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2022-2023-2024-2025
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION BILL (NO. 4) 2024-2025
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance,
Senator the Honourable Katy Gallagher)
Table of Acronyms and Defined Terms
AAA Actual Available Appropriation
AAO Administrative Arrangements Order
AFM Advance to the Finance Minister
AI Act Acts Interpretation Act 1901
BA Budget Appropriation
Commonwealth An entity as defined in section 10 of the PGPA Act
entity
corporate entity A corporate Commonwealth entity or a
Commonwealth company within the meaning of the
PGPA Act
CRF Consolidated Revenue Fund
Finance Minister Minister for Finance
GST Goods and Services Tax
non-corporate A non-corporate Commonwealth entity as defined in
entity the PGPA Act, or the High Court of Australia
PGPA Act Public Governance, Performance and Accountability
Act 2013
portfolio Portfolio Budget Statements and Portfolio Additional
statements Estimates Statements
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
House of Representatives 1
Outline
Appropriation Bill (No. 4) 2024-2025
General Outline
1 This Explanatory Memorandum accompanies the Appropriation Bill (No. 4)
2024-2025 (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.
3 In accordance with sections 53 and 54 of the Australian Constitution,
appropriations for the ordinary annual services of the Government must be
contained in a separate Bill from other appropriations. Consequently, annual
appropriations that are for the ordinary annual services of the Government are
proposed in the Appropriation Bill (No. 3) 2024-2025. Together with the
Appropriation (Parliamentary Departments) Bill (No. 2) 2024-2025, these three
Bills are termed the Additional Estimates Appropriation Bills.
4 The Additional Estimates Appropriation Bills propose annual
appropriations, in addition to the Appropriation Act (No. 1) 2024-2025,
Appropriation Act (No. 2) 2024-2025 and Appropriation (Parliamentary
Departments) Act (No. 1) 2024-2025 (the Budget Appropriation Acts), for
expenditure in relation to Government decisions which have been made since the
2024-25 Budget.
5 The Portfolio Additional Estimates Statements are published and tabled in
the Parliament in relation to the Additional Estimates Appropriation Bills. This
Explanatory Memorandum should be read in conjunction with the Portfolio
Budget Statements that accompanied the Bills for the 2024-25 Budget
Appropriation Acts, and the Portfolio Additional Estimates Statements which
contain details on the appropriations set out in the Schedules to the Additional
Estimates Appropriation Bills.
Structure of the Bill
6 The Bill provides for the appropriation of specified amounts for expenditure
by Australian Government entities, primarily being non-corporate Commonwealth
entities (non-corporate entities) under the Public Governance, Performance and
Accountability Act 2013 (PGPA Act).
7 Part 1 of the Bill deals with definitions (clause 3), the interpretative role of
the portfolio statements (clause 4), and the concept of notional transactions
between non-corporate entities (clause 5).
8 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 corporate entity items (clause 11).
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
House of Representatives 2
Outline
9 Part 3 of the Bill specifies the amount available for allocation from the
Advance to the Finance Minister after the commencement of the Bill, once
enacted (clause 12).
10 Part 4 of the Bill deals with credits to special accounts (clause 13), sets out
terms and conditions applying to State, ACT, NT and local government items
(clause 14), provides for amounts to be appropriated as necessary (clause 15), and
specifies when the Bill is repealed (clause 16). Clause 15 of the Bill recognises
that the appropriations in the Bill may also be varied by the PGPA Act.
11 The Bill does not contain additional debit limits for the general purpose
financial assistance and national partnership payments under the Federal
Financial Relations Act 2009.
Financial Impact
12 The Bill, once enacted, will appropriate the amounts specified in Schedule 2
as set out in clause 6.
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
House of Representatives 3
Statement of Compatibility with Human Rights
Statement of Compatibility with Human Rights
1 The Bill seeks to appropriate money for services that are not considered to
be the ordinary annual services of the Government.
