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2016
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION BILL (NO. 2) 2016-2017
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance,
Senator the Honourable Mathias Cormann)
Table of Acronyms and Defined Terms
AFM Advance to the Finance Minister
AI Act Acts Interpretation Act 1901
BAF Building Australia Fund
COAG Council of Australian Governments
Commonwealth An entity as defined in section 10 of the PGPA Act
entity
CRF Consolidated Revenue Fund
EIF Education Investment Fund
Finance Minister Minister for Finance
GST Goods and Services Tax
non-corporate Non-corporate Commonwealth entities as defined in
entities the PGPA Act or the High Court
PGPA Act Public Governance, Performance and
Accountability Act 2013
PGPA Rule Public Governance, Performance and
Accountability Rule 2014
portfolio Portfolio Budget Statements
statements
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
House of Representatives 1
Outline
Appropriation Bill (No. 2) 2016-2017
General Outline
1 This Explanatory Memorandum accompanies Appropriation Bill (No. 2)
2016-2017 (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 The Bill proposes appropriations broadly equivalent to 7/12ths of the
estimated 2016-2017 annual appropriations that are not for the ordinary services
of the Government, plus Budget measures for the full year of 2016-2017. Supply
Bill (No. 2) 2016-2017 appropriates the CRF for the residual 5/12ths, less any
Budget measures, with a view to ensuring that there are adequate appropriations
for the first part of 2016-2017 for activities that are not for the ordinary annual
services of the Government.
4 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)
2016-2017. Other annual appropriations that are not for the ordinary annual
services of the Government are proposed in Appropriation (Parliamentary
Departments) Bill (No. 1) 2016-2017. Appropriation Bill (No. 1) 2016-2017 and
Appropriation (Parliamentary Departments) Bill (No. 1) 2016-2017 are on the
same proportional basis of 2016-2017 estimates as for this Bill. Together these
three Bills are termed the Budget Appropriation Bills.
5 The 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 2016-2017 portfolio statements,
which contain details on the appropriations set out in the Schedules of the Bills.
The portfolio statements are taken to cover both the Bill and the Supply Bill
(No. 2) 2016-2017.
Structure of appropriations in the Bill
6 The Bill provides for the appropriation of specified amounts for expenditure
by Australian Government entities, primarily being non-corporate Commonwealth
entities (non-corporate entities) under the Public Governance, Performance and
Accountability Act 2013 (PGPA Act).
7 Part 1 of the Bill deals with definitions, the interpretative role of the
portfolio statements and the concept of notional transactions. Part 2 of the Bill
proposes appropriations to make payments of the amounts in Schedule 2 for State,
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
House of Representatives 2
Outline
ACT, NT and local government items (clause 7), administered items (clause 8),
administered assets and liabilities items (clause 9), other departmental items
(clause 10) and corporate entity items (clause 11). Part 3 of the Bill specifies a
way in which the amounts in Schedule 2 may be adjusted (clause 12).
8 Part 4 deals with the debit limits applicable for the current year (current year
is defined in clause 3 of the Bill) to the Building Australia Fund and the Education
Investment Fund established by the Nation-building Funds Act 2008.
9 This Part also deals with the debit 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
debit 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 when the Bill is repealed (clause 18). In addition to the adjustment
provision in Part 3, clause 17 of the Bill recognises that the appropriations
proposed in the Bill may also be varied by the PGPA Act.
Financial Impact
11 The Bill, if enacted, would appropriate the amounts specified in Schedule 2.
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
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, the Bill performs an important constitutional function, by
authorising the withdrawal of money from the CRF for the broad purposes
identified in the Bill.
3 However, as the High Court has emphasised, beyond this, 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
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) 2016-2017
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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) 2016-2017.
Clause 2--Commencement
2 Clause 2 provides for the Bill to commence as an Act on the later of either
1 July 2016 or the day of the Royal Assent.
Clause 3--Definitions
3 Clause 3 defines the key terms used in the Bill, such as "administered item",
"corporate entity", "non-corporate entity", "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).
