2013-2014

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

 

Appropriation Bill (No. 6) 2013-2014

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the Minister for Finance,

Senator the Honourable Mathias Cormann)

 

 

 

Table of Acronyms and Defined Terms

 

 

 

 

Appropriation Bill (No. 6) 2013-2014

General Outline                       

1                This Explanatory Memorandum accompanies Appropriation Bill (No. 6) 2013-2014 (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 amounts appropriated through the Appropriation Acts that implemented the 2013-2014 Budget and the 2013-2014 Mid-Year Economic and Fiscal Outlook.

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. 5) 2013-2014 . Together these Bills are termed the Supplementary Additional Estimates Appropriation Bills.

4                The Portfolio Supplementary Additional Estimates Statements are published and tabled in the Parliament in relation to the Bill. This Explanatory Memorandum should be read in conjunction with the various 2013-2014 Portfolio Statements (being the Portfolio Budget Statements that accompanied the 2013-2014 Budget, the Portfolio Additional Estimates Statements and the Portfolio Supplementary Additional Estimates Statements) which contain details on the appropriations set out in the Schedules of the Bills.

Structure of appropriations in the Bill

5                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).

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 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.

9                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 established by the Nation-building Funds Act 2008 .

10            Part 5 deals with credits to Special Accounts (clause 17), the conditions that apply to payments of State, ACT, NT and local government items (clause 18 and Schedule 1) and provides for amounts to be appropriated as necessary (clause 19). Clause 19 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. 6) 2013-2014 .

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 both the Portfolio Budget Statements (that accompanied the Appropriation Bills tabled at the last Budget), the Portfolio Additional Estimates Statements (tabled at the last Additional Estimates) and the Portfolio Supplementary Additional Estimates (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 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 15 (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 18 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.

14            These payments are usually made pursuant to eligibility rules and conditions established by the Government or Parliament. Specifically, the 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. 5) 2013-2014 , New Administered Outcomes 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 2 specifies how much can be expended on each outcome. New Administered Outcomes are 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.

17            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.

18            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);

·                 administered items must be spent in accordance with rules and conditions established by the Government or the 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.

19            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

20            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, Schedule 1 to Appropriation Bill (No. 5) 2013-2014 ; Schedule 1 to Appropriation Act (No. 3) 2013-2014 ; Schedule 2 to Appropriation Act (No. 4) 2013-2014 ; Schedule 2 to Appropriation Act (No. 2) 2013-2014 or Schedule 1 to the Appropriation Act (No. 1) 2013-2014 .

21            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.

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. 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 13 of the Bill. Under clause 13, 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.

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            The full amount of the CAC Act body payments specified in Schedule 2 may be reduced in accordance with clause 14. Subclause 14(6) provides that subclause 11(2) does not prevent the CAC Act body payments in Schedule 2 being reduced.

31            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—Adjusting appropriation items

32            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

33            Clause 12 provides for amounts of State, ACT, NT and local government items and administered items which are not required at 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 Bills.

34            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, 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 2, together with any adjustments that have been made to that amount.

35             Subparagraph 12(2)(a)(i) retains a power for the Finance Minister to make a written determination specifying that subclause 12(1) does not apply in relation to the item. Subparagraph 12(2)(a)(ii) enables 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. Additionally, the power in paragraph 12(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 12(1).

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

37            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 one or more of 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 Appropriation Acts are not subject to sunsetting.

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

38            Clause 13 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 13. This clause enables surplus other 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 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 departmental appropriation remains legally available even though there is no Government authority to spend the funds;

·                 efficiency savings result in a programme costing less than expected; or

·                 a programme is abolished under government policy before the appropriation is expended.

39            Where further Appropriation Bills can effect an appropriation reduction, for example by reducing a proposed increase to appropriations, this approach may also be taken to have reduced the appropriation.

40            Paragraph 13(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.

41            Paragraph 13(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.

42            Paragraph 13(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.

43            Subclause 13(6) 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.

44            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 to reduce excess appropriations. 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).

45            Subclause 13(7) provides that a determination made under subclause 13(2) is a legislative instrument.

46            Despite subsection 44(2) of the LI Act , which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 13(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 an other departmental item because any such determination will reduce the amount of an appropriation authorised by Parliament. Subclause 13(7) also confirms subsection 54(2) of the LI Act , which provides that instruments made under annual Appropriation Acts are not subject to sunsetting.

47            Subclause 13(5) provides that a determination made under subclause 13(2) once made, must not be rescinded, revoked, amended or varied, other than to correct an error. Subclause 13(5) applies despite 33(3) of the AI Act, which would otherwise allow the Minister to repeal, rescind, revoke, amend or vary any such instrument. This subclause intends to exclude the operation of 33(3) of the AI Act from determinations made under subclause 13(2). The purpose of subclause 13(5) is to ensure that the appropriation, if reduced under the clause, cannot be restored by means of a later determination.

Clause 14—Reducing CAC Act body payment items

48            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. Paragraph 14(1)(a) enables the Prime Minister, or a Minister acting on behalf of the Prime Minister, to request that the Finance Minister reduce a CAC Act body payment item for an Agency.

49            Paragraph 14(1)(b) enables the Minister responsible for a particular Agency to request the Finance Minister to reduce a CAC Act body payment item for a body for which they are responsible. Paragraph 14(1)(c) enables the Secretary of the Department of Finance to request the Finance Minister to reduce a CAC Act body payment item for a body in the Finance portfolio. Subclause 14(7) 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.

50            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 an excess 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).

