Notes on clauses
Clause 1—Short title
1
This clause specifies that the short title of the Bill, once enacted,
will be Appropriation Act (No. 3) 2010‑2011.
2
Clause 2 provides for the Bill to commence as an Act on the day of
Royal Assent.
3
Clause 3 defines the key terms used in the Bill, such as “administered
item”, “Agency”, “CAC Act body payment item”, “current year” and “departmental
item”.
4
Clause 4 declares that the Portfolio Statements (PBS and PAES) are
extrinsic material under paragraph 15AB(2)(g) of the Acts Interpretation
Act 1901 (AI Act) that may be used to ascertain the meaning of certain
provisions in accordance with subsection 15AB(1) of the AI Act. The
purpose of the Portfolio Statements are to provide information on the proposed
allocation of resources to Government outcomes by agencies within each portfolio.
The Portfolio Statements provide information to enable Parliament to understand
the purpose of appropriations proposed in the Bill. The term “Portfolio
Statements” is defined in clause 3, to mean the PBS and PAES.
Clause 5—Notional payments, receipts etc.
5
Clause 5 ensures that payments between agencies result in a debit from the
appropriation for the paying agency. For example, the payments of the amounts
in Schedule 1 from one FMA Act agency to another do not require, in a
constitutional sense, an appropriation, because both agencies operate within
the CRF. However, for reasons of financial discipline and transparency, the practice
has arisen for these payments between agencies to be treated as though they
required an appropriation, and to debit an appropriation when such notional payments
are made.
6
Clause 5 provides that notional transactions between agencies are to be
treated as if they were real transactions. Notional transactions, therefore,
require the use of a drawing right and the debiting of an appropriation made by
Parliament. When an FMA Act agency makes a payment, whether to another FMA Act
agency or another part of the same agency (such as a different “business unit”
within the agency), it is to be treated as a “real” payment. This means that
the appropriation made by Parliament is extinguished by the amount of the
notional payment, even though no payment is actually made from the CRF. Similarly,
a notional receipt in such a situation is to be treated by the receiving
agency (where relevant) as if it were a real receipt. This does not mean every
internal transfer of public money involves a notional payment and receipt. As
explained in Regulation 19 of the Financial Management and Accountability
Regulations 1997 (FMA Regulations), some transfers of public money
from one official account to another do not involve a notional payment or
debiting an appropriation.
Part 2—Appropriation items
Clause 6—Summary of appropriations
7
Clause 6 sets out the total of the appropriations in Schedule 1
of the Bill. Importantly, the amounts in Schedule 1 may be adjusted under the
provisions in Part 3 of the Bill. In particular:
·
Departmental items may be reduced in accordance with clause 10;
·
Administered items may be reduced in accordance with clause 11;
·
CAC Act body payment items may be reduced in accordance with
clause 12; and
·
items may be increased by a determination under clause 13
(Advance to the Finance Minister).
8
The amounts in Schedule 1 of the Bill may be adjusted further in
accordance with sections 30, 30A, 31 and 32 of the FMA Act. Specifically:
·
Section 30 allows an agency to re-credit, to an appropriation
that had been relied upon for an initial payment by the agency, an amount
equivalent to the repayment. The re-crediting, or reinstatement, authorised by section 30,
can result in the total amount paid from the CRF in gross terms, exceeding the
amount specified in an item. Section 30 also applies to notional transactions
between and within agencies.
·
Appropriations may be adjusted by amounts recovered by an agency
from the Australian Taxation Office for Goods and Services Tax (GST), in accordance
with section 30A of the FMA Act. The amounts specified in Schedule 1
exclude recoverable GST. The appropriations shown represent the net amount that
Parliament is asked to allocate to particular purposes. Section 30A has
the effect of increasing an appropriation by the amount of the GST qualifying
amount arising from payments in respect of the appropriation. As a result,
there is sufficient appropriation for payments under an appropriation item,
provided that the amount of those payments, less the amount of recoverable GST,
can be met from the initial amount shown against the item in Schedule 1. Section 30A
also applies to notional transactions between and within agencies.
·
Departmental items may be increased to take into account certain
other amounts received by an agency, if those receipts are prescribed by FMA
Regulation 15, in accordance with section 31 of the FMA Act. For
example FMA Regulation 15 prescribes amounts that offset costs in relation
to the activities of an agency and amounts that relate to an employee’s leave
(including amounts received under the new paid parental leave scheme that was
established on 1 January 2011). FMA Regulation 15 also establishes a
mechanism for agencies to hold money in a trust or similar arrangement as
departmental.
