APPROPRIATION BILL (NO. 2) 2008-2009 Explanatory Memorandum

Commonwealth of Australia Explanatory Memoranda

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APPROPRIATION BILL (NO. 2) 2008-2009

2008 THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA HOUSE OF REPRESENTATIVES APPROPRIATION BILL (NO. 2) 2008-2009 EXPLANATORY MEMORANDUM (Circulated by the authority of the Minister for Finance and Deregulation, the Honourable Lindsay Tanner MP)

Outline Appropriation Bill (No. 2) 2008-2009 General Outline 1 This explanatory memorandum accompanies an Appropriation Bill (No. 2) 2008-2009 (the Bill), consistent with the Government's commitment to increasing transparency of the Budget process generally. Explanatory memoranda have not previously been used for appropriation bills, but are being prepared in relation to the financial year 2008-2009 onwards. 2 The main purpose of the Bill is to make annual appropriations from the Consolidated Revenue Fund (CRF) for services that are not the ordinary annual services of the Government. To comply with sections 53 and 54 of the Australia Constitution, appropriations for the ordinary annual services of the Government are contained in a separate bill, Appropriation Bill (No. 1) 2008- 2009. 3 This Explanatory Memorandum describes the reforms and clarifications that have been made since Appropriation Act (No. 2) 2007-2008 and Appropriation Act (No. 4) 2007-2008 (previous Appropriation Acts). The Explanatory Memorandum should be read in conjunction with the 2008-2009 Portfolio Budget Statements (PB Statements) which contain details of the appropriations set out in Schedules 2 to the Bill. The PB Statements are published and tabled in the Parliament together with the Bill. Structure of appropriations in the Bill 4 The Bill provides for the appropriation of specified amounts for expenditure by Australian Government agencies (being those under the Financial Management and Accountability Act 1997 (FMA Act) and the High Court of Australia) plus bodies under the Commonwealth Authorities and Companies Act 1997 (CAC Act bodies). 5 Part 1 of the Bill deals with definitions, PB Statements and the concept of notional payments. Part 2 of the Bill proposes appropriations to make payments of the amounts in Schedule 2 for State, ACT, NT and local government items (clause 7), administered items (clause 8), administered assets and liabilities items (clause 9) and other departmental items (clause 10). Part 2 also establishes a new type of payment for CAC Act body payment items (clause 11). 6 Part 3 of the Bill specifies the ways in which the amounts in Schedule 2 may be adjusted. In addition to the adjustment provisions in Part 3, clause 19 House of Representatives page 1 Appropriation Act (No. 2) 2008-2009

Outline of the Bill recognises that the appropriations in the Bill may also be varied by the FMA Act. 7 Part 4 deals with reductions of State, ACT, NT and local government items and administered items made in previous Acts. Part 5 deals with special accounts and sets out the amount appropriated under the Act. Financial Impact 8 This Bill will appropriate the amounts specified in Schedule 2. House of Representatives page 2 Appropriation Act (No. 2) 2008-2009

Notes on clauses Notes on clauses Part 1--Preliminary Clause 1--Short title 1 This clause specifies the short title of the Bill, once enacted, will be Appropriation Act (No. 2) 2008-2009. Clause 2--Commencement 2 Clause 2 provides for the Bill to commence as an Act on the day of Royal assent. Clause 3--Definitions 3 Clause 3 defines the key terms used in the Bill, such as `administered item', `departmental item', `State, ACT, NT and local government items' and `current year' (being the financial year ending on 30 June 2009). 4 In terms of new definitions, the Bill recognises that the CAC Act bodies are separate from the Commonwealth. In contrast, previous Appropriation Acts provided appropriations for expenditure by FMA Act agencies and CAC Act bodies alike. To clarify the distinction clause 3 of the Bill defines: · `agency' to be an agency within the meaning of the FMA Act or the High Court of Australia (since the High Court is recognised as a agency for the purposes of the Bill, although it is not a prescribed agency under the FMA Act, due to its status under its enabling legislation); and · `CAC Act body' to be a Commonwealth authority or a Commonwealth company within the meaning of the CAC Act (see clause 9 for their appropriations). 5 A new definition, `CAC Act body payment item' has also been included in clause 3 to specify that the payments for CAC Act bodies will be the amounts set out in Schedule 2 in relation to a CAC Act body under the heading "Non-operating". Clause 4--Portfolio Budget Statements 6 Clause 4 declares that PB Statements are extrinsic material under paragraph 15AB(2)(g) of the Acts Interpretation Act 1901 (AI Act) that may be House of Representatives page 3 Appropriation Act (No. 2) 2008-2009

