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2010-2011-2012-2013
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION (PARLIAMENTARY DEPARTMENTS) BILL (NO. 1)
2013-2014
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance and Deregulation,
Senator the Honourable Penny Wong)
Table of Acronyms and Defined Terms
AI Act Acts Interpretation Act 1901
CAC Act Commonwealth Authorities and Companies Act1997
CRF Consolidated Revenue Fund
Finance Minister Minister for Finance and Deregulation
FMA Act Financial Management and Accountability Act 1997
FMA Regulations Financial Management and Accountability
Regulations 1997
GST Goods and Services Tax
LI Act Legislative Instruments Act 2003
PB Statements Portfolio Budget Statements
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2013-2014
House of Representatives 1
Appropriation (Parliamentary Departments)
Bill (No. 1) 2013-2014
General Outline
1 This Explanatory Memorandum accompanies Appropriation (Parliamentary
Departments) Bill (No. 1) 2013-2014 (the Bill).
2 The main purpose of the Bill is to propose appropriations from the
Consolidated Revenue Fund (CRF) for expenditure in relation to the
Parliamentary Departments. Appropriations for the Parliamentary Departments
are not for the ordinary annual services of the Government, as is proposed in
Appropriation Bill (No.1) 2013-2014.
3 This Explanatory Memorandum should be read in conjunction with the
2013-2014 Portfolio Budget Statements (PB Statements) for the Parliamentary
Departments, which contain detail on the appropriations set out in Schedule 1 of
the Bill. The PB Statements are published and tabled in the Parliament in relation
to the Bill.
Structure of appropriations in the Bill
4 The Bill provides for the appropriation of specified amounts for expenditure
by the Parliamentary Departments.
5 Part 1 of the Bill deals with definitions, the interpretative role of the PB
Statements and the concept of notional payments.
6 Part 2 of the Bill proposes appropriations to make payments of the amounts
in Schedule 1 for departmental items (clause 7), administered items (clause 8),
administered assets and liabilities items (clause 9) and other departmental items
(clause 10).
7 Part 3 of the Bill specifies the ways in which the amounts in Schedule 1 may
be adjusted. In addition to the adjustment provisions in Part 3, clause 15 of the
Bill recognises that the appropriations in the Bill may also be varied by the
Financial Management and Accountability Act 1997 (FMA Act).
8 Part 4 of the Bill deals with miscellaneous items including matters relating
to Special Accounts and the appropriation of the Consolidated Revenue Fund.
Financial Impact
9 The Bill, if enacted, would appropriate the amounts specified in Schedule 1.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2013-2014
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Statement of Compatibility with Human Rights
1 The Bill provides for the appropriation of specified amounts for
expenditure by the Parliamentary Departments.
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 Budget Papers and the Portfolio Budget Statements.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2013-2014
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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 the
Appropriation (Parliamentary Departments) Act (No. 1) 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",
"current year", and "departmental item". Each Parliamentary Department is an
agency for the purposes of the FMA Act.
Clause 4--Portfolio Statements
4 Clause 4 declares that the PB 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. The purpose of the PB Statements is to provide
information on the proposed allocation of resources to the outcomes of the
parliamentary departments. The PB Statements provide information to enable
Parliament to understand the purpose of appropriations proposed in the Bill. The
term "Portfolio Statements" is defined in the Bill, at clause 3, to mean the
Portfolio Budget Statements.
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 1 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.
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.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2013-2014
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7 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
8 Clause 6 sets out the total of the appropriations in Schedule 1 of the Bill.
Importantly, the amounts in Schedule 1 may be adjusted under the provisions in
Part 3 of the Bill. In particular:
Departmental items, administered assets and liabilities items and other
departmental items may be reduced in accordance with clause 11;
Administered items may be reduced in accordance with clause 12; and
items may be increased by a payment from the advance to the responsible
Presiding Officer in accordance with clause 13.
