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2010-2011
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION BILL (NO. 4) 2010-2011
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance and Deregulation,
Senator the Honourable Penny Wong)
Table of Acronyms and Defined Terms
Act No. 1 Appropriation Act (No. 1) 2010-2011
Act No. 2 Appropriation Act (No. 2) 2010-2011
AEs Additional Estimates
AFM Advance to the Finance Minister
AI Act Acts Interpretation Act 1901
BAF Building Australia Fund
CAC Act Commonwealth Authorities and Companies Act
1997
CRF Consolidated Revenue Fund
EIF Education Investment Fund
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
LI Act Legislative Instruments Act 2003
PAES Portfolio Additional Estimates Statements
PBS Portfolio Budget Statements
House of Representatives page 1 Appropriation Bill (No. 4) 2010-2011
Outline
Appropriation Bill (No. 4) 2010-2011
General Outline
1 This explanatory memorandum accompanies Appropriation Bill (No. 4)
2010-2011 (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 in addition to those provided in the 2010-2011
Budget.
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. 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. 3) 2010-2011.
Together Appropriation Bill (No. 3) 2010-2011 and the Bill are termed the
Additional Estimates (AEs) appropriation Bills.
4 This Explanatory Memorandum should be read in conjunction with the
various Portfolio Statements, in particular:
(a) the Portfolio Additional Estimates Statements (PAES) which
contain detail on the appropriations set out in Schedule 2 to the
Bill and are published and tabled in the Parliament in relation to
the Bill; and
(b) Portfolio Budget Statements (PBS) that were published and
tabled in the Parliament in relation to the Appropriation Bill
(No. 1) 2010-2011 and Appropriation Bill (No. 2) 2010-2011.
Structure of appropriations in the Bill
5 The Bill provides for the appropriation of specified amounts for
expenditure by Australian Government agencies (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 bodies).
6 Part 1 of the Bill deals with definitions, the interpretative role of the
Portfolio Statements and the concept of notional payments.
House of Representatives page 2 Appropriation Bill (No. 4) 2010-2011
Outline
7 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), other departmental items (clause 10) and CAC Act body
payment items (clause 11).
8 Part 3 of the Bill specifies the ways in which the amounts in Schedule 2
may be adjusted.
9 Part 4 deals with the general drawing rights limits applicable for the
current year (current year is defined in clause 3 of the Bill) to the Building
Australia Fund (BAF), Education Investment Fund (EIF) and the Health and
Hospitals Fund (HHF) established by the Nation Building Funds Act 2008. 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".
10 Part 5 deals with credits to Special Accounts (clause 17), the conditions
that apply to payments of State, ACT, NT and local government items
(clause 18) and provides for amounts to be appropriated as necessary
(clause 19). Clause 19 recognises that the appropriations proposed in the Bill
may also be varied by the FMA Act.
Financial Impact
11 The Bill will appropriate the amounts specified in Schedule 2.
House of Representatives page 3 Appropriation Bill (No. 4) 2010-2011
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. 4) 2010-2011.
Clause 2--Commencement
2 Clause 2 provides for the Bill to commence as an Act on the day of
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 (PBS and PAES) are
extrinsic material 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. The purpose of the
Portfolio Statements are 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 at clause 3, to mean the PBS and PAES.
Clause 5--Notional payments, receipts etc.
5 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.
House of Representatives page 4 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
6 Clause 5 provides that notional transactions between agencies are to be
treated as if they were 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. 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. 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
7 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 the provisions in
Part 3 of the Bill. In particular:
· States, ACT, NT and local government items and administered items may
be reduced in accordance with clause 12;
· Administered assets and liabilities items and other departmental items
may be reduced in accordance with clause 13;
· CAC Act body payment items may be reduced in accordance with
clause 14; and
· items may be increased by a determination under clause 15 (Advance to
the Finance Minister).
8 The amounts in Schedule 2 of the Bill may be adjusted further in
accordance with sections 30, 30A, 31 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
House of Representatives page 5 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
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 recovered 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.
· Departmental items may be increased to take into account certain other
amounts received by an agency, if those receipts are prescribed by the
FMA Regulation 15, in accordance with section 31 of the FMA Act. For
example FMA Regulation 15 prescribes amounts that offset costs in
relation to the activities of an agency and amounts that relate to an
employee's leave (including amounts received by an agency under the
new paid parental leave scheme that was established on 1 January 2011).
FMA Regulation 15 also establishes a mechanism for agencies to hold
money in a trust or similar arrangement as departmental.
· 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
9 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.
