Title Appropriation Bill (No. 1) 2019-2020 [and] Appropriation Bill (No. 2) 2019-2020 [and] Appropriation (Parliamentary Departments) Bill (No. 1) 2019-2020
Database Bills Digests
Date 13-09-2019
Source Bills Digest Service
Parl No. 46
Author HAWKINS, Phillip
Citation Id 6908609
Key item Yes
Major subject Appropriations and supply
Parliamentary departments
Minor subject Appropriations and Supply Bills
Pages 19p., bibl.
Volume no. 030 (2019-20)
System Id legislation/billsdgs/6908609


Appropriation Bill (No. 1) 2019-2020 [and] Appropriation Bill (No. 2) 2019-2020 [and] Appropriation (Parliamentary Departments) Bill (No. 1) 2019-2020

ISSN 1328-8091

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BILLS DIGEST NO. 30, 2019–20 13 SEPTEMBER 2019

Appropriation Bill (No. 1) 2019-2020 [and] Appropriation Bill (No. 2) 2019-2020 [and] Appropriation (Parliamentary Departments) Bill (No. 1) 2019-2020 Phillip Hawkins Economic Policy Section

Contents

Purpose of the Bill ........................................................... 3

History of the Bills ........................................................... 4

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

Background ..................................................................... 4

About appropriations .................................................. 4

Constitutional requirements ....................................... 5

Powers of the House of Representative to appropriate ................................................................. 5

Powers of the Senate to amend .................................. 5

The ‘ordinary annual services of government’ versus the ‘other’ services of government ................. 5 Departmental and administered expenses ............... 6 Outcomes and programs ........................................... 7

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

Appropriations for corporate Commonwealth entities ..................................................................... 8

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

Appropriations for payments to the states ............. 8 Appropriations for the Parliament and the Judiciary ....................................................................... 8

Supply Acts .................................................................. 9

2019 election ............................................................. 9

Advances to the Finance Minister and the Presiding Officers ........................................................ 9

Debit limits .............................................................. 10

Date introduced: 25 July 2019

House: House of Representatives

Portfolio: Finance

Commencement: The Bills commence on Royal Assent

Links: The links to the Appropriation Bill (No. 1) 2019–2020, the Appropriation Bill (No. 2) 2019–2020 and the Appropriation (Parliamentary Departments) Bill (No. 1) 2019–2020 can be found on the Bills home pages, 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 September 2019.

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Appropriation Bill (No. 1) 2019-2020 [and] Appropriation Bill (No. 2) 2019-2020 [and] Appropriation (Parliamentary Departments) Bill (No. 1) 2019-2020 2

Committee consideration .............................................. 10

Senate Standing Committee for the Scrutiny of Bills ............................................................................ 10

Scrutiny Committee comments on the No. 1 Bill .... 11 Scrutiny Committee comments on the No. 2 Bill .... 12 Financial implications .................................................... 12

Statement of Compatibility with Human Rights.............. 12

Parliamentary Joint Committee on Human Rights ... 12 Key issues and provisions .............................................. 13

No. 1 Bill .................................................................... 13

Table 1: Total Appropriation for 2019–20 .......... 14 No. 2 Bill .................................................................... 15

Table 2: Total Appropriation for 2019–20 .......... 16 Parliamentary Departments Bill ................................ 17

Table 3: Total Appropriation for 2019–20 .......... 18

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Purpose of the Bill This Bills Digest refers to three Bills (jointly referred to as the Appropriation Bills).

The purpose of the Appropriation Bill (No. 1) 2019–2020 (the No. 1 Bill) is to propose appropriations from the Consolidated Revenue Fund (CRF) of $58,404,241,000 ($58.4 billion). This is broadly equivalent to 7/12ths of the estimated 2019–20 annual appropriations for the ordinary annual services of Government. The balance of the appropriations for the ordinary annual services of the Government for the 2019–20 financial year was contained in the Supply Act (No. 1) 2019– 2020 (the No. 1 Supply Act) which received Royal Assent on 4 April 2019.1

Of the appropriations proposed in the No. 1 Bill:

• $34,096,306,000 ($34.1 billion) is for the departmental activities of government entities and

• $24,307,935,000 ($24.3 billion) is for activities that government entities administer on behalf of the Commonwealth Government.

