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2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Appropriation Bill (No. 2) 2009-2010
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance and Deregulation,
the Honourable Lindsay Tanner MP)
Appropriation Bill (No. 2) 2009-2010
General Outline
This explanatory memorandum accompanies Appropriation Bill (No. 2) 2009-
2010 (the Bill).
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.
Appropriations for the ordinary annual services of the Government must be
contained in a separate bill to other appropriations in accordance with
sections 53 and 54 of the Australian Constitution. Consequently, the Bill
proposes appropriations that are not for the ordinary annual services of
the Government. Annual appropriations that are for the ordinary annual
services of the Government are proposed in Appropriation Bill (No. 1) 2009-
2010. Other annual appropriations that are not for the ordinary annual
services of the Government are proposed in Appropriation (Parliamentary
Departments) Bill (No. 1) 2009-2010.
This Explanatory Memorandum should be read in conjunction with the 2009-
2010 Portfolio Budget Statements (PBS) which contain details of the
appropriations set out in Schedule 2 to the Bill. The PBS are published and
tabled in the Parliament together with the Bill.
Structure of appropriations in the Bill
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).
6 Part 1 of the Bill deals with definitions, and the interpretative
role of the PBS, and the concept of notional payments.
7 Part 2 of the Bill proposes appropriations to make payments of the
amounts in Schedule 2 for State, ACT, NT and local government items
(clause 7), administered items (clause 8), administered assets and
liabilities items (clause 9), other departmental items (clause 10) and CAC
Act body payment items (clause 11).
8 Part 3 of the Bill specifies the ways in which the amounts in
Schedule 2 may be adjusted. In addition to the adjustment provisions in
Part 3, clause 19 of the Bill recognises that the appropriations in the
Bill may also be varied by the FMA Act.
9 Part 4 deals with the general drawing rights limits applicable for
the current year (current year is defined in clause 3 of the Bill) to the
Building Australia Fund, Education Investment Fund and the Health and
Hospitals Fund established by the Nation Building Funds Act 2008. This part
also deals with the general drawing rights limit, for the current year, for
the purposes of section 9 and section 16 of the Federal Financial Relations
Act 2009.
10 Part 5 deals with credits to Special Accounts (clause 17) the
conditions that apply to payments of State, ACT, NT and local government
items (clause 18) and sets out the amount appropriated under the Act
(clause 19). Clause 19 recognises that the appropriations proposed in the
Bill may also be varied by the FMA Act.
Financial Impact
11 This Bill will appropriate the amounts specified in Schedule 2.
Notes on clauses
Part 1-Preliminary
Clause 1-Short title
This clause specifies the short title of the Bill, once enacted, will be
Appropriation Act (No. 2) 2009-2010.
Clause 2-Commencement
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', 'other departmental item', 'State, ACT, NT and local
government items' and 'current year'.
Clause 4-Portfolio Statements
4 Clause 4 declares that PBS are extrinsic material under
paragraph 15AB(2)(g) of the Acts Interpretation Act 1901 (AI Act) that may
be used to ascertain the meaning of certain provisions in the Bill in
accordance with subsection 15AB(1) of the AI Act. The purpose of the PBS is
to provide information on the proposed allocation of resources to
Government outcomes by agencies within the portfolio. The PBS provide
information, explanation and justification to enable Parliament to
understand the purpose of each appropriation proposed in the Bill. The PBS
are defined in the Bill to mean the Portfolio Budget Statements.
Clause 5-Notional payments, receipts etc
5 Clause 5 ensures that payments between agencies result in a debit to
the 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.
6 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
7 Clause 6 sets out the total of the appropriations in Schedule 2 of
the Bill. Importantly, the amounts in Schedule 2 may be adjusted under the
provisions in Part 3 of the Bill. In particular:
. 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.
. 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.
8 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 1997, 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
9 Clause 7 provides administered appropriations for financial
assistance to the States, ACT, NT and local governments. State, ACT, NT and
local government items are appropriated separately for outcomes, making it
clear what the funding is intended to achieve. The amount specified in
Schedule 2 for an outcome may be applied by an agency for the purpose of
making payments to any of the States, ACT, NT or local government
authorities for the purpose of achieving that outcome.
