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2022-2023-2024-2025
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SUPPLY BILL (NO. 1) 2025-2026
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
AFM Advance to the Finance Minister
AI Act Acts Interpretation Act 1901
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
statements
Explanatory Memorandum to Supply Bill (No. 1) 2025-2026
House of Representatives 1
Outline
Supply Bill (No. 1) 2025-2026
General Outline
1 This Explanatory Memorandum accompanies the Supply Bill (No. 1)
2025-2026 (the Bill).
2 The main purpose of the Bill is to propose appropriations from the
Consolidated Revenue Fund (CRF) for the ordinary annual services of the
Government.
3 The Bill proposes appropriations broadly equivalent to 5/12ths of the
estimated 2025-26 annual appropriations for the ordinary annual services of the
Government. The Bill proposes a greater proportion of appropriations for certain
entities which may have disproportionately high expenditure early in the financial
year or need flexibility to respond to service delivery requirements such as the
National Emergency Management Agency. Further details of the amounts
proposed in the Bill are outlined in the Notes on Clauses section of this
Explanatory Memorandum (under Schedule 1--Services for which money is
appropriated).
4 Annual appropriations for the ordinary annual services of the Government
for the balance of 2025-26, being an amount broadly equivalent to 7/12ths plus
2025-26 Budget measures, are proposed in the Appropriation Bill (No. 1)
2025-2026.
5 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, the Bill
proposes appropriations for the ordinary annual services of the Government.
Other annual appropriations that are not for the ordinary annual services of the
Government are proposed in the Supply Bill (No. 2) 2025-2026 and the Supply
(Parliamentary Departments) Bill (No. 1) 2025-2026, on broadly the same
proportional basis as this Bill. Together these three Bills are termed the Supply
Bills.
6 The Portfolio Budget Statements (portfolio statements) show amounts
included in both Supply Bills (Nos. 1 and 2) 2025-2026 and Appropriation Bills
(Nos. 1 and 2) 2025-2026. This Explanatory Memorandum should be read in
conjunction with the various 2025-26 portfolio statements, which contain details
of the appropriations set out in the Schedules to the Bills.
Structure of the Bill
7 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).
Explanatory Memorandum to Supply Bill (No. 1) 2025-2026
House of Representatives 2
Outline
8 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).
9 Part 2 of the Bill proposes appropriations to make payments of the amounts
in Schedule 1 for departmental items (clause 7), administered items (clause 8) and
corporate entity items (clause 9).
10 Part 3 of the Bill specifies the amount available for allocation from the
Advance to the Finance Minister (AFM) after the commencement of the Bill, once
enacted (clause 10).
11 Part 4 of the Bill deals with credits to special accounts (clause 11), provides
for amounts to be appropriated as necessary (clause 12), and specifies when the
Bill is repealed (clause 13). In addition to the AFM provision in Part 3, clause 12
of the Bill recognises that the appropriations proposed in the Bill may also be
varied by the PGPA Act.
Financial Impact
12 The Bill, once enacted, will appropriate the amounts specified in Schedule 1
as set out in clause 6.
Explanatory Memorandum to Supply Bill (No. 1) 2025-2026
House of Representatives 3
Statement of Compatibility with Human Rights
Statement of Compatibility with Human Rights
1 The Bill seeks to appropriate money for 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 Supply Bill (No. 1) 2025-2026
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
Supply Act (No. 1) 2025-2026.
Clause 2--Commencement
2 Clause 2 provides for the Bill to commence as an Act on the later of either
1 July 2025 or the day of the Royal Assent.
Clause 3--Definitions
3 Subclause 3(1) defines the key terms used in the Bill, such as "administered
item", "non-corporate entity", and "special account".
4 Subclause 3(2) confirms that, for the purposes of other laws, the Bill when
enacted is to be regarded as an Appropriation Act.
Clause 4--Portfolio statements
5 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.
