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Appropriation Bill (No. 3) 2017-2018 [and] Appropriation Bill (No. 4) 2017-2018



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ISSN 1328-8091

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BILLS DIGEST NO. 86, 2017-18 16 MARCH 2018

Appropriation Bill (No. 3) 2017-2018 [and] Appropriation Bill (No. 4) 2017-2018 Dinty Mather and Daniel Weight Economics Section

Contents

Purpose of the Bills ......................................................... 3

Structure of the Bills........................................................ 4

Appropriations generally ................................................. 4

Constitutional requirements ....................................... 4

The ‘ordinary annual services of the Government’ and ‘other’ annual services of the Government .............................................................. 5

The Senate’s powers ................................................. 6

Presentational requirements ...................................... 6

Departmental and administered expenses ............... 6 Outcomes and programs ........................................... 7

Appropriations for ‘outcomes’ of non-corporate Commonwealth entities ......................... 7

Appropriations for corporate Commonwealth entities ..................................................................... 7

Non-operating appropriations ................................ 8

Appropriations for payments to the states ............. 8 Notional payments - transactions between entities that are part of the Commonwealth ............ 8 Advance to the Finance Minister ..................................... 8

Committee consideration ................................................ 9

Senate Standing Committee for the Scrutiny of Bills .............................................................................. 9

Appropriation Bill (No. 3) 2017-2018 ....................... 9

The Advance to the Finance Minister ..................... 10

Appropriation Bill (No. 4) 2016-2017 ..................... 11

Date introduced: 8 February 2018

House: House of Representatives

Portfolio: Finance

Commencement: Both Bills would commence on Royal Assent. Links: The links to the No. 3 Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

The links to the No. 4 Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at March 2018.

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Statement of Compatibility with Human Rights.............. 11

Concluding comments ................................................... 12

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Purpose of the Bills The purpose of the Appropriation Bill (No. 3) 2017-2018 (the ‘No. 3 Bill’) is to appropriate an additional $1,355,473,000 ($1.4 billion) from the Consolidated Revenue Fund (CRF)1 in the 2017- 18 financial year for the ordinary annual services of the Government.

The purpose of the Appropriation Bill (No. 4) 2017-2018 (the ‘No. 4 Bill’) is to appropriate an additional $132,714,000 ($132.7 million) from the CRF in the 2017-18 financial year for the other annual services of the Government.

These amounts are in addition to amounts appropriated for the Executive Government and Judiciary in May 2017 by:

• the Appropriation Act (No. 1) 2017-20182 and

• the Appropriation Act (No. 2) 2017-2018.3

The details of the additional amounts proposed to be appropriated were set out in the 2017-18 Mid-Year Economic and Fiscal Outlook (MYEFO) that was released by the Treasurer on 18 December 2017.4

The ‘Abstracts’ to Schedule 1 of the No. 3 Bill and Schedule 2 to the No. 4 Bill provide the following summaries of the amounts proposed to be appropriated by Portfolio by each Bill.5

Portfolio

No. 3 Bill Total No. 4 Bill Total

$'000 $'000

Agriculture and Water Resources 60,901 2,200

Attorney-General’s 76,800 17,778

Communications and the Arts 7,246 -

Defence 33,170 3,190

Education and Training 97,442 27,065

Environment and Energy 17,475 -

Finance 40,761 10,793

Foreign Affairs and Trade 26,279 3,875

Health 116,875 4,560

Home Affairs 579,831 20,749

Human Services 9,228 15,946

Infrastructure and Regional Development 93,687 -

Jobs and Innovation 101,021 4,464

Prime Minister and Cabinet 24,722 11,700

Social Services 36,689 -

Treasury 33,346 10,394

Total 1,355,473 132,714

1. The CRF consists of all revenues and moneys raised or received by the executive government of the Commonwealth. The CRF is self-executing, which means that all money received by the Commonwealth automatically becomes part of the CRF. 2. Appropriation Act (No. 1) 2017-2018. 3. Appropriation Act (No. 2) 2017-2018. 4. S Morrison (Treasurer) and M Cormann (Minister for Finance), Mid-Year Economic and Fiscal Outlook 2017-18,

Commonwealth of Australia, December 2017. 5. Appropriation Bill (No. 3) 2017-2018, Schedule 1, p. 9; Appropriation Bill (No. 4) 2017-2018, Schedule 2, p. 11.