The purpose of the Appropriation Bill (No. 2) 2019–2020 (the No. 2 Bill) is to propose appropriations in the amount of $7,420,961,000 ($7.4 billion) from the CRF. This is broadly equivalent to 7/12ths of the 2019–20 annual appropriations that are not for the ordinary annual services of the Government for 2019–20. The balance of the appropriations for the other services of Government for the 2019–20 financial year was contained in the Supply Act (No. 2) 2019–2020 (the No. 2 Supply Act) which received Royal Assent on 4 April 2019.2

Of the appropriations proposed in the No. 2 Bill:

• $433,618,000 ($433.6 million) is for payments to states, ACT and NT and local governments and

• $6,987,343,000 ($7.0 billion) is for non-operating activities.

The purpose of Appropriation (Parliamentary Departments) Bill (No. 1) 2019–2020 (Parliamentary Departments Bill) is to propose appropriations in the amount of $160,839,000 ($160.8 million) from the CRF for expenditure related to parliamentary departments. This is broadly equivalent to 5/12ths of the estimated 2019–2020 annual appropriations for expenditure in relation to the parliamentary departments. The balance of the annual appropriations for the parliamentary departments for 2019–2020 was contained in the Supply (Parliamentary Departments) Act (No. 1) 2019–2020 (the Parliamentary Departments Supply Act).3

Of the appropriations proposed in the Parliamentary Departments Bill:

• $117,071,000 ($117.1 million) is for the activities of parliamentary departments

• $8,171,000 ($8.2 million) is for the administrative functions of parliamentary departments and

• $35,597,000 ($35.6 million) is for the non-operating expenses of the Department of Parliamentary Services.

1. For the originating Bill, see Parliament of Australia, ‘Supply Bill (No. 1) 2019–2020 homepage’, Australian Parliament website. 2. For the originating Bill, see Parliament of Australia, ‘Supply Bill (No. 2) 2019–2020 homepage’, Australian Parliament website. 3. For the originating Bill, see Parliament of Australia, ‘Supply (Parliamentary Departments) Bill (No. 1) 2019–2020 homepage’, Australian Parliament website.

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History of the Bills Versions of the Appropriation Bills were previously introduced into the House of Representatives on 2 April 2019 but lapsed at the dissolution of the 45th Parliament.4

The current Bills are largely the same as those introduced in the last Parliament, but take account of changes to the Administrative Arrangements Order, which has the effect of shifting some ministerial responsibilities and some funding between portfolios, and the inclusion of amounts for decisions taken since the introduction of the lapsed Bills.

Structure of the Bills Part 1 of each Bill deals with preliminary matters, including when the Acts commence, and how to interpret the Acts.

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

Part 3 of the No. 1 and No. 2 Bill establish the Advance to the Finance Minister (AFM) for 2019– 2020, whereas Part 3 of the Parliamentary Departments Bill establishes the Advance to the responsible Presiding Officer for 2019–2020.

Part 4 of both the No. 1 Bill and the Parliamentary Departments Bill and Part 5 of the No. 2 Bill deal with technical matters including crediting amounts to special accounts, the formal appropriation of moneys from the CRF, and the subsequent automatic repeal of the Acts.

Part 4 of the No. 2 Bill sets the maximum amounts that can be drawn each year from the CRF for three types of grant to the states and territories that the Commonwealth may make. These limits are known as ‘debit limits’.

Schedule 1 of the No. 2 Bill nominates the Ministers who are able to impose conditions on grants of financial assistance to the states and territories proposed in that Bill.

Schedule 1 of the No. 1 Bill and the Parliamentary Departments Bill and Schedule 2 of the No. 2 Bill contain the details of the amounts and types of appropriation to be made to each entity.

Background

About appropriations An appropriation is the legal release of monies from the Consolidated Revenue Fund (CRF).5 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 Australian Constitution.6

Under the terms of the Constitution, there are certain unique requirements that a Bill proposing to appropriate monies from the CRF must satisfy.

