BILLS DIGEST NO. 131, 2017–18
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Purpose of the Bill
Compatibility with Human Rights
Date introduced: 8
House: House of
later of 1 July 2018 and Royal Assent
Links: The links to the Bills,
their Explanatory Memoranda and second reading speeches can be found on the
Bills’ home pages for the Appropriation
Bill (No. 1) 2018–2019, the Appropriation
Bill (No. 2) 2018–2019 and the Appropriation
(Parliamentary Departments) Bill (No. 1) 2018–2019, or through the Australian
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
The purpose of the Appropriation Bill (No. 1) 2018–2019
(the No. 1 Bill) is to seek an appropriation from the Consolidated Revenue Fund
(CRF) of $95,230,047,000 ($95.2 billion) for the ordinary services of
Of this appropriation:
($55.8 billion) is for the departmental activities of government entities
($39.4 billion) is for activities that government entities administer on behalf
of the Commonwealth Government.
The purpose of the Appropriation Bill (No. 2) 2018–2019
(the No. 2 Bill) is to seek an appropriation for the other services of
Government. The No. 2 Bill seeks to appropriate $13,003,986,000 ($13.0 billion)
from the CRF:
($463.7 million) for payments to states, ACT and NT and local governments
($5.8 million) for new administered outcomes
($12.5 billion) for non-operating activities.
The purpose of the Appropriation (Parliamentary
Departments) Bill (No. 1) 2018–2019 (the Parliamentary Departments Bill)
is to appropriate $249,859,000 ($249.9 million) for the Parliamentary
of the Bill
Part 1 of each Bill deals with preliminary matters,
including when the Acts commence, and how to interpret the Acts.
Part 2 of each Bill outlines the quantum and types
of appropriation from the CRF.
Part 3 of each Bill provides for either an Advance
to the Finance Minister (AFM) or an Advance to the Presiding Officers of the
Parliamentary departments, whichever is appropriate.
Part 4 of both the No. 1 Bill and the
Parliamentary Departments Bill and Part 5 of the No. 2 Bill deal
with technical matters including crediting amounts to special accounts, the
formal appropriation of moneys from the CRF, and the automatic repeal of the
Part 4 of the No. 2 Bill sets the maximum amounts
that can be drawn each year from the CRF for three types of grant to the states
and territories that the Commonwealth may make. These limits are known as
Schedule 1 of the No. 2 Bill nominates the
Ministers who are able to impose conditions on grants of financial assistance
to the states and territories proposed in that Bill.
Schedule 1 of the No. 1 Bill and the
Parliamentary Departments Bill and Schedule 2 of the No. 2 Bill
contain the details of the amounts and types of appropriation to be made to
There are certain unique constitutional requirements that
a Bill proposing to appropriate moneys must satisfy. An appropriation Bill must
also comply with certain presentational requirements. The No. 1 and No. 2
and Parliamentary Departments Bills do not deal with standing appropriations.
Section 81 of the Constitution provides:
All revenues or moneys raised or received by the Executive
Government of the Commonwealth shall form one Consolidated Revenue Fund, to be
appropriated for the purposes of the Commonwealth ...
Section 83 of the Constitution provides that no
money may be withdrawn from the CRF ‘except under appropriation made by law’.
The effect of these two sections is that all moneys received by the
Commonwealth must be paid into the CRF, and must not be spent before there is
an appropriation authorising specific expenditure.
Powers of the House of
Representative to Appropriate
Section 53 of the Constitution provides that laws
appropriating money may not originate in the Senate.
Further, under section 56 of the Constitution, all proposed laws for the
appropriation of money may only be introduced following a recommendation by the
By convention the Governor-General acts only upon the advice of the Executive,
so section 56 prevents non–government members of the House of Representatives
introducing Bills that would propose to appropriate money from the CRF.
Powers of the Senate to amend
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
The Senate may amend proposed laws appropriating revenue
for purposes other than for the ordinary annual services of the Government, as
long as it does not ‘increase any proposed charge or burden on the people’.
Conceivably, the Senate could amend an appropriation Bill for the other
services of Government so as to, for example, redirect the proposed
appropriation to another purpose, or reduce the proposed appropriation to nil.
