Bills Digest no. 108 2008–09
Appropriation Bill (No. 5) 2008-09
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date
introduced: 26 February
2009
House: House of Representatives
Portfolio: Finance and Deregulation
Commencement:
On Royal
Assent
Links: The
relevant links to the Bill, Explanatory Memorandum and
second reading speech can be accessed via BillsNet, which is at
http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
To appropriate about $384 million
for the ordinary annual services of government.
On 3 February 2009, the Rudd Government announced the National
Building and Jobs Plan (the Plan).[1] The context was the deteriorating Australian and
world economies. The Plan s purpose is to provide additional fiscal
stimulus to counter the contraction in the economy. Appropriation
Bill (No. 5) 2008-09 (the Bill) appropriates additional funding in
support of the Plan. The Plan is the fourth fiscal stimulus package
and follows the Economic Security Strategy,[2] the Nation Building Package,[3] and the Council of
Australian Governments (COAG) funding package.[4]
Section 83 of the Constitution provides that no monies may be
withdrawn from the Consolidated Revenue Fund except under an
appropriation made by law . Laws authorising spending are
either:
- special appropriations, or
- one of (usually) six annual appropriation acts.
Special appropriations which account for about 80 per cent of
spending are spending authorised by acts for particular purposes.
Examples are age pensions, carer payments, and the seniors
concession allowance paid under the Social Security
(Administration) Act 1999, and Family Tax Benefits A and B
paid under A New Tax System (Family Assistance)
(Administration) Act 1999. The remaining twenty per cent of
spending is funded by annual appropriations.
Section 54 of the Constitution requires that there be a separate
law appropriating funds for the ordinary annual services of the
government. That is why there are separate bills for ordinary
annual services and for other annual services. The distinction
between ordinary and other annual services was set out in a Compact
between the Senate and the Government in 1965 (the Compact was
updated to take account of the adoption of accrual budgeting).
Appropriation Bill (No. 1) is introduced with the Budget and
appropriates funds for the ordinary annual services of the
Government . Appropriation Bill (No. 2) which is also introduced
with the Budget appropriates funds for other annual services. A
third Appropriation Bill Appropriation (Parliamentary Departments)
Bill No. 1 funds the parliamentary departments.
Additional
estimates
Funding requirements usually change after the Budget is brought
down. The government may agree to additional funding if the amounts
in the three Budget Appropriation Acts are inadequate and so has to
seek parliamentary approval for additional spending. The process
whereby additional funds are provided is called additional
estimates and usually begins around
November of the Budget year. The approved additional estimates are
incorporated into Appropriation Bills No. 3 and No. 4 and
Appropriation (Parliamentary Departments) Bill No. 2. These Bills
are the counterparts of Appropriation Bills No. 1 and No. 2 and
Appropriation (Parliamentary Departments) Bill No. 1
respectively.
When the Budget is brought down, the government releases
Portfolio Budget Statements. They contain, amongst other things,
explanations of the funding sought through the three Appropriation
Bills. The Portfolio Budget Statements are relevant documents for
the purposes of section 15AB of the Acts Interpretation Act
1901.[5] This
means that the Portfolio Budget Statements can be used to help
interpret an Act. Portfolio Additional Estimates Statements are the
counterparts of Portfolio Budget Statements and contain
explanations of the funding sought through the additional estimates
Appropriation Bills.[6]
The Senate s powers
in relation to ordinary annual services
Section 53 of the Constitution provides that the Senate may not
amend proposed laws appropriating revenue or moneys for the
ordinary annual services of the government. The Senate may,
however, return to the House of Representatives any such proposed
laws requesting, by message, the omission or amendment of any items
or provisions therein.
Departmental expenses (outputs) are costs incurred in running
agencies, for example, salaries, depreciation and other day-to-day
operating expenses. Administered expenses (items) are the costs of
providing the programs that agencies administer. While most
administered expenses are funded through special appropriations,
some are funded through the Appropriation Bills. The Bass Strait
Passenger Vehicle Equalisation Scheme is an example of an
administered expense funded as an ordinary annual service.