4. Parliament of Australia, ‘Appropriation Bill (No. 1) 2019–2020 homepage’, Australian Parliament website; Parliament of Australia, ‘Appropriation Bill (No. 2) 2019–2020 homepage’, Australian Parliament website; Parliament of Australia, ‘Appropriation (Parliamentary Departments) Bill (No. 1) 2019–2020 homepage’, Australian Parliament website.

5. Department of Finance (DoF), Guide to appropriations—RMG 100, DoF website, last updated 8 August 2019. 6. Pape v Commissioner of Taxation (2009) 238 CLR 1, [2009] HCA 23.

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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, to be appropriated for the purposes of the Commonwealth … 7

Section 83 of the Constitution provides that no money may be withdrawn from the CRF ‘except under appropriation made by law’. 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.

Powers of the House of Representative to appropriate Section 53 of the Constitution provides that laws appropriating money may not originate in the Senate.8 Further, under section 56 of the Constitution, all proposed laws for the appropriation of money may only be introduced following a recommendation by the Governor-General. By convention the Governor-General acts only upon the advice of the Executive, so in practice section 56 prevents non-government members of the House of Representatives introducing Bills that would propose to appropriate money from the CRF.9

Powers of the Senate to amend The Senate may not amend proposed laws appropriating revenue or moneys for the ordinary annual services of the Government. The Senate may, however, return to the House of Representatives any such proposed laws requesting, by message, the omission or amendment of any items or provisions.10

The Senate may amend proposed laws appropriating revenue 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’.11 Conceivably, the Senate could amend an appropriation Bill for the other services of Government so as to, for example, redirect the proposed appropriation to another purpose, or reduce the proposed appropriation to nil. The Senate may also request that, if new measures are included in a Bill for the ‘ordinary annual services of Government’, the Bill be returned to the House with a message requesting those new measures be omitted from the Bill.

The ‘ordinary annual services of government’ versus the ‘other’ services of government Section 54 of the Constitution requires that there be a separate law appropriating funds for the ‘ordinary annual services of government’, and that other matters must not be dealt with in the same Bill. However, what constitutes the ‘ordinary annual services of the Government’ and ‘other’ services of the Government is not 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 1965.12 Several amendments have been made to the

7. Commonwealth of Australia Constitution Act (The Constitution), section 81. 8. Ibid., section 53. 9. BC Wright, ed, House of Representatives practice, seventh edn, Department of the House of Representatives, Canberra, 2018, p. 416.

10. The Constitution, section 53. 11. Ibid., section 53. 12. R Laing, ed, Odgers' Australian Senate practice, 14th edn, The Senate, Canberra, 2016, p. 386.

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Compact since 1965, and in 2010 the Senate Standing Committee on Appropriations and Staffing recommended the Senate restate the Compact in a consolidated form.13 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:

(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. 14

Adherence to the Compact has not always been strict, and the High Court has held that any disagreements between the Houses are not justiciable.15 Any disputes are to be determined between the Houses themselves.

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

13. Senate Appropriations and Staffing Committee, Ordinary annual services of the government: 50th report, The Senate, Canberra, June 2010, p. 3. 14. Laing, ed, op. cit., p. 387. 15. Osborne v Commonwealth (1911) 12 CLR 321 at 336, [1911] HCA 19.

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over which they have some control.16 Generally, administered expenses are the costs of programs that agencies run for the Government, while departmental expenses are the costs incurred in running agencies.17

Appropriation Bills, therefore, distinguish between ‘administered’ expenses and ‘departmental’ expenses. An administered appropriation may be used only for the program or outcome that it is appropriated for, while a departmental appropriation may be moved between different departmental activities.18

Outcomes and programs While the level of detail necessary for an Appropriation Act to be valid is generally low,19 in the Pharmaceutical Benefits case the High Court held:

… there cannot be appropriations in blank, appropriations for no designated purpose, merely authorising expenditure ... 20

The Appropriation Bills must, therefore, also describe—in general terms—what the moneys are to be utilised for. 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. In 2018, the Department of Finance explained ‘outcome statements’ in the following terms:

… 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 objectives.

An outcome statement should provide an immediate impression of what success looks like. 21

Outcome statements, therefore, tend to be aspirational in nature.

