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2013-2014
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION BILL (NO. 2) 2014-2015
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance,
Senator the Honourable Mathias Cormann)
Table of Acronyms and Defined Terms
AAO Administrative Arrangements Order
AFM Advance to the Finance Minister
AI Act Acts Interpretation Act 1901
BAF Building Australia Fund
CAC Act Commonwealth Authorities and Companies Act
1997
COAG Council of Australian Governments
CRF Consolidated Revenue Fund
EIF Education Investment Fund
Finance Minister Minister for Finance
FMA Act Financial Management and Accountability Act 1997
FMA Regulations Financial Management and Accountability
Regulations 1997
GST Goods and Services Tax
HHF Health and Hospitals Fund
MoG Machinery of Government
PGPA Act Public Governance, Performance and
Accountability Act 2013
Portfolio Portfolio Budget Statements
Statements
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
House of Representatives 1
Outline
Appropriation Bill (No. 2) 2014-2015
General Outline
1 This Explanatory Memorandum accompanies Appropriation Bill (No. 2)
2014-2015 (the Bill).
2 The main purpose of the Bill is to propose appropriations from the
Consolidated Revenue Fund (CRF) for services that are not the ordinary annual
services of the Government.
3 Appropriations for the ordinary annual services of the Government must be
contained in a separate Bill from other appropriations in accordance with
sections 53 and 54 of the Australian Constitution (the Constitution).
Consequently, the Bill proposes appropriations that are not for the ordinary annual
services of the Government. Annual appropriations that are for the ordinary
annual services of the Government are proposed in Appropriation Bill (No. 1)
2014-2015. Other annual appropriations that are not for the ordinary annual
services of the Government are proposed in Appropriation (Parliamentary
Departments) Bill (No. 1) 2014-2015. Together these three Bills are termed the
Budget Appropriation Bills.
4 The 2014-2015 Portfolio Budget Statements (Portfolio Statements) are
published and tabled in the Parliament in relation to the Bill. This Explanatory
Memorandum should be read in conjunction with the various 2014-2015 Portfolio
Statements, which contain details on the appropriations set out in the Schedules of
the Bills.
5 Importantly, the Bill has been drafted to not take account of potential
amendments that may be required to implement the Public Governance,
Performance and Accountability Act 2013 (PGPA Act). Those amendments will
be addressed in transitional legislation that is yet to be introduced into the
Parliament. The explanatory memoranda to those transitional Bills will provide a
comprehensive explanation of the approach being taken to ensure consistency
between the PGPA Act and annual Appropriation Acts.
Structure of appropriations in the Bill
6 The Bill provides for the appropriation of specified amounts for expenditure
by Australian Government entities, primarily being Agencies under the Financial
Management and Accountability Act 1997 (FMA Act) plus payments to bodies
under the Commonwealth Authorities and Companies Act 1997 (CAC Act).
7 Part 1 of the Bill deals with definitions, the interpretative role of the
Portfolio Statements and the concept of notional payments. Part 2 of the Bill
proposes appropriations to make payments of the amounts in Schedule 2 for State,
ACT, NT and local government items (clause 7), administered items (clause 8),
administered assets and liabilities items (clause 9) and other departmental items
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
House of Representatives 2
Outline
(clause 10) and CAC Act body payment items (clause 11). Part 3 of the Bill
specifies the ways in which the amounts in Schedule 2 may be adjusted.
8 Part 4 deals with the general drawing rights limit applicable for the current
year (current year is defined in clause 3 of the Bill) to the Building Australia
Fund, Education Investment Fund and Health and Hospitals Fund established by
the Nation-building Funds Act 2008.
9 This Part also deals with the general drawing rights limits, for the current
year, for the purposes of section 9 and section 16 of the Federal Financial
Relations Act 2009, which is detailed under the subheadings "General purpose
financial assistance" and "National partnership payments". Part 4 also deals with
adjustments to the general drawing rights limit for the Goods and Services Tax
(GST).