Departmental outputs and administered expenses contribute to
outcomes. Outcomes are the results or consequences for the
community that the government wishes to achieve. An example, in the
Attorney-General s portfolio, is:
An equitable and accessible system of federal
civil justice.[7]
Reduction
processes
Departmental expenses and administered expenses Budget
allocations can be reduced. It is sometimes the case that an
appropriation for a departmental expense exceeds what is
needed. However, departmental items do not automatically lapse if
they are not spent. In these circumstances, a reduction process to
extinguish the unspent amount is available. Under this process, on
request in writing from a minister, the Finance Minister may issue
a determination to reduce the agency s departmental expenses
appropriation. In short, the excess of the amount allocated over
the amount expended can be extinguished.
Appropriations for administered expenses are also
subject to an annual process to extinguish amounts that are not
required. The amount identified as spending on administered
expenses in agencies financial statements as published in their
annual reports is the basis for this process. In short, the amount
of the reduction is the difference between the amount appropriated
and the amount spent as shown in the agency s financial
statements.
In effect, the unused amounts are returned to consolidated
revenue.
Financial implications
The Bill appropriates $384.179 million, and is the fifth to
appropriate money for ordinary annual services for financial year
2008 09. The other items of legislation to do so are:
The Nation Building and Jobs Plan is the main fiscal stimulus
package the government has introduced to counter the current
downturn in the economy. The Appropriation (Nation Building and
Jobs) Act (No. 1) 2008-09 appropriated some funds for the
Nation Building and Jobs Plan. In his second reading speech for the
Bill, the Minister for Competition Policy and Consumer Affairs, and
Assistant Treasurer, the Hon. Chris Bowen (the Minister), stated
that additional funding would be needed to underpin the Nation
Building and Jobs Plan. The Bill provides some of this additional
funding. [Appropriation Bill (No. 6) 2008-09 also contains
additional funding in support of the Nation Building and Jobs
Plan. See also the Bills
Digest for Appropriation Bill (No. 6) 2008-09].
The Bill appropriates $285.619 million for the Department of
Education, Employment and Workplace Relations ($15.541million is
for departmental expenses and $270.078 million for administered
expenses. Of the $285.619 million, $223.3 million is to be expended
as follows:
- $43.7 million is for the expected increase in commencements and
completion claims under the Australian apprenticeships system
- $38.8
million is to assist apprentices and trainees to return to the
workforce and continue training. Employers and training
organisations will be encouraged to retain apprentices and trainees
through an additional payment on completion of training
- $34 million will be provided to keep open, until 31 March 2009,
241 ABC Learning centres, which the receiver has assessed to be
unviable under the ABC Learning business model
- $36.8 million will be provided to ensure that any Australian
worker made redundant will receive assistance to help them re-enter
the workforce, and
- $70 million is to meet an expected increase in expenditure
against the General Employee Entitlements and Redundancy
Scheme.
The Department of Infrastructure, Transport, Regional
Development and Local Government will receive an additional $20.066
million in 2008 09 ($3.666 million for departmental expenses and
$16.4 million for administered expenses). According to the
Minister, the Department will be provided with an additional $16.4
million in 2008 09 and $195 million in total over two years to
implement the East Kimberley Development Package. The package is
designed to support economic development in the region through
investment in social and common use infrastructure. Payment is
conditional on joint assessments, with the Western Australian
government, of potential infrastructure investments.
The Bill provides $28.486 million to the Department of Families,
Housing, Community Services and Indigenous Affairs ($17.395 million
for departmental expenses and $11.091 million for administered
expenses). According to the Minister, the funding will allow the
doubling of the Emergency Relief Program until 30 June
2011.[9] The
additional $11.091 million will enable community organisations
concerned to respond to the expected increase in demand for
emergency relief resulting from the recent deterioration in
economic conditions.
