Bills Digest no. 115 2015–16
PDF version [661KB]
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.
Daniel Weight, Economics Section
Paula Pyburne, Law and Bills Digests Section
3 May 2016
Contents
Purpose of the Bills
Structure
of the Bills
Background
Committee
consideration
Policy
position of non-government parties/independents
Financial
implications
Statement
of Compatibility with Human Rights
Key
issues and provisions
Date introduced: 2
May 2016
House: House of
Representatives
Portfolio: Finance
Commencement: The
later of Royal Assent or 1 July 2016
Links: The links to the Bills,
their Explanatory Memoranda and second reading speeches can be found on the
homepages for the Supply
Bill (No.1) 2016-17; the Supply
Bill (No. 2) 2016-17; and the Supply
(Parliamentary Departments) Bill (No. 1) 2106-17 or through the through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the Federal
Register of Legislation website.
All hyperlinks in this Bills Digest are correct as at
May 2016.
Purpose of
the Bills
This Bills Digest refers to three Bills.
The purpose of Supply Bill (No. 1) 2016-17 (Supply
Bill No. 1) is to propose appropriations in the amount of $35,032,450,000 from
the Consolidated Revenue Fund (CRF) which are broadly equivalent to 5/12ths of
the estimated 2016–17 annual appropriations for the ordinary annual services of
the Government—excluding Budget measures. The balance of the annual
appropriations for the ordinary annual services of the Government for 2016–17
including Budget measures for that year will be in Appropriation Bill (No.1)
2016–17 (Appropriation Bill No. 1).
The purpose of Supply Bill (No. 2) 2016-17 (Supply
Bill No. 2) is to propose appropriations in the amount of $6,000,158,000 from
the CRF which are broadly equivalent to 5/12ths of the estimated 2016–17 annual
appropriations that are not for the ordinary annual services of the Government.
The purpose of Supply (Parliamentary Departments) Bill (No.
1) 2016-17 (Parliamentary Departments Supply Bill) is to propose
appropriations in the amount of $96,752,000 from the CRF which are broadly
equivalent to 5/12ths of the estimated 2016–17 annual appropriations for
expenditure in relation to the Parliamentary Departments—excluding Budget
measures.
Due to the speed with which the Bills are expected to pass
both the House of Representatives and the Senate this Bills Digest merely sets
out the nature of the Bills and the rationale for their introduction. Analysis
of the contents of the various Portfolio Budget Statements will be prepared
separately by the Parliamentary Library.
Structure
of the Bills
Part 1 of each of the Bills deals with preliminary
matters, including when the Acts commence, and how to interpret them.
Part 2 of each Bill outlines the quantum and types
of appropriation from the CRF.
Part 3 of Supply Bill No. 1 and Supply Bill No. 2 establishes
the Advance to the Finance Minister (AFM) for
2016–17, whereas, Part 3 of the Parliamentary Departments Supply Bill
establishes the Advance to the responsible Presiding Officer for 2016–17.
Part 4 of the Supply Bill No. 2 deals with the
drawing right limits (an administrative restriction on spending, but not an
appropriation).
Part 4 of the Supply Bill No. 1 and the
Parliamentary Departments Supply Bill and Part 5 of the Supply Bill No.
2 provide for several technical matters, including but not limited to details
relating to special accounts and formally appropriating the amounts required
from the CRF.
Schedule 1 of the Supply Bill No. 1 and the
Parliamentary Departments Supply Bill and Schedule 2 of the Supply Bill
No. 2 provide details about the appropriations to both non-corporate entities
and to corporate entities as defined by the Public Governance,
Performance and Accountability Act 2013.
Schedule 1 of the Supply Bill No. 2 lists the
Ministers responsible for determinations of payments to, or for, the states,
ACT, NT and local government.