Notes on clauses used to ascertain the meaning of certain provisions in the Bill in accordance with subsection 15AB(1) of the AI Act. The purpose of the PB Statements is to provide information on the proposed allocation of resources to Government outcomes by agencies within the portfolio. The PB Statements provide information, explanation and justification to enable Parliament to understand the purpose of each appropriation proposed in the Bill. 7 Subsection 4(2) of previous Appropriation Acts provided that where the PB Statements indicated a particular activity is in respect of a particular outcome, then the amount in the administered item is taken to contribute to achieve the outcome. In the Bill this provision has been relocated to improve readability to clause 8 which deals with appropriations for administered items. Clause 5--Notional payments, receipts etc 8 Clause 5 ensures that payments between agencies result in a reduction of the available appropriation to the paying agency. For example the payments of the amounts in Schedule 2 of the Bill from one FMA Act agency to another do not require an appropriation. 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 payments are made. 9 Clause 5 provides that these notional transactions between agencies are to be treated as if they were real transactions. The effect is that when a notional transaction takes place, the paying agency must debit the appropriation made to it by Parliament. For constitutional purposes this means that the real appropriation made by Parliament is extinguished by the amount of the notional payment. 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. Also, the amounts in Schedule 2 may be adjusted under the provisions in Part 3 of the Bill. Specifically: · States, 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. House of Representatives page 4 Appropriation Act (No. 2) 2008-2009

Notes on clauses · CAC Act body payment items may be reduced in accordance with clause 14. · Items may be increased by a payment from the Advance to the Finance Minister in accordance with clause 15. · Items may be increased in accordance with clause 16 of Appropriation Bill (No.1) 2008-2009 which provides for the receipt of payments from Comcover. 11 The amounts in Schedule 2 of the Bill may further be adjusted in accordance with sections 30 to 32 of the FMA Act. Specifically: · Items may be increased by the reinstatement of amounts that an agency is repaid, in accordance with section 30 of the FMA Act. 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. · Items may be adjusted by amounts recovered 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. · Departmental items may be increased to take into account certain other amounts received by an agency, if those receipts are prescribed by the Financial Management and Accountability Regulations, in accordance with section 31 of the FMA Act. · 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 shifted 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. The amount specified in House of Representatives page 5 Appropriation Act (No. 2) 2008-2009

Notes on clauses 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. 14 The Finance Minister manages payments from State, ACT, NT and local government 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. 15 The following changes have been made to clause 7: · Subsection 7(1) and (2) of previous Appropriation Acts enabled the Finance Minister to `issue out of the CRF amounts' specified in a State, ACT, NT and local government item. As noted in paragraph 14 above the Finance Minister manages the use of public money through drawing rights issued under the FMA Act. Therefore clause 7 of the Bill no longer refers to the Finance Minister issuing an amount from the CRF. · Subsections 7(1) and (3) of previous Appropriation Acts required the Finance Minister to determine whether a lesser amount should be issued out of the CRF for an item, having regard to the expenses of the agency in relation to the item. Subclause 7(1) of the Bill does not requires that determination by the Finance Minister. Reductions of the amount provided for State, ACT, NT and local government item can now be dealt with under the more efficient process in clause 12 of the Bill. · Subsection 7(1) of previous Appropriation Acts also specified that the amounts issued out of the CRF for a State, ACT, NT and local government item may `not exceed, in total,' the amounts specified for the item. Clause 7 no longer includes this limit, as the payment may be adjusted in accordance with Part 3 of the Bill or sections 30 to 32 of the FMA Act. House of Representatives page 6 Appropriation Act (No. 2) 2008-2009