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Significant items within each Portfolio are identified in the Assistant Minister for Finance, Mr Coleman’s, second reading speeches to each Bill.6

Structure of the Bills Part 1 of each Bill deals with preliminary matters, including when the Acts commence, how to interpret the Acts, and the deeming of notional payments between non-corporate Commonwealth entities to be real transactions.7

Part 2 of each Bill outlines the quantum and types of appropriation from the CRF.

Part 3 of each Bill provides for an Advance to the Finance Minister (AFM).8

Part 4 of each Bill deals with technical matters including crediting amounts to special accounts, the formal appropriation of moneys from the CRF, and the automatic repeal of the subsequent Acts.

Schedule 1 of the No. 4 Bill nominates the Ministers that are able to impose conditions on grants of financial assistance to the states and territories proposed in that Bill.

Schedule 1 of the No. 3 Bill and Schedule 2 of the No. 4 Bill contain the details of the amounts and types of appropriation proposed to be made to each entity.

Appropriations generally An appropriation is the legal release of moneys from the CRF. Appropriation Acts, however, do not create a source of power for the Commonwealth to spend money; they merely release that money from the CRF. The Commonwealth’s power to spend money must be found in other parts of the Constitution.9

Under the terms of the Constitution, a Bill proposing to appropriate moneys from the CRF must satisfy certain unique requirements. An Appropriation Bill must also comply with certain presentational requirements.

Constitutional requirements Section 81 of the Constitution provides:

All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund [CRF], to be appropriated for the purposes of the Commonwealth … 10

Section 83 of the Constitution provides that no money may be withdrawn from the CRF ‘except under appropriation made by law’.11 The effect of these two sections is that all moneys received by the Commonwealth must be paid into the CRF, and must not be spent before there is an appropriation authorising specific expenditure.

6. D Coleman (Assistant Minister for Finance), ‘Second reading speech: Appropriation Bill (No. 3) 2017-2018’, House of Representatives, Debates, 8 February 2018, p. 712; D Coleman (Assistant Minister for Finance), ‘Second reading speech: Appropriation Bill (No. 4) 2017-2018,’ House of Representatives, Debates, 8 February 2018, p. 713.

7. The need for notional payments to be deemed to be real payments is explained on page 7 of this Digest. 8. An Advance is a provision in the Annual Appropriation Acts that enables the Finance Minister to provide additional appropriation to entities for urgent and unforeseen expenditure in the current year. This is known as an Advance to the Finance Minister. The Advance to the Finance Minister is explained further on page 8 of this digest. 9. Pape v Commissioner of Taxation (2009) 238 CLR 1, [2009] HCA 23. 10. Australian Constitution, section 81. 11. Ibid., section 83.

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Section 53 of the Constitution prevents proposed laws appropriating moneys originating in the Senate.12 Further, under section 56 of the Constitution, all proposed laws for the appropriation of moneys may only be introduced into the House of Representatives following a recommendation by the Governor-General.13 As the Governor-General only acts upon the advice of the Executive, this provision of the Constitution prevents non-government members of the House of Representatives from introducing Bills that would propose to appropriate money from the CRF.14

The ‘ordinary annual services of the Government’ and ‘other’ annual services of the Government Section 54 of the Constitution requires that there be a separate law appropriating funds for the ‘ordinary annual services of the Government’, and that other matters must not be dealt with in the same Bill.15 However, neither the ‘ordinary annual services of the Government’ nor the ‘other’ annual services of the Government are defined in the Constitution.