10 Part 5 deals with credits to Special Accounts (clause 15), the conditions that
apply to payments of State, ACT, NT and local government items (clause 16 and
Schedule 1), provides for amounts to be appropriated as necessary (clause 17) and
specifies the cessation date of the Bill, once enacted (Clause 18). Clause 17
recognises that the appropriations proposed in the Bill may also be varied by the
FMA Act.
Financial Impact
11 The Bill, if enacted, would appropriate the amounts specified in Schedule 2.
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
House of Representatives 3
Statement of compatibility with human rights
Statement of compatibility with human rights
1 The Bill seeks to appropriate money for services that are not considered to
be the ordinary annual services of the Government.
2 Accordingly, this Appropriation Bill performs an important constitutional
function, by authorising the withdrawal of money from the Consolidated Revenue
Fund for the broad purposes identified in the Bill.
3 However, as the High Court has emphasised, beyond this, the Appropriation
Acts do not create rights and nor do they, importantly, impose any duties.
4 Given that the legal effect of Appropriation Bills is limited in this way, the
Appropriation Bill is not seen as engaging, or otherwise affecting, the rights or
freedoms relevant to the Human Rights (Parliamentary Scrutiny) Act 2011.
5 Detailed information on the relevant appropriations, however, is contained
in the Portfolio Statements.
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
House of Representatives 4
Notes on clauses
Notes on clauses
Part 1--Preliminary
Clause 1--Short title
1 This clause specifies that the short title of the Bill, once enacted, will be
Appropriation Act (No. 2) 2014-2015.
Clause 2--Commencement
2 Clause 2 provides for the Bill to commence as an Act on the day of the
Royal Assent.
Clause 3--Definitions
3 Clause 3 defines the key terms used in the Bill, such as "administered item",
"Agency", "current year", "other departmental item", and "State, ACT, NT and
local government item".
Clause 4--Portfolio Statements
4 Clause 4 declares that the Portfolio Statements are relevant documents
under paragraph 15AB(2)(g) of the Acts Interpretation Act 1901 (AI Act) that
may be used to ascertain the meaning of certain provisions in accordance with
subsection 15AB(1) of the AI Act. Paragraph 15AB(2) of the AI Act effectively
provides that the material that may be considered in the interpretation of a
provision of an Act includes any document that is declared by the Act to be a
relevant document.
5 The purpose of the Portfolio Statements is to provide information on the
proposed allocation of resources to Government outcomes by Agencies within
each portfolio. The Portfolio Statements provide information to enable Parliament
to understand the purpose of appropriations proposed in the Bill. The term
"Portfolio Statements" is defined in the Bill, at clause 3, to mean the Portfolio
Budget Statements (tabled with this Bill).
Clause 5--Notional payments, receipts etc.
6 Clause 5 ensures that payments between Agencies result in a debit from the
appropriation for the paying Agency. For example, the payments of the amounts
in Schedule 2 from one FMA Act Agency to another do not require, in a
constitutional sense, an appropriation, because both Agencies operate within the
CRF. However, for reasons of financial discipline and transparency, the practice
has arisen for these payments between Agencies to be treated as though they
required an appropriation, and to debit an appropriation when such notional
payments are made. This is consistent with section 6 of the FMA Act.
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
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Notes on clauses
7 Clause 5 provides that notional transactions between Agencies are to be
treated as if they are real transactions. Notional transactions, therefore, require the
use of a drawing right and the debiting of an appropriation made by Parliament.
When an FMA Act Agency makes a payment, whether to another FMA Act
Agency or another part of the same Agency (such as a different "business unit"
within the Agency), it is to be treated as a "real" payment.
8 This means that the appropriation made by Parliament is extinguished by the
amount of the notional payment, even though no payment is actually made from
the CRF. Similarly, a notional receipt in such a situation is to be treated by the
receiving Agency (where relevant) as if it were a real receipt.
9 This does not mean every internal transfer of public money involves a
notional payment and receipt. As explained in regulation 19 of the Financial
Management and Accountability Regulations 1997 (FMA Regulations), some
transfers of public money from one official account to another do not involve a
notional payment or debiting an appropriation.
