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Appropriation Bill (No. 2) 2014-2015

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2013-2014

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

 

Appropriation Bill (No. 2) 2014-2015

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the Minister for Finance,

Senator the Honourable Mathias Cormann)

 

 



 

Table of Acronyms and Defined Terms

 

 

AAO

Administrative Arrangements Order

AFM

Advance to the Finance Minister

AI Act

Acts Interpretation Act 1901

BAF

Building Australia Fund

CAC Act

Commonwealth Authorities and Companies Act 1997

COAG

Council of Australian Governments

CRF

Consolidated Revenue Fund

EIF

Education Investment Fund

Finance Minister

Minister for Finance

FMA Act

Financial Management and Accountability Act 1997

FMA Regulations

Financial Management and Accountability Regulations 1997

GST

Goods and Services Tax

HHF

Health and Hospitals Fund

MoG

Machinery of Government

PGPA Act

Public Governance, Performance and Accountability Act 2013

Portfolio Statements

Portfolio Budget Statements

 





 

Appropriation Bill (No. 2) 2014-2015

General Outline                       

1                This Explanatory Memorandum accompanies Appropriation Bill (No. 2) 2014-2015 (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.

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 (the 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. 1) 2014-2015 . Other annual appropriations that are not for the ordinary annual services of the Government are proposed in Appropriation (Parliamentary Departments) Bill (No. 1) 2014-2015 . Together these three Bills are termed the Budget Appropriation Bills.

4                The 2014-2015 Portfolio Budget Statements (Portfolio Statements) are published and tabled in the Parliament in relation to the Bill. This Explanatory Memorandum should be read in conjunction with the various 2014-2015 Portfolio Statements, which contain details on the appropriations set out in the Schedules of the Bills.

5                Importantly, the Bill has been drafted to not take account of potential amendments that may be required to implement the Public Governance, Performance and Accountability Act 2013 (PGPA Act). T hose amendments will be addressed in transitional legislation that is yet to be introduced into the Parliament. The explanatory memoranda to those transitional Bills will provide a comprehensive explanation of the approach being taken to ensure consistency between the PGPA Act and annual Appropriation Acts.

Structure of appropriations in the Bill

6                The Bill provides for the appropriation of specified amounts for expenditure by Australian Government entities, 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).

7                Part 1 of the Bill deals with definitions, the interpretative role of the Portfolio Statements and the concept of notional payments. 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) and other departmental items (clause 10 ) and CAC Act body payment items (clause 11). Part 3 of the Bill specifies the ways in which the amounts in Schedule 2 may be adjusted.

8                Part 4 deals with the general drawing rights limit applicable for the current year (current year is defined in clause 3 of the Bill) to the Building Australia Fund , Education Investment Fund and Health and Hospitals Fund established by the Nation-building Funds Act 2008 .

9                This Part also deals with the general drawing rights limits, for the current year, for the purposes of section 9 and section 16 of the Federal Financial Relations Act 2009 , which is detailed under the subheadings “General purpose financial assistance” and “National partnership payments”. Part 4 also deals with adjustments to the general drawing rights limit for the Goods and Services Tax (GST).

10            Part 5 deals with credits to Special Accounts (clause 15), the conditions that apply to payments of State, ACT, NT and local government items (clause 16 and Schedule 1), provides for amounts to be appropriated as necessary (clause 17) and specifies the cessation date of the Bill, once enacted (Clause 18). Clause 17 recognises that the appropriations proposed in the Bill may also be varied by the FMA Act.

Financial Impact

11            The Bill, if enacted, would appropriate the amounts specified in Schedule 2.





 

Statement of compatibility with human rights

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

2                Accordingly, this Appropriation Bill performs an important constitutional function, by authorising the withdrawal of money from the Consolidated Revenue Fund for the broad purposes identified in the Bill.

3                However, as the High Court has emphasised, beyond this, the Appropriation Acts do not create rights and nor do they, importantly, impose any duties.