9 The amounts in Schedule 1 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 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 a Parliamentary
Department 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 1 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 1. Section 30A also applies to notional
transactions between and within agencies.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2013-2014
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Departmental items may be increased to take into account certain other
amounts received by a Parliamentary Department, if those receipts are
prescribed by the FMA Regulations, in accordance with section 31 of the
FMA Act.
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--Departmental items
10 Clause 7 provides that the amount specified in a departmental item for a
Parliamentary Department may be applied for the departmental expenditure of the
Parliamentary Department. Clause 3 defines:
"departmental item" to be the total amount set out in Schedule 1 in relation
to a Parliamentary Department under the heading "Departmental"; and
"expenditure" to be payments for expenses, acquiring assets, making loans
or paying liabilities.
11 While the departmental items in Schedule 1 may be divided between
outcomes, the different amounts against outcomes are notional. The total
appropriation for departmental expenses represents the departmental item.
12 Departmental items involve costs over which a Parliamentary Department
has control. Departmental appropriations can be used to make any payment
related to the functions of the Parliamentary Department, including on purposes
covered by other items, whether or not they are in the Act for a Parliamentary
Department. Expenditure typically covered by departmental items includes
employee expenses, suppliers and other operational expenses (e.g. interest and
finance expenses).
13 Departmental items include amounts specifically to meet costs associated
with the acquisition and capitalised maintenance of existing departmental assets
valued at $10 million or less.
14 Departmental items are not expressed in terms of a particular financial year
and do not automatically lapse. Departmental items are available until they are
spent or reduced in accordance with clause 11 of this Bill. Because the cash to
meet expenses can be required at times other than when the expenses are incurred,
the departmental appropriations remain available until required.
15 The Finance Minister manages the payment from departmental items by the
Parliamentary Departments 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
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2013-2014
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Finance Minister (or the Finance Ministers delegate) in relation to those
activities.
16 Amounts appropriated for departmental items can be subject to a reduction
process in accordance with clause 11 of the Bill. Under clause 11, the responsible
Presiding Officer for a Parliamentary Department may make a written request
asking the Finance Minister to make a determination to reduce a Parliamentary
Departments departmental appropriation.
Clause 8--Administered items
17 Subclause 8(1) provides for the appropriation of administered expense
amounts to be applied by a Parliamentary Department for the purpose of
contributing to the outcome for an administered item. An administered item is
defined in clause 3 to be the amounts set out in Schedule 1 opposite an outcome
for a Parliamentary Department under the heading "Administered". These items
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 1 specifies how much can be expended on each outcome.
18 The appropriations for administered items in Schedule 1 represent the
amounts required to meet the total estimated expenses for the administered
outcomes for 2013-2014.
19 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 PB 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).
20 Administered expenses are those administered by a Parliamentary
Department. Specifically:
administered items are tied to outcomes (departmental items are not);
administered items must be spent in accordance with rules and conditions
established by Government or 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.
21 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 Ministers delegate) in relation to those activities.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2013-2014
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Clause 9--Administered assets and liabilities items
22 Clause 9 provides amounts in Schedule 1 to acquire new administered
assets, enhance existing administered assets and/or discharge administered
liabilities relating to activities administered by the Parliamentary Departments.
Administered assets and liabilities appropriations are provided for functions
managed by a Parliamentary Department. Administered assets and liabilities items
can also be applied for any outcomes of a Parliamentary Department.
23 Clause 11 ensures that Parliamentary Departments only have access to the
amount of appropriation required to fund activities in the year. Amounts
appropriated for administered assets and liabilities items can be subject to a
reduction process in accordance with clause 11 of the Bill. Under clause 11,
the responsible Presiding Officer for a Parliamentary Department may make a
written request to ask the Finance Minister to make a determination to reduce an
administered assets and liabilities item of a Parliamentary Department.