10 Clauses 7 and 18 delegate Parliament's power under section 96 of the
Constitution to impose terms and conditions on payments of financial
assistance to the States to the responsible Ministers listed in Schedule 1
of the Bill. Schedule 1 also lists the Ministers who may determine the
amounts and timing of those payments. There is a process in clause 12 for
dealing with State, ACT, NT and local government items that are not fully
expensed or spent during the year.
11 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.
Clause 8-Administered items
12 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 "New Administered Expenses". As with administered items
in Appropriation Bill (No. 1) 2009-2010, 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. New Administered Expenses are proposed when an
agency is to carry out new administered activities for a new outcome.
13 The purposes for which each administered item can be spent are set
out in subclause 8(2). Subclause 8(2) provides that where the PBS indicates
a particular activity is in respect of a particular outcome, then
expenditure on that activity is taken to be expenditure for the purpose of
contributing to achieving that outcome. The outcomes are not, however,
necessarily tied to the existence of a particular agency (eg, abolishing a
department will not effect the valid operation of an appropriation for an
administered item for an outcome of that department, because the purpose of
the appropriation does not depend on the existence of the department).
14 New 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. Specifically:
. administered items are tied to outcomes, departmental items are not;
. administered items must be spent in accordance with rules and
conditions established by Government or Parliament; and
. there is a process in clause 12 for dealing with administered items
that are not fully expensed or spent during the financial year.
15 The Finance Minister manages payments from administered items by
agencies through the issuing of drawing rights in accordance with
sections 26 and 27 of the FMA Act. Drawing rights control who may spend
money from appropriations, and allow for conditions and limits to be set by
the Finance Minister (or the Finance Minister's delegate) in relation to
those activities.
Clause 9-Administered assets and liabilities items
16 Clause 9 provides amounts in Schedule 2 to acquire administered
assets, enhance existing administered assets and/or discharge administered
liabilities relating to activities administered by agencies on behalf of
the Government. Administered assets and liabilities appropriations are
provided for functions managed by an agency on behalf of the Government.
Administered assets and liabilities items can be applied for any outcomes
of the agency in Schedule 2 of this Act, or Schedule 1 to Appropriation Act
(No. 1) 2009-2010.
17 Amounts appropriated for administered assets and liabilities items
can be subject to a reduction process in accordance with clause 13 of the
Bill. Under clause 13, the Minister responsible for an agency may make a
written request to ask the Finance Minister to make a determination to
reduce an item of an agency. If the Finance Minister is responsible for the
agency the Chief Executive of the agency may make the request.
18 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
19 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 are used to restore
appropriations used to deliver departmental outputs in the 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 this appropriation bill.
20 Other departmental items are not expressed in terms of a particular
financial year and do not automatically lapse. Other departmental items
are available until they are spent. For example, equity injection
appropriations provide funding to meet the cost expected to be incurred in
the Budget year to acquire a new asset; however, for a number of reasons,
some part of the appropriation might not be required until a later
financial year. Amounts appropriated for an other departmental item can be
subject to a reduction process in accordance with clause 13 of the Bill.
21 The Finance Minister manages the payment from other departmental
items by agencies through the issuing of drawing rights in accordance with
sections 26 and 27 of the FMA Act. Drawing rights control who may spend
from appropriations, and allow for conditions and limits to be set by the
Finance Minister (or the Finance Minister's delegate) in relation to those
activities.
Clause 11-CAC Act body payment items
22 Clause 11 provides for direct appropriations of money for CAC Act
bodies to be paid from the CRF by the relevant department. Clause 11
provides that payments for CAC Act bodies must be paid to those bodies to
be used for the purposes of those bodies.
23 A CAC Act body is defined in clause 3 to be a Commonwealth authority
or a Commonwealth company within the meaning of the CAC Act. Many CAC Act
bodies receive funding directly from appropriations. However, these bodies
are legally and financially separate from the Commonwealth and as a result,
do not debit appropriations or make payments from the CRF.