4                Given that the legal effect of Appropriation Bills is limited in this way, the Appropriation Bill is not seen as engaging, or otherwise affecting, the rights or freedoms relevant to the Human Rights (Parliamentary Scrutiny) Act 2011 .

5                Detailed information on the relevant appropriations, however, is contained in the Portfolio Statements.

 





 

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. 2) 2014-2015 .

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”, “other departmental item”, and “State, ACT, NT and local government item”.

Clause 4—Portfolio Statements

4                Clause 4 declares that the Portfolio Statements are relevant documents 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. Paragraph 15AB(2) of the AI Act effectively provides that the material that may be considered in the interpretation of a provision of an Act includes any document that is declared by the Act to be a relevant document.

5                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. The term “Portfolio Statements” is defined in the Bill, at clause 3, to mean the Portfolio Budget Statements (tabled with this Bill).

Clause 5—Notional payments, receipts etc.

6                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. This is consistent with section 6 of the FMA Act.

7                Clause 5 provides that notional transactions between Agencies are to be treated as if they are 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.

8                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.

9                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

10            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 Part 3 of the Bill. Items may be increased by a determination under clause 12 (Advance to the Finance Minister).

11            The amounts in Schedule 2 of the Bill may be adjusted further in accordance with sections 30, 30A and 32 of the FMA Act. Specifically:

·                 Section 30 allows an Agency to re-credit, to an appropriation that had been relied upon for an initial payment by the Agency, an amount equivalent to the repayment. The re-crediting, or reinstatement, authorised by section 30, can result in the total amount paid from the CRF in gross terms exceeding the amount specified in an item. Section 30 also applies to notional transactions between and within Agencies.

·                 Appropriations may be adjusted by amounts recoverable by 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 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 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.

·                 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

12            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.

13            Clauses 7 and 13 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.

14            These payments are usually made pursuant to eligibility rules and conditions established by the Government or Parliament. Specifically, the Minister for Finance (Finance Minister) manages payments to State, ACT, NT and local governments 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

15            Subclause 8(1) provides for the appropriation of new administered outcome 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 an amount set out in Schedule 2 opposite an outcome for an Agency under the heading “New Administered Outcomes”. New Administered Outcomes are those administered by an Agency on behalf of the government (e.g. certain grants, benefits and transfer payments).

16            As with administered items in Appropriation Bill (No. 1) 2014-2015 , New Administered Outcomes are appropriated separately for outcomes. This is unlike departmental items, where the split across outcomes is not notional, and makes it clear what the funding is intended to achieve. Schedule 2 specifies how much can be expended on each outcome.

17            New Administered Outcomes are typically proposed when:

·                 an Agency seeks administered operating appropriations for the first time (including existing Agencies that have received departmental operating appropriations in the past);

·                 annual administered operating appropriations are proposed for the first time, for programmes previously funded by special appropriations; and

·                 an Agency’s outcomes are changed to reflect new programme objectives, strategies and/or activities.

18            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.

19            New administered outcomes 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).

20            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

21            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 Schedule 2 of this Bill, or Schedule 1 to Appropriation Bill (No. 1) 2014-2015.

22            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

23            Clause 10 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 .

24            Other departmental items are not expressed in terms of a particular financial year and do not automatically lapse. Other departmental items are available until they are spent, or the Act through which they were appropriated is repealed or sunsets. 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.

25            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

26            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 used for the purposes of those bodies.

27            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.

28            CAC Act body payments are initiated by requests to the relevant portfolio Departments 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 hold the amounts paid to them on their own account.

29            Subclause 11(2) provides that if a CAC Act body is subject to another Act that requires amounts appropriated by Parliament for the purposes of that body to be paid to the body, then the full amount of the CAC Act body payment must be paid to the body. 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.