A working distinction between ordinary and other annual services was agreed in a Compact between the Senate and the Government in 1965.16 Several amendments have been made to the Compact since 1965 and, in 2010, the Senate Standing Committee on Appropriations and Staffing recommended that the Senate restate the Compact in a consolidated form.17 On 22 June 2010, the Senate resolved as follows:

(1) To reaffirm its constitutional right to amend proposed laws appropriating revenue or moneys for expenditure on all matters not involving the ordinary annual services of the Government.

(2) That appropriations for expenditure on:

(a) the construction of public works and buildings;

(b) the acquisition of sites and buildings;

(c) items of plant and equipment which are clearly definable as capital expenditure (but not including the acquisition of computers or the fitting out of buildings);

(d) grants to the states under section 96 of the Constitution;

(e) new policies not previously authorised by special legislation;

(f) items regarded as equity injections and loans; and

(g) existing asset replacement (which is to be regarded as depreciation),

are not appropriations for the ordinary annual services of the Government and that proposed laws for the appropriation of revenue or moneys for expenditure on the said matters shall be presented to the Senate in a separate appropriation bill subject to amendment by the Senate.

(3) That, in respect of payments to international organisations:

12. Ibid., section 53. 13. Ibid., section 56. 14. B Wright and P Fowler, House of Representatives practice, 6th edn, Department of the House of Representatives, Canberra, 2012, p. 424.

15. Australian Constitution, section 54: ‘The proposed law which appropriates revenue or moneys for the ordinary annual services of the Government shall deal only with such proposed appropriation’. 16. J Odgers, Odgers' Australian Senate practice, 14th edn, Department of the Senate, Canberra, 2016, p. 386. 17. Senate Standing Committee on Appropriations and Staffing, Ordinary annual services of the government: 50th report, The

Senate, Canberra, June 2010.

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(a) the initial payment in effect represents a new policy decision and therefore should be in Appropriation Bill (No. 2); and

(b) subsequent payments represent a continuing government activity of supporting the international organisation and therefore represent an ordinary annual service and should be in Appropriation Bill (No. 1).

(4) That all appropriation items for continuing activities for which appropriations have been made in the past be regarded as part of ordinary annual services. 18

Adherence to the Compact has not always been strict, and the High Court has held that any disagreements between the Houses are not justiciable.19 Any disputes, therefore, are to be determined between the Houses themselves.

The Senate’s powers Section 53 of the Constitution provides, among other things, that the Senate may not amend proposed laws appropriating revenue or moneys for the ordinary annual services of the Government. The Senate may, however, return such proposed laws to the House of Representatives and request, by message, the omission or amendment of any items or provisions.

The Senate may amend proposed laws appropriating revenue or moneys for purposes other than for the ordinary annual services of the Government, as long as it does not ‘increase any proposed charge or burden on the people’.20 Conceivably, the Senate could amend an appropriation Bill for the other annual services of Government in order to, for example, redirect the proposed appropriation to another purpose, or reduce the proposed appropriation to nil.

Where a Bill for the ordinary annual services of the Government includes amounts that the Senate considers should, because of the Compact, be included in a Bill for the other annual services of the Government, the Senate may elect to deal with that Bill as if it were a Bill for the other annual services of government. In other words, the Senate may treat such a Bill as being susceptible to amendment.21

Presentational requirements

Departmental and administered expenses Australian Accounting Standard 1050 Administered Items requires that government agencies distinguish between revenues and expenses that they administer for the Government, and those over which they have some control.22 Generally, administered expenses are the costs of providing the programs that agencies run for the Government, while departmental expenses are the costs incurred in running agencies.

Appropriation Bills, therefore, distinguish between ‘administered’ expenses and ‘departmental’ expenses. Administered appropriation may only be used for the program or outcome that it is appropriated for, while departmental appropriation may be moved between different departmental activities.23

18. Australia, Senate, Journals, 127, 2008-10, 22 June 2010, pp. 3642-3. 19. Osborne v Commonwealth (1911) 12 CLR 321, [1911] HCA 19, per Griffith CJ at [336]. 20. Australian Constitution, section 53. 21. Wright and Fowler, House of Representatives practice, op. cit., p. 430. 22. Australian Accounting Standards Board (AASB), Administered items, AASB 1050, December 2013. 23. Combet v Commonwealth (2005) 224 CLR 494, [2005] HCA 61, per Gummow, Hayne, Callinan and Heydon JJ at [123].