24 CAC Act body payments will be initiated by requests to the relevant
portfolio agencies from the CAC Act bodies. The Finance Minister manages
appropriations for CAC Act bodies through the issuing of drawing rights in
accordance with sections 26 and 27 of the FMA Act. Drawing rights control
who may spend money from appropriations, and allow for conditions and
limits to be set by the Finance Minister (or the Finance Minister's
delegate) in relation to those payments. CAC Act bodies will hold the
amounts paid to them on their own account.
25 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.
26 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
subclause 11(2) does not prevent the CAC Act body payments in Schedule 2
being reduced.
27 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
28 Part 3 of the Bill includes provisions that may reduce or increase
the amounts specified in Schedule 2. The reduction provisions are contained
in clauses 12 through 14 inclusive. The advance to the Finance Minister
provision that can increase the amounts specified in Schedule 2 is
contained in clause 15.
Clause 12-Reducing State, ACT, NT and local government items and
administered items
29 Clause 12 provides for amounts of State, ACT, NT and local government
items and administered items which are not required at the end of the
current year to be extinguished. If the Government then decides that the
amounts should be spent in a later financial year, it must request
Parliament to appropriate these amounts in future Appropriation Acts.
30 Clause 12 limits the amount that may be applied for those items to
the amount reported in an agency's annual report. Subclause 12(1) provides
that if the amount published in the annual report is less than the amount
of the item, then the relevant item is taken to be reduced to the amount
specified in the annual report. The amount of the item specified in
Schedule 2 of the Bill may be increased or reduced by the other clauses of
Part 3 of the Bill or in accordance with sections 30 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.
31 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 an amount specified in his or her determination. The power in
paragraph 12(2)(b) is to ensure that the amount published for the item can
be corrected if, for example, the amount is erroneous or requires updating
after an agency's annual report is published.
32 Subclause 12(3) provides that a determination made under subclause
12(2) is a legislative instrument.
33 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
34 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;
. 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.
35 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.
36 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).
37 Subclause 13(6) provides that a determination made under
subclause 13(2) is a legislative instrument.
38 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 items 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, which provides that instruments made under
Appropriation Acts are not subject to sunsetting.
Clause 14-Reducing CAC Act body payment items
39 Clause 14 provides a similar process for reducing CAC Act body
payment items to the process for reducing departmental items.
Subclause 14(1) enables a Minister responsible for a CAC Act body, or in
the case of a CAC Act body for which the Finance Minister is responsible,
the Secretary of the Finance Department, to ask the Finance Minister to
reduce a CAC Act body payment item for that body. Subclause 14(6) provides
that a request under subclause 14(1) is not a legislative instrument within
the meaning of section 5 of the LI Act.
40 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 payment
item. 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).
41 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.
42 Subclause 14(7) provides that a determination made under
subclause 14(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 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 Act. Parliament retains the power to disallow a
determination to reduce a CAC Act body payment item because any such
determination will reduce the amount of an appropriation authorised by
Parliament. Subclause 14(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
44 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 2009-2010 financial year, for which
Schedule 2 does not provide a sufficient appropriation.
45 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 1 because of an omission or understatement or
because of unforeseen circumstances (ie, according to the AFM guidelines,
an urgent need for expenditure 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).
46 Subclause 15(2) enables the Finance Minister to make a determination
to add an amount from the AFM to an item in Schedule 2, to a new item not
already in Schedule 2, or to a new outcome.
47 A further AFM provision will only be requested in the additional
estimates bills for the current year if the AFM in this Bill is close to
being exhausted.
48 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.
49 A subclause 15(2) determination is not subject to disallowance as
this would frustrate the purpose of the provision, which is to provide
additional appropriation for urgent expenditure. Neither is an AFM subject
to the sunsetting provisions of the LI Act 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-General drawing rights limits
Clause 16 - General drawing rights limits
50 Clause 16 is a new provision to the annual appropriation Acts that
relates to the general drawing rights limits for the recently commenced
Nation-building Funds Act 2008 and Federal Financial Relations Act 2009.