The Senate may also request that, if new measures are included in a Bill for the
‘ordinary annual services of Government’, the Bill be returned to the House
with a message requesting those new measures be omitted from the Bill.
The ‘ordinary annual services of
government’ versus the ‘other’ services of government
Section 54 of the Constitution requires that there
be a separate law appropriating funds for the ‘ordinary annual services of
government’, and that other matters must not be dealt with in the same Bill.
However, what constitutes the ‘ordinary annual services of the Government’ and
‘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
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.
On 22 June 2010, the Senate resolved as follows:
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
(b) the acquisition of sites and buildings;
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
(e) new policies not previously authorised by
(f) items regarded as equity injections 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
initial payment in effect represents a new policy decision and therefore should
be in Appropriation Bill (No. 2); and
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).
all appropriation items for continuing activities for which appropriations have
been made in the past be regarded as part of ordinary annual services.
Adherence to the Compact has not always been strict, and
the High Court has held that any disagreements between the Houses are not
Any disputes are to be determined between the Houses themselves.
Departmental and administered
Australian Accounting Standard 1050 Administered Items
requires that government agencies distinguish between revenues and expenses
that they administer for the Government, and those over which they have some
Generally, administered expenses are the costs of programs that agencies run
for the Government, while departmental expenses are the costs incurred in
Appropriation Bills, therefore, distinguish between
‘administered’ expenses and ‘departmental’ expenses. An administered
appropriation may be used only for the program or outcome that it is
appropriated for, while a departmental appropriation may be moved between
different departmental activities.
Outcomes and programs
While the level of detail necessary for an Appropriation
Act to be valid is generally low,
in the Pharmaceutical Benefits case the High Court held:
... there cannot be appropriations in blank, appropriations for
no designated purpose, merely authorising expenditure ... 
The Appropriation Bills must therefore describe—in general
terms—what the moneys are to be utilised for. The Bills use four methods for
describing the purposes of the proposed appropriations.
for ‘outcomes’ of non-corporate Commonwealth entities
For non-corporate Commonwealth entities, the purposes of
operating appropriations (both departmental and administered) are specified
with reference to the ‘outcomes’ of those entities. The Department of Finance
explains ‘outcome statements’ in the following terms:
... outcome statements articulate Government objectives and
form an integral part of the appropriations framework. They:
the purpose for which annual appropriations are approved by the Parliament for
use by entities;
2. provide a basis for budgeting and reporting against
the use of appropriated funds; and
and assess entity and program non-financial performance in contributing to
An outcome statement should provide an immediate impression
of what success looks like.
Outcome statements, therefore, tend to be aspirational in
for corporate Commonwealth entities
As corporate Commonwealth entities are legally distinct
from the Commonwealth itself, money cannot be appropriated directly
to those entities.
Instead, amounts are appropriated to relevant departments for on-payment to
corporate Commonwealth entities within departments’ portfolios.
Non-operating appropriations are amounts designated for
the capital needs of entities. Typically, these amounts are equity injections
into entities, or monies for the purchase or development of the assets of
entities. Under the Compact, they can only ever be proposed in a Bill dealing
with the ‘other’ annual services of Government.
for payments to the states
Under section 96 of the Constitution, the
Commonwealth may make payments to the states with or without conditions, and
amounts intended for payments to the states are identified separately. Again,
because of the Compact, amounts to the states can only ever be proposed in a
Bill dealing with the ‘other’ annual services of Government. Amounts to the
Australian Capital Territory and the Northern Territory are also included with
the amounts for the states.
Appropriations for the Parliament
and the Judiciary
In 1981, the Senate Select Committee on Parliament’s
Appropriations and Staffing considered the appropriations for the Parliament.
That Committee noted the unique constitutional position of the Parliament
vis-à-vis the Executive. That Committee noted section 53 of the Constitution’s
reference to the ‘ordinary annual services of the Government’ before observing:
... the Parliament may be ordinary; it may be annual; it may
even be regarded as a service; but it is not a service of the Government. It is
therefore inconsistent with the concept of the separation of powers and the
supremacy of Parliament to treat the provisions made for the Parliament as
being an ordinary annual service of the Government.