Background
About appropriations
An appropriation is the legal release of monies from the Consolidated
Revenue Fund (CRF).[1] Appropriation Acts, however, do not create a source of power for the
Commonwealth to spend money; they merely release that money from the CRF. The
Commonwealth’s power to spend money must be found in other parts of the Constitution.[2]
Under the terms of the Constitution, there are
certain unique requirements that a Bill proposing to appropriate monies from
the CRF must satisfy.
Constitutional requirements
Section 81 of the Constitution provides that:
All revenues or moneys raised or received by the Executive
Government of the Commonwealth shall form one Consolidated Revenue Fund [CRF],
to be appropriated for the purposes of the Commonwealth …[3]
Section 83 of the Constitution provides that no
money may be withdrawn from the CRF ‘except under appropriation made by law’.[4] The effect of these two sections is that all monies received by the
Commonwealth must be paid into the CRF, and must not be spent before there is
an appropriation authorising specific expenditure.
The ‘ordinary annual services of Government’ versus
‘other’ services of Government
Section 54 of the Constitution requires that there
be a separate law appropriating funds for the ‘ordinary annual services of the
Government’, and that other matters must not be dealt with in the same Bill.[5] However, what constitutes the ‘ordinary annual services of the Government’ and
the ‘other’ services of the Government is not defined in the Constitution.
A working distinction between ordinary and other annual
services was agreed in a ‘Compact’ between the Senate and the Government in
1965.[6] Several amendments have been made to the Compact since 1965, and in 2010 the
Senate Standing Committee on Appropriations and Staffing recommended the Senate
restate the Compact in a consolidated form.[7] On 22
June 2010, the Senate resolved as follows:
(1) To
reaffirm its constitutional right to amend proposed laws appropriating revenue
or moneys for expenditure on all matters not involving the ordinary annual
services of the Government.
(2) That appropriations for expenditure on:
(a) the construction of
public works and buildings;
(b) the acquisition of
sites and buildings;
(c) items
of plant and equipment which are clearly definable as capital expenditure (but
not including the acquisition of computers or the fitting out of buildings);
(d) grants to the states
under section 96 of the Constitution;
(e) new policies not
previously authorised by special legislation;
(f) items regarded
as equity injections and loans; and
(g) existing asset
replacement (which is to be regarded as depreciation),
are not appropriations for the ordinary annual services of
the Government and that proposed laws for the appropriation of revenue or
moneys for expenditure on the said matters shall be presented to the Senate in
a separate appropriation bill subject to amendment by the Senate.
(3) That, in respect of payments to international
organisations:
(a) the
initial payment in effect represents a new policy decision and therefore should
be in Appropriation Bill (No. 2); and
(b) subsequent
payments represent a continuing government activity of supporting the international
organisation and therefore represent an ordinary annual service and should be
in Appropriation Bill (No. 1).
(4) That
all appropriation items for continuing activities for which appropriations have
been made in the past be regarded as part of ordinary annual services.[8]
Adherence to the Compact has not always been strict, and
the High Court has held that any disagreements between the Houses are not
justiciable.[9] Any disputes, therefore, are to be determined between the Houses themselves.
