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Appropriation Bill (No.3) 1998-99



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Bills Digest No. 68  1998-99

 

Appropriation Bill (No.3) 1998-99

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Contents

 

 

Passage History

Appropriation Bill (No.3) 1998-99

Date Introduced: 3 December 1998

House:  House of Representatives

Portfolio:  Finance and Administration

Commencement:  On Royal Assent

Purpose

To authorise the Minister for Fin ance to issue an additional $1 382 330 000 from the Consolidated Revenue Fund (CRF), in addition to funds appropriated by the Appropriation Act (No.1) 1998-99 , for the ordinary annual services of the government.

Background

Annual authorisations for expend iture are contained in:

•  Appropriation Act (No. 1) , which authorises expenditure for the ordinary annual services of government

•  Appropriation Act (No. 2) , which authorises expenditure on capital works and services, payments to the States and other purposes not authorised by special legislation, and

•  Appropriation (Parliamentary Departments) Act (No.1) , which authorises expenditure for the five parliamentary departments.

If the initial appropriation is insufficient for the financial year additional appr opriations may be sought. These additional appropriations are known as additional estimates - their purpose being to meet essential and unavoidable expenditures.

Glossary of Terms

Appropriation - is the setting apart, assigning or applying to a particular use or to a particular person a sum of money. In the budget context an appropriation usually refers to an authorisation by Parliament to draw on funds from the CRF.

Budget Outlays - refer to the net cost to the taxpayer of providing government services. Appropriations/payments out of the CRF are adjusted to take account (for example) of many government receipts. Hence a hypothetical government program 'XYZ' may have a total appropriation of $600 million but this may only represent budget outlays of $500 million if the 'XYZ' receives income of $100 million from other (non-budget) sources.

Running costs - are the full current and minor capital costs incurred by a department or agency in providing government services for which the department or agency is responsible. For many departments, staff salaries will represent the largest proportion of such costs.

Carryovers - are the mechanism by which funds appropriated for running costs in one year can be spent in some future year. The rationale for carrying forward unspent funding is based upon flexibility. Carryovers also reduce the incentive for unnecessary end-of-year spending and allow managers to plan spending without being restricted by cut-off dates. Up to 10 per cent of the total running costs budget can be carried forward from any one year.

Borrowings - Borrowings allow agencies to bring forward some future years' appropriation to be spent in an earlier year. This is intended to provide agencies with the flexibility to respond to changing spending priorities; and a mechanism to meet unforeseen costs.

Borrowings are arranged either through annual appropriation or additional estimates Bills, with a consequent reduction in a future appropriation, or through the Provision for Running Costs Borrowings (PRCB). The PRCB is a reserve that agencies can draw on to borrow running costs funds from future appropriation where it is not viable to wait until the passage of the next Appropriation Bill. Agencies can borrow from the PRCB if:

• there is a legitimate reason to borrow running costs

• the agency has a running costs appropriation

• the borrowings are repaid in full from some future appropriation, and

• sufficient funds are available.

• Agencies are allowed to borrow up to 10% of the total running costs budget f rom any one year.

It is suggested that this Bills Digest be read in conjunction with the Parliamentary Research Service Budget Review 1998-99 .

Outline of Major Additional Appropriations

Major additional appropriations effected by this Bill are:

• Attorney-General's Department - $27 680 000 is appropriated for the running costs of the Australian Federal Police (AFP). Most of this amount is associa ted with the AFP Reform program.(1)

• Department of Defence - Changing priorities has lead to an appropriation of $119 021 000 for running costs.(2) An appropriation of $22 329 000 is for compensation and legal services associated with the Military Compensation Scheme.(3) The Defence Housing Authority receives an appropriation of $58 052 000 to 'reposition itself in the market'.(4)

• Department of Employment, Workplace Relations and Small Business - $83 237 000 is appropriated for labour market training and assistance largely due to carryovers.(5) An amount of $2 085 000 is appropriated to meet the litigation costs of the waterfront dispute.(6)

• Department of Family and Community Services - $147 047 000 is appropriated for the running costs of Centrelink(7) which also receives an appropriation of $64 849 000 for delivery of income support services.(8) An amount of $32 267 000 is appropriated for child care assistance due to a delay in the implementation of the childcare smartcard.(9)

• Department of Health and Aged Care - $21 700 000 is appropriated for the running costs associated with additional funding for private health insurance initiatives.(10) An amount of $46 942 000 is appropriated to meet obligations in capital funding for residential facilities.(11) An amount of $39 060 000 is appropriated for contestable hearing services as a result of new contract arrangements with service providers and manufacturers.(12)

• Department of Industry, Science and Resources - $20 102 000 is appropriated for the running costs of the Australian Geological Survey Organisation. This includes imposition of a capital use charge for the Symonston building in Canberra of $18 387 000.(13) An amount of $18 579 000 is appropriated for bounty payments under the Bounty (Computers) Act 1984 to meet additional claims lodged and anticipated through to the end of the current financial year.(14)

• Department of the Treasury - $247 500 000 is appropriated for servicing the debt of the Australian National Railways Commission.(15)

Main Provisions

Clause 4 authorises the Minister for Finance to issue from the CRF a total of $1 382 330 000 in respect of the year ending 30 June 1999. The Schedule gives a portfolio and program break-up of the proposed expenditure.

Clause 6 authorises the Minister for Finance to issue additional funds in respect of increases in salaries in 1998-99.

Endnotes

 

1. Additional Estimates Statements 1998-99, Attorney-General's Portfolio, p.70.

2. Appropriations Bill (No.3) 1998-99, Second Reading Speech, Minister fo r Finance and Administration, the Hon. John Fahey, MP, 3 December 1998.

3. Ibid.

4. Ibid.

5. Ibid.

6. Additional Estimates Statements 1998-99, Employment, Workplace Relations and Small Business Portfolio, p.19.

7. Commonwealth Services Delivery Agency.

8.  Additional Estimates Statements 1998-99, Family and Community Services Portfolio, p.22.

9. Ibid., p.23.

10. Additional Estimates Statements 1998-99, Health and Aged Care Portfolio, p.6.

11. Ibid.

12. Appropriations Bill (No.3) 1998-99, Second Reading Speec h, Minister for Finance and Administration, the Hon. John Fahey, MP, 3 December 1998.

13. Additional Estimates Statements 1998-99, Industry, Science and Research Portfolio, p.32.

14. Ibid., p.21.

15. Additional Estimates Statements 1998-99, Treasury Portfo lio, p.16.

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Contact Officer

Ross Kilmurray

6 January 1999

Bills Digest Service

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