Notes on clauses
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. 2) 2013-2014.
2 Clause 2 provides for the Bill to commence as an Act on the day of the Royal Assent.
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).
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 both the Portfolio Budget Statements (that accompanied the Appropriation Bills tabled at the last Budget) and the Portfolio Additional Estimates 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.
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. 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
9 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, administered assets and liabilities items and other departmental items may be reduced in accordance with clause 11;
· Administered items may be reduced in accordance with clause 12; and
· Each of these items may be increased by a payment from the advance to the responsible Presiding Officer in accordance with clause 13.
10 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 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
11 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.
12 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.
13 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).
14 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.
15 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 reduced in accordance with clause 11 of this Bill. 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.
16 The Finance Minister manages the payment from departmental items by the 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 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.
17 Amounts appropriated for departmental items can be subject to a reduction process in accordance with clause 11 of the Bill. Under clause 11, the responsible Presiding Officer for a Parliamentary Department may make a written request asking the Finance Minister to make a determination to reduce a Parliamentary Department’s departmental appropriation.
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 2013-2014.
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);
· administered items must be spent in accordance with rules and conditions established by Government or Parliament; and
· there is a process in clause 12 for dealing with administered items that are not fully expensed or spent during the financial year.
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 Clause 11 ensures that Parliamentary Departments only have access to the amount of appropriation required to fund activities in the year. Amounts appropriated for administered assets and liabilities items can be subject to a reduction process in accordance with clause 11 of the Bill. Under clause 11, the responsible Presiding Officer for a Parliamentary Department may make a written request to ask the Finance Minister to make a determination to reduce an administered assets and liabilities item of a Parliamentary Department.
25 Where further Appropriation Bills can effect an appropriation reduction, for example by reducing a proposed increase to appropriations, this approach may also be taken to have reduced the appropriation.
26 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 Finance Minister (or the Finance Minister’s delegate) in relation to those payments.
Clause 10—Other departmental items
27 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.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 reduced in accordance with clause 11. 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. Amounts appropriated for another departmental item can be subject to a reduction process in accordance with clause 11 of the Bill.
28 Where further Appropriation Bills can effect an appropriation reduction, for example by reducing a proposed increase to appropriations, this approach may also be taken to have reduced the appropriation.
29 The Finance Minister manages the payment from other department 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—Adjusting appropriation items
Clause 11—Reducing departmental items, administered assets and liabilities items and other departmental items
30 Departmental items, administered assets and liabilities items and other departmental items remain available until the appropriations are spent or reduced in accordance with clause 11. This clause enables surplus amounts to be reduced to promote the efficient, effective and ethical management of any surplus appropriations. Parliamentary Departments should only spend all of an appropriation item if there are government decisions to support that expenditure.
31 Examples of where clause 11 may be appropriate to reduce one of these items include:
· an excessive amount of appropriation was made 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 programme costing less than expected; or
· a programme is abolished under government policy before the appropriation is expended.
32 Subclause 11(1) enables the responsible Presiding Officer for a Parliamentary Department to ask the Finance Minister to reduce one of these items for that Parliamentary Department. Subclause 11(6) notes that a request under subclause 11(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 that has substantive effect.
33 Subclause 11(2) enables the Finance Minister to make a written determination to reduce one of those items. The Finance Minister is not obliged to act on a request to reduce excess appropriations. However, if the Finance Minister does:
· the determination must be for the amount specified in the request: subclause 11(2);
· the determination may not reduce the item below nil: subclause 11(3); and
· the item will be taken to be reduced in accordance with the determination of the Finance Minister: subclause 11(4).
34 Subclause 11(5) provides that once a determination is made under subclause 11(2), it must not be rescinded, revoked, amended or varied, other than to correct an error. Subclause 11(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, which would otherwise allow the Minister to repeal, rescind, revoke, amend or vary any such instrument from determinations made under subclause 11(2). The purpose of subclause 11(5) is to ensure that the departmental item appropriation, when reduced under subclause 11(2), cannot be restored by means of a later determination.
