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2019-2020-2021-2022
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SUPPLY BILL (NO. 2) 2022-2023
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance,
Senator the Honourable Simon Birmingham)
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. 2) 2022-2023
House of Representatives 1
Outline
Supply Bill (No. 2) 2022-2023
General Outline
1 This Explanatory Memorandum accompanies the Supply Bill (No. 2)
2022-2023 (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 The Bill proposes appropriations broadly equivalent to 5/12ths of the
estimated 2022-23 annual appropriations that are not for the ordinary annual
services of the Government. The Bill proposes greater appropriations for certain
entities which may have disproportionately high expenditure early in the financial
year or support the continuing COVID-19 response, such as the Department of
Health. 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 services that are not the ordinary annual services
of the Government for the balance of 2022-23, being an amount broadly
equivalent to 7/12ths plus 2022-23 Budget measures, are proposed in the
Appropriation Bill (No. 2) 2022-2023.
5 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 (the 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 the Supply Bill (No. 1)
2022-2023, on broadly the same proportional basis as this Bill.
6 The Portfolio Budget Statements (portfolio statements) show amounts
included in both the Supply Bills (Nos. 1 and 2) 2022-2023 and Appropriation
Bills (Nos. 1 and 2) 2022-2023. This Explanatory Memorandum should be read in
conjunction with the various 2022-23 portfolio statements, which contain details
on the appropriations set out in the Schedules of 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).
8 Part 1 of the Bill deals with definitions, the interpretative role of the
portfolio statements and the concept of notional transactions. Part 2 of the Bill
proposes appropriations to make payments of the amounts in Schedule 2 for State,
Explanatory Memorandum to Supply Bill (No. 2) 2022-2023
House of Representatives 2
Outline
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). Part 3 of the Bill specifies the
Advance to the Finance Minister (AFM) provision (clause 12).
9 Part 4 of the Bill deals with the debit limits applicable for 2022-23
(clause 13) for the general purpose financial assistance and national partnership
payments, as specified in the Federal Financial Relations Act 2009. Part 4 also
deals with increases to the debit limits to provide for the Goods and Services Tax
(GST) (clause 14).
10 Part 5 deals with credits to special accounts (clause 15), the conditions that
apply to payments of State, ACT, NT and local government items (clause 16 and
Schedule 1), provides for amounts to be appropriated as necessary (clause 17) and
specifies when the Bill is repealed (clause 18). In addition to the AFM provision
in Part 3, clause 17 of the Bill recognises that the appropriations proposed in the
Bill may also be varied by the PGPA Act.
Financial Impact
11 The Bill, if enacted, would appropriate the amounts specified in Schedule 2
as set out in clause 6.
Explanatory Memorandum to Supply Bill (No. 2) 2022-2023
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 Bills 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. 2) 2022-2023
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. 2) 2022-2023.
Clause 2--Commencement
2 Clause 2 provides for the Bill to commence as an Act on the later of either
1 July 2022 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 "State, ACT, NT and local government item".
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. The term "portfolio statements" is defined in
subclause 3(1) to mean the Portfolio Budget Statements tabled in relation to the
Appropriation Bill (No. 2) 2022-2023.
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 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 Supply Bill (No. 2) 2022-2023
House of Representatives 5
Notes on clauses
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 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 2 of the Bill.
The amounts in Schedule 2 may be increased by a determination under clause 12
(Advance to the Finance Minister).
10 The amounts in Schedule 2 of the Bill may be adjusted further in accordance
with sections 74 to 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 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 Supply Bill (No. 2) 2022-2023
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--State, ACT, NT and local government items
12 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.
13 Clauses 7 and 16 delegate Parliament's power under section 96 of the
Constitution to impose terms and conditions on payments of financial assistance
to the States to the responsible Ministers listed in Schedule 1 of the Bill.
Schedule 1 also lists the Ministers who may determine the amounts and timing of
those payments. These payments are usually made pursuant to eligibility rules and
conditions established by the Government or Parliament.
14 Additional information on payments to the States, Territories and local
government can be found in the portfolio statements of the relevant entities. These
documents can be found at www.budget.gov.au.
Clause 8--Administered items
15 Subclause 8(1) provides for the appropriation of new administered outcome
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
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 Supply Bill (No. 1) 2022-2023, New Administered
Outcomes are appropriated separately for each outcome, making it clear what the
funding is intended to achieve.
16 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.
