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Tuesday, 15 September 1987
Page: 103

Mr DAWKINS (Minister for Employment, Education and Training)(8.16) —I move:

That the Bill be now read a second time.

The purpose of this Bill is to make provision for the financing of the prospective Budget deficit in 1987-88 together with the associated prospective deficit in the Consolidated Revenue Fund. Legally, payments from the Consolidated Re- venue Fund cannot exceed moneys available to that Fund. In order to meet any prospective deficit in the Consolidated Revenue Fund it is customary to seek legislative authority to charge defence and other Consolidated Revenue Fund expenditure to, or reimburse the Consolidated Revenue Fund from, the Loan Fund. This Bill therefore seeks authority to borrow money in 1987-88 for defence and other purposes and to enable certain other expenditures to be met from the Loan Fund rather than from the Consolidated Revenue Fund.

In addition, and for the first time, the Bill provides for continuity of that authority by the inclusion of a supply clause. In the past, borrowing authority under the annual Loan Act ceased to be available on 30 June until the next Loan Act was passed, usually by urgent passage in the Budget sittings. Borrowing authority during the supply period for next financial year will be limited to the amount included in the Supply Act (No. 1) 1988-89 for defence purposes, that Act having been passed by the Parliament prior to the end of the 1987-88 financial year.

Apart from a comparatively small amount attributable to the expenses of raising loans under the authority of this legislation, the Bill does not authorise defence or other expenditures additional to those otherwise authorised by Parliament under annual Appropriation Acts and under Acts providing for special or standing appropriations. The Bill is simply a machinery financing measure-the provisions of the Bill in fact explicitly prohibit borrowings for expenditures additional to those authorised by the Parliament.

Successive governments have, for many years, introduced legislation in the form of an annual Loan Bill to authorise the issue of moneys from the Loan Fund to meet defence expenditures or to reimburse the Consolidated Revenue Fund from the Loan Fund in respect of certain non-defence expenditures.

In the Budget Speech the Treasurer (Mr Keating) announced that the Budget deficit in prospect for 1987-88 is estimated to be some $27m. This gives rise to a prospective deficit in the Consolidated Revenue Fund of around $2.4 billion-the Consolidated Revenue Fund differs from the Budget deficit as some CRF expenditures and receipts are classified as financing transactions in the functional classification of Budget outlays and, for the purposes of the Budget figuring, certain Budget outlays are met direct from either the Loan Fund or the Trust Fund. Existing standing authorities enable some $1.2 billion of expenditure to be charged to the Loan Fund in 1987-88, leaving a shortfall of some $1.2 billion for which separate funding authority is required. This Bill seeks authority to borrow moneys accordingly.

The amount of borrowings that may be undertaken pursuant to the proposed legislation is, in the case of defence expenditure, the amount for which appropriation is sought for defence purposes in the Appropriation Bill (No. 1)-some $7.1 billion in 1987-88-and any moneys for defence purposes that may be appropriated in the Supply Act (No. 1) for the next financial year. The effective limit in 1987-88 is likely to be significantly less than appropriations as defence expenditures cannot be charged to the Loan Fund until the legislation is enacted. The legal limit for borrowing for non-defence purposes is determined by the level of borrowing authority approved by the Loan Council. It is estimated that the 1987-88 limits will be sufficient to enable the financing of the Budget deficit. In concluding, I emphasise that the Bill does not in any way impinge upon the Parliament's prerogative to appropriate public moneys but simply provides a mechanism for financing expenditures previously approved and appropriated by the Parliament. I commend the Bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Smith) adjourned.