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2013-2014
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION BILL (NO. 4) 2013-2014
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
Act (No. 2) Appropriation Act (No. 2) 2013-2014
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
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
LI Act Legislative Instruments Act 2003
Portfolio Portfolio Additional Estimates Statements and
Statements Portfolio Budget Statements
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
House of Representatives 1
Outline
Appropriation Bill (No. 4) 2013-2014
General Outline
1 This Explanatory Memorandum accompanies Appropriation Bill (No. 4)
2013-2014 (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 amounts appropriated through the
Appropriation Acts that implemented the 2013-2014 Budget of the previous
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. 3)
2013-2014. Other annual appropriations that are not for the ordinary annual
services of the Government are proposed in Appropriation (Parliamentary
Departments) Bill (No. 2) 2013-2014. Together these three Bills are termed the
Additional Estimates Appropriation Bills.
4 The Portfolio Additional Estimates Statements are published and tabled in
the Parliament in relation to the Bill. This Explanatory Memorandum should be
read in conjunction with the various 2013-2014 Portfolio Statements (being the
Portfolio Budget Statements that accompanied the 2013-2014 Budget and the
Portfolio Additional Estimates Statements) which contain details on the
appropriations set out in the Schedules of the Bills.
Structure of appropriations in the Bill
5 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).
6 Part 1 of the Bill deals with definitions, the interpretative role of the
Portfolio Statements and the concept of notional payments.
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.
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
House of Representatives 2
Outline
9 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 Health and Hospitals
Fund established by the Nation-building Funds Act 2008.
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
Schedule 1) 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, if enacted, would appropriate the amounts specified in Schedule 2.
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
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. 4) 2013-2014
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. 4) 2013-2014.
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 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. 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 both the
Portfolio Budget Statements (that accompanied the Appropriation Bills tabled at
the last Budget) and the Portfolio Additional Estimates 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. 4) 2013-2014
House of Representatives 5
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. 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
9 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:
State, 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).
10 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.
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
House of Representatives 6
Notes on clauses
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.
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
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 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.
12 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.
These payments are usually made pursuant to eligibility rules and conditions
established by the Government or Parliament. Specifically, the 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
13 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).
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
House of Representatives 7
Notes on clauses
14 As with administered items in Appropriation Bill (No. 3) 2013-2014, 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 programmes previously funded by special appropriations; and
an Agency's outcomes are changed to reflect new programme objectives,
strategies and/or activities.
15 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.
16 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);
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.
17 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
18 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, Schedule 1 to Appropriation Bill (No. 3) 2013-2014; Schedule 2 to
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
House of Representatives 8
Notes on clauses
Appropriation Act (No. 2) 2013-2014 (Act (No. 2)); or Schedule 1 to the
Appropriation Act (No. 1) 2013-2014.
19 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 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.
20 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.
Clause 10--Other departmental items
21 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.
22 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 other departmental
items can be subject to a reduction process in accordance with clause 13 of the
Bill. Under clause 13, a written request must be made to the Finance Minister to
enable a determination to be made to reduce an other departmental item of an
Agency.
23 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
24 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.
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
House of Representatives 9
Notes on clauses
25 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.
26 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.
27 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.
28 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.
29 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
30 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.
Clause 12--Reducing State, ACT, NT and local government
items and administered items
31 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.
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
House of Representatives 10
Notes on clauses
32 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.
33 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).
34 Subclause 12(3) provides that a determination made under subclause 12(2)
is a legislative instrument.
35 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, 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
36 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 other departmental item appropriation amounts to be reduced to
promote the efficient, effective, economical and ethical management of any
surplus appropriations. Agencies should only spend all of an administered assets
and liabilities item or an other departmental item if there are government
decisions to support that expenditure. Examples of where clause 13 may be
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
House of Representatives 11
Notes on clauses
appropriate to reduce an administered assets and liabilities item or an other
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 programme costing less than expected; or
a programme is abolished under government policy before the appropriation
is expended.
37 Where further Appropriation Bills can effect an appropriation reduction, for
example by reducing a proposed increase to appropriations, this approach may
also be taken to have reduced the appropriation.
38 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 an other 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 an other 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
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.
39 Subclause 13(2) enables the Finance Minister to make a written
determination to reduce an administered assets and liabilities item or an other
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).
40 Subclause 13(7) provides that a determination made under subclause 13(2)
is a legislative instrument.
41 Despite subsection 44(2) of the LI Act, which provides that instruments
made under annual Appropriation Acts are not subject to disallowance,
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
House of Representatives 12
Notes on clauses
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 an other 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.
42 Subclause 13(5) provides that a determination made under subclause 13(2)
once made, must not be rescinded, revoked, amended or varied, other than to
correct an error. Subclause 13(5) applies despite 33(3) of the AI Act, which would
otherwise allow the Minister to repeal, rescind, revoke, amend or vary any such
instrument. 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.
Clause 14--Reducing CAC Act body payment items
43 Clause 14 provides a similar process for reducing CAC Act body payment
items to the process for reducing administered assets and liabilities items and
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 to request the Finance Minister to reduce a CAC Act body
payment item for a body in the Finance portfolio. 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.
44 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).
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
House of Representatives 13
Notes on clauses
45 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.
46 Subclause 14(8) provides that a determination made under subclause 14(2)
is a legislative instrument.
47 Despite subsection 44(2) of the 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.
48 Subclause 14(5) provides that a determination made under subclause 14(2)
once made, must not be rescinded, revoked, amended or varied, other than to
correct an error. 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,
which would otherwise allow the Minister to repeal, rescind, revoke, amend or
vary any such instrument from determinations made under subclause 14(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.