The general drawing rights limits provide Parliament with a mechanism by
which it may review the maximum amounts that can be paid under each of
these Acts in a financial year. Note that this clause is not an
appropriation for either of the Nation-building Funds Act 2008 or and
Federal Financial Relations Act 2009.
Nation-building Funds Act 2008
51 For the purposes of section 109 of the Nation-building Funds Act
2008, clause 16(1) provides the general drawing rights limit for the
Building Australia Fund (BAF) for the current year.
52 The BAF is established under section 12 of the Nation-building Funds
Act 2008. It consists of the investments of the BAF and the BAF Special
Account, which is a Special Account recognised under section 21 of the FMA
Act and established under section 13 of the Nation-building Funds Act 2008.
The general drawing rights limit applies to the main purposes of the BAF,
namely making payments in relation to the creation or development of
transport infrastructure, communications infrastructure, energy
infrastructure and water infrastructure. The general drawing rights limit
does not apply to payments for eligible Nation Broadband Network matters.
53 For the purposes of section 199 of the Nation-building Funds Act
2008, clause 16(2) provides the general drawing rights limit for the
Education Investment Fund (EIF) for the current year.
54 The EIF is established under section 131 of the Nation-building Funds
Act 2008. It consists of the investments of the EIF and the EIF Special
Account, which is a Special Account recognised under section 21 of the FMA
Act and established under section 132 of the Nation-building Funds Act
2008. The general drawing rights limit applies to the main purposes of the
EIF, namely making payments in relation to the creation or development of
higher education infrastructure, research infrastructure, vocational
education and training infrastructure, and eligible education
infrastructure, as well as any transitional Higher Education Endowment Fund
payments.
55 For the purposes of section 267 of the Nation-building Funds Act
2008, clause 16(3) provides the general drawing rights limit for the Health
and Hospitals Fund (HHF) for the current year.
56 The HHF is established under section 214 of the Nation-building Funds
Act 2008. It consists of the investments of the HHF and the HHF Special
Account, which is a Special Account recognised under section 21 of the FMA
Act and established under section 215 of the Nation-building Funds Act
2008. The general drawing rights limit applies to the main purposes of the
HHF, namely making payments in relation to the creation or development of
health infrastructure.
57 It is important to note that this Bill will not appropriate amounts
to be paid from the BAF, the EIF or the HHF. The intention for specifying
general drawing rights limits in clauses 16(1) to 16(3) inclusive is to set
maximum limits on the amounts that may be covered by drawing rights issued
by the Finance Minister under the FMA Act for the current year, for the
purposes to which the limits apply.
58 Specifying a general drawing rights limit, and thereby limiting the
ability to issue drawing rights to that limit, is an effective mechanism to
manage expenditure of public money as the official or Minister making a
payment of public money cannot do so without the authority of a valid
drawing right under the FMA Act. The purpose of so doing is to provide
Parliament with a transparent mechanism by which it may review the rate at
which amounts committed to the BAF, EIF and HHF are expended.
59 The general drawing rights limits for the current year for the BAF,
EIF and HHF are specific to the current year applicable to this Act. The
general drawing rights limits for the current year in this Bill will not
limit the general drawing rights limits that may be specified in regard to
any other year.
Federal Financial Relations Act 2009
60 For the purposes of subsection 9(3)(b) of the Federal Financial
Relations Act 2009, clause 16(4) provides the general drawing rights limit
for general purpose financial assistance for the current year.
61 This general drawing rights limit applies for the current year to the
amount that the Treasurer can credit to the COAG Reform Fund and the total
amount covered by drawing rights authorising debits from that Fund for the
purposes of making a grant of general purpose financial assistance to a
State, the Australian Capital Territory or the Northern Territory.
62 The COAG Reform Fund was established by section 5 of the COAG Reform
Fund Act 2008, which is a Special Account under section 21 of the FMA Act.
The purposes of the COAG Reform Fund Special Account are provided at
section 6 of the COAG Reform Fund Act 2008.