House of Representatives page 6 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
10 Clauses 7 and 18 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. There is a process in clause 12 for dealing with State, ACT,
NT and local government items that are not fully expensed or spent during the
year.
Clause 8--Administered items
11 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". As with administered items in
Appropriation Bill (No. 3) 2010-2011, New Administered Outcomes are
appropriated separately for outcomes (i.e. unlike departmental items, the split
across outcomes is not notional), making it clear what the funding is intended to
achieve. Schedule 2 specifies how much can be expended on each outcome.
New Administered Outcomes are 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 programs previously funded by special appropriations; and
· an agency's outcomes are changed to reflect new program objectives,
strategies and/or activities.
12 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. The outcomes are not, however,
necessarily tied to the existence of a particular agency (e.g. abolishing a
department will not affect the valid operation of an appropriation for an
administered item for an outcome of that department, because the purpose of
the appropriation does not depend on the existence of the department).
13 New administered outcomes are those administered by an agency on
behalf of the Government (e.g. certain grants, benefits and transfer payments).
House of Representatives page 7 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
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;
· administered items must be spent in accordance with rules and conditions
established by the Government or the Parliament; and
· there is a process in clause 12 for dealing with administered items that are
not fully expensed or spent during the financial year.
14 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
15 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
the Bill, Schedule 1 to the Appropriation Act (No. 1) 2010-2011 (Act No. 1),
Schedule 2 to the Appropriation Act (No. 2) 2010-2011 (Act No. 2) or
Schedule 1 to Appropriation Bill (No. 3) 2010-2011.
16 Amounts appropriated for administered assets and liabilities items can be
subject to a reduction process in accordance with clause 13 of the Bill. Under
clause 13, the Minister responsible for an agency may make a written request to
ask the Finance Minister to make a written determination to reduce an item of
an agency. If the Finance Minister is responsible for the agency, the Chief
Executive of the agency may make the request.
17 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.
House of Representatives page 8 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
Clause 10--Other departmental items
18 Clause 10 appropriates departmental non-operating appropriations in the
form of equity injections and loans, 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
· "loans" can be provided to agencies when an investment in future
departmental activities is expected to result in a direct return such as an
efficiency saving (these are generally not formal loans established in
contracts).
19 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. 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. Amounts
appropriated for another departmental item can be subject to a reduction process
in accordance with clause 13 of the Bill.
20 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
21 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.
22 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.
House of Representatives page 9 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
23 CAC Act body payments are initiated by requests to the relevant portfolio
agencies 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.
24 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) 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.
25 The full amount of the CAC Act body payments specified in Schedule 2
may be reduced in accordance with clause 14. Subclause 14(6) provides that
subclause 11(2) does not prevent the CAC Act body payments in Schedule 2
being reduced.
26 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--Adjusting appropriation items
27 Part 3 of the Bill provides for reductions or increases to the amounts
specified in Schedule 2. The reduction provisions are contained in clauses 12
through 14 inclusive. The Advance to the Finance Minister provision that can
increase the amounts specified in Schedule 2 is contained in clause 15.
28 Clauses 12, 13 and 14 were amended in the 2009-2010 Appropriation
Bills, by introducing additional mechanisms for initiating the reduction of
unspent items. This has the purpose of increasing the efficiency of the reduction
process particularly when surplus appropriations result from government
decisions.
House of Representatives page 10 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
Clause 12--Reducing State, ACT, NT and local government
items and administered items
29 Clause 12 provides for amounts of State, ACT, NT and local government
items and administered items which are not required at the end of the current
year to be extinguished. If the Government then decides that the amounts
should be spent in a later financial year, it must request Parliament to
appropriate these amounts in future Appropriation Bills.
30 Clause 12 limits the amount that may be applied for those items to the
amount reported in an agency's annual report. Subclause 12(1) provides that if
the amount published in the annual report is less than the amount of the item,
then the relevant item is taken to be reduced to the amount specified in the
annual report. The amount of the item specified in Schedule 2 of the Bill may
be increased or reduced by the other clauses of Part 3 of the Bill or in
accordance with sections 30, 30A and 32 of the FMA Act. The amount in the
annual report must therefore be compared with the amount for the item in
Schedule 2, together with any adjustments that have been made to that amount.
31 Subparagraph 12(2)(a)(i) retains a power for the Finance Minister to
make a written determination specifying that subclause 12(1) does not apply in
relation to the item. Subparagraph 12(2)(a)(ii) enables the Finance Minister to
determine that an amount published in the financial statements of an agency is
taken to be an amount specified in his or her determination. The power in
paragraph 12(2)(b) is to ensure that the amount published for the item can be
corrected if, for example, the amount is erroneous. Additionally, the power in
paragraph 12(2)(b) is to provide the Finance Minister with the capacity to make
a written determination in those cases where an agency has failed to specify a
required amount in its annual report. In those cases, the amount specified in the
determination as the required amount will be taken to be the required amount
for the purposes of subclause 12(1).