17 New Administered Outcomes 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).
Explanatory Memorandum to Supply Bill (No. 2) 2022-2023
House of Representatives 7
Notes on clauses
18 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
19 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 the
non-corporate entity in Schedule 2 of the Bill, or Schedule 1 to the Supply Act
(No. 1) 2022-2023.
Clause 10--Other departmental items
20 Clause 10 appropriates departmental non-operating appropriations in the
form of equity injections, over which the non-corporate entity also 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. For example, "equity injections" can be provided to non-corporate
entities to enable investment in assets to facilitate departmental activities and for
Designated Collecting Institutions to purchase heritage and cultural assets.
21 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
22 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.
23 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
Explanatory Memorandum to Supply Bill (No. 2) 2022-2023
House of Representatives 8
Notes on clauses
legally separate from the Commonwealth, and as a result, do not debit
appropriations or make payments from the CRF.
24 Corporate entity payments are initiated by requests to the relevant portfolio
Departments from the corporate entities. The Finance Minister manages
appropriations for corporate entities through a discretionary power to control the
timing and amount made available under section 51 of the PGPA Act, except as
required by law. Corporate entities hold the amounts paid to them on their own
account.
25 Subclause 11(2) provides that if a corporate entity is subject to another Act
that requires amounts appropriated by 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.
26 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.
27 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
28 Clause 12 of the Bill enables the Finance Minister to allocate additional
amounts for items when satisfied that there is an urgent need for expenditure, and
the existing appropriation in the current year is not provided for, or is
insufficiently provided for. The allocated amount is referred to as the Advance to
the Finance Minister (AFM).
29 Subclause 12(1) has the effect that a determination can only be made under
subclause 12(2) if the Finance Minister is satisfied there is an urgent need for
expenditure in the current year that is not provided for, or is insufficiently
provided for, in Schedule 2 either because of an omission or understatement, or
because of unforeseen circumstances.
30 Subclause 12(2) enables the Finance Minister to make a determination to
allocate an amount from the AFM to an existing item in Schedule 2, to a new item
not already in Schedule 2, or to a new outcome.
31 Subclause 12(3) provides that the total amount that can be determined under
the AFM provisions in the Bill, once enacted, and the Appropriation Act (No. 2)
2022-2023 is $3,600 million.
Explanatory Memorandum to Supply Bill (No. 2) 2022-2023
House of Representatives 9
Notes on clauses
32 Subclause 12(4) provides that the total amount of the AFM provisions in
subclause 12(3) includes $3,000 million for future urgent and unforeseen
COVID-19 related expenditure and $600 million for other urgent and unforeseen
expenditure.
33 Subclause 12(5) provides that, should both the Bill and the Appropriation
Bill (No. 2) 2022-2023 be enacted, the amounts specified in subsections 12(3) and
(4) of the Appropriation Act (No. 2) 2022-2023 are to be disregarded. Instead, the
amounts specified in subsections 12(3) and (4) of the Supply Act (No. 2)
2022-2023 are the total amounts 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 $3,600 million.
34 It should be noted that Appropriation Act (No. 2) 2022-2023 and
Appropriation Bill (No. 2) 2022-2023 are defined in subclause 3(1) to refer only
to the version of that legislation introduced in the present Parliament (known as
the 46th Parliament). If that appropriation legislation lapses because of the calling
of a Federal Election, subsection 12(5) of the Supply Act (No. 2) 2022-2023 would
not apply.
35 If in the next Parliament (the 47th Parliament) another Bill is introduced with
the same title, that is Appropriation Bill (No. 2) 2022-2023, that legislation would
not be covered by subsection 12(5) of the Supply Act (No. 2) 2022-2023, because
it would fall outside the definition in the Supply Bill (that is, it would not be
associated with the 46th Parliament).
36 Subclause 12(6) provides that a determination under subclause 12(2) is a
legislative instrument, which must be tabled in Parliament. It is not subject to
section 42 (disallowance) of the Legislation Act 2003 as this would frustrate the
purpose of the provision, which is to provide additional appropriation for urgent
expenditure. This also reflects the need for entities to have certainty of
appropriation when making expenditures. Further, an AFM is not subject to 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 18).
37 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 Parliament in its consideration of legislation.