2 Accordingly, the Bill performs an important constitutional function, by
authorising the withdrawal of money from the CRF for the broad purposes
identified in the Bill.
3 However, as the High Court has emphasised, beyond this, the Appropriation
Acts do not create rights and nor do they, importantly, impose any duties.
4 Given that the legal effect of Appropriation Acts is limited in this way, the
Bill is not seen as engaging, or otherwise affecting, the rights or freedoms relevant
to the Human Rights (Parliamentary Scrutiny) Act 2011.
5 Detailed information on the relevant appropriations, however, is contained
in the portfolio statements.
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
House of Representatives 4
Notes on clauses
Notes on clauses
Part 1--Preliminary
Clause 1--Short title
1 Clause 1 specifies that the short title of the Bill, once enacted, will be the
Appropriation Act (No. 4) 2024-2025.
Clause 2--Commencement
2 Clause 2 provides for the Bill to commence as an Act on the day of the
Royal Assent.
Clause 3--Definitions
3 Clause 3 defines the key terms used in the Bill, such as "administered item",
"non-corporate entity", and "State, ACT, NT and local government item".
Clause 4--Portfolio statements
4 Clause 4 declares that the portfolio statements are relevant documents for
the purposes of section 15AB of the Acts Interpretation Act 1901 (AI Act).
Paragraph 15AB(2)(g) of the AI Act provides for material to be considered in the
interpretation of an Act if the material is declared by the Act to be a relevant
document for the purposes of section 15AB of the AI Act.
5 The purpose of the portfolio statements is to provide information on the
proposed allocation of resources to government outcomes by Commonwealth
entities within each portfolio. The term "portfolio statements" is defined in
clause 3 to mean the Portfolio Budget Statements (that accompanied the
Appropriation Bills tabled at the last Budget) and the Portfolio Additional
Estimates Statements tabled in relation to the Bill.
Clause 5--Notional transactions between entities that are part
of the Commonwealth
6 Clause 5 provides that notional transactions between non-corporate entities
are to be treated as if they are real transactions. Notional transactions, therefore,
require the debiting of an appropriation made by the Parliament. The payments of
the amounts in Schedule 2 from one non-corporate entity to another do not
require, in a constitutional sense, an appropriation, because both non-corporate
entities operate within the CRF. For reasons of financial discipline and
transparency, the practice has arisen for these payments between non-corporate
entities to be treated as though they required an appropriation, and to debit an
appropriation when such notional payments are made. This is consistent with
section 76 of the PGPA Act.
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
House of Representatives 5
Notes on clauses
7 When a non-corporate entity makes a payment, whether to another
non-corporate entity or another part of the same non-corporate entity (such as a
different "business unit" within the entity), it is to be treated as a "real" payment.
This means that the appropriation made by the 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 non-corporate entity (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.
Part 2--Appropriation items
Clause 6--Summary of appropriations
8 Clause 6 sets out the total of the appropriations in Schedule 2 to the Bill.
The amounts in Schedule 2 may be increased by a determination made under
subsection 12(2) of the Appropriation Act (No. 2) 2024-2025 (section 12 deals
with the Advance to the Finance Minister).
9 The amounts in Schedule 2 to the Bill may be adjusted further in accordance
with sections 74 and 75 of the PGPA Act. Specifically:
• Section 74 of the PGPA Act, when read with Rule 27 of the Public
Governance, Performance and Accountability Rule 2014, permits
non-corporate entities to retain certain types of receipts by adding them to
their most recent departmental item or other type of appropriation in an
Appropriation Act when prescribed.
• Appropriations may be adjusted by amounts recoverable by a non-corporate
entity from the Australian Taxation Office for Goods and Services Tax
(GST), in accordance with section 74A of the PGPA Act. The amounts
specified in Schedule 2 exclude recoverable GST. The appropriations shown
represent the net amount that the Parliament is asked to allocate to particular
purposes.
• Section 74A 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. Section 74A also applies to notional
transactions between and within non-corporate entities.