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Clause 8 of the No. 3 Bill and clause 9 of the No. 4 Bill provide the appropriation of administered amounts for the purpose of contributing to the specified outcomes for a non-corporate entity. Administered amounts are appropriated separately for each outcome to provide for transparency in terms of what the funding is expected to achieve.

The Explanatory Memorandum to the No. 3 Bill states:

Administered items are those administered by a non-corporate entity 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. 24

Outcomes and programs While the level of detail necessary for an Appropriation Act to be valid is generally low, in the Pharmaceutical Benefits case the High Court held:

… there cannot be appropriations in blank, appropriations for no designated purpose, merely authorising expenditure … 25

The Appropriation Bills must therefore describe—in general terms—the purpose for which moneys are to be used. The Bills use four methods for describing the purposes of the proposed appropriations.

Appropriations for ‘outcomes’ of non-corporate Commonwealth entities For non-corporate Commonwealth entities, the purposes of operating appropriations (both departmental and administered) are specified with reference to the ‘outcomes’ of those entities, as articulated in an entity’s outcome statement. The Department of Finance’s Guide to Preparing the 2017-18 Portfolio Budget Statements advised as follows with respect to outcome statements:

… outcome statements articulate Government objectives and form an integral part of the appropriations framework. They:

1. explain the purpose for which annual appropriations are approved by the Parliament for use by entities;

2. provide a basis for budgeting and reporting against the use of appropriated funds; and

3. measure and assess entity and program non-financial performance in contributing to Government policy objectives.

An outcome statement should provide an immediate impression of what success looks like. It should provide readers with a sense of what performance information is likely to be useful in assessing whether a specific outcome is delivered satisfactorily. 26

Appropriations for corporate Commonwealth entities As corporate Commonwealth entities (CCEs) are legally distinct from the Commonwealth itself, moneys cannot be appropriated directly to those entities.27 Instead, amounts are appropriated to

24. Explanatory Memorandum, Appropriation Bill (No. 3) 2017-2018, p. 8. See also Explanatory Memorandum, Appropriation Bill (No. 4) 2017-2018, p. 7. 25. Attorney-General (Vic); Ex rel Dale v Commonwealth (‘Pharmaceutical Benefits case’) (1945) 71 CLR 237, [1945] HCA 30, per Latham CJ at [253]. 26. Department of Finance, Guide to preparing the 2017-18 portfolio budget statements, March 2016, p. 32. 27. Public Governance, Performance and Accountability Act 2013, section 11, ‘Note’.

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relevant departments for on-payment to CCEs within the department’s portfolios.28 Clause 9 of the No. 3 Bill and clause 12 of the No. 4 Bill provide for appropriations of moneys for CCEs to be paid from the CRF by the relevant Department, with a requirement that those payments be used for the purposes of those CCEs.

Generally, under section 51 of the PGPA Act, appropriations for corporate entities are managed by the Finance Minister who has a discretionary power in terms of the amount paid and the timing. Subclause 9(2) of the No. 3 Bill and subclause 12(2) of the No. 4 Bill provide that if an Act provides that a corporate entity must be paid amounts appropriated by Parliament for the purposes of that

entity, then the full amount of the corporate entity payment must be paid to the entity.

Non-operating appropriations Non-operating appropriations are amounts designated for the capital needs of entities. Typically, these amounts are equity injections into entities, or moneys for the purchase or development of the assets of entities. Under the Compact, they can only ever be proposed in a Bill dealing with the ‘other’ annual services of Government.

Appropriations for payments to the states Under section 96 of the Constitution, the Commonwealth Parliament may make payments to the states with or without conditions. Amounts intended for payment to the states are identified separately in appropriation Bills. Again, because of the Compact, amounts to the states can only ever be proposed in a Bill dealing with the ‘other’ annual services of Government. Amounts to the Australian Capital Territory and the Northern Territory are also included with the amounts for the states.

