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CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer and Copyright Details
Appropriation Bill (No. 1)
1999-2000
Date Introduced: 11 May 1999
House: House of Representatives
Portfolio: Treasury
Commencement: Royal Assent
To authorise the
Minister for Finance to issue $36 024.4 million from the
Consolidated Revenue Fund for the ordinary annual services of
government during 1999-2000.
For information on the major changes to the
expenditure and activities of the various portfolios and agencies
announced in the Budget, refer to the Library publication 'Budget
Features, 1999-2000.'
The second reading speech for this Bill is the
vehicle used to announce the annual Budget. This Bill, together
with the Appropriation Bill (No. 2) 1999-2000 (which deals with
capital works, grants to the States and other matters not covered
in Appropriation Bill (No. 1) 1999-2000) and the Appropriation
(Parliamentary Departments) Bill 1999-2000, are introduced in May
each year. If additional funds are needed later in the year it is
common for further Appropriation Bills to be introduced and these
are known as the additional estimates. Funding from the
Appropriation Bills comprises approximately 25% of the expenditure
of Commonwealth agencies, the remainder coming from special
appropriations and income receipts.(1)
For the first time, this year's Budget has been
prepared using the accrual accounting method which provides a
greater emphasis on agency outcomes and a more accurate indication
of the life time cost of a program and this has resulted in some
minor changes in the structure of the Appropriation Bills compared
to previous years:
-
- the 1965 Compact between the Senate and House (which was
entered into to regulate the content of the Appropriation Bills to
prevent problems with section 53 of the Constitution which provides
that the Senate may not amend Bills appropriating money for the
ordinary annual services of government) to:
-
- include the full cost of outputs to Departments in
Appropriation Bill (No. 1)
-
- include equity injections and loans and administrative expenses
for new programs in Appropriation Bill (No. 2), and
-
- provide that the Appropriation Bills will not lapse at the end
of the financial year as expenses are of an ongoing nature.(2)
Budget
The Budget is based on a number of assumptions
and forecasts regarding future economic conditions and activity.
The following are some of the forecasts for 1999-2000, with
estimates for 1998-99 in brackets(3):
Total final demand%
3
(41/4)
GDP%
3
(41/4)
Total business investment%
0 (2)
CPI%
2
(11/4)
Unemployment rate
71/2
(73/4)
Current Account deficit
(% of GDP)
51/4
(51/2)
Revenue
$162.8b
Surplus
$5.4b (on an accrual basis)
In addition to the economic parameters the
Budget also makes a number of assumptions regarding the revenue and
expenditure, which are particularly relevant when considering the
possible future impact of the government's A New Tax System package
(ANTS) which envisages significant changes in the tax revenue mix
through the introduction of a goods and services tax (GST) and
personal income tax cuts. The revenue estimates contained in the
forward estimates are based on the implementation of government
policy as announced, which is estimated to see total revenue fall
as a percentage of GDP from 26.3% in 1999-2000 to 22.9% in
2001-2.(4)
However, the agreement between the government
and Australian Democrats reached on 28 May 1999 for the passage of
the ANTS legislation through the Senate will have significant
implications for the Budget forecasts and outcomes. At the time of
writing, the proposed changes to revenue through such measures as
the exemption for non-processed food, changes in the proposed
alteration to the diesel fuel rebate, changes in the personal
income tax rates, possible alterations to Federal/State funding
arrangements and additional expenditure on environmental items are
not precisely known, but they will have an impact on the figures
presented in the Budget for 2000-2001 and later years. While the
revenue and expenditure figures for 1999-2000 are likely to be
unaffected by the proposed changes, there may be other impacts for
the forecasts as expenditure patterns and expectations change in
anticipation of the implementation of the ANTS package.
The amount available for agency's expenditure on
Departmental and administered items is specified in the Schedule to
the Bill. The total amount specified in the Schedule is $36 024
million (clause 5).
Where an amount is specified in the Schedule for
an administered item, the Minister for Finance may issue the lesser
of the amount specified in the item and the amount determined by
the Minister as expenses incurred by the entity in relation to the
item in the 1999-2000 year (clause 7). In relation
to Departmental items, the Minister must issue the amount
specified:
-
- where an Act specifies that an entity must be paid amounts
appropriated for the purposes of the entity and this Bill specifies
an amount, or
-
- for certain payments of remuneration and allowances
(clause 6).
The Minister for Finance may increase the amount
in a Departmental item/s by determination to a total maximum of $20
million (clause 9), while clause
10 provides that where there are unforeseen circumstances
and the need is urgent, the Minister for Finance may increase
expenditure by a total of $175 million. Parliament must be notified
of increased spending under clauses 9 and 10.
Clause 13 will formally
appropriate the funds for the Bill.
While the move to accrual accounting has
benefits in comparisons with private enterprise which generally
uses the accrual accounting method and provides a more transparent
view of the total cost of an activity, the changes have made year
to year comparisons more difficult in some areas. While both
expense and accrual figures are available for comparison with last
year, the Portfolio Budget Papers are now in a different format to
previous years which can make program and sub-program (as they were
previously referred to) analysis difficult as the activity may now
be in an outcome or agency expense that is not easily comparable to
the old figures.
-
- 1999-2000 Budget Paper No. 4, 1.
- Ibid., 1-2.
- 1999-2000 Budget Paper No. 1, 2-5, 1-4, 6-15.
- Ibid., 6-14.
Chris Field
31 May 1999
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 1999
Except to the extent of the uses permitted under the
Copyright Act 1968, no part of this publication may be
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Published by the Department of the Parliamentary Library,
1999.
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