6 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. For the purposes of this Act and the Appropriation
Act (No. 1) 2025-2026 as defined in subclause 3(1), the portfolio statements are
taken to cover both the Bill for this Act and the Appropriation Bill (No. 1)
2025-2026 as defined in subclause 3(1).
Clause 5--Notional transactions between entities that are part
of the Commonwealth
7 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 1 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
Explanatory Memorandum to Supply Bill (No. 1) 2025-2026
House of Representatives 5
Notes on Clauses
appropriation when such notional payments are made. This is consistent with
section 76 of the PGPA Act.
8 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
9 Clause 6 sets out the total of the appropriations in Schedule 1 to the Bill.
The amounts in Schedule 1 may be increased by a determination made under
subclause 10(2) (clause 10 deals with the Advance to the Finance Minister).
10 The amounts in Schedule 1 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 1 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 1. 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 Supply Bill (No. 1) 2025-2026
House of Representatives 6
Notes on Clauses
11 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--Departmental items
12 Clause 7 provides that the amount specified in a departmental item for a
non-corporate entity may be applied for the departmental expenditure of the
non-corporate entity. Clause 3 defines:
• "departmental item" to be the total amount set out in Schedule 1 in relation
to a non-corporate entity under the heading "Departmental"; and
• "expenditure" to be payments for expenses, acquiring assets, making loans
or paying liabilities.
13 While the departmental items in Schedule 1 may be divided between
outcomes, the different amounts against outcomes are notional. The total
appropriation for departmental expenses represents the departmental item.
14 Departmental items involve costs over which a non-corporate entity has
control. Departmental appropriations can be used to make any payment related to
the functions of the non-corporate entity including on purposes covered by other
items whether or not they are in the Act for an entity. Expenditure typically
covered by departmental items includes:
• employee expenses, suppliers and other operational expenses (e.g. interest
and finance expenses); and
• costs associated with the replacement of minor departmental assets valued at
$10 million or less and the capitalised maintenance of minor departmental
assets valued at $10 million or less.
15 The cash to meet departmental expenses may be required at times other than
when the expenses are incurred. Departmental items are available until they are
spent, or until 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.
16 Generally, if non-corporate entities are directed by the Government to
perform additional activities, they are expected to meet the cost of the additional
activities from their existing appropriations, which may then be replenished by a
departmental appropriation in the following financial year. This is known as
supplementation and applies when the direction was given, or a decision to
propose further appropriations is made, in a timeframe within which it is not
practicable to include the expected expenses in a further Appropriation Bill for
that financial year.
Explanatory Memorandum to Supply Bill (No. 1) 2025-2026
House of Representatives 7
Notes on Clauses
17 There can also be occasions when a non-corporate entity, such as a portfolio
Department, is required to assist with matters in relation to other areas of the
Government. Examples can include whole-of-Government activities or a portfolio
Department assisting with the formation and initial costs of a new portfolio body
(for which the Department might later be supplemented). Another example would
be where the Government has decided to implement shared services arrangements,
and one non-corporate entity is providing corporate services assistance to another
non-corporate entity.
Clause 8--Administered items
18 Subclause 8(1) provides for the appropriation of administered amounts to
be applied by a non-corporate entity for the purpose of contributing to the
outcome for a non-corporate entity. An "administered item" is defined in
subclause 3(1) to be the amount set out in Schedule 1 opposite an outcome for a
non-corporate entity under the heading "Administered". Administered amounts
are appropriated separately for each outcome, so, unlike departmental items, the
split across outcomes is not notional. This makes it clear what the funding is
intended to achieve.
19 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.
20 Administered items are those 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).
Clause 9--Corporate entity items
21 Clause 9 provides for appropriations of money for corporate entities to be
paid from the CRF by the relevant Department. Clause 9 provides that payments
for corporate entities must be used for the purposes of those entities.