Part 2--Appropriation items
Clause 6--Summary of appropriations
10 Clause 6 sets out the total of the appropriations in Schedule 2 of the Bill.
Importantly, the amounts in Schedule 2 may be adjusted under Part 3 of the
Bill. Items may be increased by a determination under clause 12 (Advance to the
Finance Minister).
11 The amounts in Schedule 2 of the Bill may be adjusted further in accordance
with sections 30, 30A and 32 of the FMA Act. Specifically:
Section 30 allows an Agency to re-credit, to an appropriation that had been
relied upon for an initial payment by the Agency, an amount equivalent to
the repayment. The re-crediting, or reinstatement, authorised by section 30,
can result in the total amount paid from the CRF in gross terms exceeding
the amount specified in an item. Section 30 also applies to notional
transactions between and within Agencies.
Appropriations may be adjusted by amounts recoverable by an Agency from
the Australian Taxation Office for Goods and Services Tax (GST),
in accordance with section 30A of the FMA Act. The amounts specified in
Schedule 2 exclude recoverable GST. The appropriations shown represent
the net amount that Parliament is asked to allocate to particular purposes.
Section 30A has the effect of increasing an appropriation by the amount of
the GST qualifying amount arising from payments in respect of the
appropriation. As a result, there is sufficient appropriation for payments
under an appropriation item, provided that the amount of those payments,
less the amount of recoverable GST, can be met from the initial amount
shown against the item in Schedule 2. Section 30A also applies to notional
transactions between and within Agencies.
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
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Notes on clauses
Items may be adjusted to take into account the transfer of functions between
Agencies, in accordance with section 32 of the FMA Act. It is possible that
adjustments under section 32 may result in new items and/or outcomes
being created in an Appropriation Act. It might also result in amounts being
transferred between Appropriation Acts.
Clause 7--State, ACT, NT and local government items
12 Clause 7 provides administered appropriations for financial assistance to the
States, ACT, NT and local governments. State, ACT, NT and local government
items are appropriated separately for outcomes, making it clear what the funding
is intended to achieve. The amount specified in Schedule 2 for an outcome may be
applied by an Agency for the purpose of making payments to any of the States,
ACT, NT or local government authorities for the purpose of achieving that
outcome.
13 Clauses 7 and 13 delegate Parliament's power under section 96 of the
Constitution to impose terms and conditions on payments of financial assistance
to the States to the responsible Ministers listed in Schedule 1 of the Bill.
Schedule 1 also lists the Ministers who may determine the amounts and timing of
those payments.
14 These payments are usually made pursuant to eligibility rules and conditions
established by the Government or Parliament. Specifically, the Minister for
Finance (Finance Minister) manages payments to State, ACT, NT and local
governments through the issuing of drawing rights in accordance with sections 26
and 27 of the FMA Act. Drawing rights control who may spend money from
appropriations, and allow for conditions and limits to be set by the Finance
Minister (or the Finance Minister's delegate) in relation to those activities.
Clause 8--Administered items
15 Subclause 8(1) provides for the appropriation of new administered outcome
amounts to be applied by an Agency for the purpose of contributing to the
outcome for an Agency. An "administered item" is defined in clause 3 to be an
amount set out in Schedule 2 opposite an outcome for an Agency under the
heading "New Administered Outcomes". New Administered Outcomes are those
administered by an Agency on behalf of the government (e.g. certain grants,
benefits and transfer payments).
16 As with administered items in Appropriation Bill (No. 1) 2014-2015, New
Administered Outcomes are appropriated separately for outcomes. This is unlike
departmental items, where the split across outcomes is not notional, and makes it
clear what the funding is intended to achieve. Schedule 2 specifies how much can
be expended on each outcome.
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
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Notes on clauses
17 New Administered Outcomes are typically proposed when:
an Agency seeks administered operating appropriations for the first time
(including existing Agencies that have received departmental operating
appropriations in the past);
annual administered operating appropriations are proposed for the first time,
for programmes previously funded by special appropriations; and
an Agency's outcomes are changed to reflect new programme objectives,
strategies and/or activities.