• Items may be adjusted to take into account the transfer of functions between
non-corporate entities, in accordance with section 75 of the PGPA Act. It is
possible that adjustments under section 75 may result in new items and/or
outcomes being created in an Appropriation Act.
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
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Notes on clauses
10 Additionally, the Finance Minister manages the payment from items in the
Bill to Commonwealth entities using a discretionary power under section 51 of the
PGPA Act. Section 51 allows the Finance Minister to manage the timing and the
amount of appropriated money to be made available to a Commonwealth entity
(an entity as defined in section 10 of the PGPA Act), except as required by law.
Clause 7--State, ACT, NT and local government items
11 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 each outcome, making it clear what the
funding is intended to achieve. The amount specified in Schedule 2 for an
outcome may be applied by a non-corporate entity for the purpose of making
payments to any of the States, ACT, NT or local government authorities for the
purpose of achieving that outcome.
12 Additional information on payments to the States, ACT, NT and local
governments can be found in the portfolio statements of the relevant entities.
These documents can be found at www.transparency.gov.au.
Clause 8--Administered items
13 Subclause 8(1) provides for the appropriation of an administered item for a
new administered outcome to be applied by a non-corporate entity for the purpose
of contributing to achieving that outcome. An "administered item" is defined in
clause 3 to be an amount set out in Schedule 2 opposite an outcome for a
non-corporate entity under the heading "New Administered Outcomes". As with
administered items in the Appropriation Bill (No. 3) 2024-2025, administered
items are appropriated separately for each outcome, making it clear what the
funding is intended to achieve.
14 The purposes for which each administered item can be spent are further 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.
15 New administered outcomes are administered by a non-corporate entity on
behalf of the Government (e.g. certain grants, benefits and transfer payments).
These payments are usually made pursuant to eligibility rules and conditions
established by the Government or the Parliament. Specifically, administered items
are tied to outcomes (departmental items are not).
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
House of Representatives 7
Notes on clauses
16 New administered outcomes are typically proposed when a non-corporate
entity's outcomes are changed to reflect new program objectives, strategies and/or
activities; and/or
• a non-corporate entity seeks administered operating appropriations for the
first time (including existing non-corporate entities that have received
departmental operating appropriations in the past); and/or
• annual administered operating appropriations are proposed for the first time
for programs previously funded by special appropriations.
Clause 9--Administered assets and liabilities items
17 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 non-corporate entities on behalf of the
Government. Administered assets and liabilities appropriations are provided for
functions managed by a non-corporate entity on behalf of the Government.
Administered assets and liabilities items can be applied for any outcomes of a
non-corporate entity specified in Schedule 2 to this Bill, or Schedules to the
2024-25 Appropriation Acts listed in paragraphs 9(1)(b) to (d).
Clause 10--Other departmental items
18 Clause 10 appropriates amounts for other departmental expenditure under
the heading "Equity Injections", over which the non-corporate entity exercises
control. This clause provides that the amount specified in other departmental
items for a non-corporate entity may be applied for the departmental expenditure
of the entity.
19 Equity Injection appropriations may be used to make payments related to
enhancing the entity's asset base or reducing prior year liabilities, and would not
generally include other (operating) expenditure. Expenditure that may be typically
covered includes:
• the acquisition and construction costs associated with new departmental
assets, for example, the construction of a new building that will facilitate
departmental activities;
• the acquisition of heritage and cultural assets by Designated Collection
Institutions;
• the replacement of major departmental assets valued at more than
$10 million, for example, the development of a departmental software
application valued at more than $10 million to replace an existing software
application; and
• the reduction of prior year liabilities, for example, the payment of liabilities
incurred in a prior year relating to remediation costs to restore sites.
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
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Notes on clauses
20 Other departmental items are not expressed in terms of a particular financial
year. 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. Other departmental items are available until they are
spent, or the Act through which they were appropriated is repealed. Annual
Appropriation Acts have a lifespan of up to three years after which they
automatically repeal.