·
Items may be adjusted to take into account the transfer of
functions between agencies, in accordance with section 32 of the FMA Act. It
is possible that adjustments under section 32 may result in new items
and/or outcomes being created in an Appropriation Act. It might also result in
amounts being transferred between Appropriation Acts.
Clause 7—Departmental items
9
Clause 7 provides that the amount specified in a departmental item for
an agency may be applied for the departmental expenditure of the agency. Clause 3
defines:
·
“departmental item” to be the total amount set out in Schedule 1
in relation to an agency under the heading “Departmental”; and
·
“expenditure” to be payments for expenses, acquiring assets,
making loans or paying liabilities.
10
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.
11
Departmental items involve costs over which an agency has control. Departmental
appropriations can be used to make any payment related to the functions of the
agency including on purposes covered by other items whether or not they are in
the Act for an agency. Expenditure typically covered by departmental items includes
employee expenses, suppliers and other operational expenses (e.g. interest
and finance expenses). There can also be occasions when an agency, such as a
portfolio department, needs to cover 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 reimbursed). Another example
would be where government has decided to implement shared services
arrangements, and one agency is providing corporate services assistance to
another agency.
12
From 2010-11, departmental items include amounts specifically to meet
costs associated with the acquisition and capitalised maintenance of
departmental assets valued at $10 million or less. Departmental items also
include supplementation in circumstances when agencies were directed by government to undertake additional responsibilities in the
previous financial year. This applies when the direction was given, or a
decision to propose further appropriation Bills 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.
13
Generally, agencies are expected to meet the cost of additionally
directed activities from their existing appropriations, which may then be
replenished by a departmental appropriation in the following financial year.
Provision of such payments was previously covered by a class of appropriations
known as “previous years’ outputs” within “other departmental items”, currently
clause 10 of Appropriation Bill (No. 4)2010-2011. The appropriation
Bills no longer recognise the term “Previous years’ outputs”, as
the concept is now integrated within departmental items.
14
Departmental items are not expressed in terms of a particular financial
year and do not automatically lapse. Because the cash to meet expenses such as
employee entitlements can be required at times other than when the expenses are
incurred, the departmental appropriations remain available until required. Departmental
items are available until they are spent or reduced in accordance with clause
10.
15
The Finance Minister manages the payment from departmental items by agencies
through the issuing of drawing rights in accordance with sections 26 and
27 of the FMA Act. Drawing rights control who may spend money from appropriations,
and allow for conditions and limits to be set by the Finance Minister (or the
Finance Minister’s delegate) in relation to those activities.
16
Amounts appropriated for departmental items can be subject to a
reduction process in accordance with clause 10 of the Bill. Under
clause 10, the Prime Minister or a Minister acting on behalf of the
Prime Minister, the Minister responsible for an agency, or the Chief Executive
of an agency, for which the Finance Minister is responsible, may make a written
request asking the Finance Minister to make a written determination to reduce
the agency’s departmental appropriation.
Clause 8—Administered items
17
Subclause 8(1) provides for the appropriation of administered amounts to
be applied by an agency for the purpose of contributing to the outcome for an agency.
An administered item is defined in clause 3 to be the amounts set out in
Schedule 1 opposite an outcome for an agency under the heading “Administered”.
Administered amounts are appropriated separately for outcomes (i.e. unlike
departmental items, the split across outcomes is not notional), making it clear
what the funding is intended to achieve. Schedule 1 specifies how much can
be expended on each outcome.
18
The appropriations for administered items in Schedule 1 represent
the amounts required to meet the total estimated additional expenses for the
administered outcomes for 2010-2011.
19
The purposes for which each administered item can be spent are set out
in subclause 8(2). Subclause 8(2) provides that where the Portfolio Statements indicate a particular activity is
in respect of a particular outcome, then expenditure on that activity is taken
to be expenditure for the purpose of contributing to achieving that outcome. The
outcomes are not, however, necessarily tied to the existence of a particular
agency (e.g. abolishing a department will not affect the valid operation of an
appropriation for an administered item for an outcome of that department,
because the purpose of the appropriation does not depend on the existence of
the department).
20
Administered items are those administered by an agency on behalf of the
Government (e.g. certain grants, benefits and transfer payments). These payments
are usually made pursuant to eligibility rules and conditions established by
the Government or the Parliament. Specifically:
·
administered items are tied to outcomes, departmental items are
not;
·
administered items must be spent in accordance with rules and
conditions established by the Government or Parliament; and
·
there is a process in clause 11 for dealing with administered
items that are not fully expensed or spent during the financial year.
