Bills Digest no. 136 2008–09
Appropriation Bill (No. 1) 2009-2010
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:12 May 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 $71.283
billion for the ordinary annual services of government.
Constitutional aspects
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withdrawn from the Consolidated Revenue Fund except under an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. Appropriation Bill
(No. 1) 2009-2010 (the Bill) is an annual appropriation.
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 annual appropriation
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.
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.
Budget terms and
processes
Departmental expenses (outputs) are the 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. Most
administered expenses are funded through special appropriations but
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.[1]
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.
The advance to the Finance Minister (AFM) provides flexibility
to the Budget process by authorising the Finance Minister to expend
money when the Finance Minister is satisfied that there is an
urgent need for expenditure during the financial year but for which
there is not a sufficient appropriation. The Finance Minister can
expend money from the AFM only if the proposed expenditure meets
certain criteria, namely, there is an urgent need for the
expenditure that is not provided for, or is insufficiently provided
for, because of an omission or understatement or because of
unforeseen circumstances.
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. This means that the Portfolio Budget
Statements can be used to help interpret an Act.
The Bill appropriates about $71.283 billion for the ordinary
annual services of government compared with about $60.875 billion
in Appropriation Bill (No. 1) 2008-09. Schedule 1
contains the amounts appropriated and the purposes for which the
funds are appropriated as defined by outcomes. As usual, the single
largest portfolio appropriation is for defence with some $23
billion.
The provisions are largely identical to those in previous
Appropriation Bills. The notable exception is the addition of
clause 14 which deals with Indigenous Employment
Special Account Receipts.
Clause 6 Summary of appropriations states that
the total of the items specified in Schedule 1 is
$71 283 073 000.
Clause 7 provides that the amount specified in
a departmental item for an agency may be applied for its
departmental expenditure. The note to the clause observes that the
Finance Minister manages the expenditure of public money under the
Financial Management and Accountability Act 1997.
Clause 8 deals with administered items .
Subclause 8(1) confirms that if an amount is
specified as an administered item for an outcome, then money can be
expended to achieve that outcome. Subclause 8(2)
provides that where the Portfolio Statements 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). CAC Act bodies are legally and financially separate from
the Commonwealth and so do not debit appropriations or make
payments from the Consolidated Revenue Fund. Rather, funding for
CAC Act bodies is paid to the relevant portfolio departments which,
in turn, pass the funds on to the CAC Act bodies.
Subclause 9(2) provides that if a CAC Act
body is subject to another Act, and that Act requires that amounts,
appropriated by Parliament for the purposes of that body to be paid
to the body, then the full amount of the CAC Act body payment must
be paid to the body.
A process exists whereby unspent departmental expenses
appropriations 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 for 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. 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 in clause 10.
As noted, the advance to the Finance Minister (AFM) provides
flexibility to the Budget process by authorising the Finance
Minister to expend money in certain circumstances. Clause
13 deals with the AFM. Subclause 13(1)
contains the criteria the Finance Minister must apply before the
Finance Minister can make payments from the AFM. The criteria are
that the Finance Minister must be satisfied that there is an urgent
need for expenditure that is not provided for, or is insufficiently
provided for, in Schedule 1 because of an
omission or understatement or because of unforeseen circumstances.
Subclause 13(3) limits expenditure from the AFM to
$295 million. Subclause 13(4) provides that where
the Finance Minister has made a determination to expend money from
the AFM, the determination is a legislative instrument. Further,
the determination must be tabled in Parliament but is not subject
to disallowance or sunsetting.
Clause 14 Indigenous Employment Special Account
Receipts is a new clause. The wording in this clause is
virtually identical to that of section 15 Flexible Funding Pool
receipts in
Appropriation Act (No. 1) 2008-09. The provisions dealing with
Flexible Funding Pool receipts were introduced following the
Commonwealth government s Northern Territory Emergency Response. A
special account titled the Northern Territory Flexible Funding Pool
Special Account (NTFFP) was established to fund employment creation
initiatives under the Response. According to the Explanatory
Memorandum:
Clause 14 provides appropriations for agencies
to spend amounts equal to receipts from the Indigenous Employment
Special Account or the Northern Territory Flexible Funding Pool
Special Account (the NTFFP).[2]
With respect to the Indigenous Employment Special Account, the
Explanatory Memorandum explains:
The Indigenous Employment Special Account was
established to replace the NTFFP to better reflect the range of
activities that the Government intended to fund. Although it is
anticipated that the Indigenous Employment Special Account may
operate alongside the NTFFP Special Account for a short period of
time, it is intended that once the balance of the NTFFP Special
Account reaches zero that Special Account will be
abolished.[3]
Subclause 14(1) provides that if an amount from
the NTFFP or the Indigenous Employment Special Account is debited
to an outcome for an administered item [paragraph
14(1)(a)], and if the Finance Minister specifies that item
in a written determination [paragraph 14(1)(b)],
the administered item is increased by the amount of the debit.