16. Australian Accounting Standards Board (AASB), Administered items, AASB 1050, December 2013. 17. The Department of Finance describes administered appropriation items as ‘normally related to activities governed by eligibility rules and conditions established by the Government or parliament such as grants, subsidies and benefit payments’, DoF, ‘Guide to appropriations-RMG 100: annual appropriations: background’, DoF website, last updated 3 December 2018.

18. Combet v Commonwealth (2005) 224 CLR 494, [2005] HCA 61 at paragraph 123. 19. See generally, Combet v Commonwealth, op. cit. 20. Attorney-General (Vic); Ex rel Dale v Commonwealth (‘Pharmaceutical Benefits case’) (1945) 71 CLR 237, per Latham CJ at 253, [1945] HCA 30.

21. DoF, Guide to preparing the 2019–20 portfolio budget statements, 8 February 2019, p. 37.

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Appropriations for corporate Commonwealth entities As corporate Commonwealth entities are legally distinct from the Commonwealth itself, money cannot be appropriated directly to those entities.22 Instead, amounts are appropriated to relevant Departments for on-payment to corporate Commonwealth entities within Departments’ portfolios.

Non-operating appropriations Non-operating appropriations are amounts designated for the capital needs of entities. Typically, these amounts are equity injections into entities, or monies 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 may make payments to the states with or without conditions, and amounts intended for payments to the states are identified separately. 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.

Appropriations for the Parliament and the Judiciary In 1981, the Senate Select Committee on Parliament’s Appropriations and Staffing considered the appropriations for the Parliament, in view of the unique constitutional position of the Parliament vis-à-vis the Executive. The Committee noted section 53 of the Constitution’s reference to the ‘ordinary annual services of the Government’ before observing:

… the Parliament may be ordinary; it may be annual; it may even be regarded as a service; but it is not a service of the Government. It is therefore inconsistent with the concept of the separation of powers and the supremacy of Parliament to treat the provisions made for the Parliament as being an ordinary annual service of the Government.

23

The Committee recommended:

… all items of expenditure administered by the Executive departments on behalf of the Parliament be brought together in [a] Parliamentary Appropriation Bill … 24

Since 1982, the appropriations for the Parliamentary departments have been provided for via a distinct Appropriation Bill.

Quarantining appropriations in this way only applies to the Parliamentary departments (of which there are currently four).25 It does not extend to other aspects of the finances of the Parliament, such as providing for the remuneration and allowances of parliamentarians.

Despite the fact that, under the Constitution, the Judiciary is also distinct from the Executive, there is no equivalent practice whereby the Judiciary is provided for via a distinct Appropriation Bill.

22. Public Governance, Performance and Accountability Act 2013 (Cth), section 11, ‘Note’. 23. Australia, Parliament, Senate Select Committee on Parliament’s Appropriations and Staffing, Parliament’s appropriations and staffing: report of the Senate select committee, Parl. Paper, 151, Canberra, 1981, p. 18. 24. Ibid., p. 22. 25. Namely: Department of the Senate, Department of the House of Representatives, Department of Parliamentary Services and

the Parliamentary Budget Office.

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Supply Acts A Supply Act generally provides for interim appropriations out of the Consolidated Revenue Fund to fund the core activities of the government until the passage of the annual Appropriation Bills. The use of Supply Acts was a common occurrence from Federation until 1993, as the practice of successive Commonwealth governments was to deliver the Budget and table the annual Appropriation Bills after the commencement of the financial year on 1 July. Since 1994, however, the Commonwealth has generally delivered the Budget and tabled the annual Appropriation Bills in May, prior to the commencement of the next financial year.26

2019 election Supply Bills were introduced into Parliament on 2 April 2019. The need for Supply Acts in that case arose because of the timing of the 2019 Federal Election on 18 May 2019, which necessitated that the Budget be brought forward to 2 April 2019.27.

In that case, the Supply Acts provide a legal appropriation of 5/12ths of the annual funding required in 2019–20. This package of Appropriation Bills provides the remaining 7/12ths of funding for the remainder of the 2019–20 budget year.

