Bills Digest No. 67,
2018–19
PDF version [590KB]
Dinty Mather
Economics Section
26
March 2019
Contents
The Bills Digest at a glance
Purpose of the Bill
Structure of the Bill
Background
Committee consideration
Financial implications
Statement of Compatibility with Human
Rights
Date introduced: 14
February 2019
House: House of
Representatives
Portfolio: Finance
Commencement: On
Royal Assent
Links: The links to the Appropriation
Bill (No. 3) 2018–2019, the Appropriation
Bill (No. 4) 2018–2019 and the Appropriation
(Parliamentary Departments) Bill (No. 2) 2018–2019 can be found on the
Bill’s home page, or 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 March 2019.
The Bills Digest at a glance
Appropriation Bill (No. 3) 2018-2019,
Appropriation Bill (No. 4) 2018-2019 and Appropriation (Parliamentary
Departments) Bill (No. 2) 2018–2019 (the Parliamentary Departments Bill) underpin
the Government’s Mid‑Year Economic and Fiscal Outlook, and provide
appropriations from the consolidated revenue fund for the Government’s
activities.
This Bills Digest contains background material including
the constitutional and other requirements for appropriation Bills.
Purpose of
the Bill
The purpose of the Appropriation Bill (No. 3)
2018–2019 (No. 3 Bill) is to seek an appropriation from the Consolidated
Revenue Fund (CRF) of $2,541,754,000 ($2.5 billion) for the ordinary services
of Government.[1]
Of this appropriation:
- $910,282,000
($0.9 billion) is for the departmental activities of government entities[2]
and
- $1,631,472,000
(1.6 billion) is for activities that government entities administer on behalf
of the Commonwealth Government.[3]
The purpose of the Appropriation Bill (No. 4)
2018–2019 (No. 4 Bill) is to seek an appropriation for the other services
of Government. The No. 4 Bill seeks to appropriate $752,891,000 ($752.9 million)
from the CRF.[4]
The entire appropriation is for non-operating activities.[5]
The purpose of the Appropriation (Parliamentary
Departments) Bill (No. 2) 2018–2019 (Parliamentary Departments Bill) is to
appropriate $4,311,000 ($4.3 million) for the Parliamentary departments.[6]
Structure of
the Bill
Part 1 of each Bill 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 each Bill replenishes the Finance
Minister’s Advances or the Advance to the
Presiding Officers of the Parliamentary departments, as appropriate.
Part 4 of each Bill deals with several technical
matters, including crediting amounts to special accounts, and formally
appropriating the amounts required from the CRF.
Schedule 1 in each Bill provides detailed
information about the proposed appropriations to be made to the departments and
other Commonwealth entities listed.
Background
Under the Charter of Budget Honesty Act 1998, the
Government must release a Mid-Year Economic and Fiscal Outlook (MYEFO)
report ‘by the end of January in each year, or within six months after the last
budget, whichever is later’.[7]
The Government released the 2018–19 MYEFO on 17 December 2018.[8]
The 2018–19 MYEFO updated revenue and expenditure forecasts, and included the
announcement of new policy measures.[9]
These Bills will add to or alter the appropriations set
out in the 2018–19 Budget Appropriation Acts – as required – to reflect all
measures announced in the 2018–19 MYEFO or subsequently.[10]
Further details of those measures are included in the 2018–19 MYEFO.
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. 3 and No. 4 and
Parliamentary Departments Bills do not deal with standing appropriations.
Constitutional
requirements
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 [CRF],
to be appropriated for the purposes of the Commonwealth ...[11]
Section 83 of the Constitution provides that no
money may be withdrawn from the CRF ‘except under appropriation made by law’.[12]
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.[13]
Further, under section 56 of the Constitution, all proposed laws for the
appropriation of money may only be introduced following a recommendation by the
Governor-General.[14]
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.[15]
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
provisions.[16]
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’.[17]
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.[18]
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
1965.[19]
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.[20]
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.[21]
Adherence to the Compact has not always been strict, and
the High Court has held that any disagreements between the Houses are not
justiciable.[22]
Any disputes are to be determined between the Houses themselves.