30            In addition to the annual appropriations, some CAC Act bodies may also receive public money from related entities such as a portfolio Department and from special appropriations managed by those Departments. Many CAC Act bodies also receive funds from external sources.

Part 3— Advance to Finance Minister

31            Part 3 of the Bill provides for increases to the amounts specified in Schedule 2. The Advance to the Finance Minister provision that can increase the amounts specified in Schedule 2 is contained in clause 12.

Clause 12—Advance to the Finance Minister

32            Clause 12 enables the Finance Minister to provide additional appropriations for items when satisfied there is an urgent need for that expenditure, and the existing appropriation is inadequate. This additional appropriation is referred to as the Advance to the Finance Minister (AFM). Subclause 12(3) provides that the total amount that can be determined under the AFM provision is $380 million.

33            Subclause 12 (1) establishes the criteria about which the Finance Minister must be satisfied before determining to add an amount to an item of an agency.

34            The Finance Minister will only consider issuing an amount under subclause 12 (1) if satisfied there is an urgent need for expenditure that is no t provided for, or is insufficiently provided for, in Schedule 2, because of an omission or understatement, or because of unforeseen circumstances. Generally, the other appropriation adjustment options in Part  3 of the Bill or under sections 30, 30A and 32 of the FMA Act must have been exhausted before the Finance Minister will make a determination under subclause  12(2) .

35            Subclause 12 (2) enables the Finance Minister to make a determination to add an amount from the AFM to an item in Schedule  2 , to a new item not already in Schedule 2, or to a new outcome.

36            A further AFM provision will be requested in the Additional Estimates Appropriation Bills for the cur rent year if pressures at that time suggest the AFM in this Bill will be close to being exhausted before the end of the financial year.

37            Subclause 12 (4) provides that a determination under subclause  12 (2) is a legislative instrument, which must be tabled in Parliament but is not subject to disallowance or sunsetting.

38            A subclause  12 (2) determination is not subject to disallowance as this would frustrate the purpose of the provision, which is to provide additional appropriation for urgent expenditure. Further, an AFM is not subject to the sunsetting provisions of the Legislative Instruments Act 2003 , because the amount allocated from the AFM would be extinguished when it is spent.

Part 4—General drawing rights limits

Clause 13—General drawing rights limits

39            The Finance Minister manages the spending of appropriations 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 annual or special 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.

40            In addition to any conditions or limits imposed by drawing rights issued by the Finance Minister, Parliament may also approve annual general drawing rights limits for the following special appropriations:

·                 the amounts that may be debited or spent from 3 Special Accounts established by the Nation-building Funds Act 2008; and

·                 the amounts that may be spent for general purpose financial assistance or national partnership payments under the Federal Financial Relations Act 2009 .

41            Specifying a general drawing rights limit in clause 13, 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 transparent mechanism by which it may review the rate at which amounts are committed for expenditure.

42            Note that clause 13 is not an appropriation for either of the Nation-building Funds Act 2008 or the Federal Financial Relations Act 2009 .

Nation-building Funds Act 2008

43            For the purposes of section 109 of the Nation-building Funds Act 2008 , subclause 13(1) provides the general drawing rights limit for the Building Australia Fund (BAF) for the current year.

44            The BAF is established under section 12 of the  Nation-building Funds Act 2008. It consists of the investments of the BAF and the BAF Special Account, which is a Special Account recognised under section 21 of the FMA Act and established under section 13 of the  Nation-building Funds Act 2008 . The general drawing rights limit applies to the main purposes of the BAF, namely making payments in relation to the creation or development of transport infrastructure, communications infrastructure, energy infrastructure and water infrastructure. The general drawing rights limit does not apply to payments for eligible Nation Broadband Network matters.

45            For the purposes of section 199 of the Nation-building Funds Act 2008 , subclause 13(2) provides the general drawing rights limit for the Education Investment Fund (EIF) for the current year.

46            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.