Clause 11--Corporate entity items
21 Clause 11 provides for appropriations of money for corporate entities to be
paid from the CRF by the relevant Department. Clause 11 provides that payments
for corporate entities must be used for the purposes of those entities.
22 A "corporate entity" is defined in clause 3 to be a corporate Commonwealth
entity or a Commonwealth company within the meaning of the PGPA Act. Many
corporate entities receive funding from appropriations. However, these entities are
legally separate from the Commonwealth, and as a result, do not debit
appropriations or make payments from the CRF.
23 Corporate entity payments are initiated by requests to the relevant portfolio
Departments from the corporate entities. Corporate entities hold the amounts paid
to them on their own account.
24 Subclause 11(2) provides that if a corporate entity is subject to another Act
that requires amounts appropriated by the Parliament for the purposes of that
entity to be paid to the entity, then the full amount of the corporate entity payment
must be paid to the entity.
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 corporate
entity, where that other legislation requires the Commonwealth to pay the full
amount appropriated for the purposes of the entity.
26 In addition to the annual appropriations, some corporate entities may also
receive public money from related entities such as a portfolio Department and
from special appropriations managed by those Departments. Many corporate
entities also receive funds from external sources.
Part 3--Advance to the Finance Minister
Clause 12--Advance to the Finance Minister
27 The Advance to the Finance Minister (AFM) is a mechanism provided
under section 12 of the Appropriation Act (No. 2) 2024-2025. It permits the
Finance Minister, by legislative instrument, to amend Schedule 2 to the Act to
make provision for certain urgent expenditure up to a total limit of $600 million.
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
House of Representatives 9
Notes on clauses
28 The AFM is an important mechanism which provides the Government with
the capacity to respond to urgent and unforeseen pressures such as those that
emerged throughout the COVID-19 pandemic without impinging on the important
role of the Parliament in its consideration of other legislation.
29 Subclause 12(1) of the Bill provides that irrespective of the amounts
allocated from the AFM before the commencement of the Bill once enacted, the
amount available under section 12 of the Appropriation Act (No. 2) 2024-2025
will be restored to the original amount of $600 million after the commencement of
the Bill once enacted. This ensures that there will be sufficient scope to provide
amounts from the AFM for the remainder of the financial year. From the date this
Bill commences as an Act, the total amount that can be determined under the
AFM will again be $600 million.
30 Subclause 12(2) prevents appropriations for the same expenditure from both
the AFM and the Bill. It provides that if the Bill appropriates an amount for
particular expenditure but prior to the commencement of this Bill as an Act, the
Finance Minister allocates an amount from the AFM for the same expenditure (the
advanced amount), then the appropriation in this Bill, once enacted, will be
reduced by the amount of the advanced amount. The appropriated amount cannot
be reduced below nil.
31 For example, if the Bill provides $20 million for a program and an advanced
amount of $5 million is allocated by the Finance Minister 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).
32 The Finance Minister may continue to make determinations under
subsection 12(2) of the Appropriation Act (No. 2) 2024-2025 to add an amount
from the AFM to an item of a Commonwealth entity in Schedule 2 to that Act if
the criteria in subsection 12(1) of the Act are satisfied.
Part 4 - Miscellaneous
Clause 13--Crediting amounts to special accounts
33 Clause 13 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 PGPA Act by a determination of the Finance Minister (section 78) that
is disallowable by the Parliament or by another Act (sections 79 and 80). The
determination or Act that establishes the special account will specify the purposes
of the special account.
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
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Notes on clauses
Clause 14--Conditions etc. applying to State, ACT, NT and local
government items
34 Clause 14 deals with the Parliament's power under section 96 of the
Constitution to provide financial assistance to the States. Clause 14 delegates the
power to the responsible Ministers named in Schedule 1 to the Bill, by providing
the Ministers named in Schedule 1 with the power to determine:
• in the way described in subclause 14(3), the terms and conditions under
which payments to or for a State, the Australian Capital Territory, the
Northern Territory or a local government authority may be made (paragraph
(2)(a)); and
• the amounts and timing of those payments (paragraph (2)(b)).