Notes on clauses Clause 8--Administered items 16 Subclause 8(1) provides for the appropriation of new administered expense 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 the amounts set out in Schedule 2 opposite an outcome for an agency under the heading "Administered Expenses". As with administered items in Appropriation Bill (No. 1) 2008-2009, the administered expenses in the Bill are appropriated separately for outcomes to make clear what the funding is intended to achieve. Schedule 2 specifies how much may be expended on each outcome. 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 PB Statements indicate a particular activity is in respect of a particular outcome, then the amount in the administered item is taken to contribute to achieve the outcome. Administered expenses are those administered by an agency on behalf of the Government (eg, certain grants, benefits and transfer payments). These payments are usually made pursuant to eligibility rules and conditions established by the Government or Parliament. 18 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. 19 To remove unnecessary conditions that were included in section 8 of previous Appropriation Acts, changes have been made to clause 8 that are similar to changes to clause 7 of the Bill (see paragraph 15 above) and also to clause 8 (administered items) of Appropriation Bill (No. 1) 2008-2009. Clause 12 will provide a streamlined process to reduce administered item appropriations that are not required. Clause 9--Administered assets and liabilities items 20 Clause 9 provides amounts in Schedule 2 to acquire new administered assets, enhance existing administered assets and/or discharge administrative 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 also be applied for any outcomes of the agency (ie. the outcomes in the Bill or Appropriation Bill (No. 1) 2008- 2009). House of Representatives page 7 Appropriation Act (No. 2) 2008-2009

Notes on clauses 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. 22 The requirement for the Finance Minister to `issue amounts out of the CRF' for administered assets and liabilities that was in section 9 of previous Appropriation Acts has been removed from clause 9 for the same reasons as it was removed from clauses 7 and 8 of the Bill (see paragraph 15 above). 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, loans or previous years' outputs, 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 investments in new capacity to produce departmental outputs; · `loans' can be provided to agencies when an investment to produce future departmental outputs is expected to result in a direct return such as an efficiency saving (these are generally not formal loans established in contracts); and · `previous years' outputs' appropriations can be used to restore appropriations used to deliver departmental outputs in a previous year (eg, when a decision is made to implement a new activity after the date for inclusion in the additional appropriation bills). Expenditure on such activities are met initially from existing appropriations which are then replenished by the previous years' outputs appropriations in future appropriation bills. 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 House of Representatives page 8 Appropriation Act (No. 2) 2008-2009

Notes on clauses provide funding for the full costs of acquiring new assets some of which might not be incurred until a later financial year. Amounts appropriated for an other departmental item can be subject to a reduction process in accordance with clause 13 of the Bill. 25 The requirement for the Finance Minister to `issue amounts out of the CRF' for other departmental items that was in section 10 of the previous Appropriation Act has not been included in clause 10 for the same reasons as it is not included in clauses 7 to 9 of the Bill (see paragraph 15 above). The Finance Minister manages the payment from other department 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 establishes an appropriation provision for direct appropriations for CAC Act bodies to be managed 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 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 will be initiated by requests from the CAC Act bodies. The Finance Minister manages payments from CAC Act body payment items by agencies through the issuing of drawing rights under 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. CAC Act bodies hold the amounts paid to them on their own account 29 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(5) provides that House of Representatives page 9 Appropriation Act (No. 2) 2008-2009

Notes on clauses 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 through special appropriations and from related entities such as a portfolio department. Many CAC Act bodies also receive funds from external sources. Part 3--Adjusting appropriation items 32 Part 3 of the Bill includes provisions that may increase or reduce the amounts specified in Schedule 2. Up until the Additional Estimates Acts for 2007-08, Part 3 of the previous Appropriation Acts only included the clauses that increased appropriations. For example, in previous Appropriation Acts the provision to reduce appropriations (section 11) was included in Part 2 of that Act. The equivalent reduction clauses are now located with the other adjustment provisions in Part 3 of the Bill (clauses 12 to 14). For clarity this Part has been renamed "Adjusting appropriation items". Clause 12--Reducing State, ACT, NT and local government items and administered items 33 Clause 12 provides a more streamlined process for amounts of State, ACT, NT and local government items and administered items not required in later years to be extinguished. Clause 12 enables amounts of State, ACT, NT and local government items and administered items which are not expensed or spent during the financial year to be reduced. 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 Acts. 34 Clause 12 is a new clause in the annual appropriation bills. In previous Appropriation Acts sections 7 appropriated amounts for State, ACT, NT and local government items and section 8 appropriated amounts for administered items. These sections provided for those amounts to be reduced in accordance with a determination of the Finance Minister. Determinations under section 7 or 8 limited the amount of annual appropriation available, but did not reduce the amount of the appropriations. 35 Clause 12 establishes a more efficient process to permanently reduce State, ACT, NT and local government items and administered items. It does this by limiting 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 House of Representatives page 10 Appropriation Act (No. 2) 2008-2009

