Source: https://www.legislation.gov.au/Details/C2008B00255/Explanatory%20Memorandum/Text
Timestamp: 2019-08-18 21:21:19
Document Index: 77481091

Matched Legal Cases: ['art 1', 'art 2', 'art 3', 'art 4', 'art 3', 'art 3', 'art 3']

1 This explanatory memorandum accompanies Appropriation (Economic Security Strategy) Bill (No. 2) 2008-2009 (the Bill).
2 The main purpose of the Bill is to propose annual appropriations from the Consolidated Revenue Fund (CRF) for services that are not the ordinary annual services of the Government in relation to the Economic Security Strategy.
23 To comply with sections 53 and 54 of the Australian Constitution, proposed annual appropriations for the ordinary annual services of the Government in relation to the Economic Security Strategy are contained in a separate bill, Appropriation (Economic Security Strategy) Bill (No. 1) 2008-2009.
24 This Explanatory Memorandum should be read in conjunction with the 2008-2009 Portfolio Budget Statements (PB Statements) and Portfolio Supplementary Estimates Statements (PSES). In particular, the PSES contain details of the appropriations set out in Schedule 2 to the Bill. The PB Statements were published and tabled with the Appropriation Bill (No. 1) 2008-2009 and Appropriation Bill (No. 2) 2008-2009. The PSES are published and tabled in the Parliament together with the Bill.
5 The Bill provides for the appropriation of specified amounts for expenditure by one Australian Government agency (being those under the Financial Management and Accountability Act 1997 (FMA Act) on activities related to the Economic Security Strategy).
56 Part 1 of the Bill deals with definitions, PB Statements, PSES and the concept of notional payments. Part 2 of the Bill proposes appropriations to make payments of the amounts in Schedule 2 such as for the State, ACT, NT and local government items (clause 7).
57 Part 3 of the Bill specifies the ways in which the amounts in Schedule 2 may be adjusted.
58 Part 4 deals with special accounts and sets out the amount appropriated under the Act. In addition to the adjustment provisions in Part 3, clause 17 of the Bill recognises that the appropriations in the Bill may also be varied by the FMA Act.
9 This Bill will appropriate the amounts specified in Schedule 2.
1 This clause specifies the short title of the Bill, once enacted, will be Appropriation (Economic Security Strategy) Act (No. 2) 2008-2009.
3 Clause 3 defines the key terms used in the Bill, such as ‘administered assets and liabilities item’, ‘administered item’, ‘CAC Act body payment item’, ‘other departmental item’, ‘State, ACT, NT and local government item’ and ‘current year’ (being the financial year ending on 30 June 2009).
4 Clause 4 declares that Portfolio Budget Statements (PB Statements) and Portfolio Supplementary Estimates Statements (PSES) 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 the Bill in accordance with subsection 15AB(1) of the AI Act. The purpose of the PB Statements and PSES is to provide information on the proposed allocation of resources to Government outcomes by agencies within the portfolio. The PB Statements and PSES provide information, explanation and justification to enable Parliament to understand the purpose of each appropriation proposed in the Bill.
56 Clause 5 provides that these notional transactions between agencies are to be treated as if they were real transactions. The effect is that when a notional transaction takes place, the paying agency must debit the appropriation made to it by Parliament. For constitutional purposes this means that the real appropriation made by Parliament is extinguished by the amount of the notional payment.
9 Clause 7 provides administered appropriations for financial assistance to the States, ACT, NT and local governments. The amount specified in Schedule 2 for an outcome may be applied by an agency for the purpose of making payments to any of the States, ACT, NT or local government authorities for the purpose of achieving that outcome.
910 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.
12 Subclause 8(1) provides for the appropriation of new administered expense 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 2 opposite an outcome for an agency under the heading “Administered Expenses”. As with administered items in Appropriation (Economic Security Strategy) Act (No. 1) 2008-2009, the administered expenses in the Bill are appropriated separately for outcomes to make clear what the funding is intended to achieve. Schedule 2 specifies how much may be expended on each outcome.
13 The appropriations for administered items in Schedule 2 represent the amounts required to meet the total estimated expenses for the administered outcomes for 2008-2009 in relation to the Economic Security Strategy.
14 The purposes for which each administered item can be spent are set out in subclause 8(2). Subclause 8(2) provides that where the PB Statements or PSES indicate a particular activity is in respect of a particular outcome, then the amount in the administered item is taken to contribute to achieve the outcome. The outcomes are not, however, necessarily tied to the existence of a particular agency (eg, abolishing a department will not effect 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). Administered expenses are those administered by an agency on behalf of the Government (eg, certain grants, benefits and transfer payments). These payments are usually made pursuant to eligibility rules and conditions established by the Government or Parliament.
1415 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.
16 Clause 9 provides amounts in Schedule 2 to acquire new administered assets, enhance existing administered assets and/or discharge administered liabilities relating to activities administered by agencies on behalf of the Government. Administered assets and liabilities appropriations are provided for functions managed by an agency on behalf of the Government. Administered assets and liabilities items can also be applied for any outcomes of the agency (ie. the outcomes in the Bill or Appropriation (Economic Security Strategy) Act (No. 1) 2008-2009).
1617 Amounts appropriated for administered assets and liabilities items can be subject to a reduction process in accordance with clause 13 of the Bill. Under clause 13, the Minister responsible for an agency may make a written request to ask the Finance Minister to make a determination to reduce an item of an agency.
21 The Finance Minister manages the payment from other department 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 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.