The Bill provides $14.856 million to the Department of Foreign
Affairs and Trade to offset the effect of exchange rate
fluctuations on its ability to make payments to international
organisations on the Australian Government s behalf.
The above figures are taken from the Minister s second reading
speech.
Most of the provisions in the Bill are identical to those in the
other four items of legislation noted above.
Clause 3 contains definitions. There are five
definitions of Portfolio Statements . They all refer to the
Statements introduced as relevant documents in support of various
Acts:
- Portfolio Additional Estimates Statements
- Portfolio Budget Statements
- Portfolio Supplementary Additional Estimates Statements
- Portfolio Supplementary Additional Estimates Statements No. 2,
and
- Portfolio Supplementary Estimates Statements.
Portfolio
Additional Estimates Statements means the Portfolio Additional
Estimates Statements that were tabled in the Senate or the House of
Representatives in relation to the Bill for the Appropriation
Act (No. 3) 2008 2009 and the Bill for the
Appropriation Act (No. 4) 2008 2009.
Portfolio
Budget Statements means the Portfolio Budget Statements that
were tabled in the Senate or the House of Representatives in
relation to the Bill for the Appropriation Act (No. 1)
2008 2009 and the Bill for the Appropriation Act
(No. 2) 2008 2009.
Portfolio
Supplementary Additional Estimates Statements means the
Portfolio Supplementary Additional Estimates Statements that were
tabled in the Senate or the House of Representatives in relation to
the Bill for the Appropriation (Nation Building and Jobs) Act
(No. 1) 2008 2009 and the Bill for the Appropriation
(Nation Building and Jobs) Act (No. 2) 2008 2009.
Portfolio
Supplementary Additional Estimates Statements No. 2 means the
Portfolio Supplementary Additional Estimates Statements that were
tabled in the Senate or the House of Representatives in relation to
the Bill for this Act and the Bill for the Appropriation Act
(No. 6) 2008 2009.
The reference to Portfolio
Supplementary Estimates Statements is to the Statements
released in support of the Appropriation (Economics Security
Strategy) Act No. 1 2008 09 and the Appropriation
(Economics Security Strategy) Act (No. 2) 2008 09.
Clause 4 provides that the Portfolio Budget
Statements, Portfolio Supplementary Estimates Statements, Portfolio
Additional Estimates Statements, Portfolio Supplementary Additional
Estimates Statements and Portfolio Supplementary Additional
Estimates Statements No. 2 are relevant documents for the
purposes of section 15AB of the Acts Interpretation Act
1901.[10]
Clause 6 Summary of
appropriations states the total of the items specified in
Schedule 1 is $384 179 000. Schedule
1 lists all the agencies that are to be funded, the amount
of funding, and the breakdown of funding between departmental and
administered expenses.
Clause 8 deals with administered items .
Subclause 8(1) confirms that if an amount is
specified in an administered item to be for an outcome, then money
can be expended to achieve that outcome. Subclause
8(2) provides that where the Portfolio Budget Statements,
Portfolio Supplementary Estimates Statements, Portfolio Additional
Estimates Statements, Portfolio Supplementary Additional Estimates
Statements or Portfolio Supplementary Additional Estimates
Statements No. 2 indicate that an activity is for an outcome,
the amount in the administered item is taken to contribute towards
the achievement of that outcome.