Notes on clauses 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 to 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. 36 Subclause 12(2) retains a power for the Finance Minister to determine that an amount published in the financial statements of an agency is taken to be the 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 or requires updating after an agency's annual report is published. 37 Subclause 12(3) provides that a determination made under subclause 12(2) is a legislative instrument 38 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 39 Administered assets and liabilities items and other departmental items remain available until the appropriation is spent or reduced in accordance with clause 13. This clause enables the Chief Executive of an agency to comply with his or her obligations under section 44 of the FMA Act to promote the efficient, effective and ethical use 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; House of Representatives page 11 Appropriation Act (No. 2) 2008-2009

Notes on clauses · an amount is reclassified and appropriated again under another kind of appropriation (eg, where an amount appropriated as departmental is to be reclassified as administered and a new administered appropriation is provided). The existing appropriation remains legally available even though there is no Government authority to spend the funds; · efficiency savings result in a program costing less than expected; or · a program is abolished under Government policy before the appropriation is expended. 40 Paragraph 13(1)(a) enables the Minister responsible for an agency to ask the Finance Minister to reduce an administered assets and liabilities item or an other departmental item for that agency. Paragraph 13(1)(b) enables the Chief Executive of an agency for which the Finance Minister is responsible to ask the Finance Minister to reduce an administered assets and liabilities item or an other departmental item for that agency. Subclause 13(5) 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. 41 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. However, if the Finance Minister does: · the determination must not be greater than 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). 42 Subclause 13(6) provides that a determination made under subclause 13(2) is a legislative instrument. 43 Despite subsection 44(2) of the LI Act, which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 13(6) 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 one of these item because any such determination will reduce the amount of an appropriation authorised by Parliament. Subclause 13(6) also confirms subsection 54(2) of the LI Act, House of Representatives page 12 Appropriation Act (No. 2) 2008-2009

Notes on clauses which provides that instruments made under Appropriation Acts are not subject to sunsetting. 44 Clause 13 has been simplified by not including some ambiguous or unnecessary conditions that were included section 11 of the previous Appropriation Acts. Clause 14--Reducing CAC Act body payment items 45 Clause 14 will establish a similar process for reducing CAC Act body payment items to the process in clause 13 for reducing administered assets and liabilities items and other departmental items. Subclause 14(1) enables a Minister responsible for a CAC Act body, or in the case of a CAC Act body who the Finance Minister is responsible for, the Secretary of the Finance Department, to ask the Finance Minister to reduce a CAC Act body payment for that body. Subclause 14(6) 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. 46 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 excess CAC Act body payments. However, if the Finance Minister does: · the determination will not be greater than 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). 47 Subclause 14(5) clarifies 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. 48 Subclause 14(7) provides that a determination made under subclause 14(2) is a legislative instrument. 49 Despite subsection 44(2) of the LI Act, which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 14(7) provides that a determination reducing a CAC Act body payment item is subject to disallowance in accordance with section 42 of the LI House of Representatives page 13 Appropriation Act (No. 2) 2008-2009

Notes on clauses Act. Parliament retains the power to disallow a determination to reduce a CAC Act body payment because the determination will reduce the amount of an appropriation authorised by Parliament. Subclause 14(7) also confirms subsection 54(2) of the LI Act, which provides that instruments made under annual Appropriation Acts are not subject to sunsetting. Clause 15--Advance to the Finance Minister 50 Clause 15 provides $380 million as an advance to the Finance Minister (AFM) to be allocated when he or she is satisfied that there is an urgent need for expenditure during the 2008-2009 financial year, for which Schedule 2 does not provide a sufficient appropriation. 51 Subclause 15(1) establishes the criteria about which the Finance Minister must be satisfied before he or she may determine to add an amount from the AFM to an item of an agency. The Finance Minister will only consider issuing an amount under subclause 15(1) if satisfied there is an urgent need for expenditure that is not provided for, or is insufficiently provided for, in Schedule 2 because of an omission or understatement or because of unforeseen circumstances (ie, according to the AFM guidelines, an urgent need for expenditure is expenditure that is required within two weeks). Generally the other appropriation adjustment options in Part 3 of the Bill or under sections 30 to 32 of the FMA Act must have been exhausted before the Finance Minister will make a determination under subclause 15(2). 52 Subclause 15(2) enables the Finance Minister to make a determination to add an amount form the AFM to an item in Schedule 2, to a new item not already in Schedule 2, or to a new outcome. 53 The amount of the AFM provided by clause 15(3) is higher than previous Appropriation Acts, as the previous arrangements for recovering AFM amounts from the additional estimates acts will be discontinued. A further AFM will only be requested in the additional estimates bills for the current year if the AFM in the Bill is close to being exhausted. 54 Subclause 15(4) provides that a determination under subclause 15(2) is a legislative instrument, which must be tabled in Parliament but is not subject to disallowance or sunsetting. 55 Disallowance of a subclause 15(2) determination could frustrate the purpose of clause 15 which is to provide additional appropriations for urgent expenditure. Parliament authorises the AFM under clause 15 so that there is an amount available to cover any potential urgent requirements that may arise. A House of Representatives page 14 Appropriation Act (No. 2) 2008-2009