Paragraph 15AB(2)(g) provides for material to be considered in the interpretation
of an Act if the material is declared by the Act to be relevant material for the
purposes of section 15AB of the AI Act.
5 The purpose of the portfolio statements is to provide information on the
proposed allocation of resources to Government outcomes by Commonwealth
entities within each portfolio. 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 transactions between entities that are part
of the Commonwealth
6 Clause 5 provides that notional transactions between non-corporate entities
are to be treated as if they are real transactions. Notional transactions, therefore,
require the debiting of an appropriation made by Parliament. The payments of the
amounts in Schedule 2 from one non-corporate entity to another do not require, in
a constitutional sense, an appropriation, because both non-corporate entities
operate within the CRF. For reasons of financial discipline and transparency, the
practice has arisen for these payments between non-corporate entities 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 76 of the PGPA Act.
7 When a non-corporate entity makes a payment, whether to another non-
corporate entity or another part of the same non-corporate entity (such as a
different "business unit" within the entity), it is to be treated as a "real" payment.
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
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Notes on clauses
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 non-corporate entity (where relevant) as if it were a real receipt. This
does not mean every internal transfer of public money involves a notional
payment and receipt.
Part 2--Appropriation items
Clause 6--Summary of appropriations
8 Clause 6 sets out the total of the appropriations in Schedule 2 of the Bill. As
indicated, that total is broadly equivalent to 7/12ths of the estimated 2016-2017
annual appropriations that are not for the ordinary annual services of the
Government, plus Budget measures for that period.
9 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).
10 The amounts in Schedule 2 of the Bill may be adjusted further in accordance
with sections 74 to 75 of the PGPA Act. Specifically:
Section 74 of the PGPA Act, when read with Rule 27 of the Public
Governance, Performance and Accountability Rule 2014 (PGPA Rule),
permits non-corporate entities to retain certain types of receipts by adding
them to their most recent departmental item or other type of appropriation in
an Appropriation Act when prescribed.
Appropriations may be adjusted by amounts recoverable by a non-corporate
entity from the Australian Taxation Office for Goods and Services Tax
(GST), in accordance with section 74A of the PGPA 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 74A 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 74A also applies to notional
transactions between and within non-corporate entities.
Items may be adjusted to take into account the transfer of functions between
non-corporate entities, in accordance with section 75 of the PGPA Act. It is
possible that adjustments under section 75 may result in new items and/or
outcomes being created in an Appropriation Act.
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
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Notes on clauses
Clause 7--State, ACT, NT and local government items
11 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 a non-corporate entity for the purpose of making payments to any of
the States, ACT, NT or local government authorities for the purpose of achieving
that outcome.
12 Clauses 7 and 16 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. These payments are usually made pursuant to eligibility rules and
conditions established by the Government or Parliament.
13 Specifically, the Finance Minister manages payments to State, ACT, NT and
local governments using a discretionary power under section 51 of the PGPA Act.
Section 51 allows the Finance Minister to manage the timing and the amount of
appropriated money to be made available to State, ACT, NT and local
governments, except as required by law.
Clause 8--Administered items
14 Subclause 8(1) provides for the appropriation of new administered outcome
amounts to be applied by a non-corporate entity for the purpose of contributing to
the outcome for a non-corporate entity. An "administered item" is defined in
clause 3 to be an amount set out in Schedule 2 opposite an outcome for a
non-corporate entity under the heading "New Administered Outcomes". New
Administered Outcomes are those administered by a non-corporate entity on
behalf of the government (e.g. certain grants, benefits and transfer payments).
15 As with administered items in Appropriation Bill (No. 1) 2016-2017, 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.
16 New Administered Outcomes are typically proposed when:
a non-corporate entity seeks administered operating appropriations for the
first time (including existing non-corporate entities that have received
departmental operating appropriations in the past);
annual administered operating appropriations are proposed for the first time,
for programs previously funded by special appropriations; and
a non-corporate entity's outcomes are changed to reflect new program
objectives, strategies and/or activities.