35 Subclause 14(4) provides that determinations made under subclause 14(2)
are not legislative instruments, because these determinations are not altering the
appropriations approved by the Parliament. Determinations under subclause 14(2)
are administrative in nature and will simply determine how payments to or for a
State, ACT, NT or a local government authority will be made.
36 Determinations under clause 14 or its equivalent are rare. Most payments to
the States and Territories are governed by, and appropriated through, the Federal
Financial Relations Act 2009. For payments to the States, ACT, NT and local
government authorities under an even-numbered annual Appropriation Act,
generally other legislative or agreed frameworks determine how the payments are
made and when, such as the Local Government (Financial Assistance) Act 1995
or a National Agreement. Many of these arrangements can be found on the
Federal Financial Relations website (https://federalfinancialrelations.gov.au).
37 Although financial assistance is provided to the ACT, NT and local
governments without reference to section 96 of the Constitution, those payments
are administered in the same way. Therefore, the Ministers named in Schedule 1
may set the amounts and timing and impose terms and conditions on those
payments. Subclause 14(5) also notes that clause 14 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.
38 In the Bill, appropriation for payments to or for a State, ACT, NT or a local
government authority is sought for the Department of Education against
Outcome 1 and the National Indigenous Australians Agency against Outcome 1.
39 Further information may also be found in the portfolio statements for the
relevant entities which are available at www.transparency.gov.au.
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
House of Representatives 11
Notes on clauses
Clause 15--Appropriation of the Consolidated Revenue Fund
40 Clause 15 provides that the CRF is appropriated as necessary for the
purposes of the Bill. Significantly, this clause means that there is an appropriation
in law when this Bill commences as an Act. That is, the appropriations are not
made or brought into existence just before they are paid, but when the Act
commences. This clause indicates that the amounts appropriated may be affected
by the PGPA Act, in particular sections 74 and 75 (see clause 6), after the Act
commences.
Clause 16--Repeal of this Act
41 Clause 16 provides that the Bill, once enacted, will be repealed at the start
of 1 July 2027.
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
House of Representatives 12
Notes on clauses
Schedule 1--Payments to or for the States, ACT, NT and
local government
42 In accordance with clause 14, Schedule 1 lists the Ministers responsible for
determining conditions and payments to or for the States, ACT, NT and local
government.
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
House of Representatives 13
Notes on clauses
Schedule 2--Services for which money is appropriated
43 Schedule 2 specifies the appropriations proposed for services that are not the
ordinary annual services of the Government. Schedule 2 contains a summary table
which lists the total amounts for each portfolio. A separate summary table is
included for each portfolio, with other tables detailing the appropriations for each
Commonwealth entity. More details about the appropriations in Schedule 2 are
contained in the portfolio statements and the second reading speech for the Bill.
44 Schedule 2 includes, for information purposes, the amount appropriated in
the Appropriation Act (No. 2) 2024-2025 which is printed in italics and labelled as
"Budget Appropriation (italic figures) - 2024-2025", and an amount for the
previous financial year labelled "Actual Available Appropriation (light figures) -
2023-2024". The Budget Appropriation (BA) and Actual Available Appropriation
(AAA) are estimates that do not affect the amount available in law. These figures
provide a comparison with the proposed appropriations.
45 The BA and AAA are calculated for each item by adding the amounts
appropriated in the relevant financial year's annual Appropriation Acts, plus any
AFMs, and any adjustments under sections 51 and 75 of the PGPA Act. In some
instances, the figures may also be affected by limits applied administratively by
the Department of Finance. In addition, where an entity's outcome structure has
changed since the last Appropriation Act, only ongoing outcomes may be shown
in the Bill. For these reasons, the BA and AAA figures may be different from the
sum of amounts provided in earlier Appropriation Acts.
Explanatory Memorandum to Appropriation Bill (No. 4) 2024-2025
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