Advances to the Finance Minister and the Presiding Officers The Advance to the Finance Minister or responsible Presiding Officers of Parliamentary Departments is an appropriation of moneys without any particular outcome or purpose specified. For the 2019-20 financial year, the Advances were initially established in the Supply Acts28 and are re-stated in the Appropriation Bills.

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

… the Finance Minister [or Presiding Officer] 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. 29

The amount of appropriation allocated to the advance to the Finance Minister in 2019-20 is $295 million for the ordinary annual services of the Government;30 and $380 million in relation to the other annual services of the Government.31

For the Presiding Officers of the Parliament, the amounts of appropriation proposed to be allocated to the advance in 2019–20 are:

26. D Weight, ‘Supply Bills—a reprise’, FlagPost, Parliamentary Library blog, 29 April 2015. 27. S Morrison (Prime Minister), Transcript of press conference, Canberra, 27 November 2018. 28. See section 10 of the Supply Act (No. 1) 2019–2020; section 12 of the Supply Act (No. 2) 2019–2020; and section 11 of the Supply (Parliamentary Departments) Act (No. 1) 2019–2020.

29. Appropriation Bill (No. 1) 2019–2020, subclause 10(1); Appropriation Bill (No. 2) 2019–2020, subclause 12(1); Appropriation (Parliamentary Departments) Bill (No. 1) 2019–2020, subclause 11(1). 30. See section 10 of the Supply Act (No. 1) 2019–2020 and clause 10 of the Appropriation Bill (No. 1) 2019–2020. 31. See section 12 of the Supply Act (No. 2) 2019–2020 and clause 12 of the Appropriation Bill (No. 2) 2019–2020.

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• $300,000 each in relation to the:

– Department of the Senate – Department of the House of Representatives and – Parliamentary Budget Office and • $1,000,000 in relation to the Department of Parliamentary Services.32

Both the Supply Acts for 2019–20 and the current Appropriation Bills specify that the total amount able to be accessed under each Advance cannot be more than the amounts set out above.33

In order to access an advance, the Finance Minister or Presiding Officers, as the case may be, 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 2003 respectively do not apply.34

Debit limits In addition to appropriating moneys for the other annual services of the Government, Part 4 of the No. 2 Bill also sets a maximum amount—known as a ‘debit limit’—that may be provided to the states and territories under two specific grant programs.

The legal appropriation for the two grant programs is provided by the special appropriation in section 80 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) which provides a standing appropriation for debits from special accounts. However, the design of the legislative schemes associated with each of the grant programs requires that the maximum annual amount that may be debited under each program each year is to be set in an annual appropriation Bill.

Because the Compact prevents the No. 1 Bill from dealing with grants to the states and territories, the debit limits are set in the No. 2 Bill.

Committee consideration

Senate Standing Committee for the Scrutiny of Bills The Senate Standing Committee for the Scrutiny of Bills (the Scrutiny Committee) considered the three appropriation Bills in its Scrutiny Digest of 31 July 2019.35 The Scrutiny Committee made comments in relation to the No. 1 and No. 2 Bills which are discussed below. The Scrutiny Committee had no comment on the Parliamentary Departments Bill.36

32. See subsections 11(3)–(6) of the Supply (Parliamentary Departments) Act (No. 1) 2019–2020 and subclauses 11(3)–(6) of the Appropriation (Parliamentary Departments) Bill (No. 1) 2019–2020. 33. See subsection 10(3) of the Supply Act (No. 1) 2019–2020 and subclause 10(3) of the Appropriation Bill (No. 1) 2019–2020; subsection 12(3) of the Supply Act (No. 2) 2019–2020 and subclause 12(3) of the Appropriation Bill (No. 2) 2019–2020;

subsections 11(3)–(6) of the Supply (Parliamentary Departments) Act (No. 1) 2019–2020 and subclauses 11(3)–(6) of the Appropriation (Parliamentary Departments) Bill (No. 1) 2019–2020. 34. Appropriation Bill (No. 1) 2019–2020, subclause 10(5); Appropriation Bill (No. 2) 2019–2020, subclause 12(5); Appropriation (Parliamentary Departments) Bill (No. 1) 2019–2020, subclause 11(8). 35. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 4, 2019, The Senate, 31 July 2019. 36. Ibid., p. 38.

