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Appropriation (Implementation of the Report of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013

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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. 2) 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. 2) 2012-2013

General Outline

1                This Explanatory Memorandum accompanies Appropriation (Implementation of the Report of the Expert Panel on Asylum Seekers) Bill (No. 2) 2012-2013 (the Bill).

2                The main purposes of the Bill are to propose appropriations from the Consolidated Revenue Fund (CRF) for services that are not 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 . 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 (Implementation of the Report of the Expert Panel on Asylum Seekers) Bill (No. 1) 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 the 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 )) on activities related to Implementation of the Report of the Expert Panel on Asylum Seekers .

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 administered assets and liabilities items (clause 7) and other departmental 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 10) and provides for amounts to be appropriated as necessary (clause 11). Clause 11 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

11            The Bill seeks to appropriate money for services that are not considered to be the ordinary annual services of the Government.

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

13            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. 2) 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 assets and liabilities item”, “Agency”, “other departmental item”, and “current year”. 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 a provision in Part 3 of the Bill. In particular, Administered assets and liabilities items and other departmental items may be reduced in accordance with clause 9.

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—Administered assets and liabilities items

9                Clause 7 provides amounts in Schedule 1 to acquire administered assets, enhance existing administered assets and/or discharge administered liabilities relating to activities administered by agencies on behalf of the Government. Administered assets and liabilities appropriations are provided for functions managed by an agency on behalf of the Government. Administered assets and liabilities items can be applied for any outcomes of the agency in Schedule 1 of the Bill, Schedule 1 to the Appropriation Act (No. 1) 2012-2013, Schedule 2 to the Appropriation Act (No. 2) 2012-2013 or Schedule 1 to Appropriation (Implementation of the Report of the Expert Panel on Asylum Seekers) Act (No.   1) 2012-2013.

10            Amounts appropriated for administered assets and liabilities items can be subject to a reduction process in accordance with clause 9 of the Bill. Under clause 9, 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.

11            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 8—Other departmental items

12            Clause 8 appropriates departmental non-operating appropriations, in the form of equity injections, over which the agency also exercises control. This clause provides that the amount specified in other departmental items for an agency may be applied for the departmental expenditure of the agency. In short “equity injections” can be provided to agencies to, for example, enable investment in assets to facilitate departmental activities and for Designated Collecting Institutions to purchase heritage and cultural assets.

13            Other departmental items are not expressed in terms of a particular financial year and do not automatically lapse. Other departmental items are available until they are spent. For example, equity injection appropriations provide funding to meet the cost expected to be incurred in the Budget year to acquire a new asset; however, for a number of reasons, some part of the appropriation might not be required until a later financial year. Amounts appropriated for other departmental items can be subject to a reduction process in accordance with clause 9 of the Bill. Under clause 9, a written request must be made to the Finance Minister to enable a determination to be made to reduce an other departmental item of an agency.

14            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.

Part 3—Adjusting appropriation items

15            Part 3 of the Bill provides for reductions to the amounts specified in Schedule 1. The reduction provision is contained in clause 9.

16            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 administered assets and liabilities items and other departmental items

17            Clause 9 provides a process for reducing administered assets and liabilities items and other departmental items. Generally, these items remain available until the appropriation is spent or reduced in accordance with clause 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 an administered assets and liabilities item or an other departmental item if there are government decisions to support that expenditure. Examples of where clause 9 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 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.

18            Paragraph 9(1)(a) enables the Prime Minister, or a Minister acting on behalf of the Prime Minister, to request the Finance Minister to reduce an administered assets and liabilities item or an other departmental item for an agency. Paragraph 9(1)(b) enables the Minister responsible for a particular agency to request the Finance Minister to reduce an administered assets and liabilities item or an other departmental item for an agency for which they are responsible. Paragraph 9(1)(c) enables the Chief Executive of an agency for which the Finance Minister is responsible, to request the Finance Minister to reduce an administered assets and liabilities item or an other departmental item for that agency. Subclause 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 LI Act, on the basis that it is requesting a determination to be made and it is the determination that has substantive effect.

19            Subclause 9(2) enables the Finance Minister to make a written determination to reduce an administered assets and liabilities item or an other departmental item. The Finance Minister is not obliged to act on a request to reduce excess appropriations. However, if the Finance Minister does:

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

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

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

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

21            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 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 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.

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

Part 4— Miscellaneous

Clause 10—Crediting amounts to Special Accounts

23            Clause 10 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 11—Appropriation of the Consolidated Revenue Fund

24            Clause 11 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 indicate 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

25            Schedule 1 specifies the services for which amounts will be appropriated by the Bill. 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 appropriation for the agency.

26            Schedule 1 includes for information purposes, a figure for the previous financial year labelled the Actual Available Appropriation . The 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.

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