38 The extraordinary AFM provisions for the purposes of COVID-19 related
response expenditure take into consideration the unique and evolving nature of the
COVID-19 pandemic. These provisions ensure the Government is able to respond
to urgent and unforeseen COVID-19 related expenditure requirements should
these arise at times during the 2022-23 financial year, where it is not possible or
not practical to pass further Appropriation Acts.
Explanatory Memorandum to Supply Bill (No. 2) 2022-2023
House of Representatives 10
Notes on clauses
39 The AFM is split in the usual proportion across the pair of Bills (40 per cent
in Bill 1 and 60 per cent in Bill 2). Accordingly, the Supply Bill (No. 1)
2022-2023 provides for $2,000 million and this Bill provides for $3,000 million,
for COVID-19 related response expenditure.
40 The $5,000 million of the contingency in the Supply Bills (Nos. 1 and 2)
2022-2023 is statutorily limited to COVID-19 related expenditure only. This is
consistent with a commitment previously provided for in the Appropriation
(Coronavirus Economic Response Package) Acts (Nos. 1 and 2) 2019-20 and the
Appropriation (Coronavirus Response) Acts (Nos. 1 and 2) 2021-2022.
41 The $5,000 million is the maximum total appropriation that can be allocated
from the AFM provisions in both the Supply Bills (Nos. 1 and 2) 2022-2023 and
the Appropriation Bills (Nos. 1 and 2) 2022-2023 for COVID-19 related response
expenditure. This total is similar in value to the COVID-19 related items that have
received specific program funding in the Appropriation (Coronavirus Response)
Acts (Nos. 1 and 2) 2021-2022.
42 The $1,000 million general-purpose component of the AFM quantum
($400 million in Supply Bill (No. 1) 2022-2023 and $600 million in this Bill) is
for the purposes of responding to circumstances other than COVID-19. The
$1,000 million setting marks a normalisation in the value of the AFM for general
purposes.
43 Allocations from the AFM provisions will be subject to the same scrutiny
and accountability provisions as have applied to other AFM provisions during the
pandemic, including a media release in weeks when AFMs are issued which
reports and reconciles the use of the AFM provision, and seeking the concurrence
of the Shadow Minister for Finance on behalf of the Opposition for any proposed
AFM greater than $1 billion (as detailed at paragraph 48 below).
Effect of an AFM determination
44 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
45 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.
46 Disallowance of an AFM determination would reduce an entity's
appropriation to its original level. Yet the urgent expenditure it has already
undertaken validly prior to disallowance, in reliance upon the determination,
would count towards the newly reduced appropriation. The reason why this occurs
Explanatory Memorandum to Supply Bill (No. 2) 2022-2023
House of Representatives 11
Notes on clauses
is because 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. If a House disallows the determination, it
reverses the increase and impairs the funding remaining for other programs that
are unrelated to the AFM.
47 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.
Accountability and transparency arrangements for AFM determinations
48 Recent extraordinary AFM provisions have been supported by strong
accountability and transparency arrangements including:
(a) registration of each AFM determination with an explanatory statement on
the Federal Register of Legislation (legislation.gov.au);
(b) a media release by the Finance Minister in weeks when AFMs are issued;
(c) a commitment for the Finance Minister to seek the concurrence of the
Shadow Minister for Finance, on behalf of the Opposition, for any
proposed AFM allocation over $1 billion;
(d) an annual assurance review by the Australian National Audit Office
(ANAO); and
(e) an Annual Report on the AFM allocations tabled in Parliament, inclusive
of the ANAO's assurance review report.
49 These measures will continue throughout the 2022-23 financial year,
consistent with the arrangements that have applied to other AFMs during the
COVID-19 pandemic.
Part 4--Debit Limits
Clause 13 - Debit Limits
50 Parliament may approve annual debit limits for the amounts that may be
spent for general purpose financial assistance or national partnership payments
under the Federal Financial Relations Act 2009 (FFR Act).
51 Specifying a debit limit in clause 13 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 this authority. The purpose of doing so is to
Explanatory Memorandum to Supply Bill (No. 2) 2022-2023
House of Representatives 12
Notes on clauses
provide Parliament with a transparent mechanism by which it may review the rate
at which amounts are committed for expenditure.
52 The debit limits in this Bill are equivalent to the standard full years' amount
to ensure the Government has the flexibility to make payments to the states as
required.
53 For the purposes of paragraph 9(3) of the FFR Act, subclause 13(1) provides
the debit limit of $5,000 million for general purpose financial assistance for the
2022-23 financial year.
