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Appropriation Bill (No. 4) 2009-2010

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2008-2009

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

 

Appropriation Bill (NO. 4) 2009-2010

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the Minister for Finance and Deregulation,

the Hon Lindsay Tanner MP)

 



Table of Acronyms and Defined Terms

 

 

AEs

Additional Estimates

AFM

Advance to the Finance Minister

AI Act

Acts Interpretation Act 1901

CAC Act

Commonwealth Authorities and Companies Act1997

CRF

Consolidated Revenue Fund

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

PAES

Portfolio Additional Estimates Statements

PBS

Portfolio Budget Statements

PSES

Portfolio Supplementary Estimates Statements



 

Appropriation Bill (No. 4) 2009-2010

General Outline

1                     This explanatory memorandum accompanies Appropriation Bill (No. 4) 2009-2010 (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 2009-2010 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) 2009-2010 . Together, Appropriation Bill (No. 3) 2009-2010 and Appropriation Bill (No. 4) 2009-2010 are termed the Additional Estimates (AEs) appropriation Bills.

4                     This Explanatory Memorandum should be read in conjunction with the various Portfolio Statements, in particular:

·                 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;

·                 the 2009-2010 Portfolio Budget Statements (PBS) that were published and tabled in the Parliament in relation to the Appropriation Bill (No. 1) 2009-2010 and Appropriation Bill (No. 2) 2009-2010 ; and

·                 the Portfolio Supplementary Estimates Statements (PSES) that were published and tabled in the Parliament in relation to the Appropriation (Water Entitlements and Home Insulation) Bill 2009-2010 and Appropriation (Water Entitlements) Bill 2009-2010.

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 various 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. In addition to the adjustment provisions in Part 3, clause 21 of the Bill recognises that the appropriations in the Bill may also be varied by the FMA Act.

9                     Part 4 of the Bill deals with the general drawing rights limits applicable for the current year (current year is defined in clause 3 of the Bill) to the, Education Investment Fund and the Health and Hospitals Fund established by the Nation building Funds Act 2008 . This Part also deals with adjustments to the general drawing rights limits for Goods and Services Tax (GST).

10                 Part 5 of the Bill deals with the reduction of departmental and administered items for the Parliamentary Departments in previous appropriation Acts.

11                 Part 6 deals with credits to Special Accounts (clause 19), the conditions that apply to payments from State, ACT, NT and local government items (clause 20) and provides for amounts to be appropriated as necessary (clause 21). Clause 21 recognises that the appropriations proposed in the Bill may also be varied by the FMA Act.

Financial Impact

12                 The Bill will appropriate the amounts specified in Schedule 2.



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) Act 2009-2010 .

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’, ‘CAC Act body payment item”, ‘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, PSES and the 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 is to provide information on the proposed allocation of resources to Government outcomes by agencies within the portfolio. The Portfolio Statements provide information to enable Parliament to understand the purpose of appropriations proposed in the Bill. The Portfolio Statements are defined in the Bill, at clause 3, to mean the PBS, PSES and the 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.

6                     Clause 5 provides that notional transactions between agencies are to be treated as if they were real transactions and therefore require the use of a drawing right and the debiting of an appropriation made by Parliament. Where 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 the Financial Management and Accountability Regulations 1997 (FMA regulations) regulation 19, 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:

·                 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 13 (the Advance to the Finance Minister).

8                     The amounts in Schedule 2 of the Bill may be adjusted further in accordance with sections 30 to 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 recovered by an agency from the Australian Taxation Office for 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, or supplementing, 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 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—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.

10                 Clauses 7 and 20 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. New administered expenses 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 Parliament. Specifically, the Finance Minister manages payments from State, ACT, NT and local government 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 8—Administered items

11                 Subclause 8(1) provides for the appropriation of new administered expense 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 the amounts set out in Schedule 2 opposite an outcome for an agency under the heading “New Administered Expenses”. As with administered items in Appropriation Bill (No. 3) 2009-2010 , the new administered expenses in the Bill are appropriated separately for outcomes to make clear what the funding is intended to achieve. Schedule 2 specifies how much may be expended on each outcome. New Administered Expenses are proposed when an agency is to carry out new administered activities for a new outcome.

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 expenses 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 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 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.

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 the Appropriation Acts listed in clause 9(1)(a) to (f) inclusive.

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 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.

Clause 10—Other departmental items

18                 Clause 10 appropriates departmental non-operating appropriations in the form of equity injections, loans or previous years’ outputs, 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 investments in new capacity to produce departmental outputs;

·                 ‘loans’ can be provided to agencies when an investment to produce future departmental outputs is expected to result in a direct return such as an efficiency saving (these are generally not formal loans established in contracts); and

·                 ‘previous years’ outputs’ appropriations are used to restore appropriations used to deliver departmental outputs in the previous year (e.g. when a decision is made to implement a new activity after the date for inclusion in the additional appropriation bills). Expenditure on such activities is met initially from existing appropriations which are then replenished by the previous years’ outputs appropriations in the Bill.

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 current 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 an other 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 paid to those bodies to 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.