Notional payments - transactions between entities that are part of the Commonwealth Because of section 83 of the Constitution, all withdrawals of moneys from the CRF require an appropriation. Constitutionally, however, payments between entities that are both part of the Commonwealth, such as between two non-corporate Commonwealth entities, do not require an appropriation as they are movements of moneys within the CRF, not a withdrawal.

To avoid the difficulties that might arise in working out whether or not an individual payment does or does not require an appropriation—that is, whether a payment is between entities that are both part of the Commonwealth (such as between two departments), or whether a payment is from the Commonwealth to an entity outside of the Commonwealth (such as to an individual or a corporation)—the Appropriation Bills contain a deeming provision that requires all notional transactions between non-corporate Commonwealth entities to be nonetheless treated as withdrawals from the CRF.29

Advance to the Finance Minister An Advance to the Finance Minister is an appropriation of moneys without any particular outcome or purpose specified. Typically, the Advance is established in the first Appropriation Acts each year and then replenished whenever supplementary Appropriation Acts are passed.

28. A corporate Commonwealth entity is a body corporate that has a separate legal personality from the Commonwealth, and can act in its own right exercising certain legal rights such as entering into contracts and owning property. For example, the Central Land Council is a CCE which comes under the portfolio of the Prime Minister and Cabinet. Department of Finance, Governance Structure: corporate Commonwealth entities, 16 March, 2018.

29. Appropriation Bill (No. 3) 2017-2018, clause 5; Appropriation Bill (No. 4) 2017-2018, clause 6.

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The Finance Minister may use the amount appropriated as an advance to modify the schedule to the Appropriation Act, but only where:

the Finance Minister is satisfied that there is an urgent need for expenditure, in the current year, that is not provided for, or is insufficiently provided for, […]:

(a) because of an erroneous omission or understatement; or

(b) because the expenditure was unforeseen until after the last day on which it was practicable to provide for it in the Bill for this Act before that Bill was introduced into the House of Representatives. 30

The amount of appropriation allocated to the Advance to the Finance Minister in 2017-18 was $295 million in relation to the ordinary annual services of the Government and $380 million in relation to the other annual services of the Government.31

In order to access an Advance, the Finance Minister must issue a determination under the relevant Appropriation Act. A determination is a legislative instrument, but disallowance and sunsetting under section 42 and Part 4 of Chapter 3 of the Legislation Act 200332 respectively do not apply.33

The Federal Register of Legislation shows that during 2017-18, $122 million of the Advance to the Finance Minister provided for by Appropriation Act (No. 1) 2017-2018 was accessed and provided to the Australian Bureau of Statistics to provide for a postal survey on same sex marriage.34 In Wilkie v Commonwealth, the Member for Denison, Andrew Wilkie and others challenged the accessing of the Advance to the Finance Minister on various grounds, including that the Advance to the Finance Minister Determination made under the Appropriation Act (No. 1) 2017-2018 did not sufficiently describe the purposes for which the moneys were to be expended, and was therefore invalid as an “appropriation in blank” of the type warned of by the High Court in the Pharmaceutical Benefits case. In rejecting that argument, the High Court held that ‘the degree of specificity of the purpose of an appropriation is for Parliament to determine.’35

Clause 10 of the No. 3 Bill would reset the amount available under the Advance to the Finance Minister for 2017-18 in relation to the ordinary annual services of the Government to $295 million, and clause 13 of the No. 4 Bill would reset the amount in relation to the other annual services of the Government to $380 million.

