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2008-2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION BILL (NO. 4) 2009-2010
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance and Deregulation,
the Hon Lindsay Tanner MP)
Table of Acronyms and Defined Terms
AEs Additional Estimates
AFM Advance to the Finance Minister
AI Act Acts Interpretation Act 1901
CAC Act Commonwealth Authorities and Companies Act1997
CRF Consolidated Revenue Fund
FMA Act Financial Management and Accountability Act 1997
FMA regulations Financial Management and Accountability
Regulations 1997
GST Goods and Services Tax
LI Act Legislative Instruments Act 2003
PAES Portfolio Additional Estimates Statements
PBS Portfolio Budget Statements
PSES Portfolio Supplementary Estimates Statements
House of Representatives page 1 Appropriation Bill (No. 4) 2009-2010
Outline
Appropriation Bill (No. 4) 2009-2010
General Outline
1 This explanatory memorandum accompanies Appropriation Bill (No. 4)
2009-2010 (the Bill).
2 The main purpose of the Bill is to propose appropriations from the
Consolidated Revenue Fund (CRF) for services that are not the ordinary annual
services of the Government in addition to those provided in the 2009-2010
Budget.
3 Appropriations for the ordinary annual services of the Government must
be contained in a separate bill from other appropriations in accordance with
sections 53 and 54 of the Australian Constitution. 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. 3) 2009-2010.
Together, Appropriation Bill (No. 3) 2009-2010 and Appropriation Bill (No. 4)
2009-2010 are termed the Additional Estimates (AEs) appropriation Bills.
4 This Explanatory Memorandum should be read in conjunction with the
various Portfolio Statements, in particular:
· the Portfolio Additional Estimates Statements (PAES) which contain
detail on the appropriations set out in Schedule 2 to the Bill and are
published and tabled in the Parliament in relation to the Bill;
· the 2009-2010 Portfolio Budget Statements (PBS) that were published
and tabled in the Parliament in relation to the Appropriation Bill (No. 1)
2009-2010 and Appropriation Bill (No. 2) 2009-2010; and
· the Portfolio Supplementary Estimates Statements (PSES) that were
published and tabled in the Parliament in relation to the Appropriation
(Water Entitlements and Home Insulation) Bill 2009-2010 and
Appropriation (Water Entitlements) Bill 2009-2010.
Structure of appropriations in the Bill
5 The Bill provides for the appropriation of specified amounts for
expenditure by Australian Government agencies (primarily being agencies
under the Financial Management and Accountability Act 1997 (FMA Act)) plus
House of Representatives page 2 Appropriation Bill (No. 4) 2009-2010
Outline
payments to bodies under the Commonwealth Authorities and Companies Act
1997 (CAC Act bodies).
6 Part 1 of the Bill deals with definitions, the interpretative role of various
Portfolio Statements and the concept of notional payments.
7 Part 2 of the Bill proposes appropriations to make payments of the
amounts in Schedule 2 for State, ACT, NT and local government items
(clause 7) administered items (clause 8), administered assets and liabilities
items (clause 9), other departmental items (clause 10) and CAC Act body
payment items (clause 11).
8 Part 3 of the Bill specifies the ways in which the amounts in Schedule 2
may be adjusted. In addition to the adjustment provisions in Part 3, clause 21 of
the Bill recognises that the appropriations in the Bill may also be varied by the
FMA Act.
9 Part 4 of the Bill deals with the general drawing rights limits applicable
for the current year (current year is defined in clause 3 of the Bill) to the,
Education Investment Fund and the Health and Hospitals Fund established by
the Nation building Funds Act 2008. This Part also deals with adjustments to
the general drawing rights limits for Goods and Services Tax (GST).
10 Part 5 of the Bill deals with the reduction of departmental and
administered items for the Parliamentary Departments in previous appropriation
Acts.
11 Part 6 deals with credits to Special Accounts (clause 19), the conditions
that apply to payments from State, ACT, NT and local government items
(clause 20) and provides for amounts to be appropriated as necessary (clause
21). Clause 21 recognises that the appropriations proposed in the Bill may also
be varied by the FMA Act.
Financial Impact
12 The Bill will appropriate the amounts specified in Schedule 2.
House of Representatives page 3 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
Notes on clauses
Part 1--Preliminary
Clause 1--Short title
1 This clause specifies that the short title of the Bill, once enacted, will be
Appropriation Act (No. 4) Act 2009-2010.