21
The Finance Minister manages payments from administered items by agencies
through the issuing of drawing rights in accordance with sections 26 and
27 of the FMA Act. Drawing rights control who may spend money from
appropriations, and allow for conditions and limits to be set by the Finance Minister
(or the Finance Minister’s delegate) in relation to those activities.
Clause 9—CAC Act body payment items
22
Clause 9 provides for direct appropriations of money for CAC Act bodies
to be paid from the CRF by the relevant department. Clause 9 provides that
payments for CAC Act bodies must be used for the purposes of those bodies.
23
A CAC Act body is defined in clause 3 to be a Commonwealth
authority or a Commonwealth company within the meaning of the CAC Act. Many
CAC Act bodies receive funding directly from appropriations. However,
these bodies are legally separate from the Commonwealth, and as a result, do
not debit appropriations or make payments from the CRF.
24
CAC Act body payments are initiated by requests to the relevant
portfolio agencies from the CAC Act bodies. The Finance Minister manages appropriations
for CAC Act bodies through the issuing of drawing rights in accordance with sections 26
and 27 of the FMA Act. Drawing rights control who may spend money from
appropriations and allow for conditions and limits to be set by the Finance
Minister (or the Finance Minister’s delegate) in relation to those payments. CAC
Act bodies hold the amounts paid to them on their own account.
25
Subclause 9(2) provides that if a CAC Act body is subject to
another Act that requires amounts appropriated by Parliament for the purposes of
that body to be paid to the body, then the full amount of the CAC Act body
payment must be paid to the body. 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 CAC Act body, where that other legislation requires
the Commonwealth to pay the full amount appropriated for the purposes of the
body.
26
The full amount of the CAC Act body payments specified in
Schedule 1 may be reduced in accordance with clause 12. Subclause 12(6) provides
that subclause 9(2) does not prevent the CAC Act body payments in Schedule 1
being reduced.
27
In addition to the annual appropriations, some CAC Act bodies may also
receive public money from related entities such as a portfolio department and from
special appropriations managed by those departments. Many CAC Act bodies also
receive funds from external sources.
Part 3—Adjusting appropriation items
28
Part 3 of the Bill provides for reductions or increases to the amounts specified
in Schedule 1. Clauses 10, 11 and 12 contain provisions to reduce the
amounts specified in Schedule 1. Clause 13 establishes a mechanism
for the amounts specified in Schedule 1 to be increased.
29
Clauses 10, 11 and 12 were amended in the 2009-2010 Appropriation Bills,
by introducing additional mechanisms for initiating the reduction of unspent
items. This has the purpose of increasing the efficiency of the reduction
process particularly when surplus appropriations result from government
decisions.
Clause 10—Reducing departmental items
30
Departmental items remain available until the appropriation is spent or
reduced in accordance with clause 10. This clause enables surplus
departmental item appropriation amounts to be reduced to promote the efficient,
effective, economical
and ethical management of any surplus appropriations. Agencies should only spend
all of a departmental item if there are government decisions to support that
expenditure. Examples of where clause 10 may be appropriate to reduce a
departmental item include:
·
an excessive amount was originally appropriated in error;
·
an amount is reclassified and appropriated again under another
kind of appropriation (e.g. where an amount appropriated as departmental
is to be reclassified as administered and a new administered appropriation is
provided). The existing departmental appropriation remains legally available
even though there is no government authority to spend the funds;
·
efficiency savings result in a program costing less than
expected; or
·
a program is abolished under government policy before the
appropriation is expended.
31
Paragraph 10(1)(a) enables the Prime Minister, or a Minister acting on
behalf of the Prime Minister, to request that the Finance Minister reduce a
departmental item for an agency. Paragraph 10(1)(b) enables the Minister who is
responsible for the agency to request the Finance Minister to reduce a
departmental item for an agency. Paragraph 10(1)(c) enables the Chief
Executive of an agency for which the Finance Minister is responsible to request
the Finance Minister to reduce a departmental item for that agency.
32
Subclause 10(6) assists readers by noting that a request under subclause 10(1)
is not a legislative instrument within the meaning of section 5 of the Legislative
Instruments Act 2003 (LI Act), on the basis that it is requesting a
determination to be made, and it is the determination under subclause 10(2)
that has substantive effect.
33
Subclause 10(2) enables the Finance Minister to make a written determination
to reduce a departmental item. The Finance Minister is not obliged to act on a
request to reduce excess departmental item appropriations. However, if the
Finance Minister does:
·
the determination must be for the amount specified in the
request: subclause 10(2);
·
the determination may not reduce the departmental item below nil:
subclause 10(3); and
·
the departmental item in Schedule 1 will be taken to be reduced
in accordance with the determination of the Finance Minister:
subclause 10(4).