Presentational
requirements
Departmental
and administered expenses
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
control.[23]
Generally, administered expenses are the costs of programs that agencies run
for the Government, while departmental expenses are the costs incurred in
running agencies.[24]
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.[25]
Outcomes and
programs
While the level of detail necessary for an Appropriation
Act to be valid is generally low,[26]
in the Pharmaceutical Benefits case the High Court held:
... there cannot be appropriations in blank, appropriations for
no designated purpose, merely authorising expenditure ...[27]
The Appropriation Bills must, therefore, also 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.
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. In 2017, the Department of
Finance explained ‘outcome statements’ in the following terms:
... outcome statements articulate Government objectives and
form an integral part of the appropriations framework. They:
1. explain
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
3. measure
and assess entity and program non-financial performance in contributing to
Government objectives.
An outcome statement should provide an immediate impression
of what success looks like.[28]
Outcome statements, therefore, tend to be aspirational in
nature.
Appropriations
for corporate Commonwealth entities
As corporate Commonwealth entities are legally distinct
from the Commonwealth itself, money cannot be appropriated directly
to those entities.[29]
Instead, amounts are appropriated to relevant Departments for on-payment to
corporate Commonwealth entities within Departments’ portfolios.
Non-operating
appropriations
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.
Appropriations
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, in
view of the unique constitutional position of the Parliament vis-à-vis the
Executive. The 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.[30]
The Committee recommended:
... all items of expenditure administered by the Executive
departments on behalf of the Parliament be brought together in [a]
Parliamentary Appropriation Bill ...[31]
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).[32]
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
Bills 3 and 4 and the Parliamentary Departments Bill
propose to replenish any amounts drawn from the advance to the Finance Minister
or responsible Presiding Officers of Parliamentary Departments. The advances,
established in the first Appropriation Acts each year, are an appropriation of
moneys without any particular outcome or purpose specified.
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
(b) because
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.[33]
An equivalent legislative scheme exists for the Presiding
Officers.[34]
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.[35]
At the time of writing, only one relevant determination
had been made. On 18 December 2018 the Finance Minister made a determination
under subsection 12(1) of the Appropriation Act
(No. 2) 2018–19 for $75,379,000.[36]
This amount will be replenished under the provisions of Bill No. 4.
Committee
consideration
Senate
Standing Committee for the Scrutiny of Bills
At the time of writing, the Bills that are the subject of
this Bills Digest had not been considered by the Senate Standing Committee for
the Scrutiny of Bills.
Financial
implications
The No. 3 Bill proposes to appropriate $2,541,754,000
($2.5 billion) from the CRF.
The No. 4 Bill proposes to appropriate $752,891,000
($752.9 million) from the CRF.
The Parliamentary Departments Bill proposes to appropriate
$4,311,000 ($4.3 million) from the CRF.
The total amount of money proposed to be appropriated by
the three Bills is $3,298,956,000 ($3.3 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 seeks to appropriate money for the ordinary annual
services of the Government [or services that are not considered to be ordinary
annual services, or for expenditure by the Parliamentary Departments].
Accordingly, 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 any duties.
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) Act
2011.
Detailed information on the relevant appropriations, however,
is contained in the portfolio statements.[37]
However, the Parliamentary Joint Committee on Human Rights
has previously raised concerns about whether or not the allocation of funding
proposed in Appropriation Bills might engage human rights considerations;
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.[38]
[1]. Appropriation
Bill (No. 3) 2018–2019, clause 6.
[2]. Ibid.,
Schedule 1, Summary of appropriations.
[3]. Ibid.
[4]. Appropriation
Bill (No. 4) 2018–2019, clause 6.
[5]. Ibid.,
Schedule 1, Summary of appropriations.
