Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Appropriation (Implementation of the Report of the Expert Panel on Asylum Seekers) Bill (No. 1) 2012-2013

Bill home page  


Download WordDownload Word


Download PDFDownload PDF

2010-2011-2012

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

 

Appropriation (Implementation of the Report of the Expert Panel on Asylum Seekers) Bill (No. 1) 2012-2013

 

 

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

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

PB Statements

Portfolio Budget Statements

Portfolio Statements

Portfolio Budget Statements and Portfolio Supplementary Estimates Statements

PSE Statements

Portfolio Supplementary Estimates Statements

 



Appropriation (Implementation of the Report of the Expert Panel on Asylum Seekers) Bill (No. 1) 2012-2013

General Outline

1                This Explanatory Memorandum accompanies Appropriation (Implementation of the Report of the Expert Panel on Asylum Seekers) Bill (No. 1) 2012-2013 (the Bill).

2                The main purpose of the Bill is to propose appropriations from the Consolidated Revenue Fund (CRF) for the ordinary annual services of the 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 . Other annual appropriations that are not for the ordinary annual services of the Government are proposed in Appropriation (Implementation of the Report of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013 .

4                     This Explanatory Memorandum should be read in conjunction with the various 2012-2013 Portfolio Statements, in particular:  

·                 the Portfolio Supplementary Estimates Statements (PSE Statements) which contain details of the appropriations set out in Schedule 1 of the Bill and are published and tabled in the Parliament in relation to the Bill; and

·                 the Portfolio Budget Statements (PB Statements) that were published and tabled in the Parliament in relation to Appropriation Bill (No. 1) 2012-2013 and Appropriation Bill (No. 2) 2012-2013 .

Structure of appropriations in the Bill

5                The Bill provides for the appropriation of specified amounts for expenditure by one Australian Government agency ( being an agency under the Financial Management and Accountability Act 1997 (FMA 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 1 for departmental items (clause 7) and administered items (clause 8).

8                Part 3 of the Bill specifies the ways in which the amounts in Schedule 1 may be adjusted.

9                Part 4 deals with credits to Special Accounts (clause 11) and provides for amounts to be appropriated as necessary (clause 12). Clause 12 of the Bill recognises that the appropriations proposed in the Bill may also be varied by the FMA Act.

Financial Impact

10            The Bill will appropriate the amounts specified in Schedule 1.



Statement of compatibility with human rights

1                     The Bill seeks to appropriate money for the ordinary annual services of the Government.

2                     The Bill does not engage any of the applicable rights or freedoms outlined in the Human Rights (Parliamentary Scrutiny) Act 2011.

3                     The Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 as it does not raise any human rights issues .



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 (Implementation of the Report of the Expert Panel on Asylum Seekers) Act (No. 1) 2012-2013 .

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” and “departmental item”. The term “Portfolio Statements” is defined in the Bill, at clause 3, to mean the Portfolio Budget Statements and the Portfolio Supplementary Estimates Statements.

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. 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.

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. This means that the appropriation made by Parliament is extinguished by the amount of the notional payment, even though no payment is actually made from the CRF. Similarly, a notional receipt in such a situation is to be treated by the receiving agency (where relevant) as if it were a real receipt. This does not mean every internal transfer of public money involves a notional payment and receipt. As explained in Regulation 19 of the Financial Management and Accountability Regulations 1997 (FMA Regulations), some transfers of public money from one official account to another do not involve a notional payment or debiting an appropriation.

Part 2—Appropriation items

Clause 6—Summary of appropriations

7                Clause 6 sets out the total of the appropriations in Schedule 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 may be reduced in accordance with clause 9; and

·                 Administered items may be reduced in accordance with clause 10.

8                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 recovered by an agency from the Australian Taxation Office for Goods and Services Tax (GST), in accordance with section 30A of the FMA Act . The amounts specified in Schedule 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.