Notes on clauses subclause 15(2) determination will not require any additional appropriations to be authorised by Parliament. A subclause 15(2) determination also differs from a ministerial determination under clause 10, 11 or 12. Determinations under those clauses will reduce the amount of an appropriation approved by Parliament. As noted above, those other determinations therefore will be subject to disallowance. 56 A subclause 15(2) determination is not subject to sunsetting provisions because the amount allocated from the AFM will be extinguished when it is spent. Further, if the determination did expire after a period, then the recipient of money paid from the AFM would be liable to repay that money as if the amount had not been appropriated in the first place. Part 4--Reducing State, ACT, NT and local government items, State payment items and administered items in previous Acts Clause 16--Reducing State, ACT, NT and local government items, State payment items and administered items in previous Acts 57 Clause 16 has been added to prevent amounts of administered expenses determined under previous Appropriation Acts to be re-determined and spent. Clause 16 provides for all past determined amounts of unnecessary administered expense appropriations to be `extinguished' or `lapsed' in law. Previous Appropriations Acts limited the amounts that may be issued from the CRF for State, ACT, NT and local government items and administered items but technically did not prevent new determinations raising the limit, thereby allowing previously unavailable appropriations to be spent. Part 5--Miscellaneous Clause 17--Crediting amounts to Special Accounts 58 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) or another Act (section 21). The determination or Act that establishes the special account will specify the purposes of the special account. House of Representatives page 15 Appropriation Act (No. 2) 2008-2009

Notes on clauses Clause 18--Conditions etc applying to State, ACT, NT and local government items 59 Clause 18 delegates Parliament's power under section 96 of the Constitution to provide financial assistance to the States to the responsible Minister listed in Schedule 1 of the Bill. Clause 18 provides the Ministers named in Schedule 1 with the power to determine: · conditions under which payments to the States, the ACT and NT and local councils may be made: paragraph 18(2)(a); and · the amounts and timing of those payments: paragraph 18(2)(b). 60 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. 61 Although financial assistance is provided to the ACT, NT and local government authorities without reference to section 96, 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--Appropriations of the Consolidated Revenue Fund 62 Clause 19 provides that the CRF is appropriated as necessary for the purposes of the Bill. Significantly this clause notes that the amounts appropriated by the Bill may be affected by the FMA Act, in particular sections 30 to 32 of the FMA Act (see clause 6). Schedule 1--Payments to or for the States, ACT, NT and local government 63 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. House of Representatives page 16 Appropriation Act (No. 2) 2008-2009

Notes on clauses Schedule 2--Services for which money is appropriated 64 Schedule 2 specifies the services for which amounts will be appropriated by the Bill. 65 Schedule 2 contains a summary table detailing the total appropriations for each portfolio. A separate summary table is included for each portfolio together with other tables detailing the breakdown of the appropriations within each portfolio. 66 Schedule 2 includes, for information purposes, a figure for the previous financial year, labelled the `Actual Available Appropriation'. That figure is printed in italics under each appropriation amount to provide a comparison with the proposed appropriations. The Actual Available Appropriation does not affect the amounts available at law. 67 More details about the appropriations in Schedule 2 are contained in the Budget Papers and the PB Statements. House of Representatives page 17 Appropriation Act (No. 2) 2008-2009

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