[6]. Appropriation
(Parliamentary Departments) Bill (No. 2) 2018–2019, clause 6.
[7]. Charter of Budget Honesty
Act 1998, Schedule 1, Division 2 of Part 5.
[8]. J
Frydenberg (Treasurer) and M Cormann (Minister for Finance and the Public
Service), 2018-19
Mid–year economic and fiscal outlook, media release, 17 December 2018.
[9]. J
Frydenberg (Treasurer) and M Cormann (Minister for Finance and the Public
Service), Mid-year
economic and fiscal outlook, December 2018.
[10]. Appropriation Act (No.
1) 2018-2019, Appropriation Act
(No. 2) 2018-2019 and Appropriation
(Parliamentary Departments) Act (No. 1) 2018-2019.
[11]. The Constitution,
section 81.
[12]. The Constitution,
section 83.
[13]. The Constitution,
section 53.
[14]. The Constitution,
section 56.
[15]. BC
Wright, ed., House
of Representatives practice, sixth edn, Department of the House of
Representatives, Canberra, 2012, p. 420.
[16]. The Constitution,
section 53.
[17]. The Constitution,
section 53.
[18]. The Constitution,
section 53.
[19]. R
Laing, ed., Odgers’
Australian Senate practice, 14th edn, The Senate, Canberra, 2016, p.
386.
[20]. Senate
Standing Committee on Appropriations and Staffing, 50th
report: ordinary annual services of the government, The Senate, Canberra,
June 2010, p. 3.
[21]. R
Laing, ed., Odgers’
Australian Senate practice, op. cit., p. 387.
[22]. Osborne
v Commonwealth (1911) 12 CLR 321, at 336 [1911]
HCA 19.
[23]. Australian
Accounting Standards Board (AASB), Administered
items, AASB 1050, December 2013.
[24]. The
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-RMG 100: annual appropriations: background’,
Department of Finance website.
[25]. Combet
v Commonwealth (2005) 224 CLR 494, [2005]
HCA 61 at paragraph 123.
[26]. See
generally, Combet v Commonwealth, op. cit.
[27]. Attorney-General
(Vic); Ex rel Dale v Commonwealth (‘Pharmaceutical Benefits case’) (1945) 71
CLR 237, per Latham CJ at 253, [1945]
HCA 30.
[28]. Department
of Finance, Guide
to preparing the 2018–19 portfolio budget statements, Department of
Finance, p. 33.
[29]. Public Governance,
Performance and Accountability Act 2013 (Cth), section 11,
‘Note’.
[30]. Australia,
Parliament, Parliament’s
appropriations and staffing: report of the Senate select committee, Parliamentary
paper 151/1981, Canberra, 1981, p. 18.
[31]. Ibid., p. 22.
[32]. Namely:
Department of the Senate, Department of the House of Representatives,
Department of Parliamentary Services and the Parliamentary Budget Office.
[33]. Appropriation Act
(No. 1) 2018–2019, subsection 10(1); Appropriation Act
(No. 2) 2018–2019, subsection 12(1).
[34]. Appropriation
(Parliamentary Departments) Act (No. 1) 2018–2019, subsection 11(1).
[35]. Appropriation Act
(No. 1) 2018–2019, subsection 10(4); Appropriation Act
(No. 2) 2018–2019, subsection 12(4); Appropriation
(Parliamentary Departments) Act (No. 1) 2018–2019, subsection 11(7).
[36]. Advance to the Finance
Minister Determination (No. 1 of 2018–19).
[37]. Explanatory
Memorandum, Appropriation Bill (No. 3) 2018–2019, p. 4; Explanatory
Memorandum, Appropriation Bill (No. 4) 2018–2019, p. 4; Explanatory
Memorandum, Appropriation (Parliamentary Departments) Bill (No. 1)
2018–2019, p. 4.
[38]. See
for example, Parliamentary Joint Committee on Human Rights, Human
rights scrutiny report, 2, 2017, Canberra, 21 March 2017,
p. 46.
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