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', `agency', `CAC Act body payment item", `current year', `other
departmental item' and `State, ACT, NT and local government item'.
Clause 4--Portfolio Statements
4 Clause 4 declares that the Portfolio Statements (PBS, PSES and the
PAES) 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 accordance with subsection 15AB(1) of the AI Act. The
purpose of the Portfolio Statements is to provide information on the proposed
allocation of resources to Government outcomes by agencies within the
portfolio. The Portfolio Statements provide information to enable Parliament to
understand the purpose of appropriations proposed in the Bill. The Portfolio
Statements are defined in the Bill, at clause 3, to mean the PBS, PSES and the
PAES.
Clause 5--Notional payments, receipts etc
5 Clause 5 ensures that payments between agencies result in a debit from
the appropriation for the paying agency. For example, the payments of the
amounts in Schedule 2 from one FMA Act agency to another do not require, in
a constitutional sense, an appropriation because both agencies operate within
the CRF. However, for reasons of financial discipline and transparency, the
practice has arisen for these payments between agencies to be treated as though
House of Representatives page 4 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
they required an appropriation, and to debit an appropriation when such
notional payments are made.
6 Clause 5 provides that notional transactions between agencies are to be
treated as if they were real transactions and therefore require the use of a
drawing right and the debiting of an appropriation made by Parliament. Where
an FMA Act agency makes a payment, whether to another FMA Act agency or
another part of the same agency (such as a different `business unit' within the
agency), it is to be treated as a `real' payment. This means that the
appropriation made by Parliament is extinguished by the amount of the notional
payment, even though no payment is actually made from the CRF. Similarly a
notional receipt in such a situation is to be treated by the receiving agency
(where relevant) as if it were a real receipt. This does not mean every internal
transfer of public money involves a notional payment and receipt. As explained
in the Financial Management and Accountability Regulations 1997 (FMA
regulations) regulation 19, some transfers of public money from one official
account to another do not involve a notional payment or debiting an
appropriation.
Part 2--Appropriation items
Clause 6--Summary of appropriations
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:
· State, ACT, NT and local government items and administered items may
be reduced in accordance with clause 12;
· Administered assets and liabilities items and other departmental items
may be reduced in accordance with clause 13;
· CAC Act body payment items may be reduced in accordance with
clause 14; and
· items may be increased by a determination under clause 13 (the Advance
to the Finance Minister).
8 The amounts in Schedule 2 of the Bill may be adjusted further in
accordance with sections 30 to 32 of the FMA Act. Specifically:
House of Representatives page 5 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
· Section 30 allows an agency to re-credit (to an appropriation that had
been relied upon for an initial payment by the agency) an amount
equivalent to the repayment. The re-crediting or reinstatement authorised
by section 30 can result in the total amount paid from the CRF in gross
terms exceeding the amount specified in an item. Section 30 also applies
to notional transactions between and within agencies.
· Appropriations may be adjusted by amounts recovered by an agency from
the Australian Taxation Office for 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, or supplementing, an appropriation by the amount of
the GST qualifying amount arising from payments in respect of the
appropriation. As a result, there is sufficient appropriation for payments
under an appropriation item provided that the amount of those payments,
less the amount of recoverable GST, can be met from the initial amount
shown against the item in Schedule 2. Section 30A also applies to
notional transactions between and within agencies.
· Departmental items may be increased to take into account certain other
amounts received by an agency, if those receipts are prescribed by the
FMA 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 transferred 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 20 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.
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Notes on clauses
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. New administered expenses are those administered by an agency on
behalf of the Government (e.g. certain grants, benefits and transfer payments).
These payments are usually made pursuant to eligibility rules and conditions
established by the Government or Parliament. Specifically, 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
11 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. 3) 2009-2010, the new 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.
12 The purposes for which each administered item can be spent are set out
in subclause 8(2). Subclause 8(2) provides that where the Portfolio Statements
indicate a particular activity is in respect of a particular outcome, then
expenditure on that activity is taken to be expenditure for the purpose of
contributing to achieving that outcome. The outcomes are not, however,
necessarily tied to the existence of a particular agency (e.g. abolishing a
department will not affect 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).
13 New administered expenses are those administered by an agency on
behalf of the Government (e.g. certain grants, benefits and transfer payments).
These payments are usually made pursuant to eligibility rules and conditions
established by the Government or Parliament. Specifically:
· administered items are tied to outcomes, departmental items are not;
House of Representatives page 7 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
· 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.