47            For the purposes of section 267 of the Nation-building Funds Act 2008 , subclause 13(3) provides the general drawing rights limit for the Health and Hospitals Fund (HHF) for the current year.

48            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 the FMA 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.

49            It is important to note that this Bill will not appropriate amounts to be paid from the BAF, EIF or HHF. The intention for specifying general drawing rights limits in subclauses 13(1) to 13(3) inclusive 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.

50            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 13 places a limit over the amount of drawing rights that may be issued.

51            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 transparent mechanism by which it may review the rate at which amounts committed to the BAF, EIF and HHF are expended.

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

Federal Financial Relations Act 2009

53            For the purposes of paragraph 9(3)(b) of the Federal Financial Relations Act 2009 , subclause 13(4) provides the general drawing rights limit for general purpose financial assistance for the current year.

54            This general drawing rights limit applies for the current year to the amount that the Treasurer can credit to the Council of Australian Governments (COAG) Reform Fund and the total amount covered by drawing rights authorising debits from that Fund for the purposes of making a grant of general purpose financial assistance to a State, the Australian Capital Territory or the Northern Territory.

55            The COAG Reform Fund was established by section 5 of the COAG Reform Fund Act 2008 , which is a Special Account under section 21 of the FMA Act. The purposes of the COAG Reform Fund Special Account are provided at section 6 of the COAG Reform Fund Act 2008 .

56            If a general drawing rights limit is not indicated in an Appropriation Act for the purposes of paragraph 9(3)(b) of the Federal Financial Relations Act 2009 for a financial year, amounts cannot be credited to the COAG Reform Fund under paragraph 9(2)(a) of the Federal Financial Relations Act 2009 , and drawing rights must not be issued authorising debits from the COAG Reform Fund for the purposes to which the limit applies.

57            For the purposes of paragraph 16(3)(b) of the Federal Financial Relations Act 2009 , subclause 13(5) provides the general drawing rights limit for national partnership payments for the current year.

58            This general drawing rights limit applies for the current year to the amount that the Treasurer can credit to the COAG Reform Fund and the total amount covered by drawing rights authorising debits from that Fund for the purposes contained in paragraphs 16(1)(a) to (c) inclusive of the Federal Financial Relations Act 2009 . These purposes relate to making a grant of financial assistance to a State to support the delivery by the State of specified outputs or projects, facilitate reforms by the State, or reward the State for nationally significant reforms.

59            If a general drawing rights limit is not indicated in an Appropriation Act for the purposes of paragraph 16(3)(b) of the Federal Financial Relations Act 2009 for a financial year, amounts cannot be credited to the COAG Reform Fund under paragraph16(2)(a) of the Federal Financial Relations Act 2009 and drawing rights must not be issued authorising debits from the COAG Reform Fund for the purposes to which the limit applies.

60            It is important to note that this Bill will not appropriate amounts to be paid under sections 9 and 16 of the Federal Financial Relations Act 2009 . The intention for specifying general drawing rights limits in subclauses 13(4) and 13(5) 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 those limits apply.

Clause 14—Adjustments for GST

61            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 13.

62            Some payments from the BAF, 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 14 because that is increased by the operation of section 30A of the FMA Act. Essentially, clause 14 clarifies that the amounts specified for the general drawing rights limits for 2014-15 are exclusive of any GST qualifying amounts that may arise in respect of acquisitions made in reliance on that limit.

Part 5—Miscellaneous

Clause 15—Crediting amounts to Special Accounts

63            Clause 15 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) that is disallowable by Parliament or by another Act (section 21). The determination or Act that establishes the Special Account will specify the purposes of the Special Account.

Clause 16—Conditions etc. applying to State, ACT, NT and local government items

64            Clause 16 deals with Parliament’s power under section 96 of the Constitution to provide financial assistance to the States. Clause 16 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, ACT, NT and local government may be made: paragraph  16 (2)(a); and

·                 the amounts and timing of those payments: paragraph  16 (2)(b).