32 Subclause 12(3) provides that a determination made under
subclause 12(2) is a legislative instrument. Despite subsection 44(2) of the
Legislative Instruments Act 2003 (LI Act), which provides that instruments
made under annual Appropriation Acts are not subject to disallowance,
subclause 12(3) provides that a determination reducing a State, ACT, NT and
local government items or an administered item is subject to disallowance in
accordance with section 42 of the LI Act. Parliament retains the power to
disallow a determination to reduce one or more of these items because the
determination will reduce the amount of an appropriation authorised by
Parliament. Subclause 12(3) also confirms subsection 54(2) of the LI Act,
House of Representatives page 11 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
which provides that instruments made under Appropriation Acts are not subject
to sunsetting.
Clause 13--Reducing administered assets and liabilities items
and other departmental items
33 Clause 13 provides a process for reducing administered assets and
liabilities items and other departmental items. Generally, these items remain
available until the appropriation is spent or reduced in accordance with
clause 13. This clause enables surplus departmental item appropriation amounts
to be reduced to promote the efficient, effective, economical1 and ethical
management of any surplus appropriations. Agencies should only spend all of
an administered assets and liabilities item or another departmental item if there
are government decisions to support that expenditure. Examples of where
clause 13 may be appropriate to reduce an administered assets and liabilities
item or another departmental item include:
· an excessive amount of appropriation was made in error;
· an amount is reclassified and appropriated again under another kind of
appropriation (e.g. where an amount appropriated as departmental is to be
reclassified as administered and a new administered appropriation is
provided). The existing departmental appropriation remains legally
available even though there is no Government authority to spend the
funds;
· efficiency savings result in a program costing less than expected; or
· a program is abolished under government policy before the appropriation
is expended.
34 Paragraph 13(1)(a) enables the Prime Minister, or a Minister acting on
behalf of the Prime Minister, to request the Finance Minister to reduce an
administered assets and liabilities item or another departmental item for an
agency. Paragraph 13(1)(b) enables the Minister responsible for a particular
agency to request the Finance Minister to reduce an administered assets and
liabilities item or another departmental item for an agency for which they are
responsible. Paragraph 13(1)(c) enables the Chief Executive of an agency for
which the Finance Minister is responsible, to request the Finance Minister to
1
The definition of "proper use" of Commonwealth resources in subsection 44(3) of the FMA
Act will be amended to include "economical" from 1 March 2011 by section 5A of the
Financial Framework Legislation Amendment Act 2010.
House of Representatives page 12 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
reduce an administered assets and liabilities item or an other departmental item
for that agency. Subclause 13(6) assists readers by noting that a request under
subclause 13(1) is not a legislative instrument within the meaning of section 5
of the LI Act, on the basis that it is requesting a determination to be made and it
is the determination that has substantive effect.
35 Subclause 13(2) enables the Finance Minister to make a written
determination to reduce an administered assets and liabilities item or another
departmental item. The Finance Minister is not obliged to act on a request to
reduce excess appropriations. However, if the Finance Minister does:
· the determination must be for the amount specified in the request:
subclause 13(2);
· the determination may not reduce the item below nil: subclause 13(3); and
· the item in Schedule 2 will be taken to be reduced in accordance with the
determination of the Finance Minister: subclause 13(4).
36 Subclause 13(5) provides that a determination made under
subclause 13(2) once made, must not be rescinded, revoked, amended or varied.
Subclause 13(5) applies despite 33(3) of the AI Act. This subclause intends to
exclude the operation of 33(3) of the AI Act from determinations made under
subclause 13(2). The purpose of subclause 13(5) is to ensure that the
appropriation, if reduced under the clause, cannot be restored by means of a
later determination.
37 Subclause 13(7) provides that a determination made under
subclause 13(2) is a legislative instrument. Despite subsection 44(2) of the
LI Act, which provides that instruments made under annual Appropriation Acts
are not subject to disallowance, subclause 13(7) provides that a determination
reducing an administered assets and liabilities item or other departmental item,
is subject to disallowance in accordance with section 42 of the LI Act.
Parliament retains the power to disallow a determination to reduce a
departmental item because any such determination will reduce the amount of an
appropriation authorised by Parliament. Subclause 13(7) also confirms
subsection 54(2) of the LI Act, which provides that instruments made under
annual Appropriation Acts are not subject to sunsetting.