The rationale for the supply bills
On Thursday 28 April 2016, the
Finance Minister, Senator Cormann, confirmed that the Government would be
introducing Supply Bills in the next meeting of the Parliament.[10] Senator Cormann said:
These Bills will ensure continuity of the
normal business of government in the context of a double-dissolution election.[11]
The need for Supply Bills arises because of
the Prime Minister’s intention to request that the Governor-General
dissolve both Houses of the Parliament on or before 11 May 2016, and the truncated time the Parliament will have to consider the annual
Appropriation Bills for 2016‑17.[12]
Supply Bills
A Supply Bill generally provides for interim
appropriations out of the Consolidated Revenue Fund to fund the core activities
of the government until the passage of the annual Appropriation Bills. The
introduction of Supply Bills was a common occurrence from Federation until 1993,
as the practice of successive Commonwealth governments was to deliver the
Budget and table the annual Appropriation Bills after the commencement of the
financial year on 1 July. Since 1994, however, the Commonwealth has
generally delivered the Budget and tabled the annual Appropriation Bills in
May, prior to the commencement of the next financial year.[13]
Most recent use—1996
The most recent introduction of Supply Bills
into Parliament was on 8 May 1996.[14] The
need for Supply Bills in that case arose because of the timing of the 1996
Federal Election, which resulted in a change of government in March 1996 and
rendered the delivery of a Budget in May 1996 impractical. The Supply
Bills comprised:
- Supply Bill (No. 1) 1996-1997
- Supply Bill (No. 2) 1996-1997, and
- Supply (Parliamentary Departments) Bill 1996-1997.[15]
The appropriations proposed by Supply Bill
(No. 1) 1996-1997 totalled $14.7 million.[16] The appropriations proposed by Supply Bill (No. 2) 1996-1997 totalled $1.7
million and provided:
… interim authority for proposed expenditure on the
construction of public works and buildings, the acquisition of sites and
buildings, certain advances and loans, items of plant and equipment which are
clearly definable as capital in nature, grants to the states under section 96
of the Constitution and for payments to the Northern Territory and the
Australian Capital Territory.[17]
The Supply (Parliamentary Departments) Bill
1996-97 proposed the appropriation of $68 million for the ongoing operations of
the Parliament.[18]
The 1996-97 Supply Bills were debated in the
House of Representatives for six days from 20 May to 29 May 1996.[19] The first readings of the
Bills in the Senate took place on 30 May 1996 and the Bills passed the Senate
the following day.[20] The Bills were given Royal Assent on 14 June 1996.[21]
Together, the Bills proposed to appropriate
5/12ths of the annual funding required. This provided for funding until the end
of November 1996, by which time it was anticipated that the annual
Appropriation Bills would have come into force. Without the passage of these
Supply Bills, funding for the core activities of the government would have been
depleted soon after 1 July 1996.
Supply and the
dissolution of the Parliament
Commonwealth of Australia
Whether or not a Governor-General would
agree to a Prime Minister’s request for a double dissolution of the Parliament
without supply having been secured is uncertain.
Disregarding the events that culminated in
the dismissal of the Whitlam Government on 11 November 1975—where
Governor-General Kerr dissolved the Parliament otherwise than on the advice of
his Prime Minster—there is no example of a Governor-General accepting a
recommendation to dissolve the House of Representatives and hold an election
(double dissolution or otherwise) without the government first having secured
from the Parliament sufficient supply to fund its ongoing activities.
Elsewhere
There are only a few instances of a similar
situation arising elsewhere.
For example, in 1872 the New Zealand
Governor Sir George Bowen refused a request to dissolve the New Zealand House
of Representatives from Premier (as the position was known then) Edward
Stafford. The reasons for refusing the dissolution were manifold, but
included that there was no supply available to ensure the ongoing operations of
the public service. Governor Bowen asserted that he could not consider a
request for a dissolution unless supply had been ensured for a period of three
months.[22]
The 1877, Tasmanian Governor Frederick Weld
was asked to dissolve the Fysh Parliament, but declined. While a lack of
supply was not an issue in that decision, in a memorandum by Governor Weld to
Premier Fysh, subsequently tabled in the Tasmanian Assembly, Weld asserted that
he, as Governor:
had no right to suppose that the parliament
would depart from the usual and most constitutional course of voting the
necessary supplies for the period that must elapse before the meeting of the
new parliament.[23]
Further, Governor Weld asserted the
principle that:
nothing but the most extreme and clear public
necessity would justify the Crown in dissolving after supplies had been
refused.[24]
Whether or not Governor Weld’s view
represents a sound constitutional principle, however, is uncertain. In The King and His Dominion Governors, HV Evatt, for example, appears to express some doubt over the
matter.[25]
In any case, it appears that the likelihood
of the forthcoming Supply Bills not being passed by the Parliament is
remote. In a recent debate on Appropriation Bill (No. 3) 2015-2016 and
Appropriation Bill (No. 4) 2015-2016, Australian Labor Party (ALP) Senator Sam
Dastyari stated:
The Labor Party has a principled position about
not blocking supply, a principled position we intend to maintain… The principle
behind this is that we will treat [the Bills package] as supply and, as such,
it will be supported.[26]
Nonetheless, it would appear that
whether—and when—the Government is able to secure supply could have a bearing
on the timing of the intended dissolution of the Houses of the Parliament.