Committee consideration

Senate Standing Committee for the Scrutiny of Bills In its Scrutiny Digest No. 2 of 2018, the Senate Standing Committee for the Scrutiny of Bills made comments in relation to both Bills.36

Appropriation Bill (No. 3) 2017-2018 In relation to the No. 3 Bill, the Committee noted (as it has in relation to past Appropriation Bills):

30. Appropriation Act (No. 1) 2017-2018, section 10; Appropriation Act (No. 2) 2017-2018, section 12. 31. Appropriation Act (No. 1) 2017-2018, subsection 10(3); Appropriation Act (No. 2) 2017-2018, subsection 12(3). 32. Legislation Act 2003. 33. Appropriation Act (No. 1) 2017-2018, subsection 10(4); Appropriation Act (No. 2) 2017-2018, subsection 12(4). 34. Advance to the Finance Minister Determination (No. 1 of 2017-2018), 9 August 2017. 35. Wilkie v Commonwealth, [2017] HCA 40 at [91]. 36. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 2, 2018, The Senate, 14 February 2018.

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The inappropriate classification of items in appropriation bills as ordinary annual services when they in fact relate to new programs or projects undermines the Senate's constitutional right to amend proposed laws appropriating revenue or moneys for expenditure on all matters not involving the ordinary annual services of the government. This is relevant to the committee's role in reporting on whether the exercise of legislative power is subject to sufficient parliamentary scrutiny.

37

The Committee noted that expenditures that appear to have been improperly classified as ordinary annual services of government and therefore included in the No. 3 Bill are:

• Menzies Institute and Library ($7 million in 2017-18)38

• Australian Stockman's Hall of Fame—construction of new facilities and displays, amenity upgrades, and establishment of the Australian Rural Heritage Foundation ($15 million in 2017- 18)39 and

• Qantas Founders Museum—construction of roofing facilities ($11.3 million in 2017-18).40

In relation to this matter, the Committee:

… again notes that the government's approach to the classification of items that constitute ordinary annual services of the government is not consistent with the Senate resolution of 22 June 2010 relating to the classification of ordinary annual services expenditure in appropriation bills.

The committee reiterates its agreement with the comments made on this matter by the Senate Standing Committee on Appropriations and Staffing, and in particular that the division of items in appropriation bills since the adoption of accrual budgeting has been based on a mistaken assumption that any expenditure falling within an existing outcome should be classified as ordinary annual services expenditure.

The committee draws the 2010 Senate resolution to the attention of Senators and notes that the inappropriate classification of items in appropriation bills undermines the Senate's constitutional right to amend proposed laws appropriating revenue or moneys for expenditure on all matters not involving the ordinary annual services of the government. Such inappropriate classification of items impacts on the Senate's ability to effectively scrutinise proposed appropriations as the Senate may be unable to distinguish between normal ongoing activities of government and new programs or projects.

The committee draws this matter to the attention of Senators as it appears that the initial expenditure in relation to certain items in the latest set of appropriation bills may have been inappropriately classified as ordinary annual services (and therefore improperly included in Appropriation Bill (No. 3) 2017-2018 which should only contain appropriations that are not amendable by the Senate).

The committee will continue to draw this important matter to the attention of senators where appropriate in the future. 41

The Advance to the Finance Minister With regard to the Advance to the Finance Minister, the Committee noted that the Advance to the Finance Minister determinations:

37. Ibid., p. 1. 38. S Morrison (Treasurer) and M Cormann (Minister for Finance), Mid-Year Economic and Fiscal Outlook 2017-18, Commonwealth of Australia, December 2017, p. 145.

39. Ibid., p. 171. 40. Ibid., p. 174. 41. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 2, 2018, op. cit., pp. 4-5.

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… are legislative instruments, but they are not subject to disallowance or parliamentary scrutiny by the Regulations and Ordinances Committee…[but]…one of the core functions of the Parliament is to authorise and scrutinise proposed appropriations.

In particular, while the High Court has held that an appropriation must always be for a purpose identified by the Parliament, '[i]t is for the Parliament to identify the degree of specificity with which the purpose of an appropriation is identified. 42

Appropriation Bill (No. 4) 2016-2017 In relation to the No. 4 Bill, the Committee raised a specific concern with clause 15 of the Bill, which deals with Parliament's power under section 96 of the Constitution to provide financial assistance to the states.