Clause 14--Reducing CAC Act body payment items
38 Clause 14 provides a similar process for reducing CAC Act body payment
items to the process for reducing administered assets and liabilities items and
House of Representatives page 13 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
other departmental items. Paragraph 14(1)(a) enables the Prime Minister, or a
Minister acting on behalf of the Prime Minister, to request that the Finance
Minister reduce a CAC Act body payment item for an agency.
Paragraph 14(1)(b) enables the Minister responsible for a particular agency to
request the Finance Minister to reduce a CAC Act body payment item for a
body for which they are responsible. Paragraph 14(1)(c) enables the Secretary
of the Department of Finance and Deregulation to request the Finance Minister
to reduce a CAC Act body payment item for a body in the Finance and
Deregulation portfolio.
39 Subclause 14(7) assists readers by noting that a request under
subclause 14(1) is not a legislative instrument within the meaning of section 5
of the LI Act, on the basis that it is requesting a determination to be made and it
is the determination that has substantive effect.
40 Subclause 14(2) enables the Finance Minister to make a written
determination to reduce a CAC Act body payment item. The Finance Minister
is not obliged to act on a request to reduce an excess CAC Act body payment
item. However, if the Finance Minister does:
· the determination must be for the amount specified in the request:
subclause 14(2);
· the determination may not reduce the CAC Act body payment item below
nil: subclause 14(3); and
· the CAC Act body payment item in Schedule 2 will be taken to be
reduced in accordance with the determination of the Finance Minister:
subclause 14(4).
41 Subclause 14(5) provides that a determination made under
subclause 14(2) once made, must not be rescinded, revoked, amended or varied.
Subclause 14(5) applies despite subsection 33(3) of the AI Act. This subclause
intends to exclude the operation of subsection 33(3) of the AI Act from
determinations made under subclause 4(2). The purpose of subclause 14(5) is to
ensure that the appropriation, if reduced under the clause, cannot be restored by
means of a later determination.
42 Subclause 14(6) provides that the full amount that is required to be paid to
a CAC Act body by subclause 11(2) of the Bill may be reduced in accordance
with this clause 14.
43 Subclause 14(8) provides that a determination made under
subclause 14(2) is a legislative instrument. Despite subsection 44(2) of the
House of Representatives page 14 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
LI Act, which provides that instruments made under annual Appropriation Acts
are not subject to disallowance, subclause 14(8) provides that a determination
reducing a CAC Act body payment item is subject to disallowance in
accordance with section 42 of the LI Act. Parliament retains the power to
disallow a determination to reduce a CAC Act body payment item because any
such determination will reduce the amount of an appropriation authorised by
Parliament. Subclause 14(8) also confirms subsection 54(2) of the LI Act,
which provides that instruments made under annual Appropriation Acts are not
subject to sunsetting.
Clause 15--Advance to the Finance Minister
44 Section 15 of Act No. 2 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).
Subsection 15(3) of Act No. 2 provides that the total amount that can be
determined under the AFM provision is $380 million.
45 Clause 15 of the Bill provides that irrespective of the amounts issued
from the AFM before the commencement of the Bill, the amount available
under section 15 of Act No. 2 will be restored to the original amount of
$380 million. The provision has been added to the Bill to ensure that there will
be sufficient scope to provide amounts from the AFM for the remainder of the
financial year.
46 Subclause 15(1) specifies that if the Finance Minister has determined
under subsection 15(2) of Act No. 2 to increase an amount in Schedule 2 of Act
No. 2 from the AFM, then the amount is to be disregarded for the purposes of
subsection 15(3) of Act No. 2 when the Bill commences. From the date the Bill
commences the total amount that can be determined under the AFM will be
$380 million. Subclause 15(2) will prevent appropriations for the same
expenditure from both the AFM and the Bill. Subclause 15(2) ensures that if
Schedule 2 of the Bill provides an amount for a particular expenditure and,
prior to the commencement of the Bill, the Finance Minister determines an
amount from the AFM under section 15 of Act No. 2 for the same expenditure
(the advanced amount), then the appropriation in the Bill will be reduced by the
amount of the advanced amount. For example if the Bill provides $20 million
for a program and an advanced amount of $5 million is determined by the
Finance Minister under Act No. 2 for a particular payment under that program,
then the amount appropriated by the Bill, once enacted, will be reduced by $5
million (i.e. appropriating only $15 million for the program).