·                 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. For example, FMA Regulation 15 prescribes amounts that offset costs in relation to the activities of an agency and amounts that relate to an employee’s leave (including amounts received under the paid parental leave scheme that was established on 1 January 2011). FMA Regulation 15 also establishes a mechanism for agencies to hold money in a trust or similar arrangement as departmental.

·                 Items may be adjusted to take into account the transfer of functions between agencies, in accordance with section 32 of the FMA Act. It is possible that adjustments under section 32 may result in new items and/or outcomes being created in an Appropriation Act. It might also result in amounts being transferred between Appropriation Acts.

Clause 7—Departmental items

9                Clause 7 provides that the amount specified in a departmental item for an agency may be applied for the departmental expenditure of the agency. Clause 3 defines:

·                 “departmental item” to be the total amount set out in Schedule 1 in relation to an agency under the heading “Departmental”; and

·                 “expenditure” to be payments for expenses, acquiring assets, making loans or paying liabilities.

10            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.

11            Departmental items involve costs over which an agency has control. Departmental appropriations can be used to make any payment related to the functions of the agency including on purposes covered by other items whether or not they are in the Act for an agency. Expenditure typically covered by departmental items includes employee expenses, suppliers and other operational expenses (e.g. interest and finance expenses). There can also be occasions when an agency, such as a portfolio department, needs to cover matters in relation to other areas of the Government. Examples can include whole-of-Government activities or a portfolio department assisting with the formation and initial costs of a new portfolio body (for which the department might later be reimbursed). Another example would be where government has decided to implement shared services arrangements, and one agency is providing corporate services assistance to another agency.

12            Since 2010-2011, departmental items have included amounts specifically to meet costs associated with the acquisition and capitalised maintenance of departmental assets valued at $10 million or less. Departmental items also include supplementation in circumstances when agencies were directed by government to undertake additional responsibilities in the previous financial year. This applies when the direction was given, or a decision to propose further Appropriation Bills is made, in a timeframe within which it is not practicable to include the expected expenses in a further Appropriation Bill for that financial year.

13            Generally, agencies are expected to meet the cost of additionally directed activities from their existing appropriations, which may then be replenished by a departmental appropriation in the following financial year.

14            Departmental items are not expressed in terms of a particular financial year and do not automatically lapse. Because the cash to meet expenses such as employee entitlements can be required at times other than when the expenses are incurred, the departmental appropriations remain available until required. Departmental items are available until they are spent or reduced in accordance with clause 9.

15            The Finance Minister manages the payment from 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 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.

16            Amounts appropriated for departmental items can be subject to a reduction process in accordance with clause 9 of the Bill. Clause 9 enables the following people to make a written request to ask the Finance Minister to make a determination to reduce an agency’s departmental appropriation:  the Prime Minister or a Minister acting on behalf of the Prime Minister; the Minister responsible for an agency; or the Chief Executive of an agency for which the Finance Minister is responsible.

Clause 8—Administered items

17            Subclause 8(1) provides for the appropriation of administered 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 1 opposite an outcome for an Agency under the heading “Administered”. Administered amounts 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 additional expenses for the administered outcomes for 2012-2013.

19            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).

20            Administered items 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 Parliament; and

·                 there is a process in clause 10 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 Minister’s delegate) in relation to those activities.

Part 3—Adjusting appropriation items

22            Part 3 of the Bill provides for reductions to the amounts specified in Schedule 1. The reduction provisions are contained in clause 9 and clause 10.

23            The reduction provisions were amended in the 2010-2011 Budget Bills to introduce additional mechanisms for initiating the reduction of unspent items. The purpose of those changes was to increase the efficiency of the reduction process particularly when surplus appropriations result from government decisions.

Clause 9—Reducing departmental items

24            Departmental items remain available until the appropriation is spent or reduced in accordance with clause 9. This clause enables surplus 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 a departmental item if there are government decisions to support that expenditure. Examples of where clause 9 may be appropriate to reduce a departmental item include:

·                 an excessive amount was originally appropriated 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.