24 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 allow for conditions and limits to be set by the
Finance Minister (or the Finance Ministers delegate) in relation to those
payments.
Clause 10--Other departmental items
25 Clause 10 appropriates departmental non-operating appropriations in the
form of equity injections, over which the Parliamentary Departments also exercise
control. This clause provides that the amount specified in other departmental
items for a Parliamentary Department may be applied for the departmental
expenditure of the Parliamentary Department. In short, "equity injections" can be
provided to agencies to, for example, enable investment in assets to facilitate
departmental activities.
26 Other departmental items are not expressed in terms of a particular financial
year and do not automatically lapse. Other departmental items are available until
they are spent or reduced in accordance with clause 11. For example, equity
injection appropriations provide funding for the full costs of acquiring new assets
some of which might not be incurred until a later financial year. Amounts
appropriated for another departmental item can be subject to a reduction process
in accordance with clause 11 of the Bill.
27 The Finance Minister manages the payment from other department items by
Parliamentary Departments 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 Ministers delegate) in relation to those payments.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2013-2014
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Part 3--Adjusting appropriation items
Clause 11--Reducing departmental items, administered assets
and liabilities items and other departmental items
28 Departmental items, administered assets and liabilities items and other
departmental items remain available until the appropriations are spent or reduced
in accordance with clause 11. This clause enables surplus amounts to be reduced
to promote the efficient, effective and ethical management of any surplus
appropriations. Parliamentary Departments should only spend all of an
appropriation item if there are government decisions to support that expenditure.
29 Examples of where clause 11 may be appropriate to reduce one of these
items 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.
30 Subclause 11(1) enables the responsible Presiding Officer for a
Parliamentary Department to ask the Finance Minister to reduce one of these
items for that Parliamentary Department. Subclause 11(6) notes that a request
under subclause 11(1) is not a legislative instrument within the meaning of
section 5 of the Legislative Instruments Act 2003 (LI Act), on the basis that it is
requesting a determination to be made and it is the determination that has
substantive effect.
31 Subclause 11(2) enables the Finance Minister to make a written
determination to reduce one of those items. 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 11(2);
the determination may not reduce the item below nil: subclause 11(3); and
the item will be taken to be reduced in accordance with the determination of
the Finance Minister: subclause 11(4).
32 Subclause 11(5) provides that once a determination is made under subclause
11(2), it must not be rescinded, revoked, amended or varied, other than to correct
an error. Subclause 11(5) applies despite subsection 33(3) of the AI Act. This
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2013-2014
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subclause intends to exclude the operation of subsection 33(3) of the AI Act from
determinations made under subclause 11(2). The purpose of subclause 11(5) is to
ensure that the departmental item appropriation, when reduced under subclause
11(2), cannot be restored by means of a later determination.
33 Subclause 11(7) provides that a determination made under subclause 11(2)
is a legislative instrument.
34 Despite subsection 44(2) of the LI Act, which provides that instruments
made under annual Appropriation Acts are not subject to disallowance,
subclause 11(7) provides that a determination reducing a departmental item under
subclause 11(2) 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 11(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 12--Reducing administered items
35 Clause 12 provides for amounts of administered items not required after the
end of the current year to be extinguished. If the government then decides that
amounts should be spent in a later financial year, the government must request
Parliament to appropriate these amounts in future Appropriation Bills.
36 Clause 12 limits the amount that may be applied for an administered item to
the amount reported for that item in a Parliamentary Departments 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 administered item is taken to be reduced to
the amount specified in the annual report. The amount of the item specified in
Schedule 1 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 32of the FMA Act. The
amount in the annual report must therefore be compared with the amount for the
item in Schedule 1, together with any other adjustments that have been made to
that amount.
37 Subclause 12(2) retains a power for the Finance Minister to determine that
an amount published in the financial statements of a Parliamentary Department is
taken to be the amount specified in the Ministers determination. The power in
paragraph 12(2)(b) is to ensure that the amount published for the administered
item can be corrected if, for example, the amount is erroneous or requires
updating after the annual report is published.