Committee
consideration
Selection of Bills Committee
At the time of writing this Bills Digest none of the Bills
had been referred to Committee for inquiry and report.
Senate Standing Committee for the
Scrutiny of Bills
At the time of writing this Bills Digest the Senate Standing
Committee for the Scrutiny of Bills had not commented on the Bills.
Policy
position of non-government parties/independents
ALP
Reiterating the comments of Senator Dastyari, Dr Andrew
Leigh stated in the House of Representatives that Labor will not block supply.[27]
Greens
Adam Bandt, for the Australian Greens has said:
There is a distinction between
keeping the ordinary machinery of government going, which is what supply bills
are about—and that is what we are debating now—and, on the other hand, how we
deal with the budget. The Greens will block unfair budget measures. The Greens
will not support tax cuts in this budget while our schools and hospitals are
struggling to find the money that they need. People can be assured that the
harsh and unfair impacts of this budget that require separate legislation to
this Bill we are dealing with at the moment will be blocked in the next Parliament
if people vote for the Greens in enough numbers.[28]
Financial
implications
The Supply Bill No. 1 seeks to appropriate approximately $35
billion from the CRF. The Supply Bill No.
2 seeks to appropriate approximately $6 billion from the CRF. The
Parliamentary Departments Supply Bill seeks to appropriate approximately $96
million from the CRF.
The total amount of
money sought to be appropriated by the three Bills is $41.1 billion.
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bill’s compatibility with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[29]
Parliamentary Joint Committee on
Human Rights
At the time of writing this Bills Digest the Parliamentary
Joint Committee on Human Rights had not commented on the Bills.
Key issues
and provisions
Supply Bill No. 1
Clauses 6–9 of Supply Bill No. 1 outline the
quantum and types of appropriation from the CRF.
Clause 10 of Supply Bill No. 1 establishes the
Advance to the Finance Minister for 2016–17. The Advance to the Finance
Minister is the appropriation of monies to the Finance Minister without any
particular outcome or purpose specified. The
Advance to the Finance Minister is established in both Supply Bill No. 1 and
Supply Bill No. 2. The amount of appropriation allocated to the Advance to the
Finance Minister each year has typically been limited to $295 million for the
ordinary annual services of Government. This is the amount allocated in
subclause 10(3) of Supply Bill No. 1. The Finance Minister tables an annual
report in Parliament on the use of the Advance to the Finance Minister.[30]
Clauses 11–13 of the Supply Bill No. 1 provide for
several technical matters, including, amongst other things, details relating to
special accounts and formally appropriating the amounts required from the CRF.
Schedule 1 of the Supply Bill No. 1 provides details
about the appropriations to both non-corporate entities and to corporate entities
as defined by the Public
Governance, Performance and Accountability Act 2013.