34
Subclauses 10(5) and 10(7) apply despite subsection 33(3) of the AI Act.
Subclause 10(5) provides that once a determination is made under subclause 10(2),
it must not be rescinded, revoked, amended or varied. The purpose of this
subclause is to ensure that the departmental item appropriation, when reduced
under subclause 10(2), cannot be restored by means of a later
determination.
35
Subclause 10(7) intends to exclude the operation of subsection 33(3) of
the AI Act from determinations made under subclause 10(2). Subclause 10(7)
provides that a determination made under subclause 10(2) is a legislative
instrument. Despite subsection 44(2) of the LI Act, which provides
that instruments made under annual Appropriation Acts are not subject to
disallowance, subclause 10(7) provides that a determination reducing a
departmental item is subject to disallowance in accordance with section 42
of the LI Act. Parliament retains the power to disallow a determination to
reduce a departmental item, because any such determination will reduce the
amount of an appropriation authorised by Parliament. Subclause 10(7) also
confirms subsection 54(2) of the LI Act, which provides that
instruments made under annual Appropriation Acts are not subject to sunsetting.
Clause 11—Reducing administered items
36
Clause 11 provides for amounts of administered items not required after the
end of the current year to be extinguished. If the government then decides that
amounts should be spent in a later financial year, the government must request
Parliament to appropriate these amounts in future appropriation Bills.
37
Clause 11 limits the amount that may be applied for an administered
item to the amount reported for that item in an agency’s annual report. Subclause 11(1)
provides that if the amount published in the annual report is less than the
amount of the item, then the administered item is taken to be reduced to the
amount specified in the annual report. The amount of the item specified in
Schedule 1 of the Bill may be increased or reduced by the other clauses of
Part 3 of the Bill, or in accordance with sections 30, 30A and 32 of
the FMA Act. The amount in the annual report must therefore be compared
with the amount for the item in Schedule 1, together with any other adjustments
that have been made to that amount.
38
Subparagraph 11(2)(a)(i) retains a power for the Finance Minister to make
a written determination specifying that subclause 11(1) does not apply in
relation to the item. Subparagraph 11(2)(a)(ii) enables the Finance Minister to
determine that an amount published in the financial statements of an agency, is taken
to be the amount specified in his or her determination. The power in subparagraph 11(2)(a)(ii)
is to ensure that the amount published for the administered item in an agency
annual report can be corrected through the determination if, for example, the
amount published is erroneous or rendered out-of date by later events.
Additionally, the power in paragraph 11(2)(b) is to provide the Finance
Minister with the capacity to make a written determination in those cases where
an agency has failed to specify a required amount in its’ annual report. In
those cases the amount specified in the determination as the required amount
will be taken to be the required amount for the purposes of subclause 11(1).
39
Subclause 11(3) provides that a determination made under
subclause 11(2) is a legislative instrument. Despite subsection 44(2) of
the LI Act, which provides that instruments made under annual Appropriation
Acts are not subject to disallowance, subclause 11(3) provides that a
determination regarding an administered item is subject to disallowance in
accordance with section 42 of the LI Act. Parliament retains the
power to disallow a determination to reduce an administered item because any
such determination will reduce the amount of an appropriation authorised by
Parliament. Subclause 11(3) also confirms subsection 54(2) of the LI Act,
which provides that instruments made under annual Appropriation Acts are not
subject to sunsetting.
Clause 12—Reducing CAC Act body payment items
40
Clause 12 provides a process for reducing CAC Act body payment items,
which is similar to that for reducing departmental items. Paragraph 12(1)(a)
enables the Prime Minister, or a Minister acting on behalf of the Prime
Minister, to request that the Finance Minister reduce a CAC Act body
payment item. Paragraph 12(1)(b) enables a Minister responsible for a CAC
Act body, to request that the Finance Minister reduce a CAC Act body payment
item. Paragraph 12(1)(c) enables the Secretary of the Finance Department
to request a reduction for a CAC Act body payment item for a body which the
Finance Minister is responsible.
41
Subclause 12(7) assists readers by noting that a request under subclause 12(1)
is not a legislative instrument within the meaning of section 5 of the LI Act,
on the basis that it is requesting a determination under subclause 12(2) to
be made and it is the determination that has substantive effect.
