys by the Parliament before any payment can be made from the CRF. The Financial Management and Accountability Act 1997 (FMA Act) established four funds-the Consolidated Revenue Fund, the Loan Fund, the Reserved Money Fund and the Commercial Activities Fund (the latter two consist of a number of trust accounts) in the Commonwealth Public Account (CPA).

Depreciation Refers to the reduction in the value of an asset though wear and tear. The term is usually applied to physical assets such as plant and equipment. See also amortisation.

Forward estimates When a Budget is brought down, 'rolling' forward estimates are presented for the three years following the Budget year. These estimates assume no further policy decisions (i.e. they are based on existing policies), and are based on estimates of key economic parameters such as inflation and unemployment. Forward estimates are the starting point for budgetary deliberations, since all new policy or savings proposals constitute variations to the forward estimates.

General revenue assistance Grants paid by the Commonwealth to the States and Territories to assist in meeting recurrent outlays. They are the main form of assistance to the States and are 'untied' (i.e. there are no conditions on their expenditure). The Commonwealth Government proposes to replace general revenue assistance (but not Specific Purpose Payments) with the revenue from the GST. In 1998-99, general revenue grants comprised Financial Assistance Grants, Special Revenue Assistance ('transitional allowances' and 'special fiscal needs' grants to the Australian Capital Territory), and National Competition Payments.

Horizontal fiscal equalisation The principle underlying the Commonwealth Grants Commission's assessments of per capita relativities, which are the basis for the interstate distribution of general revenue grants. Under this principle, grants are distributed to provide each State and Territory with the capacity to provide public services at an average standard and level of efficiency, for comparable revenue effort.

Inputs Resources in the forms of people, materials, energy, facilities and funds that an agency uses in activities to produce outputs.

Net assets In an accrual system, equal total assets less total liabilities. Net assets take account of both non-debt liabilities (such as accrued superannuation), non-financial assets (such as land and buildings) and equity in public trading and financial enterprises. Net assets in an accrual system thus provide a more comprehensive picture of the government's financial position at a point in time than the cash framework measure of net debt-the difference between gross debt and financial assets. However, the valuation of some assets is highly problematic.

Operating balance In an accrual system, is revenues less expenses. It excludes spending on capital assets but includes non-cash costs (such as depreciation) and costs which, while incurred, have not yet been paid (e.g. accruing superannuation liabilities). The operating balance thus reflects the full cost of providing goods and services.

Outcomes The results and consequences of actions by the government on the community. Planned outcomes are the results or consequences that government wants to achieve for the community. Actual outcomes are the results or consequences actually achieved.

Outputs The goods and services agencies produce on behalf of government for external organisations or individuals. Outputs include goods and services produced for other areas of government external to the agency.

Performance measures Measures to assess the extent of success in achieving outcomes. Performance measures relate to outcomes, outputs, third party outputs and administered items. They are used when there is a direct causal link between an action and a change in performance. Performance measures are a more precise measure than indicators.

Price The amount the government pays for the delivery of agreed outputs.

Real Adjusted for inflation. For example, gross domestic product (GDP) is the nominal (current price) value of GDP adjusted for inflation to yield real (constant price) GDP values. This process (deflating) is to a range of other data. For example, real growth in outlays is measured by deflating nominal outlays by the GDP deflator, a measure of price changes throughout the entire economy.

Seignorage The net revenue derived by any money-issuing body e.g. a note-issuing authority. The difference between the face value of coins and the cost of their minting is an example of seignorage.

Special (or Standing) appropriation Moneys appropriated by a specific Act for a specific purpose (e.g. unemployment benefits, and grants to the States for schools). Special Appropriations do not require annual authorisation by the Parliament, as they do not lapse at the end of each financial year; rather, Special Appropriations continue until their authorising legislation is either amended or otherwise lapses. They may or may not be for a specific amount of money or particular period of time. A distinction is sometimes drawn between Standing and Special Appropriations. Standing Appropriations refer to an open-ended appropriation of the Consolidated Revenue Fund by the enabling Act of a legislatively-based program. The amount appropriated will depend on the demand for payments by claimants who have satisfied program eligibility criteria as specified in the legislation. Special Appropriations can be regarded as somewhere between Standing and Annual Appropriations. While a specified amount is provided, it is included in a separate Bill authorising the particular program, and can be specified for any number of years. Special Appropriations account for around 75 per cent of underlying outlays.