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Scrutiny Committee comments on the No. 1 Bill The Scrutiny Committee raised concerns that the No. 1 Bill seeks to appropriate money for new measures which may have been inappropriately classified as ordinary annual services of Government. These measures are:

• Agriculture Stewardship Package ($34 million over four years)

• Local School Community Fund ($30.2 million in 2019–20) and

• National Centre for Coasts, Environment and Climate ($25 million over four years).37

It stated that this inappropriate classification undermines the Senate’s constitutional right to amend laws appropriating money which are not related to the ordinary annual services of Government and noted that it has previously raised these concerns with the Finance Minister.

The committee has previously written to the Minister for Finance in relation to inappropriate classification of items in other appropriation bills on a number of occasions; however, the government has consistently advised that it does not intend to reconsider its approach to the classification of items that constitute the ordinary annual services of the government.

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.

The committee notes that any 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. 1) 2019-2020 which should only contain appropriations that are not amendable by the Senate).

38

The Scrutiny Committee also raised concerns that the Advance to Finance Minister provided by the No. 1 Bill (up to $295 million) allows the Finance Minister to allocate additional funds to entities by delegated legislation which is not disallowable.39

The committee notes that clause 10 (the AFM provision) allows the Finance Minister to allocate additional funds to entities up to a total of $295 million via non-disallowable delegated legislation and that it therefore delegates significant legislative power to the Executive. While this does not amount to a delegation of the power to create a new appropriation, one of the core functions of the Parliament is to authorise and scrutinise proposed appropriations. High Court jurisprudence has emphasised the central role of the Parliament in this regard. 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'. The AFM provision in this bill leaves the allocation of the purpose of certain appropriations in the hands of the Finance Minister, rather than the Parliament.

40

37. Ibid., p. 5. 38. Ibid., pp. 5–6. 39. Ibid., p. 6. 40. Ibid., pp. 6–7.

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Scrutiny Committee comments on the No. 2 Bill In relation to the No. 2 Bill, the Committee noted that the debit limits set in clause 13 for grants for general purpose financial assistance and for National Partnership Payments (NPPs) to the states were substantial and were significantly more than the forecast expenditure.41 The Committee drew this matter to the attention of senators.

The committee draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of setting debit limits for these grant programs well above the expected level of expenditure, noting that this practice appears to undermine the effectiveness of the debit limit regime as a mechanism for ensuring meaningful parliamentary oversight of these grant programs.

42

Financial implications The No. 1 Bill proposes to appropriate approximately $58.4 billion from the CRF. The No. 2 Bill proposes to appropriate approximately $7.4 billion from the CRF. The Parliamentary Departments Bill proposes to appropriate approximately $160.8 million from the CRF.

The total amount of money proposed to be appropriated by the three Bills is approximately $66.0 billion, representing approximately 7/12ths of the amounts proposed to be appropriated for 2019-20.

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

The Bill seeks to appropriate money for the ordinary annual services of the Government [or services that are not considered to be ordinary annual services, or for expenditure by the Parliamentary Departments].

Accordingly, the 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.

Detailed information on the relevant appropriations, however, is contained in the portfolio statements. 43

Parliamentary Joint Committee on Human Rights The Parliamentary Joint Committee on Human Rights (PJCHR) considered the Appropriation Bills in its Scrutiny Digest of 10 September 2019. The PJCHR has repeatedly raised concerns about

41. Ibid., pp. 11–12. 42. Ibid., p. 12. 43. Explanatory Memorandum, Appropriation Bill (No. 1) 2019–2020, p. 4; Explanatory Memorandum, Appropriation Bill (No. 2) 2019–2020, p. 5; Explanatory Memorandum, Appropriation (Parliamentary Departments) Bill (No. 1) 2019–2020, p. 4.

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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.44

The PJCHR has recommended that statements of compatibility for Appropriation Bills should contain an assessment of overall trends in the realisation of economic, social and cultural rights including any retrogressive measures, the impact of Budget measures on vulnerable groups and key individual Budget measures which engage human rights, including a brief assessment of their human rights compatibility.45

Despite the views of the PJCHR, the Department of Finance advised that it would not be substantially changing its approach to statements of compatibility for Appropriation Bills.46

Key issues and provisions

No. 1 Bill Clauses 6–9 of the No. 1 Bill outline the quantum and types of appropriation from the CRF.