22 A "corporate entity" is defined in subclause 3(1) 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.
Explanatory Memorandum to Supply Bill (No. 1) 2025-2026
House of Representatives 8
Notes on Clauses
24 Subclause 9(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 9(2) is to clarify that subclause 9(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 10--Advance to the Finance Minister
27 Subclause 10(1) enables the Finance Minister to allocate additional amounts
for expenditure when satisfied that there is an urgent need for expenditure in the
current year that is not provided for, or is insufficiently provided for, in
Schedule 1 either because of an erroneous omission or understatement, or because
of unforeseen circumstances. The allocated amount is referred to as the Advance
to the Finance Minister (AFM).
28 Subclause 10(2) enables the Finance Minister to make a determination to
allocate an amount from the AFM, with this Act having effect as if Schedule 1
were amended in accordance with such determination.
29 Subclause 10(3) provides that the total amount that can be determined
under subsection 10(2) of this Act and subsection 10(2) of the Appropriation Act
(No. 1) 2025-2026 cannot be more than $400 million.
30 Subclause 10(4) provides that, should both the Bill and the Appropriation
Bill (No. 1) 2025-2026 be enacted, the amount specified in subsection 10(3) of the
Appropriation Act (No. 1) 2025-2026 is to be disregarded. Instead, the amount
specified in subsection 10(3) of this Act is the total amount available to be
determined under both AFM provisions. The practical effect is that if both Bills
became Acts during the term of this Parliament, then the AFM under those
respective Acts cannot be granted beyond a total of $400 million.
31 It should be noted that Appropriation Act (No. 1) 2025-2026 and
Appropriation Bill (No. 1) 2025-2026 are defined in subclause 3(1) to refer only
to the version of that legislation introduced in the present Parliament (known as
the 47th Parliament). If that appropriation legislation lapses, subsection 10(4) of
the Supply Act (No. 1) 2025-2026 would not apply.
Explanatory Memorandum to Supply Bill (No. 1) 2025-2026
House of Representatives 9
Notes on Clauses
32 If in the next Parliament (the 48th Parliament) another Bill is introduced
with the same title, that is Appropriation Bill (No. 1) 2025-2026, that legislation
would not be covered by subsection 10(4) of the Supply Act (No. 1) 2025-2026,
because it would fall outside the definition in the Bill (that is, it would not be
associated with the 47th Parliament).
33 Subclause 10(5) provides that a determination under subclause 10(2) is a
legislative instrument, which must be tabled in the Parliament. It is not subject to
section 42 (disallowance) or Part 4 of Chapter 3 (sunsetting) of the Legislation
Act 2003; legislative instruments enabled by the Bill, once enacted, automatically
repeal when the Act itself repeals (see clause 13).
34 The following strong accountability and transparency arrangements will
continue to apply to AFM determinations made during 2025-26, consistent with
arrangements in previous years, including:
• registration of each AFM determination with an explanatory statement on
the Federal Register of Legislation (legislation.gov.au);
• a media release by the Finance Minister in weeks when AFMs are issued;
• an annual assurance review by the Australian National Audit Office
(ANAO); and
• an annual report on the AFM allocations tabled in the Parliament, inclusive
of the ANAO's assurance review report.
Effect of an AFM determination
35 An AFM determination does not authorise expenditure on a particular
purpose. It increases an existing multi-purpose line item appropriation
(departmental or administered) in the Appropriation Act that covers expenditure
on a range of different programs.
Why AFM determinations are exempt from disallowance
36 Disallowance of an AFM determination would frustrate the purpose of the
provision, which is to provide additional appropriation for urgent expenditure.
The disallowance of an AFM determination would not invalidate expenditure that
has already been made in reliance upon it. However, it would leave entities short
of the funds that they need to carry out their other ordinarily budgeted expenditure
in what remains of a financial year.
37 Disallowance of an AFM determination would reduce an entity's
appropriation to its original level. Yet the urgent expenditure it had already
undertaken validly prior to disallowance, in reliance upon the determination,
would count towards the newly reduced appropriation.