14 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
15 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 the
Appropriation Acts listed in clause 9(1)(a) to (f) inclusive.
16 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.
17 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
18 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:
House of Representatives page 8 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
· `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 (e.g. when a
decision is made to implement a new activity after the date for inclusion
in the additional appropriation bills). Expenditure on such activities is met
initially from existing appropriations which are then replenished by the
previous years' outputs appropriations in the Bill.
19 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 current 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.
20 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
21 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.
22 A CAC Act body is defined in clause 3 to be a Commonwealth authority
or a Commonwealth company within the meaning of the CAC Act. Many CAC
Act bodies receive funding directly from appropriations. However, these bodies
are legally separate from the Commonwealth and as a result, do not debit
appropriations or make payments from the CRF.
House of Representatives page 9 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
23 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.
24 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.
25 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.
26 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
27 Part 3 of the Bill provides for reductions or increases to the amounts
specified in Schedule 2. The reduction provisions are contained in clauses 12
through 14 inclusive. The Advance to the Finance Minister provision that can
increase the amounts specified in Schedule 2 is contained in clause 15.
Clause 12--Reducing State, ACT, NT and local government
items and administered items
28 Clause 12 provides for amounts of State, ACT, NT and local
government items and administered items which are not required after 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.
29 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,
House of Representatives page 10 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
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.
30 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.
31 Subclause 12(3) provides that a determination made under
subclause 12(2) is a legislative instrument.
32 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
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
annual Appropriation Acts are not subject to sunsetting.
Clause 13--Reducing administered assets and liabilities items
and other departmental items
33 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 Bill (No. 4) 2009-2010
Notes on clauses
· an amount is reclassified and appropriated again under another kind of
appropriation (e.g. where an amount appropriated as departmental is to be
reclassified as administered and a new administered appropriation is
provided). The existing 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.
34 Subclause 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. Subclause 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, on the basis that it is requesting a
determination to be made and it is the determination that has substantive effect.
35 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 be for the amount specified in the request:
subclause 13(2);
· the determination may not reduce the item below nil: subclause 13(3); and
· the item in Schedule 2 will be taken to be reduced in accordance with the
determination of the Finance Minister: subclause 13(4).
36 Subclause 13(6) provides that a determination made under
subclause 13(2) is a legislative instrument.
37 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 these items because any such determination
House of Representatives page 12 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
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 annual Appropriation Acts are not subject to
sunsetting.
Clause 14--Reducing CAC Act body payment items
38 Clause 14 provides a similar process for reducing CAC Act body
payment items to the process for reducing administered assets and liabilities
items and other departmental items. 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) assists readers by noting that a request under
subclause 14(1) is not a legislative instrument within the meaning of section 5
of the LI Act, on the basis that it is requesting a determination to be made and it
is the determination that has substantive effect.
39 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 a CAC Act body payment item.
However, if the Finance Minister does:
· the determination must be for the amount specified in the request:
subclause 14(2);
· the determination may not reduce the CAC Act body payment item below
nil: subclause 14(3); and
· the CAC Act body payment item in Schedule 2 will be taken to be
reduced in accordance with the determination of the Finance Minister:
subclause 14(4).
40 Subclause 14(5) provides that the full amount that is required to be paid
to a CAC Act body by subclause 11(2) of the Bill may be reduced in
accordance with this clause 14.
41 Subclause 14(7) provides that a determination made under
subclause 14(2) is a legislative instrument.
42 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
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Notes on clauses
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
43 Section 15 of Appropriation Act (No. 2) 2009-2010 (Act No. 2) enables
the Finance Minister to provide additional appropriations for items when
satisfied there is an urgent need for expenditure, and the existing appropriation
is inadequate. This additional appropriation is referred to as the Advance to the
Finance Minister (AFM). Subsection 15(3) of Act No. 1 provides that the total
amount that can be determined under the AFM provision is $380 million.
44 Clause 15 of the Bill provides that irrespective of the amounts issued
from the AFM before the commencement of the Bill, the amount available
under section 15 of Act No. 2 will be restored to the original amount of $380
million. The provision has been added to the Bill to ensure that there will be
sufficient scope to provide amounts from the AFM for the remainder of the
financial year.
45 Subclause 15(1) specifies that if the Finance Minister has determined
under subsection 15(2) of Act No. 2 to increase an amount in Schedule 2 of Act
No. 2 from the AFM, then that amount is to be disregarded when the Bill
commences. From the date the Bill commences the total amount that can be
determined under the AFM will be $380 million.