18 The purposes for which each administered item can be spent are set out in
subclause 8(2). Subclause 8(2) provides that where the Portfolio Statements
indicate a particular activity is in respect of a particular outcome, then expenditure
on that activity is taken to be expenditure for the purpose of contributing to
achieving that outcome.
19 New administered outcomes are those administered by an Agency on behalf
of the Government (e.g. certain grants, benefits and transfer payments). These
payments are usually made pursuant to eligibility rules and conditions established
by the Government or the Parliament. Specifically, administered items are tied to
outcomes (departmental items are not).
20 The Finance Minister manages payments from administered items by
Agencies through the issuing of drawing rights in accordance with sections 26
and 27 of the FMA Act. Drawing rights control who may spend money from
appropriations, and allow for conditions and limits to be set by the
Finance Minister (or the Finance Minister's delegate) in relation to those
activities.
Clause 9--Administered assets and liabilities items
21 Clause 9 provides amounts in Schedule 2 to acquire administered assets,
enhance existing administered assets and/or discharge administered liabilities
relating to activities administered by Agencies on behalf of the Government.
Administered assets and liabilities appropriations are provided for functions
managed by an Agency on behalf of the Government. Administered assets and
liabilities items can be applied for any outcomes of the Agency in Schedule 2 of
this Bill, or Schedule 1 to Appropriation Bill (No. 1) 2014-2015.
22 The Finance Minister manages payments from administered assets and
liabilities items by Agencies through the issuing of drawing rights, in accordance
with sections 26 and 27 of the FMA Act. Drawing rights control who may spend
money from appropriations, and they allow for conditions and limits to be set by
the Finance Minister (or the Finance Minister's delegate) in relation to those
activities.
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
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Notes on clauses
Clause 10--Other departmental items
23 Clause 10 appropriates departmental non-operating appropriations in the
form of equity injections, over which the Agency also exercises control. This
clause provides that the amount specified in other departmental items for an
Agency may be applied for the departmental expenditure of the Agency. In short,
"equity injections" can be provided to Agencies to, for example, enable
investment in assets to facilitate departmental activities and for Designated
Collecting Institutions to purchase heritage and cultural assets.
24 Other departmental items are not expressed in terms of a particular financial
year and do not automatically lapse. Other departmental items are available until
they are spent, or the Act through which they were appropriated is repealed or
sunsets. For example, equity injection appropriations provide funding to meet the
cost expected to be incurred in the Budget year to acquire a new asset; however,
for a number of reasons, some part of the appropriation might not be required
until a later financial year.
25 The Finance Minister manages the payment from other departmental items
by Agencies through the issuing of drawing rights in accordance with sections 26
and 27 of the FMA Act. Drawing rights control who may spend from
appropriations, and allow for conditions and limits to be set by the Finance
Minister (or the Finance Minister's delegate) in relation to those activities.
Clause 11--CAC Act body payment items
26 Clause 11 provides for direct appropriations of money for CAC Act bodies
to be paid from the CRF by the relevant Department. Clause 11 provides that
payments for CAC Act bodies must be used for the purposes of those bodies.
27 A "CAC Act body" is defined in clause 3 to be a Commonwealth authority
or a Commonwealth company within the meaning of the CAC Act. Many
CAC Act bodies receive funding directly from appropriations. However, these
bodies are legally separate from the Commonwealth, and as a result, do not debit
appropriations or make payments from the CRF.
28 CAC Act body payments are initiated by requests to the relevant portfolio
Departments from the CAC Act bodies. The Finance Minister manages
appropriations for CAC Act bodies through the issuing of drawing rights in
accordance with sections 26 and 27 of the FMA Act. Drawing rights control who
may spend money from appropriations, and allow for conditions and limits to be
set by the Finance Minister (or the Finance Minister's delegate) in relation to
those payments. CAC Act bodies hold the amounts paid to them on their own
account.
29 Subclause 11(2) provides that if a CAC Act body is subject to another Act
that requires 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. The purpose of subclause 11(2) is to clarify that subclause 11(1)
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
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Notes on clauses
is not intended to qualify any obligations in other legislation regulating a CAC
Act body, where that other legislation requires the Commonwealth to pay the full
amount appropriated for the purposes of the body.