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
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Notes on clauses
17 The purposes for which each administered item can be spent are further 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.
18 New Administered Outcomes are those administered by a non-corporate
entity 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).
19 The Finance Minister manages payments from administered items by
non-corporate entities using a discretionary power under section 51 of the PGPA
Act. Section 51 allows the Finance Minister to manage the timing and the amount
of appropriated money to be made available to a Commonwealth entity, except as
required by law.
Clause 9--Administered assets and liabilities items
20 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 non-corporate entities on behalf of the
Government. Administered assets and liabilities appropriations are provided for
functions managed by a non-corporate entity on behalf of the Government.
Administered assets and liabilities items can be applied for any outcomes of the
non-corporate entity in Schedule 2 of this Bill, or Schedule 1 to Appropriation Bill
(No. 1) 2016-2017.
21 The Finance Minister manages payments from administered assets and
liabilities items by non-corporate entities using a discretionary power under
section 51 of the PGPA Act. Section 51 allows the Finance Minister to manage
the timing and the amount of appropriated money to be made available to a
Commonwealth entity, except as required by law.
Clause 10--Other departmental items
22 Clause 10 appropriates departmental non-operating appropriations in the
form of equity injections, over which the non-corporate entity also exercises
control. This clause provides that the amount specified in other departmental
items for a non-corporate entity may be applied for the departmental expenditure
of the entity. In short, "equity injections" can be provided to non-corporate
entities to, for example, enable investment in assets to facilitate departmental
activities and for Designated Collecting Institutions to purchase heritage and
cultural assets.
23 Other departmental items are not expressed in terms of a particular financial
year. 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,
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
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Notes on clauses
for a number of reasons, some part of the appropriation might not be required
until a later financial year. Other departmental items are available until they are
spent, or the Act through which they were appropriated is repealed. Appropriation
Acts have a lifespan of up to three years after which they automatically repeal.
24 The Finance Minister manages the payment from other departmental items
by non-corporate entities using a discretionary power under section 51 of the
PGPA Act. Section 51 allows the Finance Minister to manage the timing and the
amount of appropriated money to be made available to a Commonwealth entity,
except as required by law.
Clause 11--Corporate entity items
25 Clause 11 provides for appropriations of money for corporate entities to be
paid from the CRF by the relevant Department. Clause 11 provides that payments
for corporate entities must be used for the purposes of those entities.
26 A "corporate entity" is defined in clause 3 to be a corporate Commonwealth
entity or a Commonwealth company within the meaning of the PGPA Act. Many
corporate entities receive funding from appropriations. However, these entities are
legally separate from the Commonwealth, and as a result, do not debit
appropriations or make payments from the CRF.
27 Corporate entity payments are initiated by requests to the relevant portfolio
Departments from the corporate entities. The Finance Minister manages
appropriations for corporate entities through a discretionary power to control the
timing and amount made available under section 51 of the PGPA Act. Corporate
entities hold the amounts paid to them on their own account.
28 Subclause 11(2) provides that if a corporate entity is subject to another Act
that requires amounts appropriated by Parliament for the purposes of that entity to
be paid to the entity, then the full amount of the corporate entity payment must be
paid to the entity. The purpose of subclause 11(2) is to clarify that subclause 11(1)
is not intended to qualify any obligations in other legislation regulating a
corporate entity, where that other legislation requires the Commonwealth to pay
the full amount appropriated for the purposes of the entity.
29 In addition to the annual appropriations, some corporate entities may also
receive public money from related entities such as a portfolio Department and
from special appropriations managed by those Departments. Many corporate
entities also receive funds from external sources.
Part 3--Advance to the Finance Minister
Clause 12--Advance to the Finance Minister
30 Clause 12 of the Bill enables the Finance Minister to provide additional
appropriations for items when satisfied there is an urgent need for expenditure,
and the existing appropriation is inadequate. This additional appropriation is
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
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Notes on clauses
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.
31 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 entity.