51            Subclause 14(6) 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.

52            Subclause 14(8) provides that a determination made under subclause 14(2) is a legislative instrument.

53            Despite subsection 44(2) of the LI Act , which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 14(8) 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(8) also confirms subsection 54(2) of the LI Act , which provides that instruments made under annual Appropriation Acts are not subject to sunsetting.

54            Subclause 14(5) provides that a determination made under subclause 14(2) once made, must not be rescinded, revoked, amended or varied, other than to correct an error. Subclause 14(5) applies despite subsection 33(3) of the AI Act. This subclause intends to exclude the operation of subsection 33(3) of the AI Act, which would otherwise allow the Minister to repeal, rescind, revoke, amend or vary any such instrument from determinations made under subclause 14(2). The purpose of subclause 14(5) is to ensure that the appropriation, if reduced under the clause, cannot be restored by means of a later determination.

Clause 15—Advance to the Finance Minister

55            Section 15 of Appropriation Act (No. 2) 2013-2014 (Act (No. 2)) 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 [1] . This additional appropriation is referred to as the Advance to the Finance Minister (AFM). Subsection 15(3) of Act (No. 2) provides that the total amount that can be determined under the AFM provision is $380 million.

56            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.

57            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 the amount is to be disregarded for the purposes of subsection 15(3) of Act (No. 2) when the Bill commences. From the date this Bill commences as an Act the total amount that can be determined under the AFM will again be $380 million.

58            Subclause 15 (2) prevents 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 programme and an advanced amount of $5 million is determined by the Finance Minister under Act (No. 2) for a particular payment under that programme, then the amount appropriated by the Bill, once enacted, will be reduced by $5 million (i.e. appropriating only $15 million for the programme).

59            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 that Act are satisfied.

Part 4—General drawing rights limits

Clause 16—General drawing rights limits

60            Clause 16 specifies a new general drawing rights limit (GDRL) for one of the Nation-building Funds Act 2008 by altering the operation of section 16 in Act (No. 2). The GDRLs 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 the Nation-building Funds Act 2008 .

61            The GDRL declared in the Bill for the Building Australia Fund (BAF) replaces the BAF general drawing rights limit declared in Act (No. 2). The general drawing rights limits for the Health and Hospitals Fund (HHF) and the Education Investment Fund (EIF) are unchanged.

62            In addition, the GDRLs specified in Act (No. 2) for the Federal Financial Relations Act 2009 are unchanged. These GDRLs relate to general purpose financial assistance and national partnership payments.

63            The change to the 2013-2014 BAF GDRL reflects minor adjustments in the timing of payments from the Fund.

Nation-building Funds Act 2008

64            For the purposes of section 109 of the Nation-building Funds Act 2008 , clause 16 of the Bill provides that the general drawing rights limit for the BAF for the current year.

65            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.

66            It is important to note that the Bill will not appropriate amounts to be paid from the HHF. The intention for specifying a general drawing rights limit in clause 16 of the Bill is to set a maximum limit 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 limit applies.

67            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.

68            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.

69            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.

Part 5—Miscellaneous

Clause 17—Crediting amounts to Special Accounts

70            Clause 17 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 18—Conditions etc. applying to State, ACT, NT and local government items

71            Clause 18 deals with Parliament’s power under section 96 of the Constitution to provide financial assistance to the States. Clause 18 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  18 (2)(a); and

·                 the amounts and timing of those payments: paragraph  18 (2)(b).

72            Subclause 18 (4) provides that determinations made under subclause  18 (2) are not legislative instruments, because these determinations are not altering the appropriations approved by Parliament. Determinations under subclause  18 (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.

73            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 18(5) also notes that clause 18 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 19—Appropriation of the Consolidated Revenue Fund

74            Clause 19 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.

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

75            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

76            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.

77            Schedule 2 shows outcomes with a proposed new appropriation. Outcomes where no further appropriations are proposed for 2013-14 are not shown.

78            Schedule 2 includes, for information purposes, the amount appropriated in Act (No. 2) and Appropriation Act (No. 4) 2013-2014 (Act (No. 4)) , which is printed in italics and labelled as “Actual Available Appropriation - 2013-2014”. The amount printed is an estimate that does not affect the amount available at law.

79            Schedule 2 also includes, for information purposes, a figure for the previous financial year printed in light figures labelled the “Actual Available Appropriation 2012-2013”.

80            That figures provides a comparison with the proposed appropriations for agencies receiving appropriation. 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.

81            The Actual Available Appropriation is an estimate that does not affect the amounts 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 (MoG) changes), plus adjustments such as AFMs and reductions by the Finance Minister.

82            In some instances the figure may also be affected by limits applied administratively by the Department of Finance.

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

84            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

85            Since the commencement of Act (No. 2), there have been changes to Departments and Agencies pursuant to the MoG changes from the Administrative Arrangements Order (AAO) of 18 September 2013, as amended on 3 October 2013 and 12 December 2013.

86            On 18 September 2013, the Governor-General in Council acting on the Prime Minister’s recommendation under section 64 of the Constitution:

·                 Abolished the following Departments of State:

-                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.

·                 Established the following Departments of State:

-                the Department of Education; and

-                the Department of Employment.

·                 Renamed the Departments of State in the first column to the names 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

87            Schedule 1 and Schedule 2 to this Bill therefore differ to Schedule 1 and Schedule 2 of Act (No. 2) in the following ways:

·                      they refer to the new names of Departments as a result of the AAO; and

·                      they include transferred outcomes in relation to transferred functions between Departments and Agencies.

88            These changes were reflected in Act (No. 4), and are reflected in this Bill.