Clause 10 of the No. 1 Bill establishes the Advance to the Finance Minister of $295 million for 2019–2020.

Clauses 11–13 of the No. 1 Bill provide for several technical matters, including, amongst other things, details relating to special accounts and formally appropriating the amounts required from the CRF.

Schedule 1 of the No. 1 Bill provides details about the appropriations to both non-corporate entities and to corporate entities as defined by the PGPA Act.

Table 1 below sets out in summary form the amount of appropriations in Schedule 1 to the No. 1 Bill, as well as the amounts in the No. 1 Supply Act and the total appropriations for 2019–20. These amounts are compared to the actual available appropriation in 2018–19.

44. Parliamentary Joint Committee on Human Rights, Human rights scrutiny report, 4, 2019, 10 September 2019, p. 17. 45. Ibid., p. 14. 46. Ibid., pp. 15–16.

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Table 1: Total Appropriation for 2019–20

Portfolio Appropriation in

Appropriation Bill (No. 1) 2019– 2020

Appropriation in Supply Act (No. 1) 2019– 2020

Total 2019–20 Appropriation

Actual Available Appropriation 2018–2019 47

$’000 $’000 $’000 $’000

Agriculture 524,901 343,701 868,602 999,138

Attorney-General’s 1,122,979 535,129 1,658,108 1,542,713

Communications and the Arts

1,516,702 1,009,200 2,525,902 2,439,085

Defence 20,526,892 14,609,955 35,136,847 33,934,754

Education 48 653,034

1,882,073 4,200,594 4,228,269 Employment, Skills, Small and Family Business 39

1,665,487

Environment and Energy

965,547 618,817 1,584,364 1,457,718

Finance 437,228 303,832 741,060 1,018,675

Foreign Affairs and Trade

3,758,278 2,665,905 6,424,183 6,240,611

Health 7,355,343 5,076,934 12,432,277 12,766,331

Home Affairs 3,656,245 2,646,048 6,302,293 6,683,597

Industry, Innovation and Science

1,356,740 941,073 2,297,813 2,259,396

Infrastructure, Transport, and Regional Development

1,520,870 917,766 2,438,636 2,099,974

Prime Minister and Cabinet

1,193,662 848,817 2,042,479 1,976,067

Social Services 9,132,116 6,390,494 15,522,610 14,826,780

Treasury 3,018,217 1,968,187 4,986,404 4,722,582

Total 49 58,404,241 40,757,931 99,162,172 97,195,690

47. Appropriation Bill (No. 1) 2019–2020, Schedule 1. 48. As a result of changes to portfolios since the earlier Appropriation and Supply Bills, figures for the previous Education and Training portfolio and the Jobs and Small Business portfolio have been combined in this table. 49. Note that there may be some variations in totals due to rounding.

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No. 2 Bill Clauses 6–11 of the No. 2 Bill outline the quantum and types of appropriation from the consolidated revenue fund.

Clause 12 of the No. 2 Bill establishes the Advance to the Finance Minister of $380 million for 2019–2020.

The money in the No. 2 Bill is appropriated to incorporated and non-incorporated Government entities according to Schedule 2 of that Bill as either:

• grants to the states, territories and local governments (see also clause 16 below)

• new administered programs or

• non-operating (or ‘capital’) appropriations.

These three types of appropriations cannot be included in the No. 1 Bill as they do not relate to the ‘ordinary annual services of Government’.

Clause 13 of the No. 2 Bill sets appropriation limits for provisions of the Federal Financial Relations Act 2009. For 2019–20 these debit limits are:

• for general purpose assistance to the states and territories: $2,916,666,666 and

• for national partnership payments: $14,583,333,334.

Clause 14 provides that the debit limits, set under clause 13, are adjusted to take into account any GST liability that may arise in relation to particular payments.

Clauses 15–17 of the No. 2 Bill provide for several technical matters. In particular, clause 16 of the No. 2 Supply Act seeks to ensure that payments made by the states, territories and local governments from financial assistance provided by the Commonwealth accord with the conditions established by the Minister listed in Schedule 1.