The table below sets out in summary form, the amounts in
Schedule 1 to Supply Bill No. 1, approximates the total for 2016–17 and
compares it to the appropriation in 2015–16. When considering the figures in
the table, it should be kept in mind that while the appropriation set out
Supply Bill No. 1 is generally based on 5/12 of the estimated 2016–17 annual
appropriation, entities ‘with a disproportionally high level of expenditure
early in the financial year’ may receive proportionately more.[31]
Table 1: Comparison with 2015–16
Portfolio |
Appropriation in
Supply Bill (No. 1) 2016–2017 (Supply for
5/12ths of year) |
Appropriation in Supply
Bill (No. 1) 2016–2017, converted to 12/12ths (full year) |
Appropriation in Appropriation
Act (No. 1) 2015–2016[32] |
Actual Available
Appropriation 2015–16[33] |
|
$’000 |
$’000 |
$’000 |
$’000 |
Agriculture and Water Resources |
397,322 |
953,572 |
463,540 |
726,779 |
Attorney‑General’s |
1,228,932 |
2,949,437 |
3,651,808 |
2,825,214 |
Communications and the Arts |
982,683 |
2,358,439 |
1,754,082 |
2,264,346 |
Defence |
12,432,242 |
29,837,381 |
29,404,935 |
29,606,271 |
Education and Training |
985,903 |
2,366,167 |
2,015,007 |
2,005,084 |
Employment |
988,654 |
2,372,770 |
2,118,161 |
2,118,188 |
Environment |
602,742 |
1,446,581 |
1,965,588 |
1,577,962 |
Finance |
466,489 |
1,119,574 |
676,496 |
695,028 |
Foreign Affairs and Trade |
2,696,110 |
6,470,664 |
5,832,123 |
5,889,391 |
Health |
4,361,881 |
10,468,514 |
7,603,427 |
8,911,542 |
Immigration and Border Protection |
1,836,515 |
4,407,636 |
4,609,577 |
5,057,099 |
Industry, Innovation and Science |
877,968 |
2,107,123 |
2,326,259 |
2,100,177 |
Infrastructure and Regional Development |
589,301 |
1,414,322 |
1,529,107 |
1,264,029 |
Prime Minister and Cabinet |
835,024 |
2,004,058 |
1,879,379 |
1,941,156 |
Social Services |
3,729,804 |
8,951,530 |
10,678,037 |
8,083,523 |
Treasury |
2,020,880 |
4,850,112 |
4,458,888 |
4,509,970 |
Total |
35,032,450 |
84,077,880 |
80,966,414 |
79,575,759 |
The Portfolio Budget Statements will be published and tabled
in the Parliament in relation to Appropriation Bill No. 1. They will cover both
Supply Bill No. 1 and Appropriation Bill No. 1.
Supply Bill No. 2
Clauses 6–11 of the Supply Bill No. 2 outline the
quantum and types of appropriation from the consolidated revenue fund.
Clause 12 establishes the Advance to the Finance
Minister for 2016–17. (See discussion about the Advance to the Finance Minister
in relation to Supply Bill No. 1 above.) The amount of appropriation allocated
to the Advance to the Finance Minister each year has typically been limited to
$380 million for the other annual services of Government. This is the amount
allocated in subclause 12(3) of Supply Bill No. 2.
The money in the Supply Bill No. 2 is appropriated to
incorporated and non-incorporated Government entities according to Schedule
2 of that Bill as either:
- grants
to the states, territories and local governments (see also clause 16 below)
- new
administered programs or
- non-operating
(or ‘capital’) appropriations.
These three types of appropriations cannot be included in
the Supply Bill No. 1 as they do not relate to the ‘ordinary annual services of
Government’.
Clause 13 of Supply Bill No 2 sets
appropriation limits for provisions of specific Acts. Clause 14 provides
that the debt limits, set under clause 13, are adjusted to take into
account any GST liability that may arise in relation to particular payments.
Clauses
15–17 of the Supply
Bill No. 2 provide for several technical matters. In particular, clause 16 of the Supply Bill No. 2 seeks to ensure that payments made by the states,
territories and local governments from financial assistance provided by the Commonwealth accord
with the conditions established by the Minister listed in Schedule 1.
The table below sets out in summary form, the amounts in
Schedule 2 to Supply Bill No. 2, approximates the total for 2016–17 and
compares it to the appropriation in 2015–16.
