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2013-2014
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
APPROPRIATION (PARLIAMENTARY DEPARTMENTS) BILL (NO. 1)
2014-2015
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Finance,
Senator the Honourable Mathias Cormann)
Table of Acronyms and Defined Terms
AI Act Acts Interpretation Act 1901
APO Advance to the responsible Presiding Officer
CRF Consolidated Revenue Fund
Finance Minister Minister for Finance
FMA Act Financial Management and Accountability Act 1997
FMA Regulations Financial Management and Accountability
Regulations 1997
GST Goods and Services Tax
PGPA Act Public Governance, Performance and Accountability
Act 2013
Portfolio Portfolio Budget Statements
Statements
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2014-2015
House of Representatives 1
Outline
Appropriation (Parliamentary Departments)
Bill (No. 1) 2014-2015
General Outline
1 This Explanatory Memorandum accompanies Appropriation (Parliamentary
Departments) Bill (No. 1) 2014-2015 (the Bill).
2 The main purpose of the Bill is to propose appropriations from the
Consolidated Revenue Fund (CRF) for expenditure in relation to the
Parliamentary Departments.
3 Appropriations for the ordinary annual services of the Government must be
contained in a separate Bill from other appropriations in accordance with
sections 53 and 54 of the Australian Constitution. Consequently, the Bill proposes
appropriations for the Parliamentary Departments, which are not for the ordinary
annual services of the Government. Annual appropriations that are for the
ordinary annual services of the Government are proposed in Appropriation Bill
(No. 1) 2014-2015. Other annual appropriations that are not for the ordinary
annual services of the Government are proposed in Appropriation Bill (No. 2)
2014-2015. Together these three Bills are termed the Budget Appropriation Bills.
4 The Portfolio Budget Statements (Portfolio Statements) are published and
tabled in the Parliament in relation to the Bill. This Explanatory Memorandum
should be read in conjunction with the various 2014-2015 Portfolio Statements
for the Parliamentary Departments, which contain details on the appropriations set
out in Schedule 1 of the Bill.
5 Importantly, the Bill has been drafted to not take account of potential
amendments that may be required to implement the Public Governance,
Performance and Accountability Act 2013 (PGPA Act). Those amendments will
be addressed in transitional legislation that is yet to be introduced into the
Parliament. The explanatory memoranda to those transitional Bills will provide a
comprehensive explanation of the approach being taken to ensure consistency
between the PGPA Act and annual Appropriation Acts.
Structure of appropriations in the Bill
6 The Bill provides for the appropriation of specified amounts for expenditure
by the Parliamentary Departments.
7 Part 1 of the Bill deals with definitions, the interpretative role of the
Portfolio Statements and the concept of notional payments.
8 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),
administered assets and liabilities items (clause 9) and other departmental items
(clause 10).
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2014-2015
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Outline
9 Part 3 of the Bill specifies the ways in which the amounts in Schedule 1 may
be adjusted. In addition to the adjustment provisions in Part 3, clause 11 of the
Bill recognises that the appropriations in the Bill may also be varied by the
Financial Management and Accountability Act 1997 (FMA Act).
10 Part 4 of the Bill deals with miscellaneous items including matters relating
to Special Accounts (clause 12), the appropriation of the CRF (clause 13) and
specifies the cessation date of the Bill, once enacted (clause 14).
Financial Impact
11 The Bill, if enacted, would appropriate the amounts specified in Schedule 1.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2014-2015
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Statement of compatibility with human rights
Statement of compatibility with human rights
1 The Bill seeks to appropriate money for expenditure by the Parliamentary
Departments.
2 Accordingly, this Appropriation Bill performs an important constitutional
function, by authorising the withdrawal of money from the Consolidated Revenue
Fund 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
Appropriation Bill is not seen as engaging, or otherwise affecting, the rights or
freedoms relevant to the Human Rights (Parliamentary Scrutiny) Act 2011.
5 Detailed information on the relevant appropriations, however, is contained
in the Portfolio Statements.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2014-2015
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Notes on clauses
Notes on clauses
Part 1--Preliminary
Clause 1--Short title
1 This clause specifies that the short title of the Bill, once enacted, will be the
Appropriation (Parliamentary Departments) Act (No. 1) 2014-2015.
Clause 2--Commencement
2 Clause 2 provides for the Bill to commence as an Act on the day of the
Royal Assent.
Clause 3--Definitions
3 Clause 3 defines the key terms used in the Bill, such as "administered item",
"current year", and "departmental item". Each Parliamentary Department is an
Agency for the purposes of the Financial Management and Accountability
Act 1997 (FMA Act).
Clause 4--Portfolio Statements
4 Clause 4 declares that the Portfolio Statements 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. Paragraph 15AB(2) of the AI Act effectively
provides that the material that may be considered in the interpretation of a
provision of an Act includes any document that is declared by the Act to be a
relevant document.