23                 CAC Act body payments will be 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 will hold the amounts paid to them on their own account.

24                 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(5) 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 through special appropriations and from related entities such as a portfolio department. 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.

Clause 12—Reducing State, ACT, NT and local government items and administered items

28                 Clause 12 provides for amounts of State, ACT, NT and local government items and administered items which are not required after 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 Acts.

29                 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 to 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.

30                 Subclause 12(2) retains a power for 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 or requires updating after an agency’s annual report is published.

31                 Subclause 12(3) provides that a determination made under subclause 12(2) is a legislative instrument.

32                 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 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 annual Appropriation Acts are not subject to sunsetting.

Clause 13—Reducing administered assets and liabilities items and other departmental items

33                 Administered assets and liabilities items and other departmental items remain available until the appropriation is spent or reduced in accordance with clause 13. This clause enables the Chief Executive of an agency to comply with his or her obligations under section 44 of the FMA Act to promote the efficient, effective and ethical use 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 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 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                 Subclause 13(1)(a) enables the Minister responsible for an agency to ask the Finance Minister to reduce an administered assets and liabilities item or an other departmental item for that agency. Subclause 13(1)(b) enables the Chief Executive of an agency for which the Finance Minister is responsible to ask the Finance Minister to reduce an administered assets and liabilities item or an other departmental item for that agency. Subclause 13(5) 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 an other departmental item. The Finance Minister is not obliged to act on a request. 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(6) provides that a determination made under subclause 13(2) is a legislative instrument.

37                 Despite subsection 44(2) of the LI Act , which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 13(6) 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 these items because any such determination will reduce the amount of an appropriation authorised by Parliament. Subclause 13(6) 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 other departmental items. Subclause 14(1) enables a Minister responsible for a CAC Act body, or in the case of a CAC Act body for which the Finance Minister is responsible, the Secretary of the Finance Department, to ask the Finance Minister to reduce a CAC Act body payment item for that body. Subclause 14(6) 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 .

39                 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 a 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).

40                 Subclause 14(5) 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.

41                 Subclause 14(7) provides that a determination made under subclause 14(2) is a legislative instrument.

42                 Despite subsection 44(2) of the LI Act , which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 14(7) 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(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 15—Advance to the Finance Minister

43                 Section 15 of Appropriation Act (No. 2) 2009-2010 (Act No. 2) enables the Finance Minister to provide additional appropriations for items when satisfied there is an urgent need for expenditure, and the existing appropriation is inadequate. This additional appropriation is referred to as the Advance to the Finance Minister (AFM). Subsection 15(3) of Act No. 1 provides that the total amount that can be determined under the AFM provision is $380 million.

44                 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.

45                 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 that amount is to be disregarded when the Bill commences. From the date the Bill commences the total amount that can be determined under the AFM will be $380 million.

46                 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).

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 two new general drawing rights limits for the Nation-building Funds Act 2008 by altering the operation of subsections 16(2) and 16(3) 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 Education Investment Fund (EIF) and Health and Hospitals Fund (HHF) general drawing rights limits declared in the Bill replace the EIF and HHF general drawing rights limits declared in Appropriation Act (No. 2) 2009-2010 .

50                 The changes to the 2009-10 EIF and HHF general drawing right limits reflect minor adjustments in the timing of payments from the Funds. The EIF general drawing right limit also includes funding for the Giant Magellan Telescope, which was announced by the Minister for Innovation, Industry, Science and Research on 20 July 2009.

51                 For the purposes of section 199 of the Nation-building Funds Act 2008 , clause 16(1) provides the general drawing rights limit for the EIF for the current year. 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.

52                 For the purposes of section 267 of the Nation-building Funds Act 2008 , clause 16(2) provides the general drawing rights limit for the HHF for the current year. 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 theFMA 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.

53                 It is important to note that the Bill will not appropriate amounts to be paid from the EIF or the HHF. The intention of specifying general drawing rights limits in clauses 16(1) and 16(2) 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.

54                 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. 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 mechanism by which it may review the rate at which amounts committed to the EIF and HHF are expended.

55                 The general drawing rights limits for the current year for the EIF and HHF are specific to the current year applicable to this Act. The general drawing rights limits for the current year in the Bill will not limit the general drawing rights limits that may be specified in regard to any other year.

Clause 17—Adjustments for GST

56                 The effect of this clause will be to increase a general drawing rights limit by the amount of any GST qualifying amount in respect of an amount paid from a fund named in clause 16 or in section 16 of Appropriation Act (No. 2) 2009-2010 .

57                 Some payments from the Building Australia Fund, EIF, HHF and the COAG Reform Fund may include a GST qualifying amount and the relevant general drawing rights limit is adjusted accordingly. The appropriation itself is not affected by clause 17 because that is increased by the operation of section 30A of the FMA Act.

58                 The clause applies to the current year and to 2008-09. This clarifies that the amounts specified for the general drawing rights limits, in both the current year and 2008-09, are exclusive of any GST qualifying amounts that may arise (or has arisen) in respect of acquisitions made in reliance on that limit.