38 The reason why this occurs is because an AFM determination does not
authorise expenditure on a particular purpose. It increases an existing
multi-purpose appropriation item (departmental or administered) in the
Explanatory Memorandum to Supply Bill (No. 1) 2025-2026
House of Representatives 10
Notes on Clauses
Appropriation Act that covers expenditure on a range of different programs. If a
House disallows the determination, it reverses the increase and impairs the
funding remaining for other programs that are unrelated to the AFM.
39 Accordingly, disallowance would leave the entity with a shortfall in the
appropriation available to fund the ongoing expenditure for which the
Government originally budgeted and which the Parliament approved when it
passed the Appropriation Act. Because of the unavoidable negative impacts that
disallowance of an AFM would cause to the routine operations of the
Government, there is a bipartisan consensus that AFM determinations should be
exempt from disallowance.
Part 4--Miscellaneous
Clause 11--Crediting amounts to special accounts
40 Clause 11 provides that if the purpose of an item in Schedule 1 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.
Clause 12--Appropriation of the Consolidated Revenue Fund
41 Clause 12 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 13--Repeal of this Act
42 Clause 13 provides that the Bill, once enacted, will be repealed at the start
of 1 July 2028.
Explanatory Memorandum to Supply Bill (No. 1) 2025-2026
House of Representatives 11
Notes on Clauses
Schedule 1--Services for which money is appropriated
43 Schedule 1 specifies the appropriations proposed for the ordinary annual
services of the Government. Schedule 1 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 1 are contained in the
portfolio statements and the second reading speech for the Bill.
44 Schedule 1 includes, for information purposes, a figure for the previous
financial year labelled "Actual Available Appropriation (italic figures) -
2024-2025". The Actual Available Appropriation (AAA) is an estimate that does
not affect the amount available at law. That figure provides a comparison with the
proposed appropriations.
45 The AAA is calculated for each item by adding the amounts appropriated
in the previous 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
figure 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 AAA figures may be different from the sum of amounts
provided in earlier Appropriation Acts.
46 The Supply Bills (Nos. 1 and 2) 2025-2026 propose approximately 5/12ths
of the 2025-26 appropriation estimates for most entities and programs, adjusted as
explained in this paragraph and in paragraphs 47 and 48 below. The 2025-26
estimates are broadly the 2024-25 base, adjusted for economic and program
specific parameters, other estimate variations, the effect of decisions announced as
part of the 2024-25 Mid-Year Economic and Fiscal Outlook or included in the
Appropriation Acts (Nos. 3 and 4) 2024-2025, and additional amounts for uneven
expenditures of selected entities. Following convention, the Supply Bills generally
do not include 2025-26 Budget measures.
47 The Supply Bill (No. 1) 2025-2026 proposes appropriations greater than
5/12ths of the 2025-26 estimates in limited circumstances, for example:
a) 12/12ths appropriation for the Department of Social Services (outcome 2) for
uneven expenditure early in the financial year, and the Australian Digital
Health Agency to ensure adequate cash flow and continuity of operations;
b) 10/12ths appropriation for payments required under the Department of
Education's National Collaborative Research Infrastructure Strategy early in
the financial year; and
c) 9/12ths appropriation for outcomes and programs of entities which have
uneven expenditure early in the financial year and/or may need to deliver
additional government services, including the Organ and Tissue Authority
(administered appropriation), the National Emergency Management Agency
Explanatory Memorandum to Supply Bill (No. 1) 2025-2026
House of Representatives 12
Notes on Clauses
(administered appropriation), the Department of Home Affairs (outcome 2),
the Department of Social Services (outcome 3), the NDIS Quality and
Safeguards Commission (departmental appropriation), and Services Australia.
48 Following convention, the Supply Bills do not include 2025-26 Budget
measures, however the Office of the Special Investigator (OSI) would receive
5/12ths of their 2025-26 appropriation estimates as without this funding OSI
would not be able to continue operating after 30 June 2025.
Explanatory Memorandum to Supply Bill (No. 1) 2025-2026
House of Representatives 13