32 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 74 to 75 of the PGPA Act must have been exhausted before the Finance
Minister will make a determination under subclause 12(2).
33 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.
34 Supply Act (No. 2) 2016-2017 provides that the total amount that can be
determined under the AFM provisions in subclause 12(2) of this Bill and the
Supply Act (No. 2) 2016-2017 is $380 million.
35 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.
36 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.
37 A determination under subclause 12(2) is not subject to section 42
(disallowance) of the Legislation Act 2003 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 Part 4 of Chapter 3 (sunsetting) of the
Legislation Act 2003, because the amount allocated from the AFM would be
extinguished when it is spent.
Part 4--Debit limits
Clause 13--Debit limits
38 Parliament may approve annual debit limits for the following special
appropriations:
the amounts that may be debited or spent from two special accounts
established by the Nation-building Funds Act 2008; and
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
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Notes on clauses
the amounts that may be spent for general purpose financial assistance or
national partnership payments under the Federal Financial Relations
Act 2009.
39 Specifying a debit limit in clause 13 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 this authority. The purpose of doing so is to
provide Parliament with a transparent mechanism by which it may review the rate
at which amounts are committed for expenditure.
40 Note that clause 13 is not an appropriation for either of the Nation-building
Funds Act 2008 or the Federal Financial Relations Act 2009.
41 The debit limits in this Bill are broadly equivalent to 7/12ths of the special
appropriations estimated for 2016-2017 expenditure under these Acts. The
Education Investment Fund debit limit makes allowance for project milestone
payments.
42 In accordance with the Supply Act (No. 2) 2016-2017, the debit limits
specified for a particular purpose in subclauses 13(1) to (4) of this Bill are to be
added together with the relevant debit limits in the Supply Act (No. 2) 2016-2017
to provide the total amount that can be debited for a particular purpose for the
current year.
Nation-building Funds Act 2008
43 For the purposes of section 109 of the Nation-building Funds Act 2008,
subclause 13(1) provides the debit 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 80 of the PGPA Act and
established under section 13 of the Nation-building Funds Act 2008. The debit
limit applies to the main purposes of the BAF, namely making payments in
relation to the creation or development of transport infrastructure,
communications infrastructure, energy infrastructure and water infrastructure. The
debit 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 debit 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 80 of the PGPA Act and
established under section 132 of the Nation-building Funds Act 2008. The debit
limit applies to the main purposes of the EIF, namely making payments in relation
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
House of Representatives 11
Notes on clauses
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 It is important to note that this Bill will not appropriate amounts to be paid
from the BAF or EIF. The intention for specifying debit limits in subclauses 13(1)
and 13(2) is to set maximum limits on the amounts that may be covered for the
current year, for the purposes to which the limits apply.
48 The debit limits for the current year for the BAF and EIF are specific to the
current year applicable to this Act and will not limit the debit limits that may be
specified in regard to any other year.
Federal Financial Relations Act 2009
49 For the purposes of paragraph 9(3) of the Federal Financial Relations
Act 2009, subclause 13(3) provides the debit limit for general purpose financial
assistance for the current year.
50 This debit 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 that can be debited 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.
51 The COAG Reform Fund was established by section 5 of the COAG Reform
Fund Act 2008, which is a special account under section 80 of the PGPA Act. The
purposes of the COAG Reform Fund Special Account are provided at section 6 of
the COAG Reform Fund Act 2008.
52 If a debit limit is not indicated in an Appropriation Act for the purposes of
paragraph 9(3) 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 amounts must not be debited from
the COAG Reform Fund for the purposes to which the limit applies.
53 For the purposes of paragraph 16(3) of the Federal Financial Relations
Act 2009, subclause 13(4) provides the debit limit for national partnership
payments for the current year.
54 This debit limit applies for the current year to the amount that the Treasurer
can credit to the COAG Reform Fund and the total amount that can be debited
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.