That Committee recommended:
... all items of expenditure administered by the Executive
departments on behalf of the Parliament be brought together in [a] Parliamentary
Appropriation Bill ...
Since 1982, the appropriations for the Parliamentary
departments have been provided for via a distinct Appropriation Bill.
Quarantining appropriations in this way only applies to
the Parliamentary departments (of which there are currently four).
It does not extend to other aspects of the finances of the Parliament, such as
providing for the remuneration and allowances of parliamentarians.
Despite the fact that, under the Constitution, the
Judiciary is also distinct from the Executive, there is no equivalent practice
whereby the Judiciary is provided for via a distinct Appropriation Bill.
Advances to the Finance Minister
and the Presiding Officers
The advance to the Finance Minister and the advance to the
responsible Presiding Officers is an appropriation of moneys without any
particular outcome or purpose specified. The advances are established in the
first Appropriation Acts each year. The advances are then replenished whenever
supplementary Appropriation Acts are passed.
The Finance Minister may use the amount appropriated as an
advance to modify the schedule to the Appropriation Act, but only where:
... the Finance Minister is satisfied that there is an urgent
need for expenditure, in the current year, that is not provided for, or is insufficiently
provided for, [...]:
(a) because of an erroneous omission or understatement; or
the expenditure was unforeseen until after the last day on which it was
practicable to provide for it in the Bill for this Act before that Bill was
introduced into the House of Representatives.
The Explanatory Memorandum asserts that an advance may
also be used to add a new item or outcome to the schedule.
An equivalent legislative scheme is proposed for the
The amount of appropriation proposed to be allocated to
the advance to the Finance Minister in 2018–2019 is $295 million in relation to
the ordinary annual services of the Government; and $380 million in relation to the
other annual services of the Government.
For the Presiding Officers of the Parliament, the amounts
of appropriation proposed to be allocated to the advance in 2018–2019 are:
each in relation to the:
of the Senate
of the House of Representatives
in relation to the Department of Parliamentary Services.
In order to access an advance, the Finance Minister or
Presiding Officers, as the case may be, must issue a determination under the
relevant Appropriation Act. A determination is a legislative instrument, but
disallowance and sunsetting under section 42 and Part 4 of Chapter 3 of the Legislation Act
2003 respectively do not apply.
In addition to appropriating moneys for the other annual
services of the Government, Part 4 of the No. 2 Bill also sets a maximum
amount—known as a ‘debit limit’—that may be provided to the states and
territories under three specific grant programs.
The legal appropriation for the three grant programs is
provided by the special appropriation in section 80 of the Public Governance,
Performance and Accountability Act 2013, which provides a standing
appropriation for debits from special accounts. However, the design of the
legislative schemes associated with each of the three grant programs requires
that the maximum annual amount that may be debited under each program each year
is to be set in an annual appropriation Bill. The three grant programs are as
from the Education Investment Fund provided for by Part 3.2 of the Nation-building
Funds Act 2008, limited in the No. 2 Bill at $2.0 million
of general purpose financial assistance (other than the revenue from the Goods
and Services Tax) provided under section 9 of the Federal Financial
Relations Act 2009, limited at $5.0 billion
made as National Partnership Payments via section 16 of the Federal
Financial Relations Act, limited at $25.0 billion.
Because the Compact prevents the No. 1 Bill from dealing
with grants to the states and territories, the debit limits are set in the No.
Senate Standing Committee for the
Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills
had no comment on the Parliamentary Departments Bill, but raised concerns with
the other two Bills.
Appropriation Bill (No. 1)
In relation to the No. 1 Bill, the Committee noted that
initial expenditure for some items of expenditure announced in the 2018–19
Budget ‘may have been inappropriately classified as “ordinary annual services”
and therefore improperly included in Appropriation Bill (No. 1) 2018–2019’.
These measures are:
of international services at Avalon Airport ($20 million in 2018-19)
and medium enterprises export hubs program ($20 million over four years)
female financial capability—Australian Securities and Investments Commission
grant program ($10 million in 2018-19).