Table 2: Comparison with 2015–16
Portfolio |
Appropriation in
Supply Bill (No. 2) 2016–2017 (Supply for
5/12ths of year) |
Appropriation in
Supply Bill (No. 1) 2016–2017, converted to 12/12ths (full year) |
Appropriation in Appropriation
Act (No. 2) 2015–2016[34] |
Actual Available
Appropriation 2015–16[35] |
|
$’000 |
$’000 |
$’000 |
$’000 |
Agriculture and Water Resources |
186,054 |
446,530 |
251,283 |
323,301 |
Attorney‑General’s |
30,481 |
73,154 |
137,260 |
109,788 |
Communications and the Arts |
3,482,054 |
8,356,930 |
7,388,134 |
7,417,286 |
Defence |
970,373 |
2,328,895 |
2,883,870 |
2,544,209 |
Education and Training |
19,801 |
47,522 |
58,500 |
63,721 |
Employment |
— |
— |
9,333 |
15,408 |
Environment |
67,766 |
162,638 |
109,097 |
166,745 |
Finance |
23,666 |
56,798 |
156,690 |
159,069 |
Foreign Affairs and Trade |
464,829 |
1,115,590 |
232,611 |
228,881 |
Health |
74,656 |
179,174 |
40,151 |
189,031 |
Immigration and Border Protection |
93,944 |
225,466 |
370,547 |
432,547 |
Industry, Innovation and Science |
33,716 |
80,918 |
99,376 |
102,233 |
Infrastructure and Regional Development |
380,449 |
913,078 |
2,952,401 |
3,330,005 |
Prime Minister and Cabinet |
22,004 |
52,810 |
48,293 |
50,519 |
Social Services |
85,607 |
205,457 |
161,661 |
156,247 |
Treasury |
64,758 |
155,419 |
106,151 |
195,280 |
Total |
6,000,158 |
14,400,379 |
15,005,358 |
15,484,270 |
Parliamentary Departments Supply
Bill
Clause 3 of the Parliamentary Departments Supply Bill
defines the term responsible presiding officer as being:
(a) in relation to the
Department of the Senate—the President of the Senate
(b) in relation to the Department of the House
of Representatives—the Speaker of that House
(c) in relation to the Department of
Parliamentary Services—the President and the Speaker together or
(d) in relation to the Parliamentary Budget
Office—the President and the Speaker together.
Clauses 6–10 of the Parliamentary Departments
Supply Bill outline the quantum and types of appropriation from the
consolidated revenue fund.
Clause 11 establishes the Advance to the responsible
Presiding Officer for 2016–17. The amount of appropriation is limited as
follows:
- for
the Department of the Senate—$300,000
- for
the Department of the House of Representatives—$300,000
- for
the Department of Parliamentary Services—$1 million and
- for
the Parliamentary Budget Office—$300,000.
These figures
reflect those in the Appropriation (Parliamentary Departments) Bill (No. 1)
2015–16.
Clauses 12–14 of the Parliamentary Departments
Supply Bill provides for several technical matters, including details relating
to special accounts, formally appropriating the amounts required from the CRF,
and the repeal of the Act at the start of 1 July 2019.
The table below sets out in summary form, the amounts in
Schedule 2 to Supply Bill No. 2, approximates the total for 2016–17 and
compares it to the appropriation in 2015–16.
Table 3: Comparison with 2015–16
Department |
Appropriation
in Parliamentary Departments Supply Bill (Supply for
5/12ths of year) |
Appropriation in
Parliamentary Departments Supply Bill, converted to 12/12ths (full year) |
Appropriation in
Appropriation (Parliamentary Departments) Bill (No. 1) 2015–16[36] |
Actual Available
Appropriation 2015–16[37] |
|
$’000 |
$’000 |
$’000 |
$’000 |
Department of the Senate |
8,436 |
20,246 |
21,503 |
21,503 |
Department of the House of Representatives |
9,058 |
21,739 |
22,134 |
22,134 |
Department of Parliamentary Services |
76,374 |
183,298 |
182,368 |
182,368 |
Parliamentary Budget Office |
2,884 |
6,922 |
7,410 |
7,410 |
Total |
96,752 |
232,205 |
233,415 |
233,415 |
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