63 If a general drawing rights limit is not indicated in an
appropriation Act for the purposes of subsection 9(3)(b) of the Federal
Financial Relations Act 2009 for a financial year, amounts cannot be
credited to the COAG Reform Fund under section 9(2)(a) of the Federal
Financial Relations Act 2009 and drawing rights must not be issued
authorising debits from the COAG Reform Fund for the purposes to which the
limit applies.
64 For the purposes of section 16(3)(b) of the Federal Financial
Relations Act 2009, clause 16(5) provides the general drawing rights limit
for national partnership payments for the current year.
65 This general drawing rights limit applies for the current year to the
amount that the Treasurer can credit to the COAG Reform Fund and the total
amount covered by drawing rights authorising debits from that Fund for the
purposes contained in section 16(1)(a) to (c) inclusive of the Federal
Financial Relations Act 2009. These purposes relate to making a grant of
financial assistance to a State to support the delivery by the State of
specified outputs or projects, facilitate reforms by the State, or reward
the State for nationally significant reforms.
66 If a general drawing rights limit is not indicated in an
appropriation Act for the purposes of section 16(3)(b) of the Federal
Financial Relations Act 2009 for a financial year, amounts cannot be
credited to the COAG Reform Fund under subsection 16(2)(a) of the Federal
Financial Relations Act 2009 and drawing rights must not be issued
authorising debits from the COAG Reform Fund for the purposes to which the
limit applies.
67 It is important to note that this Bill will not appropriate amounts
to be paid under sections 9 and 16 of the Federal Financial Relations Act
2009. The intention for specifying general drawing rights limits in
subclauses 16(4) and 16(5) is to set maximum limits on the amounts that may
be covered by drawing rights issued by the Finance Minister under the FMA
Act for the current year, for the purposes to which those limits apply.
68 Specifying a general drawing rights limit, and thereby limiting the
ability to issue drawing rights to that limit, is an effective mechanism to
manage expenditure of public money as the official or Minister making a
payment of public money cannot do so without the authority of a valid
drawing right under the FMA Act. The purpose of so doing is to provide
Parliament with a transparent mechanism by which it may review the rate at
which amounts are committed for expenditure.
Part 5-Miscellaneous
Clause 17-Crediting amounts to Special Accounts
70 Clause 17 provides that if the purpose of an item in Schedule 2 is
also the purpose of a Special Account (regardless of whether the item
expressly refers to the Special Account), then amounts may be debited
against the appropriation for that item and credited to the Special
Account. Special Accounts may be established under the FMA Act by a
determination of the Finance Minister (section 20) or another Act
(section 21). The determination or Act that establishes the Special Account
will specify the purposes of the special account.
Clause 18-Conditions etc. applying to State, ACT, NT and local government
items
71 Clause 18 deals with Parliament's power under section 96 of the
Australian Constitution to provide financial assistance to the States.
Clause 18 delegates the power to the responsible Ministers listed in
Schedule 1 of the Bill, by providing the Ministers named in Schedule 1 with
the power to determine:
. conditions under which payments to the States, 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).
72 Subclause 18(4) provides that determinations made under
subclause 18(2) are not legislative instruments, because these
determinations are not altering the appropriations approved by Parliament.
Determinations under subclause 18(2) will simply determine how
appropriations for State, ACT, NT and local government items will be paid.
The determinations are issued when required. However, payments can be made
without either determination.
73 Although financial assistance is provided to the ACT, NT and local
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
74 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
75 In accordance with clause 18, Schedule 1 lists the Ministers
responsible for determinations on payments to or for the States, ACT, NT
and local government.
Schedule 2-Services for which money is appropriated
76 Schedule 2 specifies the services for which amounts will be
appropriated by the Bill. Schedule 2 contains a summary table which lists
the total amounts for each portfolio. A separate summary table is included
with further detail for each portfolio, with other tables detailing the
appropriations for each agency.
77 Schedule 2 includes for information purposes a figure for the
previous financial year labelled the Actual Available Appropriation. The
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.
78 More details about the appropriations in Schedule 2 are contained in
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