2224 CAC Act body payments will be initiated by requests from the CAC Act bodies. The Finance Minister manages payments from CAC Act body payment items by agencies through the issuing of drawing rights under 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. CAC Act bodies hold the amounts paid to them on their own account
2225 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 CAC Act body, where that other legislation requires the Commonwealth to pay the full amount appropriated for the purposes of the body.
27 Part 3 of the Bill includes provisions to reduce the amounts specified in Schedule 2.
28 Clause 12 provides for amounts of State, ACT, NT and local government items and administered items not required in later years to be extinguished. If the Government then decides that the amounts should be spent in a later financial year, it must request Parliament to appropriate these amounts in future Appropriation Acts.
2829 Clause 12 limits the amount that may be applied for those items to the amount reported in an agency’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 relevant item is taken to be reduced to the amount specified in the annual report. The amount of the item specified in Schedule 2 of the Bill may be increased or reduced by the other clauses of Part 3 of the Bill or in accordance with sections 30 to 32 of the FMA Act. The amount in the annual report must therefore be compared with the amount for the item in Schedule 2 together with any adjustments that have been made to that amount.
2830 Subclause 12(2) retains a power for 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 paragraph 12(2)(b) is to ensure that the amount published for the item can be corrected if, for example, the amount is erroneous or requires updating after an agency’s annual report is published.
31 Subclause 12(3) provides that a determination made under subclause 12(2) is a legislative instrument
3132 Despite subsection 44(2) of the Legislative Instruments Act 2003 (LI Act), which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 12(3) provides that a determination reducing a State, ACT, NT and local government items or 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 one or more of these items because the 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 Appropriation Acts are not subject to sunsetting.
33 Administered assets and liabilities items and other departmental items remain available until the appropriation is spent or reduced in accordance with clause 13. This clause enables the Chief Executive of an agency to comply with his or her obligations under section 44 of the FMA Act to promote the efficient, effective and ethical use of any surplus appropriations. Agencies should only spend all of an administered assets and liabilities item or other departmental item if there are government decisions to support that expenditure. Examples of where clause 13 may be appropriate to reduce an administered assets and liabilities item or an other departmental item include:
34 Paragraph 13(1)(a) enables the Minister responsible for an agency to ask the Finance Minister to reduce an administered assets and liabilities item or an other departmental item for that agency. Paragraph 13(1)(b) enables the Chief Executive of an agency for which the Finance Minister is responsible to ask the Finance Minister to reduce an administered assets and liabilities item or an other departmental item for that agency. Subclause 13(5) assists readers by noting that a request under subclause 13(1) is not a legislative instrument within the meaning of section 5 of the LI Act.
37 Despite subsection 44(2) of the LI Act, which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 13(6) provides that a determination reducing an administered assets and liabilities item or other 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 one of these item because any such determination will reduce the amount of an appropriation authorised by Parliament. Subclause 13(6) also confirms subsection 54(2) of the LI Act, which provides that instruments made under Appropriation Acts are not subject to sunsetting.
38 Clause 14 provides a similar process for reducing CAC Act body payment items to the process in clause 13 for reducing administered assets and liabilities items and other departmental items. Subclause 14(1) enables a Minister responsible for a CAC Act body, or in the case of a CAC Act body who the Finance Minister is responsible for, the Secretary of the Finance Department, to ask the Finance Minister to reduce a CAC Act body payment for that body. Subclause 14(6) assists readers by noting that a request under subclause 14(1) is not a legislative instrument within the meaning of section 5 of the LI Act.
39 Subclause 14(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 excess CAC Act body payments. However, if the Finance Minister does:
40 Subclause 14(5) clarifies that the full amount that is required to be paid to a CAC Act body by subclause 11(2) of the Bill may be reduced in accordance with this clause 14.
42 Despite subsection 44(2) of the LI Act, which provides that instruments made under annual Appropriation Acts are not subject to disallowance, subclause 14(7) 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 because the determination will reduce the amount of an appropriation authorised by Parliament. Subclause 14(7) also confirms subsection 54(2) of the LI Act, which provides that instruments made under annual Appropriation Acts are not subject to sunsetting.
43 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 FMA Act by a determination of the Finance Minister (section 20) or another Act (section 21). The determination or Act that establishes the special account will specify the purposes of the special account.
Clause 16—Conditions etc applying to State, ACT, NT and local government items
44 Clause 16 delegates Parliament’s power under section 96 of the Constitution to provide financial assistance to the States to the responsible Minister listed in Schedule 1 of the Bill. Clause 16 provides the Ministers named in Schedule 1 with the power to determine:
45 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 Parliament. Determinations under subclause 16(2) will simply determine how appropriations for State, ACT, NT and local government items will be paid. The determinations are issued when required. However, payments can be made without either determination.
4546 Although financial assistance is provided to the ACT, NT and local government authorities without reference to section 96, 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.
47 Clause 17 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 to 32 of the FMA Act (see clause 6).
48 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.
49 Schedule 2 specifies the appropriations for services other than the ordinary annual services of the Government. Schedule 2 contains a summary table detailing the total appropriations for each portfolio. A separate summary table is included for each portfolio together with other tables detailing the breakdown of the appropriations within each portfolio.
4950 Schedule 2 includes for information purposes a figure for the annual Budget appropriations (the ‘Budget comparator’) and a figure for previous financial year (the ‘Actual Available Appropriation’). The Budget comparator printed in italics under each appropriation amount indicates the amounts provided by the annual appropriation Acts following the previous Budget. The Actual Available Appropriation printed in plain type under each appropriation amount provides a full year comparison with the proposed appropriations. Neither figure affects the amounts available at law.
51 More details about the appropriations in Schedule 2 are contained in the PB Statements, PSES and the second reading speech.