54 This debit limit applies for 2022-23 to the amount that the Treasurer can
credit to the Council of Australian Governments (COAG) Reform Fund and the
total amount that can be debited from that Fund for the purposes of making a
grant of general purpose financial assistance to a State, the Australian Capital
Territory or the Northern Territory.
55 The COAG Reform Fund was established by section 5 of the COAG Reform
Fund Act 2008, which is a special account under section 80 of the PGPA Act. The
purposes of the COAG Reform Fund Special Account are provided at section 6 of
the COAG Reform Fund Act 2008.
56 If a debit limit is not indicated in an Appropriation Act for the purposes of
paragraph 9(3) of the FFR Act for a financial year, amounts cannot be credited to
the COAG Reform Fund under paragraph 9(2)(a) of the FFR Act, and amounts
must not be debited from the COAG Reform Fund for the purposes to which the
limit applies.
57 For the purposes of paragraph 16(3) of the FFR Act, subclause 13(2)
provides the debit limit of $30,000 million for national partnership payments for
the 2022-23 financial year.
58 As at the 2022-23 Budget update, the estimate for national partnership
payments would be $19,800 million by 30 June 2023. Since 2014-15, the debit
limit has generally been set between $10,000 million and $15,000 million above
the expected level of spending under section 16 of the FFR Act. The debit limit
provided in subclause 13(2) would mitigate the risk of reaching the limit in the
event that unexpected circumstances arise. The limit is set to ensure the
Government has appropriate provision in place to fund existing undertakings to
the States, new programs that may be required between Appropriation Acts, and
to respond to major unexpected events such as large-scale natural disasters.
59 This debit limit applies for 2022-23 to the amount that the Treasurer can
credit to the COAG Reform Fund and the total amount that can be debited from
that Fund for the purposes contained in paragraphs 16(1)(a) to (c) inclusive of the
FFR Act. These purposes relate to making a grant of financial assistance to a State
to support the delivery by the State of specified outputs or projects, facilitate
reforms by the State, or reward the State for nationally significant reforms.
Explanatory Memorandum to Supply Bill (No. 2) 2022-2023
House of Representatives 13
Notes on clauses
60 If a debit limit is not indicated in an Appropriation Act for the purposes of
paragraph 16(3) of the FFR Act for a financial year, amounts cannot be credited to
the COAG Reform Fund under paragraph 16(2)(a) of the FFR Act and amounts
must not be debited from the COAG Reform Fund for the purposes to which the
limit applies.
61 It is important to note that this Bill will not appropriate amounts to be paid
under sections 9 and 16 of the FFR Act. The intention for specifying debit limits
in subclauses 13(1) and 13(2) is to set maximum limits on the amounts that may
be covered for the 2022-23 financial year, for the purposes to which those limits
apply.
62 Expected levels of expenditure under sections 9 and 16 of the FFR Act can
be found in the 2022-23 Portfolio Budget Statements, Treasury Portfolio (under
Programs 1.4, 1.5 and 1.9). The relevant tables include payments that are
categorised as general purpose financial assistance and national partnership
payments, including payments both subject to the debit limits and outside of the
debit limits.
Clause 14--Adjustments for GST
63 The effect of this clause will be to increase a debit limit by the amount of
any GST qualifying amount in respect of an amount paid from a fund named in
clause 13.
64 Some payments from the COAG Reform Fund may include a GST
qualifying amount and the relevant debit limit is adjusted accordingly. The
appropriation itself is not affected by clause 14, because it is increased by the
operation of section 74A of the PGPA Act. Essentially, clause 14 clarifies that the
amounts specified for the debit limits for 2022-23 are exclusive of any GST
qualifying amounts that may arise in respect of acquisitions made in relation to
that limit.
Part 5 - Miscellaneous
Clause 15--Crediting amounts to special accounts
65 Clause 15 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 Supply Bill (No. 2) 2022-2023
House of Representatives 14
Notes on clauses
Clause 16--Conditions etc. applying to State, ACT, NT and local
government items
66 Clause 16 deals with the Parliament's power under section 96 of the
Constitution to provide financial assistance to the States. Clause 16 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, in the way
described in subclause 16(3):
• conditions under which payments to the States, ACT, NT and local
government may be made: subclause 16(2)(a); and
• the amounts and timing of those payments: subclause 16(2)(b).