House of Representatives page 15 Appropriation Bill (No. 4) 2010-2011
Notes on clauses
47 The Finance Minister may continue to make determinations under
subsection 15(2) of Act No. 2 to add an amount from the AFM to an item of an
agency if the criteria in subsection 15(1) of Act No. 2 are satisfied.
Part 4--General drawing rights limits
Clause 16 - General drawing rights limits
48 Clause 16 specifies three new general drawing rights limits for the
Nation-building Funds Act 2008 and a new general drawing rights limit for the
Federal Financial Relations Act 2009 by altering the operation of section 16 in
Appropriation Act (No. 2) 2009-2010. The general drawing rights limits provide
Parliament with a mechanism by which it may review the maximum amounts
that can be paid under each of these Acts in a financial year. Note that this
clause is not an appropriation for either of the Nation-building Funds Act 2008
or and Federal Financial Relations Act 2009.
49 The general drawing rights limits declared in the Bill for the Building
Australia Fund (BAF), Education Investment Fund (EIF),and Health and
Hospitals Fund (HHF) replace the BAF, EIF and HHF general drawing rights
limits declared in Act No. 2.
50 The changes to the 2010-11 BAF, EIF and HHF general drawing right
limits reflect minor adjustments in the timing of payments from the Funds.
Nation-building Funds Act 2008
51 For the purposes of section 109 of the Nation-building Funds Act 2008,
subclause 16(1) provides that the general drawing rights limit for the Building
Australia Fund (BAF) for the current year is $1,321,100,000
52 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, communications infrastructure, energy infrastructure and water
infrastructure. The general drawing rights limit does not apply to payments for
eligible Nation Broadband Network matters.
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Notes on clauses
53 For the purposes of section 199 of the Nation-building Funds Act 2008,
subclause 16(2) provides that the general drawing rights limit for the Education
Investment Fund (EIF) for the current year is $1,236,958,000.
54 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.
55 For the purposes of section 267 of the Nation-building Funds Act 2008,
subclause 16(3) provides that the general drawing rights limit for the Health
and Hospitals Fund (HHF) for the current year is $1,104,153,330.
56 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.
57 It is important to note that this Bill will not appropriate amounts to be
paid from the BAF, the EIF or the HHF. The intention for specifying general
drawing rights limits in subclauses 16(1) to 16(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.
58 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 16 places a limit over the amount of drawing rights
that may be issued.
59 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
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Notes on clauses
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.
60 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
61 For the purposes of paragraph 9(3)(b) of the Federal Financial Relations
Act 2009, subclause 16(4) provides that the general drawing rights limit for
general purpose financial assistance for the current year is $1,500,000,000.
62 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 of making a grant of general purpose financial assistance to a State,
the Australian Capital Territory or the Northern Territory.
63 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.
64 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.
65 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 subclause 16(4) 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.
66 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
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Notes on clauses
to various officials. Clause 16 places a limit over the amount of drawing rights
that may be issued.
67 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 are
committed for expenditure.
Part 5--Miscellaneous
Clause 17--Crediting amounts to Special Accounts
68 Clause 17 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) or by another Act (section 21). The determination or Act that
establishes the Special Account will specify the purposes of the Special
Account.
Clause 18--Conditions etc. applying to State, ACT, NT and
local government items
69 Clause 18 deals with Parliament's power under section 96 of the
Australian Constitution to provide financial assistance to the States. Clause 18
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, the ACT and NT and
local councils may be made: paragraph 18(2)(a); and
· the amounts and timing of those payments: paragraph 18(2)(b).
70 Subclause 18(4) provides that determinations made under subclause 18(2)
are not legislative instruments, because these determinations are not altering the
appropriations approved by Parliament. Determinations under subclause 18(2)
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.
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Notes on clauses
71 Although financial assistance is provided to the ACT, NT and local
government authorities 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 18(5) also notes that clause 18 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 19--Appropriation of the Consolidated Revenue Fund
72 Clause 19 provides that the CRF is appropriated as necessary for the
purposes of the Bill. Significantly, this clause notes that the amounts
appropriated by the Bill may be affected by the FMA Act, in particular
sections 30, 30A and 32 of the FMA Act (see clause 6).
Schedule 1--Payments to or for the States, ACT, NT and local
government
73 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
74 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.
75 Schedule 2 includes, for information purposes, a figure for the previous
financial year labelled the Actual Available Appropriation. The figure is printed
in italics under each appropriation amount to provide a comparison with the
proposed appropriations. The Actual Available Appropriation does not affect
the amounts available at law.
76 More details about the appropriations in Schedule 2 are contained in the
Portfolio Statements and the second reading speech.
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