5 The purpose of the Portfolio Statements is to provide information on the
proposed allocation of resources to the outcomes of the Parliamentary
Departments. 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 the Bill, at clause 3, to mean the Portfolio
Budget Statements (tabled with this Bill).
Clause 5--Notional payments, receipts etc
6 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. This is consistent with section 6 of the FMA Act.
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Notes on clauses
7 Clause 5 provides that notional transactions between Agencies are to be
treated as if they are 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.
8 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.
9 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
10 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, each of these items may be increased by a payment
from the Advance to the responsible Presiding Officer in accordance with
clause 11.
11 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 recoverable by a Parliamentary
Department 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
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2014-2015
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Notes on clauses
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 a Parliamentary Department, if those receipts are
prescribed by the FMA Regulations, in accordance with section 31 of the
FMA Act.
Items may be adjusted to take into account the transfer of functions between
Agencies, in accordance with section 32 of the FMA Act. It is possible that
adjustments under section 32 may result in new items and/or outcomes
being created in an Appropriation Act. It might also result in amounts being
transferred between Appropriation Acts.
Clause 7--Departmental items
12 Clause 7 provides that the amount specified in a departmental item for a
Parliamentary Department may be applied for the departmental expenditure of the
Parliamentary Department. Clause 3 defines:
"departmental item" to be the total amount set out in Schedule 1 in relation
to a Parliamentary Department 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 Parliamentary Department
has control. Departmental appropriations can be used to make any payment
related to the functions of the Parliamentary Department, including on purposes
covered by other items, whether or not they are in the Act for a Parliamentary
Department. Expenditure typically covered by departmental items includes
employee expenses, suppliers and other operational expenses (e.g. interest and
finance expenses).
15 Departmental items include amounts specifically to meet costs associated
with the acquisition and capitalised maintenance of existing departmental assets
valued at $10 million or less.
16 Departmental items are not expressed in terms of a particular financial year
and do not automatically lapse. Departmental items are available until they are
spent, or the Act through which they were appropriated is repealed or sunsets.
Because the cash to meet expenses can be required at times other than when the
expenses are incurred, the departmental appropriations remain available until
required.
17 The Minister for Finance (Finance Minister) manages the payment from
departmental items by the Parliamentary Departments through the issuing of
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2014-2015
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Notes on clauses
drawing rights in accordance with sections 26 and 27 of the FMA Act. Drawing
rights control who may spend money from appropriations, and allow for
conditions and limits to be set by the Finance Minister (or the Finance Minister's
delegate) in relation to those activities.
Clause 8--Administered items
18 Subclause 8(1) provides for the appropriation of administered expense
amounts to be applied by a Parliamentary Department for the purpose of
contributing to the outcome for an administered item. An "administered item" is
defined in clause 3 to be the amounts set out in Schedule 1 opposite an outcome
for a Parliamentary Department under the heading "Administered". These items
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.
19 The appropriations for administered items in Schedule 1 represent the
amounts required to meet the total estimated expenses for the administered
outcomes for 2014-2015.
20 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.
21 Administered expenses are those administered by a Parliamentary
Department. Specifically, administered items are tied to outcomes (departmental
items are not).
22 The Finance Minister manages payments from administered items by
Agencies through the issuing of drawing rights in accordance with sections 26
and 27 of the FMA Act. Drawing rights control who may spend money from
appropriations, and allow for conditions and limits to be set by the Finance
Minister (or the Finance Minister's delegate) in relation to those activities.
Clause 9--Administered assets and liabilities items
23 Clause 9 provides amounts in Schedule 1 to acquire new administered
assets, enhance existing administered assets and/or discharge administered
liabilities relating to activities administered by the Parliamentary Departments.
Administered assets and liabilities appropriations are provided for functions
managed by a Parliamentary Department. Administered assets and liabilities items
can also be applied for any outcomes of a Parliamentary Department.
24 The Finance Minister manages payments from administered assets and
liabilities items by Agencies through the issuing of drawing rights, in accordance
with sections 26 and 27 of the FMA Act. Drawing rights control who may spend
money from appropriations, and allow for conditions and limits to be set by the
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Notes on clauses
Finance Minister (or the Finance Minister's delegate) in relation to those
payments.
Clause 10--Other departmental items
25 Clause 10 appropriates departmental non-operating appropriations in the
form of equity injections, over which the Parliamentary Departments also exercise
control. This clause provides that the amount specified in other departmental
items for a Parliamentary Department may be applied for the departmental
expenditure of the Parliamentary Department. In short, "equity injections" can be
provided to Agencies to, for example, enable investment in assets to facilitate
departmental activities.
26 Other departmental items are not expressed in terms of a particular financial
year and do not automatically lapse. Other departmental items are available until
they are spent, or the Act through which they were appropriated is repealed or
sunsets. For example, equity injection appropriations provide funding for the full
costs of acquiring new assets some of which might not be incurred until a later
financial year.