65            Subclause 16 (4) provides that determinations made under subclause  16 (2) are not legislative instruments, because these determinations are not altering the appropriations approved by Parliament. Determinations under subclause  16 (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.

66            Although financial assistance is provided to the ACT, NT and local governments without reference to section 96 of the Constitution, 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 16(5) also notes that clause 16 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 17—Appropriation of the Consolidated Revenue Fund

67            Clause 17 provides that the CRF is appropriated as necessary for the purposes of the Bill. Significantly, this clause means that there is an appropriation in law when the Act commences. That is, the appropriations are not made or brought into existence just before they are paid, but when the Royal Assent is given. This clause indicates that the amounts appropriated may be affected by the FMA Act, in particular sections 30, 30A and 32 (see clause 6), after the Bill receives the Royal Assent.

Clause 18—Act ceases to be in force

68            Clause 18 specifies that the Bill, once enacted, will cease to be in force at the start of 1 July 2017. As the Appropriation Acts will sunset, there is no longer a requirement for the reduction of appropriations during the year. As such, the reduction sections that applied previously are no longer required (e.g. section 12 of Appropriation Act (No. 2) 2013-2014 ) and have been excluded from this Bill.

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

69            In accordance with clause 18 , 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

70            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.

71            Schedule 2 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 for agencies receiving appropriations. In this way, comparator information is not provided for agencies abolished since the previous Appropriation Acts. For example, appropriations provided to the former Department of Education, Employment and Workplace Relations are not included in Schedule 2 to the Bill.

72            The Actual Available Appropriation is an estimate that does not affect the amount available at law. It is calculated for each item by adding the amounts appropriated in the previous year’s annual Appropriation Acts, amounts adjusted under certain provisions of the FMA Act that are recorded in the Central Budget Management System (including section 32 transfers relating to Machinery of Government changes) plus adjustments such as AFMs and reductions by the Finance Minister.

73            In some instances the figure may also be affected by limits applied administratively by the Department of Finance. In addition, where an agency’s outcome structure has changed since the last Appropriation Act, only ongoing outcomes are shown in the Bill.

74            For these reasons, the Actual Available Appropriation figures may be different from the sum of amounts provided in earlier Appropriation Acts.

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

Machinery of Government changes

76            On 18 September 2013, the Governor-General in Council acting on the Prime Minister’s recommendation under section 64 of the Constitution, gave authority to an Administrative Arrangements Order (AAO) which resulted in the various Machinery of Government (MoG) changes.

77            The Departments of State abolished were the Department of Education, Employment and Workplace Relations; the Department of Regional Australia, Local Government, Arts and Sport; and the Department of Resources, Energy and Tourism. The three abolished Departments of State do not appear in the Bill.

78            The Departments of State established were the Department of Education and the Department of Employment.

 

 

 

 

 

 

79            In addition, Departments of State in the first column were renamed to those listed in the second column:



Before 18 September 2013

After 18 September 2013

Department of Agriculture, Fisheries and Forestry

Department of Agriculture

Department of Broadband, Communications and the Digital Economy

Department of Communications

Department of Sustainability, Environment, Water, Population and Communities

Department of the Environment

Department of Infrastructure and Transport

Department of Infrastructure and Regional Development

Department of Finance and Deregulation

Department of Finance

Department of Health and Ageing

Department of Health

Department of Families, Housing, Community Services and Indigenous Affairs

Department of Social Services

Department of Immigration and Citizenship

Department of Immigration and Border Protection

Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education

Department of Industry

80            These MoG changes resulted in the transfer of legislative responsibility and related functions from abolished agencies to those newly established or renamed.  The MoG changes also resulted in the transfer of legislative responsibility and related functions between various agencies. Full details of the MoG changes as expressed in the 18 September AAO and subsequent amending AAOs can be found at http://www.dpmc.gov.au/parliamentary/index.cfm .