46 Subclause 15(2) will prevent appropriations for the same expenditure
from both the AFM and the Bill. Subclause 15(2) ensures that if Schedule 2 of
the Bill provides an amount for a particular expenditure and, prior to the
commencement of the Bill, the Finance Minister determines an amount from
the AFM under section 15 of Act No. 2 for the same expenditure (the advanced
amount), then the appropriation in the Bill will be reduced by the amount of the
advanced amount. For example if the Bill provides $20 million for a program
and an advanced amount of $5 million is determined by the Finance Minister
under Act No. 2 for a particular payment under that program, then the amount
appropriated by the Bill, once enacted, will be reduced by $5 million (i.e.
appropriating only $15 million for the program).
47 The Finance Minister may continue to make determinations under
subsection 15(2) of Act No. 2 to add an amount from the AFM to an item of an
agency if the criteria in subsection 15(1) of Act No. 2 are satisfied.
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Notes on clauses
Part 4--General drawing rights limits
Clause 16--General drawing rights limits
48 Clause 16 specifies two new general drawing rights limits for the
Nation-building Funds Act 2008 by altering the operation of subsections 16(2)
and 16(3) in Appropriation Act (No. 2) 2009-2010. 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.
49 The Education Investment Fund (EIF) and Health and Hospitals Fund
(HHF) general drawing rights limits declared in the Bill replace the EIF and
HHF general drawing rights limits declared in Appropriation Act (No. 2)
2009-2010.
50 The changes to the 2009-10 EIF and HHF general drawing right limits
reflect minor adjustments in the timing of payments from the Funds. The EIF
general drawing right limit also includes funding for the Giant Magellan
Telescope, which was announced by the Minister for Innovation, Industry,
Science and Research on 20 July 2009.
51 For the purposes of section 199 of the Nation-building Funds Act 2008,
clause 16(1) provides the general drawing rights limit for the EIF for the current
year. 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.
52 For the purposes of section 267 of the Nation-building Funds Act 2008,
clause 16(2) provides the general drawing rights limit for the HHF for the
current year. 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,
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Notes on clauses
namely making payments in relation to the creation or development of health
infrastructure.
53 It is important to note that the Bill will not appropriate amounts to be
paid from the EIF or the HHF. The intention of specifying general drawing
rights limits in clauses 16(1) and 16(2) 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.
54 Under section 27 of the FMA Act, the Finance Minister is able to issue
drawing rights, without which no public money may be spent, thereby
providing a control mechanism over spending. That power has been delegated
to various officials. Clause 16 places a limit over the amount of drawing rights
that may be issued. 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 mechanism by which it may review the rate at which amounts
committed to the EIF and HHF are expended.
55 The general drawing rights limits for the current year for the EIF and
HHF are specific to the current year applicable to this Act. The general drawing
rights limits for the current year in the Bill will not limit the general drawing
rights limits that may be specified in regard to any other year.
Clause 17--Adjustments for GST
56 The effect of this clause will be to increase a general drawing rights
limit by the amount of any GST qualifying amount in respect of an amount paid
from a fund named in clause 16 or in section 16 of Appropriation Act (No. 2)
2009-2010.
57 Some payments from the Building Australia Fund, EIF, HHF and the
COAG Reform Fund may include a GST qualifying amount and the relevant
general drawing rights limit is adjusted accordingly. The appropriation itself is
not affected by clause 17 because that is increased by the operation of
section 30A of the FMA Act.
58 The clause applies to the current year and to 2008-09. This clarifies that
the amounts specified for the general drawing rights limits, in both the current
year and 2008-09, are exclusive of any GST qualifying amounts that may arise
(or has arisen) in respect of acquisitions made in reliance on that limit.
House of Representatives page 16 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
Part 5--Reducing departmental and administered items
for Parliamentary Departments in previous Acts
Clause 18--Reducing departmental and administered items
for Parliamentary Departments in previous Acts
59 Clause 18 provides a capacity for the Finance Minister to determine, by
writing, that a departmental item or administered item for a Parliamentary
Department in a previous appropriation Act is reduced by the amount specified
in the written determination.
60 The intent of clause 18 is to allow the Finance Minister to reduce
amounts of departmental items and administered items for a Parliamentary
Department from previous Acts where amounts in those items have been
identified by the Finance Minister as having been appropriated as depreciation
and make good amounts for Parliamentary Departments in those Acts. Since the
introduction of accrual appropriations in 1999-2000 amounts of funding for
depreciation and make good have accumulated that have not yet been applied
by Parliamentary Departments. It is therefore necessary for the efficient,
effective and ethical management of appropriations to subject these
accumulated amounts to a reduction process that will extinguish them at law.