35 Subclause 11(7) provides that a determination made under subclause 11(2) is a legislative instrument.
36 Despite subsection 44(2) of the LI Act, which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 11(7) provides that a determination reducing a departmental item under subclause 11(2) 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 11(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 12—Reducing administered items
37 Clause 12 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.
38 Clause 12 limits the amount that may be applied for an administered item to the amount reported for that item in a Parliamentary Department’s annual report. Subclause 12(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 32of 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.
39 Subclause 12(2) retains a power for the Finance Minister to determine that an amount published in the financial statements of a Parliamentary Department is taken to be the amount specified in the Minister’s determination. The power in paragraph 12(2)(b) is to ensure that the amount published for the administered item can be corrected if, for example, the amount is erroneous or requires updating after the annual report is published.
40 Subclause 12(3) provides that a determination made under subclause 12(2) is a legislative instrument.
41 Despite subsection 44(2) of the LI Act, which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 12(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 12(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 13—Advance to the responsible Presiding Officer
42 Section 13 of the Appropriation (Parliamentary Departments) Act (No. 1) 2013-2014 (PD Act (No. 1)) enables the responsible Presiding Officer 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). Subsections 13(3) to 13(6) of PD Act (No. 1) provide the total amounts that can be determined under the APO provision.
43 Clause 13 of the Bill provides that irrespective of the amounts issued from the APO before the commencement of the Bill, the amount available under section 13 of PD Act (No. 1) will be restored to the original amounts. The provision has been added to the Bill to ensure that there will be sufficient scope to provide amounts from the APO for the remainder of the financial year.
44 Subclause 13(1) specifies that if the responsible Presiding Officer has determined under subsection 13(2) of PD Act (No. 1) to increase an amount in Schedule 1 of Act No. 1 from the APO, then that amount is to be disregarded when the Bill commences. From the date this Bill commences as an Act the total amounts that can be determined under the APO will again be:
(a) for the Department of the Senate—$300,000;
(b) for the Department of the House of Representatives—$300,000;
(c) for the Department of Parliamentary Services—$1 million; and
(d) for the Parliamentary Budget Office—$300,000.
45 Subclause 13(2) prevents appropriations for the same expenditure from both the APO 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 responsible Presiding Officer determines an amount from the APO under section 13 of PD 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.
46 For example if the Bill provides $20 million for a programme and an advanced amount of $5 million is determined by the responsible Presiding Officer under PD Act No. 1 for a particular payment under that programme, then the amount appropriated by the Bill, once enacted, will be reduced by $5 million (i.e. appropriating only $15 million for the programme).
47 The responsible Presiding Officer may continue to make determinations under subsection 13(2) of PD Act (No. 1) to add an amount from the AFM to an item of an Agency if the criteria in subsection 13(1) of that Act are satisfied.
48 The Bill provides the responsible Presiding Officer for the Parliamentary Budget Office is the President of the Senate and the Speaker of the House of Representatives, which aligns with the process that applies to the Department of Parliamentary Services.
Part 4—Miscellaneous
Clause 14—Crediting amounts to Special Accounts
49 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) 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 15—Appropriation of the Consolidated Revenue Fund
50 Clause 15 provides that the CRF is appropriated as necessary for the purposes of the Bill. Significantly, this clause means that there is an appropriation in law when 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.
Schedule 1—Services for which money is appropriated
51 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.
52 Schedule 1 includes, for information purposes, the amount appropriated in PD Act (No. 1), which is printed in italics and labelled as “Budget Appropriation”. The amount printed as the Budget Appropriation is an estimate that does not affect the amount available at law.
53 Schedule 1 also includes, for information purposes, a figure for the previous financial year printed in light figures labelled the “Actual Available Appropriation”. That figure provides a comparison with the proposed appropriations. 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 plus adjustments such as AFMs and reductions by the Finance Minister. In some instances the figure may also be affected by limits applied administratively by the Department of Finance. The Actual Available Appropriation is an estimate that does not affect the amount available at law.
54 More details about the appropriations in Schedule 1 are contained in the Portfolio Statements and the second reading speech for the Bill.