27 The Finance Minister manages the payment from other departmental items
by Parliamentary Departments through the issuing of drawing rights in accordance
with sections 26 and 27 of the FMA Act. Drawing rights control who may spend
from appropriations, and allow for conditions and limits to be set by the Finance
Minister (or the Finance Minister's delegate) in relation to those payments.
Part 3--Advance to responsible Presiding Officer
28 Part 3 of the Bill provides for increases to the amounts specified in
Schedule 1. The Advance to the responsible Presiding Officer provision that can
increase the amounts specified in Schedule 1 is contained in clause 11.
Clause 11--Advance to the responsible Presiding Officer
29 Clause 11 enables the responsible Presiding Officer for each of the
Parliamentary Departments to provide additional appropriations for items when
satisfied there is an urgent need for that expenditure, and the existing
appropriation is inadequate. This additional appropriation is referred to as the
Advance to the responsible Presiding Officer (APO).
30 Subclause 11(1) establishes the criteria that the responsible Presiding
Officer must be satisfied about, before determining to add an amount from the
advance to an item of a Parliamentary Department. The responsible Presiding
Officer will consider issuing an amount under subclause 11(1) if satisfied there is
an urgent need for expenditure that is not provided for, or is insufficiently
provided for, in Schedule 1 because of an omission or understatement, or because
of unforeseen circumstances. Generally, the other appropriation adjustment
options in Part 3 of the Bill or under sections 30, 30A and 32 of the FMA Act,
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2014-2015
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Notes on clauses
must have been exhausted before the responsible Presiding Officer will make a
determination under subclause 11(2).
31 Subclause 11(2) enables the responsible Presiding Officer to make a
determination to allocate an amount out of the advance to an item in Schedule 1,
to a new item not already in Schedule 1, or to a new outcome.
32 Subclauses 11(3) to (6) cap the amounts that can be allocated from the
advance to each of the Parliamentary Departments.
33 Subclause 11(7) provides that a determination under subclause 13(2) is a
legislative instrument, which is not subject to disallowance or sunsetting.
34 Disallowance of a subclause 11(2) determination could frustrate the purpose
of clause 11 which is to provide additional appropriation for urgent expenditure.
Parliament authorises the advance to the responsible Presiding Officer under
clause 11 so that there is an amount available to cover any potential urgent
requirements that may arise. A subclause 11(2) determination will not require any
additional appropriations to be authorised by Parliament.
35 A subclause 11(2) determination is not subject to sunsetting provisions
because the amount allocated from the advance to the responsible Presiding
Officer will be extinguished when it is spent.
Part 4--Miscellaneous
Clause 12--Crediting amounts to Special Accounts
36 Clause 12 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) that is disallowable by Parliament or another Act (section 21). The
determination or Act that establishes the Special Account will specify the
purposes of the Special Account.
Clause 13--Appropriation of the Consolidated Revenue Fund
37 Clause 13 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 Royal Assent is
given. This clause indicates that the amounts appropriated by the Bill may be
affected by the FMA Act, in particular sections 30, 30A, 31 and 32 of the FMA
Act (see clause 6), after the Bill receives the Royal Assent.
Explanatory Memorandum to Appropriation (Parliamentary Departments) Bill (No. 1) 2014-2015
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Notes on clauses
Clause 14--Act ceases to be in force
38 Clause 14 specifies that the Bill, once enacted, will cease to be in force at
the start of 1 July 2017. As the Appropriation Acts will sunset, there is no longer a
requirement for the reduction of appropriations during the year. As such, the
reduction sections that applied previously are no longer required (e.g. section 11
of Appropriation (Parliamentary Departments) Act (No. 1) 2013-2014) and have
been excluded from this Bill.
Schedule 1--Services for which money is appropriated
39 Schedule 1 specifies the services of the Parliamentary Departments for
which amounts will be appropriated. Schedule 1 contains a summary table which
lists the total amounts for the Parliamentary Departments and separate tables
detailing the appropriations for each Parliamentary Departments.
40 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.
41 The Actual Available Appropriation is an estimate that does not affect the
amount available at law. It is calculated for each item by adding the amounts
appropriated in the previous year's annual Appropriation Acts, amounts adjusted
under certain provisions of the FMA Act that are recorded in the Central Budget
Management System (including Section 32 transfers relating to Machinery of
Government changes) plus adjustments such as APOs and reductions by the
Finance Minister.
42 In some instances the figure may also be affected by limits applied
administratively by the Department of Finance. In addition, where an agency's
outcome structure has changed since the last Appropriation Act, only ongoing
outcomes are shown in the Bill.
43 For these reasons, the Actual Available Appropriation figures may be
different from the sum of amounts provided in earlier Appropriation Acts.
44 More details about the appropriations in Schedule 1 are contained in the
Portfolio Statements and the second reading speech for the Bill.
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