38 Subclause 12(3) provides that a determination made under subclause 12(2)
is a legislative instrument.
39 Despite subsection 44(2) of the LI Act, which provides that instruments
made under annual Appropriation Acts are not subject to disallowance,
subclause 12(3) provides that a determination regarding an administered item is
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2013-2014
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subject to disallowance in accordance with section 42 of the LI Act. Parliament
retains the power to disallow a determination to reduce an administered item,
because any such 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 annual Appropriation Acts
are not subject to sunsetting.
Clause 13--Advance to the responsible Presiding Officer
40 Clause 13 provides an advance to the responsible Presiding Officer for each
of the Parliamentary Departments to be allocated when satisfied there is an urgent
need for expenditure during the 2013-2014 financial year, for which Schedule 1
does not provide a sufficient appropriation.
41 Subclause 13(1) establishes the criteria that the responsible Presiding
Officer must be satisfied about, before determining to add an amount from the
advance to an item of a Parliamentary Department. The responsible Presiding
Officer will consider issuing an amount under subclause 13(1) if satisfied there is
an urgent need for expenditure that is not provided for, or is insufficiently
provided for, in Schedule 1 because of an omission or understatement, or because
of unforeseen circumstances1. Generally, the other appropriation adjustment
options in Part 3 of the Bill or under sections 30, 30A and 32 of the FMA Act,
must have been exhausted before the responsible Presiding Officer will make a
determination under subclause 13(2).
42 Subclause 13(2) enables the responsible Presiding Officer to make a
determination to allocate an amount out of the advance to an item in Schedule 1,
to a new item not already in Schedule 1, or to a new outcome. Subclauses 13(3) to
(5) cap the amounts that can be allocated from the advance to each of the
Parliamentary Departments.
43 Subclause 13(6) provides that a determination under subclause 13(2) is a
legislative instrument, which is not subject to disallowance or sunsetting.
44 Disallowance of a subclause 13(2) determination could frustrate the purpose
of clause 13 which is to provide additional appropriation for urgent expenditure.
Parliament authorises the advance to the responsible Presiding Officer under
clause 13 so that there is an amount available to cover any potential urgent
requirements that may arise. A subclause 13(2) determination will not require any
additional appropriations to be authorised by Parliament. A subclause 13(2)
determination also differs from a ministerial determination under clause 11 or 12.
Determinations under those clauses will reduce the amount of an appropriation
approved by Parliament. As noted above, those other determinations therefore will
be subject to disallowance.
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 (Parliamentary Departments) Bill (No. 1) 2013-2014
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45 A subclause 13(2) determination is not subject to sunsetting provisions
because the amount allocated from the advance to the responsible Presiding
Officer will be extinguished when it is spent.
Part 4--Miscellaneous
Clause 14--Crediting amounts to Special Accounts
46 Clause 14 provides that if the purpose of an item in Schedule 1 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 another Act (section 21). The determination or Act that establishes
the Special Account will specify the purposes of the Special Account.
Clause 15--Appropriation of the Consolidated Revenue Fund
47 Clause 15 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 by the Bill may be
affected by the FMA Act, in particular sections 30, 30A and 32 of the FMA Act
(see clause 6), after the Bill receives the Royal Assent.
Schedule 1--Services for which money is appropriated
48 Schedule 1 specifies the services of the Parliamentary Departments for
which amounts will be appropriated. Schedule 1 contains a summary table which
lists the total amounts for the Parliamentary Departments and separate tables
detailing the appropriations for each Parliamentary Departments.
49 Schedule 1 includes for information purposes a figure for the previous
financial year printed in italics under each appropriation amount, labelled the
,,Actual Available Appropriation. That figure 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.
50 More details about the appropriations in Schedule 1 are contained in the
PB Statements and the second reading speech.
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