Table 2 below sets out in summary form, the amount of appropriations in Schedule 2 to the No. 2 Bill, as well as the amounts in the No. 2 Supply Act and the total appropriations for 2019–20. These amounts are compared to the actual available appropriation in 2018–19.

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Table 2: Total Appropriation for 2019–20

Portfolio Appropriation in

Appropriation Bill (No. 2) 2019– 2020

Appropriation in Supply Act (No. 2) 2019– 2020

Total 2019–20 Appropriation

Actual Available Appropriation 2018–2019 50

$’000 $’000 $’000 $’000

Agriculture 299,490 213,058 512,548 722,751

Attorney-General’s 27,243 4,544 31,787 10,487

Communications and the Arts

1,762,509 1,258,940 3,021,449 5,111,644

Defence 2,428,552 1,729,357 4,157,909 3,492,471

Education 51 75,230

35,507 146,539 95,665 Employment, Skills, Small and Family Business 42

35,802

Environment and Energy

282,212 101,462 383,674 191,048

Finance 219,757 64,616 284,373 273,711

Foreign Affairs and Trade

407,190 290,854 698,044 169,907

Health 57,616 23,029 80,645 178,802

Home Affairs 124,410 70,897 195,307 214,319

Industry, Innovation and Science

130,203 36,719 166,922 63,991

Infrastructure, Transport, and Regional Development

1,319,008 850,013 2,169,021 2,514,576

Prime Minister and Cabinet

17,271 12,340 29,611 39,722

Social Services 93,170 46,885 140,055 178,069

Treasury 141,298 74,940 216,238 416,997

Total 52 7,420,961 4,813,161 12,234,122 13,674,160

50. Appropriations Bill (No. 2) 2019–2020, Schedule 1. 51. As a result of changes to portfolios since the earlier Appropriation and Supply Bills, figures for the previous Education and Training portfolio and the Jobs and Small Business portfolio have been combined in this table. 52. Note that there may be some variations in totals due to rounding.

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Parliamentary Departments Bill Clause 3 of the Parliamentary Departments Bill defines the term responsible presiding officer as being:

(a) in relation to the Department of the Senate—the President of the Senate

(b) in relation to the Department of the House of Representatives—the Speaker of that House

(c) in relation to the Department of Parliamentary Services—the President and the Speaker together or

(d) in relation to the Parliamentary Budget Office—the President and the Speaker together.

Clauses 6–10 of the Parliamentary Departments Bill outline the quantum and types of appropriation from the consolidated revenue fund.

Clause 11 establishes the Advance to the responsible Presiding Officer for 2019–2020. The amount of appropriation is limited as follows:

• for the Department of the Senate—$300,000

• for the Department of the House of Representatives—$300,000

• for the Department of Parliamentary Services—$1 million and

• for the Parliamentary Budget Office—$300,000.

Clauses 12–14 of the Parliamentary Departments Bill provides for several technical matters, including details relating to special accounts, formally appropriating the amounts required from the CRF, and the repeal of the Act at the start of 1 July 2022.

Table 3 below sets out, in summary form, the amount of appropriations in Schedule 1 to the Parliamentary Departments Bill, as well as the amounts in the Parliamentary Departments Supply Act and the total appropriations for 2019–20. These amounts are compared to the actual available appropriation in 2018–19.

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Table 3: Total Appropriation for 2019–20

Portfolio Appropriation in

Appropriation Bill (Parliamentary Departments) 2019–2020

Appropriation in Supply Act (Parliamentary Departments) 2019–2020

Total 2019–20 Appropriation

Actual Available Appropriation 2018–2019 53

$’000 $’000 $’000 $’000

Department of the Senate

13,913 9,940 23,853 24,238

Department of the House of Representatives

15,532 10,436 25,968 25,063

Department of Parliamentary Services

125,949 77,967 203,916 197,631

Parliamentary Budget Office

5,445 2,813 8,258 7,238

Total 160,839 101,156 261,995 254,170

53. Appropriation Parliamentary Departments Bill (No. 1) 2019–2020, Schedule 1.

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