61 This reduction provision is distinct from other reduction clauses in the
Bill, (at clause 12, clause 13 and clause 14) and operates independently from
those clauses. In clause 18 the Finance Minister's capacity to effect a reduction
is not conditioned on first receiving a written request for the reduction from, for
example, the responsible Presiding Officer. In addition, this clause is
specifically directed at effecting reductions in departmental and administered
items in previous appropriation Acts where amounts in those items have been
identified by the Finance Minister as having been provided as depreciation and
make good amounts for the Parliamentary Departments but those amounts have
not yet been applied by the Parliamentary Departments. Depreciation and make
good amounts have been provided for the purposes of:
· meeting depreciation costs;
· meeting amortisation costs; and
· meeting the costs of returning an asset to a previous state or condition
(subclause 18(6)).
62 Subclause 18(1) enables the Finance Minister to make a written
determination to reduce a departmental item or an administered item for a
House of Representatives page 17 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
Parliamentary Department in a previous Act. Once made, the appropriation item
for the Parliamentary Department in a previous Act will be reduced by the
amount in the written determination: subclause 18(3).
63 Under subclause 18(2) a written determination will have no effect:
· where the item affected is reduced below nil after subtracting amounts
that have been applied, under that Act in respect of the item:
subclause 18(2)(a); or
· where the amount specified in the written determination, when added to
any other amounts specified in relation to the Parliamentary Department
under subclause 18(1), exceeds the depreciation and make good amount
for the agency: subclause 18(2)(b). This subclause is intended to confine
the amount of the reduction only to amounts identified as being for
depreciation and make good amounts that have not yet been applied.
64 Subclause 18(4) provides that a determination made under
subclause 18(1) is a legislative instrument. The subclause also provides that
despite subsection 44(2) of the LI Act, which provides that instruments made
under the annual Appropriation Acts are not subject to disallowance, the
determination is subject to disallowance in accordance with section 42 of the LI
Act. Parliament retains the power to disallow a determination to reduce a
departmental or administered item because any such determination will reduce
the amount of an appropriation authorised by Parliament. Subclause 18(4) also
confirms that subsection 54(2) of the LI Act, which provides that instruments
made under the annual Appropriation Acts, are not subject to sunsetting.
65 Subclause 18(5) provides that a determination made under
subclause 18(1) once made, must not be rescinded, revoked, amended or varied.
Subclause 18(5) applies despite subsection 33(3) of the AI Act. This subclause
intends to exclude the operation of section 33(3) of the AI Act from
determinations made under subclause 18(1). The purpose of subclause 18(5) is
to ensure that the appropriation if reduced under the clause cannot be restored
by means of a later determination.
66 Subclause 18(6) provides definitions of terms in the context of the
operation of clause 18. Definitions include those for "depreciation and make
good amount", "Parliamentary Department" and "previous Act".
House of Representatives page 18 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
Part 6--Miscellaneous
Clause 19--Crediting amounts to Special Accounts
67 Clause 19 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 20--Conditions etc. applying to State, ACT, NT and
local government items
68 Clause 20 deals with Parliament's power under section 96 of the
Australian Constitution to provide financial assistance to the States. Clause 20
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 20(2)(a); and
· the amounts and timing of those payments: paragraph 20(2)(b).
69 Subclause 20(4) provides that determinations made under
subclause 20(2) are not legislative instruments, because these determinations
are not altering the appropriations approved by Parliament. Determinations
under subclause 20(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.
70 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 20(5) also notes that clause 20 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.
House of Representatives page 19 Appropriation Bill (No. 4) 2009-2010
Notes on clauses
Clause 21--Appropriation of the Consolidated Revenue Fund
71 Clause 21 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
72 In accordance with clause 20, 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
73 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.
74 Schedule 2 includes for information purposes a figure for the previous
financial year printed in plain text under each appropriation amount, labelled
the `Actual Available Appropriation'. The figure provides a comparison with
the proposed appropriations. The Actual Available Appropriation does not
affect the amounts available at law.
75 More details about the appropriations in Schedule 2 are contained in the
Portfolio Statements and the second reading speech.
House of Representatives page 20 Appropriation Bill (No. 4) 2009-2010