30 In addition to the annual appropriations, some CAC Act bodies may also
receive public money from related entities such as a portfolio Department and
from special appropriations managed by those Departments. Many CAC Act
bodies also receive funds from external sources.
Part 3-- Advance to Finance Minister
31 Part 3 of the Bill provides for increases to the amounts specified in
Schedule 2. The Advance to the Finance Minister provision that can increase the
amounts specified in Schedule 2 is contained in clause 12.
Clause 12--Advance to the Finance Minister
32 Clause 12 enables the Finance Minister to provide additional appropriations
for items when satisfied there is an urgent need for that expenditure, and the
existing appropriation is inadequate. This additional appropriation is referred to as
the Advance to the Finance Minister (AFM). Subclause 12(3) provides that the
total amount that can be determined under the AFM provision is $380 million.
33 Subclause 12(1) establishes the criteria about which the Finance Minister
must be satisfied before determining to add an amount to an item of an agency.
34 The Finance Minister will only consider issuing an amount under subclause
12(1) if satisfied there is an urgent need for expenditure that is not provided for, or
is insufficiently provided for, in Schedule 2, because of an omission or
understatement, or because of unforeseen circumstances. Generally, the other
appropriation adjustment options in Part 3 of the Bill or under sections 30, 30A
and 32 of the FMA Act must have been exhausted before the Finance Minister
will make a determination under subclause 12(2).
35 Subclause 12(2) enables the Finance Minister to make a determination to
add an amount from the AFM to an item in Schedule 2, to a new item not already
in Schedule 2, or to a new outcome.
36 A further AFM provision will be requested in the Additional Estimates
Appropriation Bills for the current year if pressures at that time suggest the AFM
in this Bill will be close to being exhausted before the end of the financial year.
37 Subclause 12(4) provides that a determination under subclause 12(2) is a
legislative instrument, which must be tabled in Parliament but is not subject to
disallowance or sunsetting.
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
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Notes on clauses
38 A subclause 12(2) determination is not subject to disallowance as this would
frustrate the purpose of the provision, which is to provide additional appropriation
for urgent expenditure. Further, an AFM is not subject to the sunsetting provisions
of the Legislative Instruments Act 2003, because the amount allocated from the
AFM would be extinguished when it is spent.
Part 4--General drawing rights limits
Clause 13--General drawing rights limits
39 The Finance Minister manages the spending of appropriations by agencies
through the issuing of drawing rights in accordance with sections 26 and 27 of the
FMA Act. Drawing rights control who may spend money from annual or special
appropriations, and allow for conditions and limits to be set by the Finance
Minister (or the Finance Minister's delegate) in relation to those activities.
40 In addition to any conditions or limits imposed by drawing rights issued by
the Finance Minister, Parliament may also approve annual general drawing rights
limits for the following special appropriations:
the amounts that may be debited or spent from 3 Special Accounts
established by the Nation-building Funds Act 2008; and
the amounts that may be spent for general purpose financial assistance or
national partnership payments under the Federal Financial Relations Act
2009.
41 Specifying a general drawing rights limit in clause 13, and thereby limiting
the ability to issue drawing rights to that limit, is an effective mechanism to
manage expenditure of public money as the official or Minister making a payment
of public money cannot do so without the authority of a valid drawing right under
the FMA Act. The purpose of so doing is to provide Parliament with a transparent
mechanism by which it may review the rate at which amounts are committed for
expenditure.
42 Note that clause 13 is not an appropriation for either of the Nation-building
Funds Act 2008 or the Federal Financial Relations Act 2009.
Nation-building Funds Act 2008
43 For the purposes of section 109 of the Nation-building Funds Act 2008,
subclause 13(1) provides the general drawing rights limit for the Building
Australia Fund (BAF) for the current year.
44 The BAF is established under section 12 of the Nation-building Funds Act
2008. It consists of the investments of the BAF and the BAF Special Account,
which is a Special Account recognised under section 21 of the FMA Act and
established under section 13 of the Nation-building Funds Act 2008. The general
drawing rights limit applies to the main purposes of the BAF, namely making
payments in relation to the creation or development of transport infrastructure,
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
House of Representatives 11
Notes on clauses
communications infrastructure, energy infrastructure and water infrastructure. The
general drawing rights limit does not apply to payments for eligible Nation
Broadband Network matters.