Clause 15--Advance to the Finance Minister
49 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 inadequate1. 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.
50 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.
51 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
1
Under the AFM guidelines, expenditure is urgent if required within two weeks. The guidelines
are available at:
http://www.finance.gov.au/budget/budget-process/advance-to-finance-minister.html.
Explanatory Memorandum to Appropriation Bill (No. 4) 2013-2014
House of Representatives 14
Notes on clauses
subsection 15(3) of Act (No. 2) when the Bill commences. From the date this Bill
commences as an Act the total amount that can be determined under the AFM will
again be $380 million.
52 Subclause 15(2) prevents 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 programme and an
advanced amount of $5 million is determined by the Finance Minister under Act
(No. 2) for a particular payment under that programme, then the amount
appropriated by the Bill, once enacted, will be reduced by $5 million (i.e.
appropriating only $15 million for the programme).
53 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 that Act are satisfied.
Part 4--General drawing rights limits
Clause 16--General drawing rights limits
54 Clause 16 specifies a new general drawing rights limit for one of the
Nation-building Funds Act 2008 by altering the operation of section 16 in
Act (No. 2). 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 the Nation-building Funds Act 2008.
55 The general drawing rights limit declared in the Bill for the Health and
Hospitals Fund (HHF) replaces the HHF general drawing rights limit declared in
Act (No. 2). The general drawing rights limits for the Building Australia Fund
(BAF) and the Education Investment Fund (EIF) are unchanged.
56 In addition, the GDRLs specified in Act (No. 2) for the Federal Financial
Relations Act 2009 are unchanged. These GDRLs relate to general purpose
financial assistance and national partnership payments.
57 The change to the 2013-2014 HHF general drawing rights limit reflects
minor adjustments in the timing of payments from the Fund.
Nation-building Funds Act 2008
58 For the purposes of section 267 of the Nation-building Funds Act 2008,
clause 16 of the Bill provides that the general drawing rights limit for the HHF for
the current year is $810,307,940.
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Notes on clauses
59 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.
60 It is important to note that the Bill will not appropriate amounts to be paid
from the HHF. The intention for specifying a general drawing rights limit in
clause 16 of the Bill is to set a maximum limit 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 limit applies.
61 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.
62 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.
63 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.
Part 5--Miscellaneous
Clause 17--Crediting amounts to Special Accounts
64 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) 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 18--Conditions etc. applying to State, ACT, NT and local
government items
65 Clause 18 deals with Parliament's power under section 96 of the
Constitution to provide financial assistance to the States. Clause 18 delegates the
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Notes on clauses
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 18(2)(a); and
the amounts and timing of those payments: paragraph 18(2)(b).
66 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.
67 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 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
68 Clause 19 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.
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, the amount appropriated in
Act (No. 2), which is printed in italics and labelled as "Budget Appropriation".
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Notes on clauses
The amount printed as the Budget Appropriation is an estimate that does not
affect the amount available at law.
72 Schedule 2 also includes, for information purposes, a figure for the previous
financial year printed in light figures labelled the "Actual Available
Appropriation". That figures provides a comparison with the proposed
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 FMA Act plus adjustments such as AFMs and reductions by the
Finance Minister. In some instances the figure may also be affected by limits
applied administratively by the Department of Finance. The Actual Available
Appropriation is an estimate that does not affect the amounts available at law.
73 More details about the appropriations in Schedule 2 are contained in the
Portfolio Statements and the second reading speech for the Bill.
74 The following Agencies appear in an annual Appropriation Bill for the first
time:
the Asbestos Safety and Eradication Agency, established on 1 August 2013
by the Asbestos Safety and Eradication Agency Act 2013; and
the National Disability Insurance Scheme Launch Transition Agency,
established on 1 July 2013 by the National Disability Insurance Scheme
Act 2013.
75 These Agencies could not, therefore, have appropriations proposed for them
in Act (No. 2), which was introduced into the House of Representatives on
14 May 2013.
Machinery of Government changes
76 Since the commencement of Act (No. 2), there have been changes to
Departments and Agencies pursuant to the Machinery of Government changes
from the Administrative Arrangements Order (AAO) of 18 September 2013, as
amended on 3 October 2013 and 12 December 2013.
77 On 18 September 2013, the Governor-General in Council acting on the
Prime Minister's recommendation under section 64 of the Constitution:
Abolished the following Departments of State:
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.
Established the following Departments of State:
the Department of Education; and
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Notes on clauses
the Department of Employment.
Renamed the Departments of State in the first column to the names in the
second column:
Before 18 September 2013 After 18 September 2013
Department of Agriculture, Department of Agriculture
Fisheries and Forestry
Department of Broadband, Department of Communications
Communications and the Digital
Economy
Department of Sustainability, Department of the Environment
Environment, Water, Population
and Communities
Department of Infrastructure and Department of Infrastructure and
Transport Regional Development
Department of Finance and Department of Finance
Deregulation
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 Department of Immigration and
Citizenship Border Protection
Department of Industry, Innovation, Department of Industry
Climate Change, Science, Research
and Tertiary Education
78 Schedule 1 and Schedule 2 to this Bill therefore differ to Schedule 1 and
Schedule 2 of Act (No. 2) in the following ways:
they refer to the new names of Departments as a result of the AAO; and
they include transferred outcomes in relation to transferred functions
between Departments and Agencies.
79 One of the ways these AAOs were implemented was through the
Acts Interpretation (Substituted References - Section 19B) Order 1997. This
Order altered references to the names of Departments in Schedule 1 and
Schedule 2 of Act (No. 2) to reflect these AAOs.
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