67 Subclause 16(4) provides that determinations made under subclause 16(2)
are not legislative instruments, because these determinations are not altering the
appropriations approved by the Parliament. Determinations under subclause 16(2)
are administrative in nature and will simply determine how appropriations for
State, ACT, NT and local government items will be paid.
68 Determinations under clause 16 are rare. Most payments to the States and
Territories are governed by, and appropriated through, the Federal Financial
Relations Act 2009. For the payments to the States, ACT, NT and local
government in an even-numbered 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 (http://www.federalfinancialrelations.gov.au/).
69 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 identified in
Schedule 1 may set the amounts and timing and impose terms and conditions on
those payments. Subclause 16(5) also notes that clause 16 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.
70 In the Bill, appropriations to the States, ACT, NT and local government are
sought for the Department of Education, Skills and Employment against
Outcome 1, the Department of Infrastructure, Transport, Regional Development
and Communications against Outcome 1 and Outcome 3, and the National
Indigenous Australians Agency against Outcome 1.
71 Further information may also be found in the portfolio statements for the
respective portfolios which are available at www.budget.gov.au.
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Notes on clauses
Clause 17--Appropriation of the Consolidated Revenue Fund
72 Clause 17 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 the Act commences. 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 to 75 (see clause 6), after the Act commences.
Clause 18--Repeal of this Act
73 Clause 18 provides that the Bill, once enacted, will repeal at the start of
1 July 2025.
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Notes on clauses
Schedule 1--Payments to or for the States, ACT, NT and
local government
74 In accordance with clause 16, Schedule 1 lists the Ministers responsible for
determinations on payments to or for the States, ACT, NT and local government.
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Notes on clauses
Schedule 2--Services for which money is appropriated
75 Schedule 2 specifies the appropriations proposed for the other than 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.
76 Schedule 2 includes, for information purposes, a figure for the previous
financial year labelled "Actual Available Appropriation (italic figures) -
2021-2022". 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.
77 The AAA is 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
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 Actual Available Appropriation figures may be different from
the sum of amounts provided in earlier Appropriation Acts.
78 The Supply Bills (Nos. 1 and 2) 2022-2023 propose approximately 5/12ths of
the 2022-23 appropriation estimates for most entities and programs, adjusted as
explained in this paragraph and in paragraphs 79 to 80 below. The 2022-23
estimates are broadly the 2021-22 base, adjusted for economic and program
specific parameters, and the effect of decisions announced as part of the 2021-22
Mid-Year Economic and Fiscal Outlook or included in the Appropriation Bills
(Nos. 3 and 4) 2021-2022 (Additional Estimates Appropriation Bills).
79 The Supply Bills propose appropriations greater than 5/12ths of the 2022-23
estimates for the following activities:
(a) full-year appropriation for the Department of Health and the National
Recovery and Resilience Agency, to provide flexibility to meet the
demands of ongoing responses to COVID-19 and the recent floods in New
South Wales and Queensland, as well as responses to any emerging
disasters;
(b) full-year appropriation for entity outcomes and programs with uneven
expenditure early in the financial year, including the Families and
Children Program and the Integrated Carer Support Service (the
Department of Social Services); the National Collaborative Research
Infrastructure Strategy (the Department of Education, Skills and
Employment); the Tertiary Education Quality and Standards Agency
(departmental capital budget); and the Department of Industry, Science,
Energy and Resources (Outcome 3 - administered);
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Notes on clauses
(c) 9/12ths appropriation to ensure adequate cash flow for select smaller
entities, as well as programs and entities with uneven expenditure early in
the financial year including:
• the National Indigenous Australians Agency;
• the National Disability Insurance Scheme Quality and Safeguards
Commission;
• the Department of Education, Skills and Employment's
Government Schools National Support Program;
• the Department of Veterans' Affairs' payment to the
Commonwealth War Graves Commission;
• the Department of Agriculture, Water and the Environment's
Commonwealth Environmental Water Program; and
(d) 9/12ths appropriation for Services Australia for unforeseen government
services that may need to be delivered.
80 Following convention, the Supply Bills generally do not include 2022-23
Budget measures, with the exception of COVID-19 response measures largely
related to drugs and health services that have been extended since the 2021-22
Mid-Year Economic and Fiscal Outlook Additional Estimates processes. The
majority of the extended COVID-19 measures fall within the responsibility of the
Department of Health, with smaller amounts for the Australian Digital Health
Agency and Services Australia.
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