45 For the purposes of section 199 of the Nation-building Funds Act 2008,
subclause 13(2) provides the general drawing rights limit for the Education
Investment Fund (EIF) for the current year.
46 The EIF is established under section 131 of the Nation-building Funds Act
2008. It consists of the investments of the EIF and the EIF Special Account,
which is a Special Account recognised under section 21 of the FMA Act and
established under section 132 of the Nation-building Funds Act 2008. The general
drawing rights limit applies to the main purposes of the EIF, namely making
payments in relation to the creation or development of higher education
infrastructure, research infrastructure, vocational education and training
infrastructure, and eligible education infrastructure, as well as any transitional
Higher Education Endowment Fund payments.
47 For the purposes of section 267 of the Nation-building Funds Act 2008,
subclause 13(3) provides the general drawing rights limit for the Health and
Hospitals Fund (HHF) for the current year.
48 The HHF is established under section 214 of the Nation-building Funds Act
2008. It consists of the investments of the HHF and the HHF Special Account,
which is a Special Account recognised under section 21 of the FMA Act and
established under section 215 of the Nation-building Funds Act 2008. The general
drawing rights limit applies to the main purposes of the HHF, namely making
payments in relation to the creation or development of health infrastructure.
49 It is important to note that this Bill will not appropriate amounts to be paid
from the BAF, EIF or HHF. The intention for specifying general drawing rights
limits in subclauses 13(1) to 13(3) inclusive is to set maximum limits on the
amounts that may be covered by drawing rights issued by the Finance Minister
under the FMA Act for the current year, for the purposes to which the limits
apply.
50 Under section 27 of the FMA Act, the Finance Minister is able to issue
drawing rights, without which no public money may be spent, thereby providing a
control mechanism over spending. That power has been delegated to various
officials. Clause 13 places a limit over the amount of drawing rights that may be
issued.
51 Specifying a general drawing rights limit, and thereby limiting the ability to
issue drawing rights to that limit, is an effective mechanism to manage
expenditure of public money as the official or Minister making a payment of
public money cannot do so without the authority of a valid drawing right under
the FMA Act. The purpose of so doing is to provide Parliament with a transparent
mechanism by which it may review the rate at which amounts committed to the
BAF, EIF and HHF are expended.
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
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Notes on clauses
52 The general drawing rights limits for the current year for the BAF, EIF and
HHF are specific to the current year applicable to this Act and will not limit the
general drawing rights limits that may be specified in regard to any other year.
Federal Financial Relations Act 2009
53 For the purposes of paragraph 9(3)(b) of the Federal Financial Relations
Act 2009, subclause 13(4) provides the general drawing rights limit for general
purpose financial assistance for the current year.
54 This general drawing rights limit applies for the current year to the amount
that the Treasurer can credit to the Council of Australian Governments (COAG)
Reform Fund and the total amount covered by drawing rights authorising debits
from that Fund for the purposes of making a grant of general purpose financial
assistance to a State, the Australian Capital Territory or the Northern Territory.
55 The COAG Reform Fund was established by section 5 of the COAG Reform
Fund Act 2008, which is a Special Account under section 21 of the FMA Act. The
purposes of the COAG Reform Fund Special Account are provided at section 6 of
the COAG Reform Fund Act 2008.
56 If a general drawing rights limit is not indicated in an Appropriation Act for
the purposes of paragraph 9(3)(b) of the Federal Financial Relations Act 2009 for
a financial year, amounts cannot be credited to the COAG Reform Fund under
paragraph 9(2)(a) of the Federal Financial Relations Act 2009, and drawing rights
must not be issued authorising debits from the COAG Reform Fund for the
purposes to which the limit applies.
57 For the purposes of paragraph 16(3)(b) of the Federal Financial Relations
Act 2009, subclause 13(5) provides the general drawing rights limit for national
partnership payments for the current year.