The Committee noted that it had previously43 sought advice as to:

whether the Department of Finance is able to issue guidance advising departments and agencies to include the following information in their portfolio budget statements where they are seeking appropriations for payments to the States, Territories and local government in future appropriation bills:

• the particular purposes to which the money for payments to the States, Territories and local government will be directed (including a breakdown of proposed grants by State/Territory);

• the specific statutory or other provisions (for example in the Federal Financial Relations Act 2009, the COAG Reform Fund Act 2008, Local Government (Financial Assistance) Act 1995 or special legislation or agreements) which detail how the terms and conditions to be attached to the particular payments will be determined; and

• the nature of the terms and conditions attached to these payments.44

In relation to the 2017-18 Budget:

The committee welcomed the significant progress made … to provide additional information about section 96 grants to the States. This included the addition of an Appendix E to Budget Paper No. 3, 2017-18, which provided details of the appropriation mechanism for all payments to the States and the terms and conditions applying to them, and a new mandatory requirement for the inclusion of further information in portfolio budget statements along the lines of that suggested by the committee.

45

However, the Committee remains concerned that only one of the four departments seeking appropriations for payments to the states had fully implemented the new mandatory information requirement.46

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act.47 In relation to the human rights implications of the Bills, the Government states:

42. Ibid., p. 10. 43. Senate Select Committee for the Scrutiny of Bills, Scrutiny digest, 8, 2016, The Senate, 9 November 2016, pp. 457-60. 44. Senate Select Committee for the Scrutiny of Bills, Scrutiny digest, 2, 2018, op. cit., pp. 9-10. 45. Ibid., p. 10. 46. Ibid., p. 10. 47. Human Rights (Parliamentary Scrutiny) Act 2011.

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[t]he Bill performs an important constitutional function, by authorising the withdrawal of money from the CRF for the broad purposes identified in the Bill.

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

Given that the legal effect of Appropriation Bills is limited in this way, the Bill is not seen as engaging, or otherwise affecting, the rights or freedoms relevant to the Human Rights (Parliamentary Scrutiny) Act 2011. 48

However, the Parliamentary Joint Committee on Human Rights has previously raised concerns about whether or not the allocation of funding proposed in Appropriation Bills might engage human rights considerations; particularly given the capacity for Appropriation Bills to give effect to a reduction in funding for programs that might be aimed at the realisation of human rights.

In its assessment of the No. 3 and No. 4 Bills, the Committee referred to its comments in relation to prior Appropriation Bills before stating as follows:

The committee notes that the statements of compatibility for the bills provide no assessment of their compatibility with human rights on the basis that they do not engage or otherwise create or impact on human rights. However, while the committee acknowledges that appropriations bills present particular challenges in terms of human rights assessments, the appropriation of funds may engage and potentially limit or promote a range of human rights that fall under the committee's mandate.

Given the difficulty of conducting measure-level assessments of appropriations bills, the committee recommends that consideration be given to developing alternative templates for assessing their human rights compatibility, drawing upon existing domestic and international precedents. Relevant factors in such an approach could include consideration of:

• whether the bills are compatible with Australia's obligations of progressive realisation with respect to economic, social and cultural rights; and

• whether any reductions in the allocation of funding are compatible with Australia's obligations not to unjustifiably take retrogressive or backward steps in the realisation of economic, social and cultural rights. 49

The Committee stated that it did not require a response from the Minister in relation to these concerns.50

Concluding comments The requirement for the Executive to secure the passage of Appropriation Bills from the Parliament is an important financial control on the Executive by the Parliament. These Bills, if passed, will be effective in releasing the proposed appropriations from the CRF.

48. Explanatory Memorandum, Appropriation Bill (No. 3) 2017-2018, p. 4; Explanatory Memorandum, Appropriation Bill (No. 4) 2017-2018, p. 4. 49. Parliamentary Joint Committee on Human Rights, Human rights scrutiny report, 2, 21 March 2017, p. 46. 50. Ibid., p. 44.

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