In relation to this matter, the Committee stated:
The committee has previously written to the Minister for
Finance in relation to inappropriate classification of items in other
appropriation bills on a number of occasions; however, the government has
consistently advised that it does not intend to reconsider its approach to the
classification of items that constitute the ordinary annual services of the
The committee again notes that the government's approach to
the classification of items that constitute ordinary annual services of the
government is not consistent with the Senate resolution of 22 June 2010.
The committee notes that any inappropriate classification of
items in appropriation bills undermines the Senate's constitutional right to
amend proposed laws appropriating revenue or moneys for expenditure on all
matters not involving the ordinary annual services of the government. Such
inappropriate classification of items impacts on the Senate's ability to
effectively scrutinise proposed appropriations as the Senate may be unable to
distinguish between normal ongoing activities of government and new programs or
The committee draws this matter to the attention of senators
as it appears that the initial expenditure in relation to certain items in the
latest set of appropriation bills may have been inappropriately classified as
ordinary annual services (and therefore improperly included in Appropriation
Bill (No. 1) 2018-2019 which should only contain appropriations that are not
amendable by the Senate).
Appropriation Bill (No. 2)
In relation to the No. 2 Bill, the Committee noted that
the debit limits set in clause 13 for grants from the Education Investment Fund,
of general purpose financial assistance and as National Partnership Payments (NPPs)
were substantial and, at least in relation to the NPPs, were significantly more
than the forecast expenditure.
The Committee drew this matter to the attention of senators, stating:
The committee draws its scrutiny concerns to the attention of
senators and leaves to the Senate as a whole the appropriateness of setting
debit limits for these grant programs well above the expected level of
expenditure, noting that this practice appears to undermine the effectiveness
of the debit limit regime as a mechanism for ensuring meaningful parliamentary
oversight of these grant programs.
The No. 1 Bill proposes to appropriate $95,230,047,000
($95.2 billion) from the CRF.
The No. 2 Bill proposes to appropriate $13,003,986,000
($13.0 billion) from the CRF.
The Parliamentary Departments Bill proposes to appropriate
$249,859,000 ($249.9 million) from the CRF.
The total amount of money proposed to be appropriated by
the three Bills is $108,483,892,000 ($108.5 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. In relation
to the human rights implications of the Bills, the Government states:
... the Bill performs an important constitutional function, by
authorising the withdrawal of money from the CRF for the broad purposes
identified in the Bill.
However, as the High Court has emphasised, beyond this,
Appropriation Acts do not create rights and nor do they, importantly, impose
Given that the legal effect of Appropriation Bills is limited
in this way, the Bill is not seen as engaging, or otherwise affecting, the
rights or freedoms relevant to the Human Rights (Parliamentary Scrutiny)
Detailed information on the relevant appropriations, however,
is contained in the portfolio statements.
Parliamentary Joint Committee on
The Parliamentary Joint Committee on Human Rights has repeatedly
stated that it considers that Appropriation Bills may engage human rights; particularly
given the capacity for Appropriation Bills to give effect to a reduction in
funding for programs that might be aimed at the realisation of human rights.
In its assessment of the Bills, the Committee referred to
its comments in relation to prior Appropriation Bills before stating as
The committee notes that, as with previous appropriations
bills, the statements of compatibility for the current bills provide no
assessment of their compatibility with human rights on the basis that they do
not engage or otherwise create or impact on human rights. However, while the
committee acknowledges that appropriations bills present particular challenges
in terms of human rights assessments, the appropriation of funds may engage and
potentially limit or promote a range of human rights that fall under the
Given the difficulty of conducting measure-level assessments
of appropriations bills, the committee recommends that consideration be given
to developing alternative templates for assessing their human rights
compatibility, drawing upon existing domestic and international precedents.
Relevant factors in such an approach could include consideration of:
whether the bills are compatible
with Australia's obligations of progressive realisation with respect to
economic, social and cultural rights;
whether any reductions in the
allocation of funding are compatible with Australia's obligations not to
unjustifiably take retrogressive or backward steps in the realisation of
economic, social and cultural rights; and
whether the allocations are
compatible with the rights of vulnerable groups (such as children; women;
Aboriginal and Torres Strait Islander Peoples; persons with disabilities; and
The Committee recommended that departmental officials meet
with it ‘to develop workable approaches to statements of compatibility for
appropriations bills’ and sought the advice of the Minister on the proposed
course of action.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
Bill (No. 1) 2018–2019, clause 6.