58 This general drawing rights limit applies for the current year to the amount
that the Treasurer can credit to the COAG Reform Fund and the total amount
covered by drawing rights authorising debits from that Fund for the purposes
contained in paragraphs 16(1)(a) to (c) inclusive of the Federal Financial
Relations Act 2009. These purposes relate to making a grant of financial
assistance to a State to support the delivery by the State of specified outputs or
projects, facilitate reforms by the State, or reward the State for nationally
significant reforms.
59 If a general drawing rights limit is not indicated in an Appropriation Act for
the purposes of paragraph 16(3)(b) of the Federal Financial Relations Act 2009
for a financial year, amounts cannot be credited to the COAG Reform Fund under
paragraph16(2)(a) of the Federal Financial Relations Act 2009 and drawing rights
must not be issued authorising debits from the COAG Reform Fund for the
purposes to which the limit applies.
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Notes on clauses
60 It is important to note that this Bill will not appropriate amounts to be paid
under sections 9 and 16 of the Federal Financial Relations Act 2009.
The intention for specifying general drawing rights limits in subclauses 13(4) and
13(5) is to set maximum limits on the amounts that may be covered by drawing
rights issued by the Finance Minister under the FMA Act for the current year, for
the purposes to which those limits apply.
Clause 14--Adjustments for GST
61 The effect of this clause will be to increase a general drawing rights limit by
the amount of any GST qualifying amount in respect of an amount paid from a
fund named in clause 13.
62 Some payments from the BAF, EIF, HHF and the COAG Reform Fund may
include a GST qualifying amount and the relevant general drawing rights limit is
adjusted accordingly. The appropriation itself is not affected by clause 14 because
that is increased by the operation of section 30A of the FMA Act. Essentially,
clause 14 clarifies that the amounts specified for the general drawing rights limits
for 2014-15 are exclusive of any GST qualifying amounts that may arise in
respect of acquisitions made in reliance on that limit.
Part 5--Miscellaneous
Clause 15--Crediting amounts to Special Accounts
63 Clause 15 provides that if the purpose of an item in Schedule 2 is also the
purpose of a Special Account (regardless of whether the item expressly refers to
the Special Account), then amounts may be debited against the appropriation for
that item and credited to the Special Account. Special Accounts may be
established under the FMA Act by a determination of the Finance Minister
(section 20) that is disallowable by Parliament or by another Act (section 21). The
determination or Act that establishes the Special Account will specify the
purposes of the Special Account.
Clause 16--Conditions etc. applying to State, ACT, NT and local
government items
64 Clause 16 deals with Parliament's power under section 96 of the
Constitution to provide financial assistance to the States. Clause 16 delegates the
power to the responsible Ministers listed in Schedule 1 of the Bill, by providing
the Ministers named in Schedule 1 with the power to determine:
conditions under which payments to the States, ACT, NT and local
government may be made: paragraph 16(2)(a); and
the amounts and timing of those payments: paragraph 16(2)(b).
65 Subclause 16(4) provides that determinations made under subclause 16(2)
are not legislative instruments, because these determinations are not altering the
appropriations approved by Parliament. Determinations under subclause 16(2)
Explanatory Memorandum to Appropriation Bill (No. 2) 2014-2015
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Notes on clauses
will simply determine how appropriations for State, ACT, NT and local
government items will be paid. The determinations are issued when required.
However, payments can be made without either determination.
66 Although financial assistance is provided to the ACT, NT and local
governments without reference to section 96 of the Constitution, those payments
are administered in the same way. Therefore the Ministers identified in
Schedule 1 may set the amounts and timing and impose terms and conditions on
those payments. Subclause 16(5) also notes that clause 16 will not limit the
powers of the Commonwealth under section 96 of the Constitution to provide
financial assistance to a State which is not appropriated by a State, ACT, NT and
local government item.
Clause 17--Appropriation of the Consolidated Revenue Fund
67 Clause 17 provides that the CRF is appropriated as necessary for the
purposes of the Bill. Significantly, this clause means that there is an appropriation
in law when the Act commences. That is, the appropriations are not made or
brought into existence just before they are paid, but when the Royal Assent is
given. This clause indicates that the amounts appropriated may be affected by the
FMA Act, in particular sections 30, 30A and 32 (see clause 6), after the Bill
receives the Royal Assent.