Specific Purpose Payments Commonwealth payments to the States and Territories for designated purposes e.g. for housing under the Commonwealth-State Housing Agreement, legal aid, and government schools. SPPs comprise current and capital grants, and are classified into three categories: SPPs paid to the States; those paid through the States for on-passing to local government, other bodies (e.g. universities) and individuals; and a small number of SPPs made directly to local government.

Tax Expenditures Concessions in the tax system, which reduce the tax liabilities of particular groups of taxpayers. The concessions reduce or delay collection of taxation revenue, and constitute a call on the Budget similar to outlays. Superannuation concessions are the single largest tax expenditure.

Outline of Major Additional Appropriations

Major additional appropriations effected by this Bill are:

  • Department of Defence - $740 million is appropriated to cover the Government's decision to increase the readiness of a second brigade to 28 days notice to move, a change in the pace of the drawdown to 50,000 full-time ADF personnel and increased depreciation expenses following asset revaluations and a reassessment of the useful lives of some assets. Additionally, employee expenses, such as ADF pay, have been increasing in real terms, while previously programmed savings in housing, health and removals costs have decreased.(3)
  • Department of the Treasury - $118 million is appropriated to the Australian Taxation Office for various costs relating to the implementation of the Goods and Services Tax and related changes to the tax system. The major items are $60 million per year to cover increased administration costs arising from the partial removal of food from the GST base and $43.72 million to implement changes to the Diesel Fuel Rebate Scheme and the introduction of the Diesel and Alternative Fuels Grants Scheme.(4)
  • Department of Immigration and Multicultural Affairs - $135.60 million is appropriated, primarily a result of the Government's decisions to offer safe haven to Kosovars and East Timorese ($48.24 million), the strengthening of systems for coastal surveillance and the detection of illegal immigration ($10.37 million) and meeting the costs associated with the significant increase in the detention of unauthorised arrivals in recent times ($41 million).(5)
  • Attorney-General's Department - $67.97 million is appropriated for various purposes, including $40.48 million to the Australian Federal Police, mainly for its participation United Nations Transitional Administration in East Timor .(6)
  • Department of Health and Aged Care - $92 million is appropriated as a result of a review of the accounting treatment of grants and personal benefit liabilities for all programs in line with Australian National Audit Office advice.(7)

Carryovers amount to about $200 million and 'the made up of minor variations in most departments and agencies.'(8)


Main Provisions

The amount available for an agency's expenditure on Departmental and administered items is specified in the Schedule to the Bill. The total amount specified in the Schedule is $1.847 billion (clause 5).

Where an amount is specified in the Schedule for an administered item, the Minister for Finance may issue the lesser of the amount specified in the item and the amount determined by the Minister as expenses incurred by the entity in relation to the item in the 1999-2000 year (clause 7). In relation to departmental items, the Minister must issue the amount specified:

  • where an Act specifies that an entity must be paid amounts appropriated for the purposes of the entity and this Bill specifies an amount, or
  • for certain payments of remuneration and allowances (clause 6).

The Minister for Finance may increase the amount in a Departmental item/s by determination to a total maximum of $20 million (clause 9), while clause 10 provides that where there are unforeseen circumstances and the need is urgent, the Minister for Finance may increase expenditure by a total of $175 million. Parliament must be notified of increased spending under clauses 9 and 10.

Clause 13 will formally appropriate the funds for the Bill.


  1. See
  2. This glossary is taken from the Parliamentary Information and Research Services Budget Review 1999-2000 which itself draws on Guide to the Commonwealth Budget Papers 1999-2000 Commonwealth of Australia, 1999.
  3. Defence Portfolio 1999-2000 Additional Estimates Statements, p. 6. See
  4. Treasury Portfolio 1999-2000 Additional Estimates Statements, p. 36. (no www address)
  5. Immigration and Multicultural Affairs Portfolio 1999-2000 Additional Estimates Statements, pp. 13-15. See
  6. Attorney-General's Portfolio 1999-2000 Additional Estimates Statements, Additional Estimates for the Australian Federal Police, p. 3. See
  7. Health and Aged Care Portfolio 1999-2000 Additional Estimates Statements pp. 21-22. See
  8. The Hon John Fahey, Second Reading Speech, House of Representative Debates, 8 December 1999 p. 13019.

Contact Officer and Copyright Details

Angus Martyn
9 February 2000
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 2000

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Published by the Department of the Parliamentary Library, 2000.

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