42
Subclause 12(2) enables the Finance Minister to make a written
determination to reduce a CAC Act body payment item. The Finance Minister is
not obliged to act on a request to reduce a CAC Act body payment item. However,
if the Finance Minister does:
·
the determination must be for the amount specified in the request:
subclause 12(2);
·
the determination may not reduce the CAC Act body payment item
below nil: subclause 12(3); and
·
the CAC Act body payment item in Schedule 1 will be taken to be
reduced in accordance with the determination of the Finance Minister: subclause
12(4).
43
Subclause 12(5) provides that a determination made under subclause 12(2)
once made, must not be rescinded, revoked, amended or varied. Subclause 12(5)
applies despite subsection 33(3) of the AI Act. This subclause intends to
exclude the operation of subsection 33(3) of the AI Act from
determinations made under subclause 12(2). The purpose of subclause 12(5)
is to ensure that the CAC Act body payment item appropriation, when reduced under
subclause 12(2), cannot be restored by means of a later determination.
44
Subclause 12(6) provides that the full amount that is required to be
paid to a CAC Act body by subclause 9(2) of the Bill may be reduced in
accordance with this clause.
45
Subclause 12(8) provides that a determination made under
subclause 12(2) is a legislative instrument. Despite subsection 44(2) of
the LI Act, which provides that instruments made under annual Appropriation
Acts are not subject to disallowance, subclause 12(8) provides that a
determination reducing a CAC Act
body payment item is subject to disallowance in accordance with
section 42 of the LI Act. Parliament retains the power to disallow a
determination to reduce a CAC Act body payment item because any such determination
will reduce the amount of an appropriation authorised by Parliament. Subclause 12(8)
also confirms subsection 54(2) of the LI Act, which provides that
instruments made under annual Appropriation Acts are not subject to sunsetting.
Clause 13—Advance to the Finance Minister
46
Section 13 of the Appropriation Act (No. 1) 2010-2011 (Act No. 1)
enables the Finance Minister to provide additional appropriations for items
when satisfied that there is an urgent need for expenditure and the existing appropriation
is inadequate. This additional appropriation is referred to as the Advance to
the Finance Minister (AFM). Subsection 13(3) of Act No. 1 provides
that the total amount that can be determined under the AFM provision is $295
million.
47
Clause 13 of the Bill provides that irrespective of the amounts issued
from the AFM before the commencement of the Bill, the amount available under
section 13 of Act No. 1 will be restored to the original amount of
$295 million. The provision has been added to the Bill to ensure that
there will be sufficient scope to provide amounts from the AFM for the
remainder of the financial year.
48
Subclause 13(1) specifies that if the Finance Minister has determined
under subsection 13(2) of Act No. 1 to increase an amount in Schedule 1 of
Act No. 1 from the AFM, then that amount is to be disregarded when the Bill
commences. From the date the Bill commences the total amount that can be
determined under the AFM will be $295 million.
49
Subclause 13(2) will prevent appropriations for the same expenditure
from both the AFM and the Bill. Subclause 13(2) ensures that if Schedule 1
of the Bill provides an amount for a particular expenditure and, prior to the
commencement of the Bill, the Finance Minister determines an amount from the
AFM under section 13 of Act No. 1 for the same expenditure (the advanced
amount), then the appropriation in the Bill will be reduced by the amount of
the advanced amount. The appropriated amount cannot be reduced below nil. For
example if the Bill provides $20 million for a grants program and an advanced
amount of $5 million is determined by the Finance Minister under Act No. 1
for a particular grant 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 grants program).
50
The Finance Minister may continue to make determinations under
subsection 13(2) of Act No. 1 to add an amount from the AFM to an item of
an agency if the criteria in subsection 13(1) of Act No. 1 are satisfied.
Part 4—Miscellaneous
Clause 14—Crediting amounts to Special Accounts
51
Clause 14 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 FMA Act by a determination of the Finance Minister
(section 20) or by another Act (section 21). The determination
or Act that establishes the Special Account will specify the purposes of the Special
Account.
Clause 15—Appropriation of the Consolidated Revenue Fund
52
Clause 15 provides that the CRF is appropriated as necessary for the
purposes of the Bill. Significantly, this clause notes that the amounts
appropriated by the Bill may be affected by the FMA Act, in particular sections 30,
30A and 32 of the FMA Act (see clause 6).
Schedule 1—Services for which money is appropriated
53
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 with further detail for each portfolio, with other tables detailing
the appropriations for each agency.
54
Schedule 1 includes for information purposes, a figure for the
previous financial year printed in italics under each appropriation amount,
labelled the “Actual Available Appropriation”. That figure provides a
comparison with the proposed appropriations. The Actual Available Appropriation
does not affect the amounts available at law.
55
More details about the appropriations in Schedule 1 are contained
in the Portfolio Statements and the second
reading speech.