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
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Notes on clauses
55 If a debit limit is not indicated in an Appropriation Act for the purposes of
paragraph 16(3) of the Federal Financial Relations Act 2009 for a financial year,
amounts cannot be credited to the COAG Reform Fund under paragraph 16(2)(a)
of the Federal Financial Relations Act 2009 and amounts must not be debited
from the COAG Reform Fund for the purposes to which the limit applies.
56 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 debit limits in subclauses 13(3) and 13(4) is to set
maximum limits on the amounts that may be covered for the current year, for the
purposes to which those limits apply.
Clause 14--Adjustments for GST
57 The effect of this clause will be to increase a debit limit by the amount of
any GST qualifying amount in respect of an amount paid from a fund named in
clause 13.
58 Some payments from the BAF, EIF and the COAG Reform Fund may
include a GST qualifying amount and the relevant debit limit is adjusted
accordingly. The appropriation itself is not affected by clause 14, because it is
increased by the operation of section 74A of the PGPA Act. Essentially, clause 14
clarifies that the amounts specified for the debit limits for 2016-17 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
59 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 PGPA Act by a determination of the Finance Minister (section 78) that
is disallowable by Parliament or by another Act (sections 79 and 80). 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
60 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: clause 16(2)(a); and
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Notes on clauses
the amounts and timing of those payments: clause 16(2)(b).
61 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) are
administrative in nature and will simply determine how appropriations for State,
ACT, NT and local government items will be paid.
62 Determinations under clause 16 or its equivalent are rare. Most payments to
the States and Territories are governed by, and appropriated through, the Federal
Financial Relations Act 2009. For the payments to the States, ACT, NT and local
government in an even-numbered Appropriation Act, generally other legislative or
agreed frameworks determine how the payments are made and when, such as the
Local Government (Financial Assistance) Act 1995 or a National Agreement.
Many of these arrangements can be found on the Federal Financial Relations
website (http://www.federalfinancialrelations.gov.au/).
63 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.
64 In this Bill, appropriations to the States, ACT, NT and local government are
sought for the Department of Agriculture and Water Resources against
Outcome 3, the Attorney-General's Department against Outcome 1, the
Department of Education and Training against Outcome 1, the Department of
Infrastructure and Regional Development against Outcome 1 and Outcome 3 and
the Department of the Prime Minister and Cabinet against Outcome 2. Further
information may also be found in the portfolio statements for the respective
portfolios. The most recent detailed estimates of Commonwealth payments to the
States, Territories and local governments from 2015-16 to 2019-20 may be found
in Budget Paper No. 3: Federal Financial Relations 2016-17 which is available at
http://www.budget.gov.au/.
Clause 17--Appropriation of the Consolidated Revenue Fund
65 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 Act commences.
This clause indicates that the amounts appropriated may be affected by the PGPA
Act, in particular sections 74 to 75 (see clause 6), after the Act commences.
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Notes on clauses
Clause 18--Repeal of this Act
66 Clause 18 specifies that the Bill, once enacted, will repeal at the start of
1 July 2019.
Schedule 1--Payments to or for the States, ACT, NT and
local government
67 In accordance with clause 16, 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
68 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 Commonwealth
entity.
69 Schedule 2 includes, for information purposes, a figure for the previous
financial year printed in italics and labelled the "Actual Available Appropriation
(italic figures) - 2015-2016". The Actual Available Appropriation is an estimate
that does not affect the amount available at law. That figure provides a
comparison with the proposed appropriations for entities receiving appropriations.
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 PGPA Act plus adjustments such as AFMs. In addition, where an entity's
outcome structure has changed since the last Appropriation Act, only ongoing
outcomes are shown in the Bill. In some instances the figure may also be affected
by limits applied administratively by the Department of Finance. For these
reasons, the Actual Available Appropriation figures may be different from the
sum of amounts provided in earlier Appropriation Acts.
70 More details about the appropriations in Schedule 2 are contained in the
portfolio statements and the second reading speech for the Bill.
Explanatory Memorandum to Appropriation Bill (No. 2) 2016-2017
House of Representatives 15