Part 5—Reducing departmental and administered items for Parliamentary Departments in previous Acts

Clause 18—Reducing departmental and administered items for Parliamentary Departments in previous Acts

59                 Clause 18 provides a capacity for the Finance Minister to determine, by writing, that a departmental item or administered item for a Parliamentary Department in a previous appropriation Act is reduced by the amount specified in the written determination.

60                 The intent of clause 18 is to allow the Finance Minister to reduce amounts of departmental items and administered items for a Parliamentary Department from previous Acts where amounts in those items have been identified by the Finance Minister as having been appropriated as depreciation and make good amounts for Parliamentary Departments in those Acts. Since the introduction of accrual appropriations in 1999-2000 amounts of funding for depreciation and make good have accumulated that have not yet been applied by Parliamentary Departments. It is therefore necessary for the efficient, effective and ethical management of appropriations to subject these accumulated amounts to a reduction process that will extinguish them at law.

61                 This reduction provision is distinct from other reduction clauses in the Bill, (at clause 12, clause 13 and clause 14) and operates independently from those clauses. In clause 18 the Finance Minister’s capacity to effect a reduction is not conditioned on first receiving a written request for the reduction from, for example, the responsible Presiding Officer. In addition, this clause is specifically directed at effecting reductions in departmental and administered items in previous appropriation Acts where amounts in those items have been identified by the Finance Minister as having been provided as depreciation and make good amounts for the Parliamentary Departments but those amounts have not yet been applied by the Parliamentary Departments. Depreciation and make good amounts have been provided for the purposes of:

·                 meeting depreciation costs;

·                 meeting amortisation costs; and

·                 meeting the costs of returning an asset to a previous state or condition (subclause 18(6)).

62                 Subclause 18(1) enables the Finance Minister to make a written determination to reduce a departmental item or an administered item for a Parliamentary Department in a previous Act. Once made, the appropriation item for the Parliamentary Department in a previous Act will be reduced by the amount in the written determination: subclause 18(3).

63                 Under subclause 18(2) a written determination will have no effect:

·                 where the item affected is reduced below nil after subtracting amounts that have been applied, under that Act in respect of the item: subclause 18(2)(a); or

·                 where the amount specified in the written determination, when added to any other amounts specified in relation to the Parliamentary Department under subclause 18(1), exceeds the depreciation and make good amount for the agency: subclause 18(2)(b). This subclause is intended to confine the amount of the reduction only to amounts identified as being for depreciation and make good amounts that have not yet been applied.

64                 Subclause 18(4) provides that a determination made under subclause 18(1) is a legislative instrument. The subclause also provides that despite subsection 44(2) of the LI Act, which provides that instruments made under the annual Appropriation Acts are not subject to disallowance, the determination 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 or administered item because any such determination will reduce the amount of an appropriation authorised by Parliament. Subclause 18(4) also confirms that subsection 54(2) of the LI Act, which provides that instruments made under the annual Appropriation Acts, are not subject to sunsetting.

65                 Subclause 18(5) provides that a determination made under subclause 18(1) once made, must not be rescinded, revoked, amended or varied. Subclause 18(5) applies despite subsection 33(3) of the AI Act. This subclause intends to exclude the operation of section 33(3) of the AI Act from determinations made under subclause 18(1). The purpose of subclause 18(5) is to ensure that the appropriation if reduced under the clause cannot be restored by means of a later determination.

66                 Subclause 18(6) provides definitions of terms in the context of the operation of clause 18. Definitions include those for “depreciation and make good amount”, “Parliamentary Department” and “previous Act”.

Part 6—Miscellaneous

Clause 19—Crediting amounts to Special Accounts

67                 Clause  19 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 another Act (section 21). The determination or Act that establishes the Special Account will specify the purposes of the Special Account.

Clause 20—Conditions etc. applying to State, ACT, NT and local government items

68                 Clause  20 deals with Parliament’s power under section 96 of the Australian Constitution to provide financial assistance to the States. Clause 20 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  20 (2)(a); and

·                 the amounts and timing of those payments: paragraph  20 (2)(b).

69                 Subclause 20 (4) provides that determinations made under subclause  20 (2) are not legislative instruments, because these determinations are not altering the appropriations approved by Parliament. Determinations under subclause  20 (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.

70                 Although financial assistance is provided to the ACT, NT and local government authorities without reference to section 96, 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 20 (5) also notes that clause  20 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 21—Appropriation of the Consolidated Revenue Fund

71                 Clause 21 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 to 32 of the FMA Act (see clause 6).

Schedule 1—Payments to or for the States, ACT, NT and local government

72                 In accordance with clause 20 , 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

73                 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.

74                 Schedule 2 includes for information purposes a figure for the previous financial year printed in plain text under each appropriation amount, labelled the ‘Actual Available Appropriation’. The figure provides a comparison with the proposed appropriations. The Actual Available Appropriation does not affect the amounts available at law.

75                 More details about the appropriations in Schedule 2 are contained in the Portfolio Statements and the second reading speech.