Schedule 1, ‘Summary of appropriations’.
Bill (No. 2) 2018–2019, clause 6.
Schedule 2, ‘Summary of appropriations’.
(Parliamentary Departments) Bill (No. 1) 2018–2019, clause 6.
. Commonwealth of
Australia Constitution Act (The Constitution), section 81.
Wright, ed, House
of Representatives practice, sixth edn, Department of the House of
Representatives, Canberra, 2012, p. 420.
. The Constitution,
Laing, ed, Odgers’
Australian Senate practice, 14th edn, The Senate, Canberra, 2016,
Standing Committee on Appropriations and Staffing, 50th
report: ordinary annual services of the government, The Senate,
Canberra, June 2010, p. 3.
Australian Senate practice, op. cit., p. 387.
v Commonwealth (1911) 12 CLR 321 at 336, 
Accounting Standards Board (AASB), Administered
items, AASB 1050, December 2013.
Department of Finance describes administered appropriation items as ‘normally
related to activities governed by eligibility rules and conditions established
by the Government or parliament such as grants, subsidies and benefit payments’,
Department of Finance, ‘Guide
to appropriations’, Department of Finance website, 25 January 2017.
v Commonwealth (2005) 224 CLR 494, 
HCA 61 at para.123.
generally, Combet v Commonwealth, op. cit.
(Vic); Ex rel Dale v Commonwealth (‘Pharmaceutical Benefits case’) (1945) 71
CLR 237, per Latham CJ at 253, 
of Finance, Guide
to preparing the 2018–19 portfolio budget statements, Department of
Finance, p. 33.
. Public Governance,
Performance and Accountability Act 2013 (Cth), section 11,
Select Committee, Parliament’s
appropriations and staffing: report of the Senate Select Committee, Parliamentary
paper 151/1981, The Senate, Canberra, 1981, p. 18.
Department of the Senate, Department of the House of Representatives,
Department of Parliamentary Services, and the Parliamentary Budget Office.
Bill (No. 1) 2018–2019, clause 10; Appropriation
Bill (No. 2) 2018–2019, clause 12.
Memorandum, Appropriation Bill (No. 1) 2017–2018, p. 8; Explanatory
Memorandum, Appropriation Bill (No. 2) 2017–2018, p. 10.
(Parliamentary Departments) Bill (No. 1) 2018–2019, clause 11.
Bill (No. 1) 2018–2019, subclause 10(3); Appropriation
Bill (No. 2) 2018–2019, subclause 12(3).
(Parliamentary Departments) Bill (No. 1) 2018–2019, subclause 11(3).
Bill (No. 1) 2018–2019, subclause 10(4); Appropriation
Bill (No. 2) 2018–2019, subclause 12(4); Appropriation
(Parliamentary Departments) Bill (No. 1) 2018–2019, subclause 11(7).
Bill (No. 2) 2018–2019, subclause 13(1).
. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 6, 2018, The Senate, 20 June
2018, pp. 4–12, 54.
. Ibid., p. 6.
measures: budget paper no. 2: 2018–19, p. 136.
p. 183; Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 6, 2018, op. cit., p. 6.
. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 6, 2018, op. cit., pp. 6–7.
p. 12. The Committee noted that the expected expenditure on NPPs in 2018–19 is
$13.8 billion (Australian Government, Budget
Paper No. 3: Federal Financial Relations 2018–19, p. 2) but that the
debit limit prescribed for that program under clause 13 of the No. 2 Bill is
$25 billion, which ‘would allow an additional $11.2 billion in national
partnership payments to be made without the need to seek further parliamentary
. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 6, 2018, op. cit., p. 12.
Memorandum, Appropriation Bill (No. 1) 2018–2019, p. 3; Explanatory
Memorandum, Appropriation Bill (No. 2) 2018–2019, p. 4; Explanatory
Memorandum, Appropriation (Parliamentary Departments) Bill (No. 1) 2018–2019,
Joint Committee on Human Rights, Human
rights scrutiny report, 5, 19 June 2018, pp. 49–50.
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