25            Paragraph 9(1)(a) enables the Prime Minister, or a Minister acting on behalf of the Prime Minister, to request that the Finance Minister reduce a departmental item for an agency. Paragraph 9(1)(b) enables the Minister who is responsible for the agency to request the Finance Minister to reduce a departmental item for an agency. Paragraph 9(1)(c) enables the Chief Executive of an agency for which the Finance Minister is responsible to request the Finance Minister to reduce a departmental item for that agency. Subclause 9(6) assists readers by noting that a request under subclause 9(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 under subclause 9(2) that has substantive effect.

26            Subclause 9(2) enables the Finance Minister to make a written determination to reduce a departmental item. The Finance Minister is not obliged to act on a request to reduce excess departmental item appropriations. However, if the Finance Minister does:

·                 the determination must be for the amount specified in the request: subclause 9(2);

·                 the determination may not reduce the departmental item below nil: subclause 9(3); and

·                 the departmental item in Schedule 1 will be taken to be reduced in accordance with the determination of the Finance Minister: subclause 9(4).

27            Subclause 9(5) provides that once a determination is made under subclause 9(2), it must not be rescinded, revoked, amended or varied. Subclause 9(7) applies despite subsection 33(3) of the AI Act. This subclause intends to exclude the operation of subsection 33(3) of the AI Act from determinations made under subclause 9(2). The purpose of subclause 9(5) is to ensure that the departmental item appropriation, when reduced under subclause 9(2), cannot be restored by means of a later determination.

28            Subclause 9(7) provides that a determination made under subclause 9(2) is a legislative instrument.

29            Despite subsection 44(2) of the LI Act , which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 9(7) provides that a determination reducing a departmental item is subject to disallowance in accordance with section 42 of the LI Act. Parliament retains the power to disallow a determination to reduce a departmental item, because any such determination will reduce the amount of an appropriation authorised by Parliament. Subclause 9(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 10—Reducing administered items

30            Clause 10 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.

31            Clause 10 limits the amount that may be applied for an administered item to the amount reported for that item in an agency’s annual report. Subclause 10(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 adjusted by clause 10 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 1, together with any other adjustments that have been made to that amount.

32            Subparagraph 10(2)(a)(i) retains a power for the Finance Minister to make a written determination specifying that subclause 10(1) does not apply in relation to the item. Subparagraph 10(2)(a)(ii) enables the Finance Minister to determine that an amount published in the financial statements of an agency, is taken to be the amount specified in his or her determination. The power in subparagraph 10(2)(a)(ii) is to ensure that the amount published for the administered item in an agency annual report can be corrected through the determination if, for example, the amount published is erroneous. Additionally, the power in paragraph 10(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 10(1).

33            Subclause 10(3) provides that a determination made under subclause 10(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 10(3) provides that a determination regarding 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 an administered item because any such determination will reduce the amount of an appropriation authorised by Parliament. Subclause 10(3) also confirms subsection 54(2) of the LI Act , which provides that instruments made under annual Appropriation Acts are not subject to sunsetting.

Part 4—Miscellaneous

Clause 11—Crediting amounts to Special Accounts

35            Clause 11 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 by another Act (section 21). The determination or Act that establishes the Special Account will specify the purposes of the Special Account.

Clause 12—Appropriation of the Consolidated Revenue Fund

36            Clause 12 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 Acts commence. That is, the appropriations are not made or brought into existence just before they are paid but when the Royal Assent is given. The words “as necessary” in 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—Services for which money is appropriated

37            Schedule 1 specifies the appropriations proposed for the ordinary annual services of the Government. Schedule 1 contains a summary table which lists the total amounts for each portfolio. A separate summary table is included with further detail for the portfolio, with another table detailing the appropriations for the agency.

38            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 provides a comparison with the proposed appropriations. The Actual Available Appropriation does not affect the amounts available at law.

39            More details about the appropriations in Schedule 1 are contained in the Portfolio Statements and the second reading speech.