Subclause 14(3) provides that the amount can be
used only in accordance with the conditions specified in the
determination. Subclause 14(4) provides that a
determination made under paragraph 14(1)(b) is a
legislative instrument but that it is not subject to the
disallowance or sunsetting provisions of the Legislative
Instruments Act 2003.
Clause 16 Appropriation of the Consolidated Revenue
Fund provides that the Consolidated Revenue Fund is
appropriated for the purposes of the Bill including the operation
of the Bill as affected by the Financial Management and
Accountability Act 1997.
Schedule 1 lists the portfolios and the amounts
the Bill appropriates to each. The following is the
Summary from the Bill.
Summary
Summary of Appropriations (plain
figures)—2009‑2010
Actual Available Appropriation (italic
figures)—2008‑2009
|
Portfolio
|
Departmental
Outputs
|
Administered
Expenses
|
Total
|
| |
$'000
|
$'000
|
$'000
|
|
Agriculture, Fisheries
and Forestry
|
327,702
|
238,154
|
565,856
|
|
366,037
|
445,686
|
811,723
|
|
Attorney‑General
s
|
3,464,154
|
670,656
|
4,134,810
|
|
3,279,785
|
592,624
|
3,872,409
|
|
Broadband, Communications
and the Digital Economy
|
260,548
|
1,311,139
|
1,571,687
|
|
208,237
|
1,255,343
|
1,463,580
|
| |
|
|
|
|
Defence
|
22,856,981
|
115,213
|
22,972,194
|
|
20,636,528
|
124,407
|
20,760,935
|
| |
|
|
|
|
Education, Employment and
Workplace Relations
|
1,122,750
|
6,479,007
|
7,601,757
|
|
2,187,760
|
5,162,227
|
7,349,987
|
|
Environment, Water,
Heritage and the Arts
|
818,859
|
4,065,935
|
4,884,794
|
|
736,801
|
2,146,220
|
2,883,021
|
|
Families, Housing,
Community Services and Indigenous Affairs
|
575,752
|
1,960,034
|
2,535,786
|
|
1,572,702
|
1,831,876
|
3,404,578
|
| |
|
|
|
|
Finance and
Deregulation
|
321,565
|
215,832
|
537,397
|
|
343,949
|
202,564
|
546,513
|
|
Foreign Affairs and
Trade
|
1,474,040
|
3,492,145
|
4,966,185
|
|
1,365,043
|
3,333,032
|
4,698,075
|
|
Health and Ageing
|
672,574
|
5,757,075
|
6,429,649
|
|
659,300
|
5,213,136
|
5,872,436
|
|
Human Services
|
4,069,458
|
11,826
|
4,081,284
|
|
1,709,927
|
177,533
|
1,887,460
|
|
Immigration and
Citizenship
|
1,238,514
|
511,635
|
1,750,149
|
|
1,222,850
|
484,778
|
1,707,628
|
|
Infrastructure,
Transport, Regional Development and Local Government
|
232,546
|
733,808
|
966,354
|
|
242,521
|
540,446
|
782,967
|
| |
|
|
|
|
Innovation, Industry,
Science and Research
|
328,404
|
1,867,889
|
2,196,293
|
|
322,740
|
1,701,382
|
2,024,122
|
|
Prime Minister and
Cabinet
|
480,293
|
259,270
|
739,563
|
|
401,724
|
56,375
|
458,099
|
|
Resources, Energy and
Tourism
|
203,298
|
1,049,351
|
1,252,649
|
|
221,869
|
545,613
|
767,482
|
|
Treasury
|
4,086,855
|
9,811
|
4,096,666
|
|
3,840,815
|
32,584
|
3,873,399
|
|
Total: Bill 1
|
42,534,293
|
28,748,780
|
71,283,073
|
| |
39,318,588
|
23,845,826
|
63,164,414
|
Concluding comments
It is difficult to relate the items in Schedule
1 to the measures announced in the
second reading speech by the Treasurer, the Hon. Wayne Swan,
because the Bill will fund only some of the measures. Further
information can, however, be found in the Portfolio
Budget Statements for 2009-2010.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2646.
Richard Webb
21 May 2009
Bills Digest Service
Parliamentary Library
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