Clause 18--Act ceases to be in force
68 Clause 18 specifies that the Bill, once enacted, will cease to be in force at
the start of 1 July 2017. As the Appropriation Acts will sunset, there is no longer a
requirement for the reduction of appropriations during the year. As such, the
reduction sections that applied previously are no longer required (e.g. section 12
of Appropriation Act (No. 2) 2013-2014) and have been excluded from this Bill.
Schedule 1--Payments to or for the States, ACT, NT and
local government
69 In accordance with clause 18, Schedule 1 lists the Ministers responsible for
determinations on payments to or for the States, ACT, NT and local government.
Schedule 2--Services for which money is appropriated
70 Schedule 2 specifies the services for which amounts will be appropriated by
the Bill. Schedule 2 contains a summary table which lists the total amounts for
each portfolio. A separate summary table is included with further detail for each
portfolio, with other tables detailing the appropriations for each Agency.
71 Schedule 2 includes, for information purposes, a figure for the previous
financial year printed in italics under each appropriation amount labelled the
"Actual Available Appropriation". That figure provides a comparison with the
proposed appropriations for agencies receiving appropriations. In this way,
comparator information is not provided for agencies abolished since the previous
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Notes on clauses
Appropriation Acts. For example, appropriations provided to the former
Department of Education, Employment and Workplace Relations are not included
in Schedule 2 to the Bill.
72 The Actual Available Appropriation is an estimate that does not affect the
amount available at law. It is calculated for each item by adding the amounts
appropriated in the previous year's annual Appropriation Acts, amounts adjusted
under certain provisions of the FMA Act that are recorded in the Central Budget
Management System (including section 32 transfers relating to Machinery of
Government changes) plus adjustments such as AFMs and reductions by the
Finance Minister.
73 In some instances the figure may also be affected by limits applied
administratively by the Department of Finance. In addition, where an agency's
outcome structure has changed since the last Appropriation Act, only ongoing
outcomes are shown in the Bill.
74 For these reasons, the Actual Available Appropriation figures may be
different from the sum of amounts provided in earlier Appropriation Acts.
75 More details about the appropriations in Schedule 2 are contained in the
Portfolio Statements and the second reading speech for the Bill.
Machinery of Government changes
76 On 18 September 2013, the Governor-General in Council acting on the
Prime Minister's recommendation under section 64 of the Constitution, gave
authority to an Administrative Arrangements Order (AAO) which resulted in the
various Machinery of Government (MoG) changes.
77 The Departments of State abolished were the Department of Education,
Employment and Workplace Relations; the Department of Regional Australia,
Local Government, Arts and Sport; and the Department of Resources, Energy and
Tourism. The three abolished Departments of State do not appear in the Bill.
78 The Departments of State established were the Department of Education and
the Department of Employment.
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Notes on clauses
79 In addition, Departments of State in the first column were renamed to those
listed in the second column:
Before 18 September 2013 After 18 September 2013
Department of Agriculture, Fisheries and Department of Agriculture
Forestry
Department of Broadband, Communications Department of Communications
and the Digital Economy
Department of Sustainability, Environment, Department of the Environment
Water, Population and Communities
Department of Infrastructure and Transport Department of Infrastructure and
Regional Development
Department of Finance and Deregulation Department of Finance
Department of Health and Ageing Department of Health
Department of Families, Housing, Department of Social Services
Community Services and Indigenous Affairs
Department of Immigration and Citizenship Department of Immigration and
Border Protection
Department of Industry, Innovation, Climate Department of Industry
Change, Science, Research and Tertiary
Education
80 These MoG changes resulted in the transfer of legislative responsibility and
related functions from abolished agencies to those newly established or renamed.
The MoG changes also resulted in the transfer of legislative responsibility and
related functions between various agencies. Full details of the MoG changes as
expressed in the 18 September AAO and subsequent amending AAOs can be
found at http://www.dpmc.gov.au/parliamentary/index.cfm.
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