Clause 9 deals with CAC Act body payment items
. A CAC Act body is a Commonwealth authority or company within the
meaning of the Commonwealth Authorities and Companies Act
1997 (the CAC Act).[11] The amounts to be paid to CAC Act bodies are shown in
Schedule 1 as Payments to CAC Act bodies . For
example, in the Defence Portfolio, Schedule 1
shows an administered expense for the Australian War Memorial of
$38.597 million. Subclause 9(1) provides that the
amount specified in a CAC Act body payment item may be paid to the
body and used for the body s purposes. Subclause
9(2) provides that if an Act provides that a CAC Act body
must be paid amounts that are appropriated by the Parliament for
the body s purposes [paragraph 9(2)(a)] and
Schedule 1 contains a CAC Act body payment
item for that body [paragraph 9(2)(b)], then the
body must be paid the full amount specified in the item. The
Explanatory Memorandum explains:
The purpose of subclause 9(2) is to clarify
that subclause 9(1) is not intended to qualify any obligations
in other legislation regulating a CAC Act body, where that
legislation requires the Commonwealth to pay the full amount
appropriated for the purposes of the body.[12]
As noted, a process exists whereby appropriations for
departmental expenses that are not needed can be abolished.
Clause 10 Reducing departmental items contains
this process. Subclause 10(1) specifies who can
request reductions in departmental expenses. Paragraph
10(1)(a) empowers the Minister for an agency to ask the
Finance Minister to reduce a departmental item for that agency,
while paragraph 10(1)(b) enables the Chief
Executive of an agency, for which the Finance Minister is
responsible, to ask the Finance Minister to reduce a departmental
item for that agency. Subclause 10(2) specifies
that the Finance Minister may make a determination reducing a
departmental item by the amount in the request. Subclause
10(3) provides that the determination will have no effect
to the extent that it would reduce the departmental item below
nil.
Clause 11 Reducing administered items contains
the process for extinguishing appropriations for administered items
that are not needed. Subclause 11(1) provides that
if the amount shown in the financial statements of an agency s
annual report shows that the expensed amount of an administered
item is less than the amount appropriated for that item, then the
amount of the reduction is the difference between the appropriated
amount and the amount in the annual report. Subclause
11(2) enables the Finance Minister to determine that an
amount, published in the financial statements of an agency, is
taken to be the amount specified in his or her determination, while
paragraph 11(2)(b) ensures that the amount
published in the annual report can be corrected. Subclause
11(3) provides that the Finance Minister s determination,
made under subclause 11(2), is a legislative
instrument, that section 42 (relating to disallowance) of the
Legislative Instruments Act 2003 applies to the
determination, but that Part 6 (relating to sunsetting provisions)
of the Legislative Instruments Act 2003 does not apply to
the determination.[13] In short, this means that the Finance Minister s
determinations are disallowable by Parliament, but once made, will
not expire.
Clause 12 contains the process for reducing CAC
Act body payments. This is almost identical to that for
departmental items (clause 10). One difference is
that whereas paragraph 10(1)(b) enables the Chief
Executive of an agency, for which the Finance Minister is
responsible, to ask the Finance Minister to reduce a departmental
item for that agency, in the case of CAC Act bodies, a similar
request must come from the Secretary of the Department if the
Finance minister is responsible for the body [paragraph
12(1)(b)]. The reason for this difference is that payments
to CAC Act bodies are channelled through the relevant portfolio
departments. Subclause 12(2) empowers the Finance
Minister to make a determination reducing a CAC Act body payment by
the amount requested. Subclause 12(5) provides
that proposed subsection 9(2) does not limit the
reduction of a CAC Act body payment under this section.
Special accounts are essentially ledgers
in which all expenditure and revenue related to a particular
purpose are recorded. This simplifies identification of all
financial activities related to that purpose. Clause
13 Crediting amounts to Special
Accounts provides that if any of the purposes of a
Special Account is a purpose that is covered by an item, then
amounts may be debited (expended) against the appropriation for
that item and credited to that Special Account.
Clause 14 provides that the Consolidated
Revenue Fund is appropriated for the purposes of this Act,
including the operation of this Act as affected by the
Financial Management and Accountability Act 1997.
Concluding comments
Addition funding of $1 830.9 million in support of the Nation
Building and Jobs Plan is contained Appropriation Bill (No. 6)
2008-09.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277
2464
Richard Webb
6 March 2009
Bills Digest Service
Parliamentary Library
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